How technical analysis can make you a profitable trader even while trading part time and why is it an essential tool in your armoury!!

What if I told you that you had a chance to make a whopping 67% return on your investment over the last year by just reading the charts once a week for 30 mins every Sunday? All you needed is a bit of knowledge of Technical analysis and how to read charts.

Hey Everyone…

Welcome back to the blog. Today I want to introduce you to the fascinating science of Technical Analysis of charts. This post is not about how to do technical analysis rather it is about knowing what is the importance of learning this skill and how profitable it can be if used correctly.

This is one skill which if mastered correctly can give you insane profits over the longer run and will also tell you when to stay out of the markets when conditions are not in your favor.

As with any skill this needs time, dedication, patience and perseverance.

I am writing today’s post keeping those people in mind who are investing in the markets for the long term horizon and who don’t have the time or the inclination to constantly follow the ups and downs of the markets.

Having a basic knowledge of technical analysis will help you spot the ideal entry points and exit points which will keep your profits safe and sound over a period of time.

Most of the people whom I know of who fit this general criteria are highly successful professionals who are busy with their professional activities. They are well aware of the massive returns which are possible from investing into the markets . Yet the fear of unknown and lack of knowledge holds them back from taking the plunge.

There are a couple of myths which I would like to bust right away..

Myth #1: Its not possible to manage my funds myself and make a consistent return on my investment due to lack of time. It is just better to outsource and let someone else manage my funds.

Reality : The reality is that even if you work on an extremely part time basis and study the markets just once a week and base your decisions on sound technical analysis you can make a healthy ROI.

Myth #2: I don’t have the necessary knowledge and to get that knowledge I will need to spend enormous amount of time.

Reality : The real truth is that you don’t need to learn technical analysis from A to Z to be able to reap rewards. Just like you don’t need to know how the Internal Combustion EngineĀ  functions to be able to run a car. All you need to know is a few basics on how to operate the vehicle and you are good to go. Similarly if you know the basics of technical analysis and find a suitable strategy with solid entry and exit rules you are very well placed to take big profits in the markets.

Lack of time and knowledge along with the fear of unknown will push you towards more conservative investment options.

Just as a illustration I am going to share a chart which plots the value of the share price of Reliance Industries over the last one year. The price is plotted on the Y-Axis (vertical) while the time is plotted along the X-Axis (horizontal).

Each candle in the chart represents one week worth of trading data (Monday to Friday) and marks the opening, closing, high and low prices for that week. GREEN candle indicates that the price went up while RED candle indicates that the price went down…(Don’t worry if it sounds all gibberish at the moment, we’ll talk in depth about all this in following posts)

If all you did was open up your charting software on a leisurely Sunday morning when you have free time and analyzed the signals on the chart you would have still netted a whopping 67% return on your investment over this year. (Watch the RED arrows in the chart). The small yellow arrow shows the entry point (price at which we would have bought) and the large Yellow arrow on thee right shows the sell off point where we book our profits.

Ofcourse there are entry and exit rules and setups which you would need to learn to be able to spot these opportunities, but they are not difficult to identify once you know what to look for.

This is just one example of what is possible. There are many many more setups like this.

I would anyday settle for a 67% ROI over a 7 to 8% return which a bank Fixed Deposit gives me. What about you?

Let me know if you are excited with what is possible if you know Technical analysis and can apply it the right way.

Looking forward to your comments.

Until next time


4 thoughts on “How technical analysis can make you a profitable trader even while trading part time and why is it an essential tool in your armoury!!

  • It is possible maximum returns. I am confused that if this simple skill makes a big difference and most of people acquired this, then why only few 2-3% population is wealthy? I think something is their And that I am finding since I started trading. I HOPE I WILL GET IT AND WILL BE AMONG 2-3%!!!!

    • It is definitely possible to make such kind of returns in the market.
      The reason why just a small bunch of people make money is because they take time and effort to learn technical analysis. Most unfortunately don’t go deep enough to understand the nuances of it.
      If done right you can surely make insane profits by knowing this stuff Rahul.

  • Technical indicators fall into four broad categories: TMVV
    T trend,
    M momentum,
    V volatility and
    V volume.
    When seeking confirmation for a trade signal provided by one indicator, it is usually best to look to an indicator from a different category. Otherwise, the same or similar inputs will be counted multiple times, giving the illusion of confirmation when in fact little new information has been taken into account. Trend indicators include moving averages, moving average convergence divergence (MACD) and the parabolic SAR. Momentum indicators include the stochastic oscillator, the commodity channel index (CCI) and the relative strength index (RSI). Volatility indicators include Bollinger Bands, standard deviation and average true range. Volume indicators include the Chaikin Oscillator (also used to measure momentum), on-balance volume (OBV) and the volume rate of change.

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