3 Basic Points to Look Out for Passive Traders while Trading
Passive traders are those traders who do not follow-up with charts daily or for a couple of days. They might be students or working professionals with non-finance jobs. Keeping an eye on the price movement of stocks takes a good amount of time. Swing trading can be easily done with mostly positive results if a few pointers are kept in mind.
1) Trend of the Stock
Trend is nothing but the movement of a stock in a particular direction (upwards/sideways/downwards). The easiest way to identify the trend of a stock is to look at its linear chart. One must mostly opt for an uptrend stock because the stock will continue to show increase in price with some minute corrections. Sidetrend should be considered when the price of stock has has touched the support and will bounce back. One should neglect downtrend because, even if the stock price has increased, the chances are high that they might go down in the upcoming days. To find a company’s trend, simply google:
(company name) line chart moneycontrol or
(company name) line chart economic times
For eg: Relaxo line chart moneycontrol
2) News about the stock
Everyday some or the other companies prevail in the headlines of news due to various other reasons. These reasons may be positive or negative which may bring move in the movement of the stocks accordingly. News such as higher expectations in profit for the quarter results may lift the price of stock and vice versa. News such as a whistleblower alleging mismanagement in company may pull down the price of stock. Avoid all the tips heard from groups and people. These tips may be fraudulent and cause losses.
3) Setting Stop Loss and Target
Every trader (passive or active), must set a target for his/her investment. Keeping a specified target, will let the trader book his profit and leave. It often happens that a stock has reached the target, and from there, it took a reversal and came downwards drastically. Keeping a stoploss, lets you minimize your loss to the extent where you can afford it. Even if you dont want to set a target, its okay, but try to set a stoploss.
There are many more points to keep in mind for a passive trader, but with these three basic points, you can book reasonable profits and reduce your losses.
Thank you for reading 😀