By analysing these four strategies, equity trading will be more effective and probable
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What Is Equity Trading?
Equity is a term used in accounting, real estate, homeownership, investing, and startup financing and valuation.
The meaning of the term equity is very similar in the various areas it can use, so it will be good to review all four of these to get the best understanding.
In accounting, equity is a term that you will find on the balance sheet.
What you own are the assets.
What you owe are the liabilities and equity.
Equity is the book value of the shareholder capital.
For example, A company in the manufacturing industry has a machine that it bought for one lakh rupees as an asset.
This asset is brought through the finance by a bank loan of 80000; money will owe to the bank.
For example, through equity, you can pay 20000 rupees, and you can be the business owner.
The accounting equation tells you that assets equal liabilities plus equity.
Assets = Liabilities + Equity
That means,
Equity = Assets – Liabilities.
Equity on the portfolio goes up; the net income gets added through retained earnings when the company is profitable.
Equity on the portfolio goes down; when the company is loss-making, it pays a dividend to its shareholders.
Equity trading is independent of the lot size.
You can place the order even with one share in equity trading.
Equity trading strategies
By applying these equity trading strategies, your trade will be most accurate and profitable.
1. Scalping Trading Strategy – Equity Trading
scapling is one of the equity trading strategies.
It is the best strategy for equity trading.
In scalping trading strategy, we set some indicators so that we can get quick entry and exit signals.
If you are in trading momentum, you can scalp the move on the way up.
In this way, scalping can protect against the risk of exiting the position too early because you had made the profit on the way.
Scalping trading strategy also works well during periods of consolidation, when the price is bounded within a range.
Price generally moves in the channel in getting a trend.
The scalper has the best opportunity to trade in a parallel channel, whether a side-channel or trending channel.
Targets should be acceptable in a 1:1 risk-reward ratio in scalping trading strategy .
One minute and five-minute charts are utilized for scalping trading strategy .
A set of five-period exponential moving average and five-period smoothen moving average is used on one minute or five-minute chart in scalping trading strategy .
Analyze the trend on the five-minute chart and trade accordingly at the one-minute chart.
In five minute chart, prices are moving in an uptrend, and we should trade on only the uptrend on one minute chart.
When prices are sideways on a five-minute chart, on one minute chart, we can buy when five EMA crosses the five SMMA.
RSI should be above 50 levels, and the Bollinger band is moving towards the upside.
Similarly, we can sell the stock when 5 EMA crosses down the 5SMMA.
RSI is below 50, and the Bollinger band is moving downward side.
Set your stop-loss at the low of the preceding candle, before the crossover in buy position and high of the candle before the crossover in short sell position.
The risk-reward ratio is 1:1 and 1:2 and exit according to your risk-reward ratio for equity trading strategies.
When prices are trending in a 5-minute chart, you can shift your stop loss to the break-even point to get the maximum of this move.
In this chart, between these two red lines, prices are moving in sideways channel and Bollinger band is also moving sideways, so we can trade in both the direction on one minute chart.
When 5 EMA is below the 5 SMMA, and RSI is below the 50 levels, the Bollinger band goes downwards.
So we can make our short sell position.
We will set our stop loss at the high of the before crossing over the candle.
I recommend trading this scalping trading strategy on a 1:1 reward ratio.
When the Bollinger band is moving sideways in one minute chart, we ignore all the signals.
When RSI is above 50 levels, do not enter the short sell position.
When RSI is below 50 levels, do not enter the buying position.
To trade the scalping trading strategy , you have to be satisfied with these three rules, they are,
5 EMA and 5 SMMA cross over should be happening.
If you are on buying side, RSI should be above 50 levels, and If you are towards the selling side, RSI should be below 50 levels.
While trading in one minute chart, the Bollinger band should be sideways on the 5-minute chart, and if you are towards buying side, the Bollinger band should be on an uptrend towards the upper side, and if you are towards the selling side, the Bollinger band should remain in a downtrend.
After the movement of sideways Bollinger band in the 5-minute chart, if the prices are moving in uptrend and Bollinger band is also in the uptrend.
So, in this case, on one minute chart, we focus only on buying position.
After taking buying entry in one minute chart, our target should be 1:2 and more, and my suggestion is the trailing stop loss.
But we will quickly exit our long position when moving average gives the exit signal.
We can exit the trade with the help of the RSI level and Bollinger band contraction also.
We should shift our stop loss level instantly in the scalping trading strategy because our target levels are minor.
For example, in any of the stocks you have selected, you have to see the direction of the Bollinger band in the 5-minute chart.
If the Bollinger band is expanding and going upward, we will make only buy position in scalping trading strategy on a one-minute time frame.
If the opening candle has gapped up, we have to wait for a clear direction of the stock.
2. Fibonacci Trading Strategy -Equity Trading.
Fibonacci trading strategy is the equity trading strategies
It is one of the best strategy for equity trading.
We have studied lagging and leading indicators; with the help of these indicators, we can get trading signals, and we can enter and exit the trade based on that.
But in this article, we will learn about the trading tool, and it is an indicator.
