TECHNICAL

ANALYSIS
Learn To Earn

2
 INDEX
1. INTRODUCTION TO TECHNICAL ANALYSIS
2. HOW TO DO TECHNICAL ANALYSIS?
3. TREND & TRENDLINES
4. SUPPORT & RESISTANCE LEVELS
5. UNDERSTANDING MULTIPLE TIMEFRAME ANALYSIS
6. CANDLESTICK PSYCHOLOGY
7. SINGLE CANDLESTICK PATTERN
8. DOUBLE CANDLESTICK PATTERN
9. TRIPLE CANDLESTICK PATTERN
10. INTRODUCTION TO CHART PATTERNS
11. HOW TO TRADE CHART PATTERN?
12.VOLUME ANALYSIS
13. GAPS
14. INTRADAY TRADING SETUPS
15. RISK MANAGEMENT
16. PUTTING IT ALL TOGATHER (PRACTICAL-BONUS)

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 Introduction to
Chapter - 1 Technical
Analysis
 Technical Analysis is an art of reading,
understanding & forecasting the
future movement of price with the help
of its historical price movement.

What Is
Technical
Analysis?
Technical analysis looks at the price
and what it has done in the past and
assumes it will perform similarly in
future under similar circumstances.

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 Technical Analysis

Trend Identification Risk & Money Entry- Exit with

Management discipline

Survival 7
 DOES
YOUR
CHARTS
LOOK LIKE
THIS?

7
 Identifying the trend: It’s the first step for a
traders to be on the right side in the market, these
How to do helps us to get right direction for trade.

Technical
Analysis? Plotting Support & Resistance

Risk and Money Management

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 Fail to Plan,
Plan to Failure
 Technical v/s Fundamental

● Technical Analysis focuses on Charts, Market ● Fundamental Analysis focuses on getting to know a
Action. company and understanding some of the factors that
● Short term Investment & Trading signals. might be affecting the current stock price.
● Trading ● Long term investment.
● Decisions are always based on major market ● Investing
trend & Stock Prices. ● Decisions are based on Financials of the company.

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Trends & Trend Lines
 "Price wont always move smoothly in trending
In a ideal uptrend, price makes higher highs and higher lows markets but this is what you can look for a
reference for an ideal trend movement"
In a ideal downtrend, price makes lower highs and lower lows
Primary Up Trend
Monthly / Weekly / Daily
Secondary Trend
Da ily / 4 Hrs / 1HR
 Minor Trend
30 M in / 15 M in / 5 M in
 Trendline
Trend lines are d r a w n connecting the s w i n g highs & s w i n g lows. They act as support &
resistance but also a break in trendline can signal a possible trend change
H o w to d r a w trend lines effectively to a da pt to all the price movement.?
Need a minimum of 3 touches
How to identify the Trend and Draw the Trend line

The trend is basically the movements of the market on a particular

chart

There are three types of trends:

1. Uptrend
2. Downtrend
3. Sideways ( Non-trending )

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Uptrend

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Uptrend

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Downtrend

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Downtrend

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Sideways

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Sideways

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Retracements and Reversals in an uptrend

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Retracements & Reversal in a Downtrend

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Support / Resistance Levels
Every moment is unique in the market

You should not trade just based on support and resistance

levels. There are more factors to look into.
Resistance & Support

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Support once broken becomes Resistance

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Resistance once broken becomes Support

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Trading Tips during Breakout
Wait for the candlestick to
actually close before taking the
trade.

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Breakout

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Breakdown

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 “Courage is one step ahead of fear.”
Never be afraid to face challenges even if
it’s tough.

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 Understanding Multiple Time Frame Analysis
Multiple time frame analysis is based on analyzing a stock chart or an indices or a currency pair, starting with
larger time frames and then working your way down to smaller time frames this helps us take decision whether
to enter or not. In short that gives us a clear idea about the trend identification, entry & exit.

