How to create a trading strategy for beginners? Top gainers and top losers intraday trading strategy !

While a successful trading career depends mostly on the management of your emotions and risks involved, learning your strategy plays an important role as well.

Trading strategy is the base on which you can practice other trading skills.

So learning how to create your own trading strategy or simply to choose an existing strategy will be an important step in your learning curve.

After practising your trading strategy, you can work on your emotions and money management skills.

So today we’ll see how to create your own trading strategy with the top gainer or loser intraday trading strategy example, which is both simple and profitable for beginners.

STOCK SELECTION

Stock selection is basically where/ on which stock you would enter a trade.

Any trading strategy starts with a stock selection method. You can choose the one according to your trading style.

There are several stock selection methods like top gainers and losers, top volume, news based, open interest, indicator signal, price action signal etc.

1. In this strategy, you can choose the first three stocks in the top gainers or top losers from the money control site.

Choose according to the market direction so if the overall market direction is positive, choose from top gainers.

Instead of choosing the first stock, we can choose the second or third stock so that these stocks will have some space to move upwards because the first stock has already reached its maximum potential by that time or it could also move a bit upwards later.

In this strategy you can choose the first three stocks in the top gainers or top losers according to the market direction.

If the overall market direction is positive, we’ll choose from top gainers. If it is negative, choose top losers.

Instead of choosing the first stock we can choose the second or third stock so that these stocks will have some space to move upwards because the first stock has already reached its maximum potential by that time or it could also move uh a bit upwards later.

2. Mostly the second or third stocks will have some space to move upwards so we’ll go with the second or third one.

3. I will also filter the stocks among these three by referring to the larger time frames.

*We’ll start with tech mahindra in this example in the video below. We’ll see where we could have entered and exited.

(If you look at the money control website, you can see quickly, the investing opportunities that is for the fundamental side, strength weakness, opportunity, threat etc.

And also technicals. It is very bullish if you want to see all the technicals like moving averages, rsi etc., you can quickly go through the section and choose the stock.)

ENTRY CRITERIA

Entry criteria is WHEN you enter the trade.

There are so many entry criteria out there, which basically tells you when to enter the trade. You can choose it according to your style.

2 basic types of entry are breakouts and reversals. Choose one according to your style.

4. In higher time frame, check if the stock is in uptrend. If it is in a range, the better. So that you can enter the stock when it breaks the range.

Range or previous level breakout is the entry criteria in this strategy. You can use other entry criteria which includes price action entry, indicator signals etc.

5. It is advisable for beginners to trade between 9.45 am to 10.30 am. At 10 am we should be ready to take a trade in whatever stock you’ve chosen .

6. Check if the volume is increasing. If yes, choose the stock.

Like in this example, if it is near the previous level, get ready and if it breaks this level you enter the trade.

We cannot catch the exact move as we don’t know where it would reverse or continue.

So for the safer side what we do is we’ll exactly start around the middle of the candle after entry.

So we see we start at the middle okay so now what you can do is you can either use a normal candlestick or use heikinashi, because you might be confused looking at the candlestick as a beginner.

7. Check if heikinashi candle is green in color with long body and wick in upper direction.

EXIT CRITERIA

Exit criteria is basically WHEN to exit the trade.

Plan your exits for both possibilities i.e. profit and stop loss.

Basically there are few types of exits like opposite signal of entry criteria, or according to your risk reward ratio, or trailing stop loss.

You can also change your exit criteria according to your trading style.

8. In this example, you can book quick 30 points. Or according to your risk reward ratio. You can also use trailing stop loss to lock in your profits.

Here in this example, if it is forming a range a rectangle box or whatever you call it, be ready to take a trade because it will give a huge moment after the consolidation.

Once a consolidation breaks out, either it goes down or up, whatever side it is, it will give a quick huge moment like 5 or 10 points or depending upon the time frame you’re trading.

You can also see on the next day, if it breaks above this or you can see how it is reacting and you can understand the market from that movement.

You should always confirm the price with candlesticks because candlesticks gives us the actual price, actual price action and what is happening in the current market.

In this example, look at the candlestick. Here you can see in the day chart it has broken its resistance so it is going to move in the positive direction for a few days so we could have got it right here.

Check out this example video on my youtube channel for trading strategies.

These are the basics of any trading strategy.

1. Stock selection method

2. Entry criteria

3. Exit criteria (for profit & stop loss)

Now you can mix and match all these 3 basics and form your own trading strategy.

See you soon with another trading post !

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