How to use Top Down Approach for Stock Selection ?
Concept : Relative Strength
Weak Vs Strong Sectoral Analysis
Weak Vs Strong Stock Analysis
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Step 1 : Choose the Strongest Sector
Use The concept of Relative Strength to identify Strong Sector .
Example Comparing Auto Vs Nifty
Here we can See the 65 RS line is Positive and Increasing meaning A outperformance of AUTO index 2/n
Look For Strongest Sectors
Like : PSUBANKS , AUTO and INFRA
The RS line Should be Preferred Sloping up
Use 65 RS for Short Term and 130 for Midterm Holding 4/n
What do Weak Sectors Look Like ?
Nifty : Pharma Fmcg It
This Sector Should be completely AVOIDED for trading as the whole sector is underperforming 5/n
Now As we have Selected The Strongest Sectors
Lets select the Strongest Stock in that particular Sector Using Stock Vs Sector Analysis
Outperformers : Canara Bank , SBIN
RS settings 6/n
Underperformers are stock that dont even give benchmark returns
PNB bank , Karnataka bank 7/n
Similary in AUTO sector Some Stoccks will be weak and some will be strong .
Bet on the winning hose and not on loosing horse by identifying outperformers .
Example :
Hero Vs Maruti
Which Stock to Select ? 8/n
I made A few Lakhs using this Famous Swing Trading Strategy
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It is characterized by a period of price volatility followed by a contraction phase, leading to a breakout in the stock's price. Here's a breakdown of the VCP pattern:
Breakout Rules :
Buy Stocks on Break , not after breakout
Use Alert Systems or place GTT orders near Breakout area
If you miss the breakout better to stay away from stock as RR goes out of favour
It took me 3 years to understand Volume Price Analysis
I'll explain in next 10 tweets
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RT for max Support
Support Resistance
✅They simply represent the 'extreme' psychological levels of fear and greed in that particular price region and time.
✅Strength of Buyers = Sellers
✅Lower volatility price congestions
7 less known Tradingview Indicators that all traders should know about
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1. @TraderLion_ Enhanced Volume Indicator
Lime Green Bars Suggests day when the stocks closes near the days high and volume greater than past 10 down volume days Suggesting Institutional Accumulation
Has Features Like :Highest/Lowest Volume in a year.
Modified version of Bollinger Bands
When price is written in blue, volatility overall is falling. When the outer bands start to fatten up in blue, a contraction signal is forming. Works with any length of your choosing