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Weekly Trend Analysis

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Daily Trend Analysis

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 Candlesticks & Psychology
• Candlestick are mostly used to identify trading patterns. Patterns can help the technical analyst to set up a
profitable trade. The patterns are formed by grouping two or multiple candles in a particular sequences.

•Learning Japanese candlestick is like learning a new language. Imagine you got a book which is written in a
foreign language, you look at the pages but you get nothing from what is written.

•The identical thing in terms of financial markets. If you don’t know a way to examine Japanese candlesticks,
you may in no way be able to do trade in the market.

•Japanese candlesticks are the language of financial markets, if you get the skill of reading charts, you will
understand what The market is telling you, and you'll be capable of make the right decision in the right time.

•Just as a human being, candlesticks also have different body sizes, and when it comes to trading, it’s also
important to check out the bodies of candlesticks whether big or small that shows strength & weakness and
understand the psychology behind it. that’s what you will learn in after understanding candlesticks and it's
psychology. 15
 Candlestick Anatomy
● There are two types of candlesticks – Bullish candle and Bearish candle.
● The structure of the candlestick however remains the same
● When close > open = It is a Bullish candle.
● When close < open = It is a Bearish candle

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 Using candlestick patterns will help you understand what the big boys are doing, and will show
you when to enter, when to exit, and when to stay away from the market.

• Eachcandleshowsfour pricepoints: Open, High, Low

and Close for a particular period.
• Fore.g.Ifyou are viewinga Dailychart,each candlewilldepict
the Open, High, Low & Close for that day.

• Range of a Candle = High – Low

• Body ofa CandleClose – Open (Absolute Value)

• Ifthe closingpriceofa candleisgreater thanthe openingpriceth en

the candle will be GREEN incolor.

•Ifthe closingpriceof a candle islesser than the

openingpricethenthe candle will be RED incolor.

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On looking at a candlestick we need to identify 2 things. One is which
kind of candle it is and how much intensity it has.
 When you quit, you have lost.
If you never quit, you still have a chance!

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Candlestick
Patterns

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SINGLE CANDLESTICK PATTERN

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Hammer Pattern
Type: Reversal

Relevance: Bullish

Prior Trend: Bearish

Reliability: Low

Confirmation: Definitely required

No. of Sticks: 1

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Definition:
● The Bullish Hammer Pattern is a significant candlestick that usually occurs at the bottom of a trend or during a
downtrend and it is called a hammer since it is hammering out a bottom. The Bullish Hammer Pattern is a candlestick
pattern, it has a strong similarity to the Bullish Dragonfly Doji Pattern. In the case of Dragonfly Doji Pattern, the
opening and closing prices are identical whereas the Bullish Hammer Pattern has a small real body at the upper end
of the trading range.

Criteria:
● The market trend is identified as downtrend.
● Then we see a small body at the upper end of the trading range. Color of this body is not so important.
● We would like to see the lower shadow at least twice as long as the body.
● There is no upper shadow.

Explaination:
● The overall sentiment of the market is bearish, characterized by a downtrend. Then market opens with a sharp sell off
implying the continuation of the downtrend. However, prices suddenly turn upwards, the sell-off is quickly absorbed
and bullish sentiment continues during the day with a closing price at or near to its high for the day which causes the
long lower shadow. Apparently the market looses to continue in the selling side. This observation reduces the
previous bearish sentiment causing the short traders to feel increasingly issues with their bearish positions.
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Shooting Star
Type: Reversal

Relevance: Bearish

Prior Trend: Bullish

Reliability: Low

Confirmation: Definitely required

No. of Sticks: 2

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Definition:
● Shooting Star Pattern suggests that prices may be approaching to a top. It looks like its name, a shooting
star. The shooting star is a very small real body characterized by a long upper shadow, which gaps away
from the prior real body.

