How to trade stocks based on Technical analysis, Risk reward, Channels, Fibonacci, Elliott wave?

Trading stocks or for that matter any asset class requires a proper management and mixture of various aspects. Many traders think it is only research that will result into profitable outcome. But trust me it takes a lot of other aspects like Emotions, Temperament, Risk management, Money management, Technical analysis, etc.

Now look at the below chart that shows various techniques we use in order to give “Stock Tip” or Equity  calls to our clients.

Dabur India 60 mins chart:

Elliott wave and technical analysis: The above chart shows application of various techniques combined together. The most important aspect is to see:

1. If prices are forming higher highs and higher lows that will be first thing to confirm that the short term trend is positive. Break above the high of 277 (spot) and 278 (Fut) confirmed this.

2. Second thing to observe if there is a recognizable pattern – a rectangle pattern having resistance at 275 was decisively taken out giving a target zone of 288 based on the width of the pattern projected upwards.

3. Elliott wave structure: showing that wave C should come on upside post completion of wave B which was confirmed on faster retracement of last falling segment within wave B

4. Fibonacci projection of wave C = wave A was also again near the zone of 290.

5. Risk Reward: Prudent stoploss and risk reward ratio is very important. The Gap area near 271 – 272 provided ideal stop for the target of 278.

Based on the above observation and analysis we generated a Buy call on Dabur which was sent across to our clients via Yahoo messenger / SMS on 29^th April –

“DABUR INDIA FUT BUY AT CMP 278.60 SL 271.50 TGT 288”

Later, once the stock moved in our favor preserving capital is utmost important:

“DABUR INDIA FUT BUY CALL GIVEN ON FRIDAY BOOK PART TP AT 282 AND TRAIL STOP TO COST”

Target achieved: “DABUR INDIA FUT BUY CALL GIVEN ON FRIDAY BOOK PART TP AT 282 AND TRAIL STOP TO COST”

The above research highlights prudent and objective methods we follow to generate trading calls on Equity, Commodity and Currency markets. But not always all calls will result into a profitable outcome. Nevertheless, if the probability of success if 75% to 80% with favorable risk reward ratio the net outcome over the long run is still going to be positive.

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