That tool is Fibonacci (retracement tool) for equity Trading Strategies.
When we apply this tool, we get some levels known as Fibonacci levels; these levels are beneficial and can be a very effective component of your trading strategy.
Leonardo Fibonacci is a great Italian mathematician who first observed the specific ratio of a number series recorded as describing the natural proportions of the things in the universe, including price data.
All the Fibonacci ratios rise from the number series, and these series of numbers are derived from the starting with one and followed by two and then adding 1 and 2 equals three the third number and adding 2+3 =5 the fourth number.
0,1,2,3,5,8,12,22,34,55,89,144,233……
By adding the two numbers, the result will be the following preceding number.
If we divide any number by this preceding number, the number is always 1.6.
For example, if we divide 5/3, we get 1.6; if we divide 144/89, we get 1.6.
And the inverse of this ratio is 0.618, and these two ratios refer to as GOLDEN RATIO.
All the golden ratio levels are essential, and the reason is that traders worldwide are watching these levels and placing buy or sell orders at the zones.
So these levels act as important support and resistance levels.
We have to identify, swing low and swing high of the current trend.
To know the Fibonacci trading strategy retracement level for equity Trading Strategies.
Applying this tool to the market will follow either an uptrend or downtrend, golden ratio support, and resistance levels.
For example, when prices are taking support at 0.5 level of the Fibonacci tool, we have to place the buy order of the stock, where the prices are facing the support.
Stop-loss should be below the support level, and profits should be according to your risk-reward ratio for equity trading Strategies.
When prices are facing resistance at 0.5 level of the Fibonacci tool, we have to place the sell order of the stock, where the prices are taking the resistance.
Stop-loss should be above the resistance level, and profits should be according to your risk-reward ratio.
Though Fibonacci is an essential tool, there was a problem with it: the ultimate support level, where the corrections occur.
So we have to add other indicators like moving average, Bollinger band, and MACD to get our entry signal and confirming the positions.
Another problem is that market will not resumes its uptrend after taking the support.
For example, if the prices have taken support at the 38.2% level, but if prices breach this level on the downside again, then we may not have clarity about where the prices will retake support before resuming the uptrend.
So we should always place the stop loss below our entry-level for equity Trading Strategies.
Another problem is that we cannot identify the current swing because there are many swings in the current trend.
There are many short and long swings.
I suggest choosing the current swings on the higher time frame chart.
How to make use of these Fibonacci levels? Equity Trading Strategies
If you are a positional trader, your chart should be weekly, daily and hourly charts.
We have to find the support levels, and we will use Fibonacci to know the retracement levels,
We have to apply the Fibonacci trading strategy from low to high.
We have to mark the levels close to our position because those levels are much significant.
On using the Fibonacci trading strategy alone will not be able to get a probable trade, by using the following indicators, you will be able to get accurate trade.
3. Heiken Ashi trading strategy – Equity Trading
Heiken Ashi trading strategy is best strategy for equity trading.
Heiken Ashi trading strategy will be helpful for the identification of the direction of the market.
It will be helpful to whether the market is on the bullish side or the bearish side.
The critical thing to remember while trading this strategy is,
It is entirely different from the candlestick patterns.
If the candlestick patterns are entirely on the bullish side, the rally will be on the upside.
If the candlestick patterns are entirely on the bearish side, the rally will be on the downside
Everything we discuss in this article can apply to all markets.
What Is Heiken Ashi Trading Strategy ? Equity Trading
Heikin Ashi is a Japanese word Heikin means average Ashi means pays, which means Average payments.
You can use the Heikin-Ashi at any time frame for the probable trade.
Heikin-Ashi candle has no tails on the bullish side, indicating the strong move towards the upside.
Heikin-Ashi candle has no tails on the bearish side, indicating the strong move towards the downside.
Heikin-Ashi candle will be helpful to control your emotions like exiting the trade, and it will help prevent the booking of small profits.
Heikin-Ashi candle is very stable, and it will give a clear-cut vision regarding the market.
It is the most vital pattern in the market that appears mostly in price trend analysis and gives accurate values for price changes in the market trend.
Heiken Ashi trading strategy used to detect the momentum of the market. It gives a different value for changing in the speed in the market and calculates them accordingly to fit them in the market and helps draw specific momentum value on the top of trends and the bottom of trends.
Your entry should be above the retracement of the green candle.
Stoploss should be below the dip of the red candles.
Target should be according to your risk-reward ratio for equity Trading Strategies.
If the candles below have no shadows in the bullish trend, it will be the most probable and profitable trade.
Your entry should be below the retracement of the red candle.
Stoploss should be above the retracement of the green candles.
Target should be according to your risk-reward ratio.
If the candles above have no shadows in the bearish trend, it will be the most probable and profitable trade.
It shows an uptrend when the green candles and these candles do not have a shadow or very soft shadow, and then the market offers a strong uptrend in the market.
Heiken Ashi trading strategy shows a trend change in the market when the candlestick has a small body, and it has both the upper and lower side
shadows.