Criteria:
● Market is identified by a uptrend.
● We see a white or green candlestick on the first day.
● Prices then opens with a gap creating a small real body at the lower end of the trading range on the
second day.
● Upper shadow or the upper wick of the pattern on the second day is usually atleast twice as long as the
real body of the candle is.
● However, on the second day pattern has no lower shadow.

Explanation:
● The Shooting Star simply indicates us that the market opened near its low, then prices strongly rallied up
and finally prices moved down to close near the opening price. In other words, the rally of the day was
not sustained and may see some sell off from upcoming days. 25
DOUBLE CANDLESTICK PATTERN

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Bullish Engulfing Pattern
Type: Reversal

Relevance: Bullish

Prior Trend: Bearish

Reliability: Medium

Confirmation: Suggested

No. of Sticks: 2

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Definiton:
● Bullish Engulfing Pattern is a pattern characterized by a large white real body engulfing a preceding small
black real body, which appears during a downtrend. The white body doesn't necessarily cover the shadows of
the black body but totally engulfs the body itself. The
● Bullish Engulfing Pattern is an important bottom reversal signal.

Criteria:
● Market is identified by downtrend.
● Then we see a small black or red body.
● Next day we see a white or green body that completely engulfs the black or red body of the preceding day.

Explaination:
● While the market sentiment is bearish; we see some subsided selling reflected by the short, black real body
of the first day. another day shows bull strength with a closing price at or above the previous day’s open. It
shows that the downtrend is now losing momentum and the bulls started to take the lead.

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Bullish Piercing
Type: Reversal

Relevance: Bullish

Prior Trend: Bearish

Reliability: High

Confirmation: Suggested

No. of Sticks: 2

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Definition:
● Bullish Piercing Pattern is a reversal pattern. A long black or red candlestick is followed by a gap lower during the next
day while the market is in downtrend. The day
● ends up as a strong white or green candlestick, which closes more than half into the prior black or red candlesticks real
body.

Criteria:
● Market is identified by downtrend.
● We see a long black or red candlestick.
● Then we see a long white or green candlestick whose opening price is below previous day’s low on the second day.
● The second day’s close is contained within the first day body and it is also above the midpoint of the first day’s body.
● The second day however fails to close above the body of the first day then downtrend may continue.

Explanation:
● The market price moves down in a downtrend. The first black or red real body reinforces this bearish view. The next
day the market opens lower through a gap down opening. Everything now goes, as bears want it. However suddenly the
market surges toward the close, leading the prices to close sharply above the mid point of the previous day close. Now
the bears are losing their confidence and closing or re-evaluating their short positions. The potential buyers start
thinking that new lows may not hold and perhaps it is time to take long positions in this market.
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Bullish Harami
Type: Reversal

Relevance: Bullish

Prior Trend: Bearish

Reliability: Low

Confirmation: Strongly suggested

No. of Sticks: 2

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Definition:
● Bullish Harami Pattern is identified by a small white real body contained within a prior relatively long black or red
real body. “Harami” is an old Japanese word for “pregnant”.
● The big black or red candlestick is “the mother candle” and the small candlestick is “the baby candle”.

Criteria:
● The market is in a bearish mood identified by downtrend.
● Then we see a long black or red candlestick.
● We see a white or green candlestick on the following day where the small white or green real body is completely
engulfed by the real body of the first day. The shadows or wicks (high/low) of the
● second candlestick are not necessarily contained within the first body, however it's preferable if they are.

Explanation:
● The Bullish Harami Pattern is a sign of disparity about the market’s health. While the market is identified by
downtrend and bearish mood or sentiment; there is heavy selling reflected by a long, black or red real body
however it is followed by a small white or green body candle in the next day. This may sign like a trend reversal
since the second day’s small real body shows that the bearish power is diminished or weakened.

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Bearish Engulfing Pattern

Type: Reversal

Relevance: Bearish

Prior Trend: Bullish

Reliability: Medium

Confirmation: Suggested

No. of Sticks: 2

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Definition:
● Bearish Engulfing Pattern is a large black real body, which engulfs a small white real body in an
uptrend.
● The Bearish Engulfing Pattern is an important top reversal signal.

