How To Make Superior Profits With Remarkable & Time Tested Tool
‘Today’s Case Study Sun Pharma Gave profit of Rs. 3⃣7⃣0⃣0⃣0⃣/- in just 3 days on margin of Rs. 80,000.’
MOVING AVERAGES CROSSOVER
Worldwide Traders use Moving averages as their basic study to identify the trend.
There are four types of Moving Averages,
- Simple Moving Averages (SMA);
- Exponential Moving Averages(EMA);
- Triangular Moving Averages(TMA);
- Weighted Moving Averages (WMA)
Simple and Exponential Moving average are the two very popular moving averages used across the world.
There can be many permutations and combinations of the moving averages. We use Double Period Crossover Method or the GOLDEN CROSS) In this method there can be two types of trade setups:
Bullish Trade Setup : Shorter term EMA is crossing the slightly longer term EMA from downward to upward. That means the shorter term EMA intersects the longer term EMA. This helps the traders to identify the trend of the stock price which is UP, followed by stock price going up. This is also known as EMA BULLISH CROSSOVER
Bearish Trade Setup : Here, the Shorter term EMA intersects the Longer term EMA. Identified trend is DOWN, followed by the stock price going down. This is also known as EMA BEARISH CROSSOVER.
In Non trending market where the trend is not so much clear there is possibility of getting multiple crossover instances also known as whipsaws.
Hope you like it.
Now let me show you how did our traders made hand some Rs.37,000 profit in one futures contract on investment (margin) of just Rs. 80,000/-. Amazing profit of 46% in just 3 days.
Case Study :
Stock : SUN Pharma Reco. Rate: 533 SL 520 TARGET 580
Lets have a Look at chart, You can find at point 1, the dark green line(5 Day EMA) crossed over the dark pink line (20 Day EMA).
Immediately we came out with BUY recommendation on the stock @ 533 with a stop loss of 520 which is approximately 1 percent below the level of 525 support line. for a target of 580 @ point 2, which was considered as resistance , as the stock fell from the cliff to as low as 435 (approx)
There was another factor played supportive role confirming the uptrend that is the green trend line T1 has given the stock a stronger support each time the stock corrected.
Just see the beauty, on day three the stock shot up like a rocket and went to touch the resistance level and made a high of 585 on 28th Dec.
In brief, the EMA CROSSOVERs Bullish or Bearish can very well be considered as TREND SETTER after which the stock may go up and down.
Isn’t this amazing.
3 Questions to ask ourself.
- Do I Trade with the Trend or against the trend of the market ?
- What are the trend defining tools or systems which I must know ?
- How I can improve my trading and get more benefits by using this tool ?
“TRADE with the TREND, because the TREND is your FRIEND”
For more such posts stay tuned…