Most of the people give up investing in the stock market after making huge losses.
But, why do people suffer losses in the first place? 🤔
This is because people depend on
🤦🏻♀️ Tips from experts
🤦🏻♀️ News
🤦🏻♀️ Gut feelings
Why is it a bad idea?
Let’s say you see a very muscular and fit person at the gym. He appears bulky and strong, and you find out from other people that he works out 3 hours a day at the gym. 👀
The “news”, “gut feeling” and “expert” trainer might say that he’s fit and he’ll live for very long, but only ECG will determine if he has a heart condition.
The “ECG” is usually the “trend” of the stock market. To make the right decisions in the stock market, you need:
✅ Fundamental knowledge
✅ Technical knowledge
Fundamental knowledge comprises of the condition of the economy, interest rates, latest govt schemes, monetary policies, budget, International factors and much more. which is very hard to track periodically
Whereas, technical knowledge comprises of:
💸 Price
📈 Trend
which is usually the easy method
The easiest way to make decisions is through Relative strength index
What is RSI
It determines the strength of a company’s share through its trend. RSI can be checked through any of the following websites:
investing.com
moneycontrol.com
What is usually recommended?
• If the RSI of a company is lesser than 40: sell
• If the RSI is between 40 and 60: hold
• If the RSI is above 60: buy
Is RSI reliable?
Before it gets in the news, it gets on the trend.
The news about Yes bank (Rana Kapoor’s criminal conspiracy) got out on 22nd September 2018 (price went down from 350 to 150) but the trend already got visible on 31st August 2018 (Price: 350) 😶
Similar cases were visible with Reliance Industries, Jet Airways, Kingfisher and DHFL.
It is always wise to depend on trends rather than the word of mouth from people. Do your research and check the RSI before making such trades. 😇