Criteria:
● Market is identified by uptrend.
● We see a white or green candlestick on the first day.
● Then we see a black or red bearish candlestick that completely engulfs the body of the first or
previous day's candle.

Explanation:
● Market is in a bull mood or bull trend. Then we see diminished buying reflected by the short, white
or green real body. This is then followed by a strong sell-off, which lead to a close at or below the
previous day’s open. The uptrend has lost momentum and the bears may be gaining strength over the
market.
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Bearish Harami
Type: Reversal

Relevance: Bearish

Prior Trend: Bullish

Reliability: Low

Confirmation: Strongly suggested

No. of Sticks: 2

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Definition:
● Bearish Harami Pattern is a candlestick or double candlestick pattern composed of a small black or red real body
contained within a prior relatively long white or green real body. “Harami” is an old Japanese word which
means “pregnant”. The big white or green candlestick is “the mother candle” and the small candlestick is “the
baby candle”.

Criteria:
● Market is identified by an uptrend.
● We see a long white or green candlestick on the first day or previous day.
● Then we see a black or red candlestick on the second day whose real body is completely
● engulfed by the real body of the previous day or an inside candle. The shadows or the wicks (high / low) of the
second candlestick do not have to be contained inside the first candle's body, though it's preferable if they are.

Explanation:
● The Bearish Harami Pattern is a sign of a disparity about the market’s health. Bull market or Bull trend
continues further confirmed by the long white or green real body’s vitality but then we see the small red
bearish real body which shows some uncertainty. This shows the bulls’
● upward drive has weakened and now a trend reversal is possible might fall from here.

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Dark Cloud
Type: Reversal

Relevance: Bearish

Prior Trend: Bullish

Reliability: High

Confirmation: Suggested

No. of Sticks: 2

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Definition:
● Bearish Dark Cloud Cover Pattern is a two-candlestick pattern signaling a top or trend reversal after an uptrend. We see
a strong white or green real body on the first day. The second day opens strongly above the previous day high However,
market closes near the low of the day and well within the prior day’s white body at the end of the day or half of the
green candle.

Criteria:
● Market is identified by an uptrend.
● We see a long white or green candlestick on the first day.
● Then we see a black or red real body characterized by an open above the high of the previous day on the second day.
● The second black candlestick closes within and below the midpoint of the previous day’s white or green real body.

Explanation:
● Market goes up with an uptrend. Then we see a strong white or green candlestick followed up by a gap suggesting that
bulls retain the control. However, the rally does not continue or sustained.
● Market unfortunately closes at or near the lows of the day so the second day body moving
● well into the prior day’s real body. Longs are shaken off somehow and short sellers now have a benchmark to place a
stop, which is at the new high of the second day.
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TRIPLE CANDLESTICK
PATTERN

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Morning Star
Type: Reversal

Relevance: Bullish

Prior Trend: Bearish

Reliability: High

Confirmation: Suggested

No. of Sticks: 3

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Definition:
● This is also a multiple candlestick formation signaling a major bottom reversal. It is composed of a long black pr red
candlestick followed by a doji, which characteristically gaps down to form a doji star. Then we have a third white or
green candlestick whose closing is well into the first session’s black real body. that's a meaningful bottom pattern.

Criteria:
● Market is identified by downtrend.
● We see a long black or red candlestick in the first day.
● Then we can see a Doji candlestick forming up on the second day that gaps in the direction of the previous
downtrend.
● The white or green candlestick on the third day confirms the reversal.

Explanation:
● Black or red real body while market is falling down may suggest that the bears are in command. Then a Doji
candlestick appears showing the lossing control of sellers to drive the market lower. Confirmation of bull are in is
seen on the third day’s strong white or green real body. A Morning Doji Star Pattern should have a gap before and
after the middle line’s real body. The second gap is rare, but lack of it will not take away from the power of this
formation.