Heiken Ashi trading strategy shows downtrends in the market when the candlesticks have red candles, and the candlestick has a lower shadow, and they do not have an upper shadow, then this indicator is pointing towards the strong downtrend in the market
Heiken Ashi trading strategy is for buying plan or interest. When the candlesticks of the market have long shadows on their lower side of the candles, they show that buying side price action can also be determined.
Heiken Ashi trading strategy useful for selling system when the candlesticks of the market have long shadows on their upper side of the candles and the bearish can be determined.
4. Pull Back Trading Strategy In The Bullish Move – Equity Trading
When we get two or three green candles in a momentum move, we will get a higher high and higher close; in each candle, the closing is above the previous candle’s close.
But after two or three candles, we get two or three red candles, in which the close will be lower than the close of the previous candle so that this candle will have the lower high and lower lows.
We have to draw a retracement line based on the retracement of the red candles.
When we get the break out of these candles, when we get a candle that has a closing higher than the open of this candle, we can make entry and expect a further move in the prices.
But in some cases, when momentum is very high, we get only one red candle; after this red candle again, we get more green candles in an upward direction, so if we get only one red candle, they should not make entry at the breakout of this retracement line. Instead, we should wait for the break out of the high of this momentum move.
So when we get the green candle closing above the horizontal red line level, you can expect a further up move at a price at the open of the next green candle.
In pullback patterns, our stop loss will be the low of the pullback.
In this case, there are these three red candles, and the last red candle low is your stop-loss.
We get one red candle; our stop loss level should be low of the single red candle.
In most cases, volume decreases in the pullback, but when the breakout happens, then the books will increase.
Now see the chart; these are the big candles but do not enter the trade till the red candles pullback has been formed.
Now draw the red retracement line by joining the red candles.
After the breakout of the red retracement line by the green candle, you have to make an entry after the increase of volumes.
Stoploss should be below the retracement of the last candle for equity trading.
In the case of a single red candle pullback, you have to wait for the price to retrace till the previous candle high.
If the price does not reach the previous candle high, it will be a consolidating day in most cases.
In pullback trading strategy, in momentum move, trading at first pullback will be more profitable because it puts us into the group of traders who have missed the first move.
After the three consecutive pullback patterns, I don’t suggest trading on the fourth pullback pattern because, after three pullback patterns, I will expect a consolidation phase.
If you are trading the first Pull back trading strategy, your target should be up to 1:2 and more.
How To Trade Pull Back Trading Strategy In The Bearish Movement? Equity Trading
When we get two or three red candles in a momentum move, we will get lower high and lower lows; in each candle, the closing is below the previous candle’s close.
But after two or three candles, we get two or three green candles, in which the closing will be higher than the close of the previous candle so that this candle will have the higher high and lower lows.
We have to draw a retracement line based on the retracement of the green candles.
When we get the break out of these candles, when we get a candle that has a closing lower than the open of this candle, we can make entry and expect a further down move in the prices.
But in some cases, when momentum is very high, we get only one green candle; after this green candle again, we get more red candles in a downward direction, so if we get only one green candle, they should not make entry at the breakout of this retracement line. Instead, we should wait for the break out of the low of this momentum move.
So when we get the red candle closing below the horizontal red line level, you can expect a further down move at a price and entry at the open of the following red candle.
In downtrend pullback patterns, our stop loss will be the high of the pullback.
In this case, there are these three green candles, and the last green candle high is your stop-loss.
We get one green candle; our stop loss level should be high of the single green candle.
In most cases, volume decreases in the pullback, but when the breakout happens, then the books will increase.
Now see the chart; these are the big candles but do not enter the trade till the green candles pullback has been formed.
Now draw the red retracement line by joining the green candles.
After the breakout of the red retracement line by the red candle, you have to make an entry after the increase of volumes.
Stoploss should be above the retracement of the last candle for equity trading strategies.
In the case of a single green candle pullback, you have to wait for the price to retrace till the previous candle low.
If the price does not reach the previous candle low, it will be a consolidating day in most cases.
In pull back trading strategy, in momentum move, trading at first pullback will be more profitable because it puts us into the group of traders who have missed the first move.
After the three consecutive pullback patterns, I don’t suggest trading on the fourth pullback pattern because, after three pullback patterns, I will expect a consolidation phase.
If you are trading the first Pull back trading strategy, your target should be up to 1:2 and more in equity trading.
For equity trading I recommend large-cap trading stocks because an individual can’t manipulate the scrip, and the movement will be based on that stock’s news and financial status.
I recommend 5 minutes time frame for intraday traders for equity Trading Strategies.
These are the equity Trading Strategies.
You can apply these strategies in equity trading stocks.
These types of trades will be more practical and most probable.
By combining these equity trading strategies, you will get the most accurate and most probable trade.
If you are interested in taking these types of most probable trades, you may contact us to be a profitable and most probable trader.
These are the only samples for equity trading.
The original program will be in our private groups on equity trading strategies.
For applying these Equity Trading strategies the best platform is a trading view
I am not a trainer; in the stock market, there are no trainers; all are learners.
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