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Evening Star Pattern

Type: Reversal

Relevance: Bearish

Prior Trend: Bullish

Reliability: High

Confirmation: Suggested

No. of Sticks: 3

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Definition:
● This is a major top reversal pattern formed by three or multiple candlesticks. The first candlestick is a long white or green body; the
second one is a small real body that may be white or green. It is characteristically marked with a gap in higher direction thus forming
an evening star. In fact, the first two candles forming up a basic star pattern. Finally we see the black or a red candlestick with a
closing price well within first session’s white or green real body. This pattern clearly shows that the market now turned bearish from
bullish.

Criteria:
● Market is identified by uptrend.
● We see a long white or green candlestick in the first day or previous day.
● Then we may see a small candlestick on the second day with a gap in the direction of the previous uptrend.
● Finally we see a black or red bearish candlestick on the third day.

Explanation:
● The market is already in an uptrend when the white or green real body appears which further suggests the bullish nature of the
market. Then a small real body appears showing the
● diminished capacity of the longs. The strong black or red real body of the third day is a proof that the bears have taken the control
over the market. A Bearish Evening Star Pattern has a gap before and after the middle real body. The second gap is very rare, but
lack of it does not take away from the power of this formation.

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5252
 Chart Patterns

There are several types of Chart Patterns that we are going

to know.

Let us get started.

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 Introduction to Chart Patterns

What are Chart Patterns?

● You must’ve heard that history repeats itself ? This is somewhat similar
happens in markets. Everytime history repeats and that is what price
action is, to predict the move by witnessing past data .
● In this case, Markets always repeats with particular patterns around
the breakout or while making a reversal.

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 Symmetrical Triangle.
• Symmetrical Triangle is basically a range being formed and also which is being reducing for Buyer’s and Seller’s.
•As stock price reaches to the most narrow zone somewhere it will give a breakout. Either to the upside or the
downside.

•There’s an upper trend line falling which is acting as Resistance and there’s a lower trend line which is acting as a
Support.

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Symmetrical Triangle

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 Descending Triangle.
This form of Triangle explains :-
● At a particular horizontal zone stock is taking support and also forming lower high’s
● In this scenario usually all all the buyer’s are taken down from that zone and downside breakout can
be seen
● There are also chance’s where there can be a reversal breakout to the upside, Where it forms a higher
high and retest the trend line as well.
Descending Triangle

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 Ascending Triangle.
● The Ascending Triangle works as opposite as The Descending Triangle, Where there’s a particular horizontal
resistance zone and stock is constantly making higher high’s.
● This is generally a Bullish Pattern
● But Trade can be taken any side (This is my view).
Ascending Triangle

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 Falling Wedge
● Falling Wedge is somewhat similar pattern like the ascending triangle, but in this pattern the
downside support trend line is also quiet falling.
● It is basically a Bullish Reversal Pattern.

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Falling Wedge

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 Rising Wedge
● Rising Wedge is as opposite as Falling Wedge.
● It is considered as Bearish Reversal pattern.
● This scenario also can be considered when range get’s narrow.

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Rising Wedge

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 Flag and Pole
● Flag and Pole is basically a trend continuation pattern.
● As we know market structure moves in waves, with help of identifying flag and pole we can clear
out the retracement move and with breakout of that we can take the Impulsive move.

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Bullish Flag & Pole Pattern

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 Inverted Flag and Pole
● Inverted Flag and Pole pattern basically is a bearish continuation pattern, as opposite as normal Flag
and Pole pattern.

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Bearish Flag & Pole Pattern

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 Range Breakout
● When the is a stock being moving in a zone it is called a range
● This is a scenario where at a point buyer’s take control and somewhere at a point seller’s take
control.

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Range Breakout
 Channel Pattern
● Bullish Channel
● A bullish channel is a rising range where with an upside resistance and a
rising support we can identify the trend and can trade on important
level’s
● Generally, In this channel you can do TWO types of trading:-

● 1). When stock is trading nearly at support or resistance

OR
● 2).When stock give a breakout on any direction
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Bullish Channel

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 Bearish Channel
Bearish channel is a falling channel where we get help to know
stock is in downtrend.

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 Head and Shoulder
● It is a Reversal pattern.
● Head and Shoulder shows when in an uptrend stock fails to create higher high and higher low and it then
creates a horizontal zone that acts a support and when it is broken it can show a good breakout to downside.
● Head and Shoulder usually work’s out in an uptrend.

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Head and Shoulder

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 Inverted Head and Shoulder
● Inverted Head and Shoulder works opposite as Head and Shoulder.
● It is a bullish reversal pattern.
● In this case stock fails to create a lower low and attempts to make an
equal high with that horizontal resistance crossing the stock turns
bullish.
● Inverted Head and Shoulder is considered more powerful than
regular head and shoulder pattern.

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Inverted Head and Shoulder

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Inverted Head and Shoulder

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 Double Top
● Double top is a bearish reversal pattern.
● It shows the weakness where the stock is unable to cross previous high and with that it once it breaches the
neckline it can show good reversal momentum.
● For reference you can expect “M” to be formed.

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Double Top

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Triple Top Pattern

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 Double Bottom
● Double bottom is bullish reversal pattern.
● This indicates the stock failed to form a lower high and this shows exhaustion of sellers
● You can refer letter “W” for reference.

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Double Bottom
Triple Bottom Pattern

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Triple Bottom Pattern
 Cup and Handle Pattern
● Cup and handle is basically a bullish reversal pattern
● At first it creates a rounding bottom by creating a short term resistance zone from where the cup
starts, then after a retracement stock again tries to cross that level by creating a handle and once if
successfully crosses and sustains we can see a good reversal.

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Bullish Cup and Handle Pattern

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 Assignment Discussion
Try identifying at least 1chart pattern for each of the following

Bull Flag &

Rising Wedge - Downtrend
Falling Wedge - Uptrend
Descending Triangle Going Upside
Triple Bottom
Double Top
Head & Shoulders
Ascending Triangle
Cup & Handle

Spend quality screen time to improve pattern recognizing abilities

How to trade Reversal Chart patterns?

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How to trade Continuation Chart
patterns?

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How to trade Bilateral Chart Patterns?

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Volume Analysis
G A P S
 What are Gaps?

Gaps are sharp breaks in price that are

created when the market closes after a day
of tradingand then reopens at a different
price.
Gap up
Gaps can happen moving up or down
The Gap up in Bajaj Auto Ltd is due
to the Earling release on 21 Jan 2021,
which we can easily identify with the
symbol in trading view.

Gap up
Common Gap Example
 Continuation Gap Example

Continuation gaps generally occur due to important events like earnings, news, etc.
Exhaustion Gap
Example
Breakaway Gap
Example
Gap borders acts as good support & resistance levels
Nifty Index Chart for Gap Fills
Intraday Trading Setups
 BASED ON GAP UP / GAP DOWN
1.GAP UP BULLISH

LONGENTRY
PATTERNS

Here the price gaps up and makes a pullback and breaks days high. Entry after candle close above
days high and consolidation.
Gap up bullish - Example
Gap up bullish - Example
 BASED ON GAP UP / GAP DOWN
2.GAP DOWN BULLISH

Yesterday's close

LONGENTRY
PATTERNS

Here the price gaps up and make a pullback and breaks yesterday's close. Entry after candle close
above yesterday's close and consolidation.
When there is much g a p b / w open price and previous day close and if we observe the g a p down bullish, we can go long after the N pattern
formation and breakout with SL below the pullback.
When there is much g a p b / w open price and previous day close and if we observe the g a p down bullish, we can go long after the N pattern
formation and breakout with SL below the pullback.
 BASED ON GAP UP / GAP DOWN
3.BULLISH BASE VIOLATION

LONGENTRY
PATTERNS
Yesterday's close

Here the price gaps up and makes a bearish candle and makes a reversal before breaking
yesterday close and breaks days high. Entry after candle close above days high and
consolidation.
Bullish Base Violation - Example
When there is much gap b / w open price and previous day close and if we observe the gap down bullish, we can go long after the N
pattern formation and breakout with SL below the pullback.
SHORT ENTRY PATTERNS
BASED ON GAP UP / GAP DOWN
1.GAP DOWN BEARISH

Yesterday's close

Here the price gaps down and makes a pullback and breaks days low. Entry after candle close below
days low and consolidation.

Tahis pattern is also can be identified as "Reverse N" pattern

G a p d o w n Bearish - Example
G a p d o w n Bearish - Example
SHORT ENTRY PATTERNS
BASED ON GAP UP / GAP DOWN
2.GAP UP BEARISH

Yesterday's close

Here the price gaps up and reverses to break days low. Entry after candle close
below yesterday close and consolidation.

Tahis pattern is also can be identified as "Reverse N" pattern

Gapup Bearish - Example
Gapup Bearish - Example
SHORT ENTRY PATTERNS
BASED ON GAP UP / GAP DOWN
3.BEARISH BASE VIOLATION

Yesterday's close

Here the price gaps up with a bullish candle but could not sustain the momentum and violates that in
the next few candles and breaks yesterday close and days open. Entry after candle close below
yesterday’s low and today’s open.
When there is much g a p b / w open price and previous day close and if we observe the base violation break bearish candle close
below days opening then also we can try to apply this base violation strategy by entering after the candle close below days
opening and SL above days high.
When there is much g a p b / w open price and previous day close and if we observe the base violation break bearish candle close
below days opening then also we can try to apply this base violation strategy by entering after the candle close below days
opening and SL above days high.
 Risk Management
Why Is Risk Management Important?
● Always Have a Trading Plan
● Position Sizing
● Stop Loss and Trailing Stop
● Consistency Is the Key

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 Rules of Risk Management
● If you lose trades consecutively, you can either lower your trading size by 50%, or take a break from trading. When you come back,
you should trade smaller positions until you start winning again.
● Only risk 1% or 2% of your capital per trade. You must avoid opening large positions to make up your losses.
● Set and forget. Once you open a position, leave it. If you keep moving your stops, you are only
increasing the risk of making wrong decisions.
● Keep a trading journal as you trade. You can record details about your positions and the market conditions. Keeping a trading log
will help you improve your trading skills and learn from your previous mistakes.
● Stick to your strategy. You cannot change your plan just because you lost two or three trades. Losing trades is part of the equation,
and by sticking to your strategy for a period of time you can then assess its reliability.
● Do not take losses personally. It is not your fault the market is not moving in the desired direction. Instead, you need to adopt a
neutral trading style.
● Do not let losing trades run. Protect your capital from unnecessary losses. The sooner you cut your losses, the better you preserve
your capital.
Do not jump on a trade just because you see the price moving down or up. Instead, wait for the market to retrace back and be
prepared to enter.
● Never trade money that you cannot afford to lose.

18
 S.E.T.S
• STOP LOSS: Max Loss capacity that you are ready to bear per trade. Stop-loss orders
are used to limit loss or lock in profit on existing positions.
• ENTRY PRICE: Entry point refers to the price at which an investor buys or sells a security. A good
entry point is often the first step in achieving a successful trade. Investors can use trendlines,
moving averages, and indicators to help determine suitable entries.
• TARGET: Target Price is referred as the best possible projected price limit for a financial security.
Target Price is a limit that is the best possible outcome for the stockholder's investment. Upon
achieving the Target Price, the investors or traders simply sell their stocks, as according to them they
have achieved the most probable reward from those particular stocks.
• SIZE: Investors use position sizing to help determine how many units of security they can
purchase, which helps them to control risk and maximize returns.