2 Minute Trading Strategy for Daily Living in Stock Market
When you hear the word “strategy’, what comes in your mind ….Financial Analysts roasting newspapers and juggling various theories to carve out the best. Forget it, I bring you the most simple 2-minute strategy based on Exponential Moving Averages(EMA) and I will tell you how to do that, in fact.
No finance degrees, no complex mathematical formula, no overnight zero-to-hero trading secret but just a 2-minute strategy to make a decent living. If this is not you who want to earn a daily living from stock market trading, you can quit right now.
I won’t explain what is EMA and other blah blah technicals. You may do Google search for this. I want you to learn just the right steps to make buy or sell decisions on the stock in 2 minutes. So, I am going to take a real example but it is no way a recommendation of a stock purchase/sell and remember that the share market is a risky game.
I am from India so my content is based on shares listed in the National Stock Exchange. Suppose you have Rs. 100000 fund to invest and you are before the broker’s trading screen and blue/red bricks keep blinking before your eyes. You are surfing that lucky charm right.
Let us say you selected three stocks( Remember, no recommendation for investment) — Punjab National Bank, Tata Consultancy Services, and Reliance Industries. The Script Codes of these companies are PNB, TCS, and RIL.
Now, go to the “in.investing.com” site (I am not promoting investing.com site, you may choose any other website. I found it easier as per my experience) and you will land on the page which holds the Indian version of www.investing.com.
It will prompt you to signup but you can skip it. Now, type in name of your share in search box shown below (Dated 11/12/2019). Let us start with PNB.
When you type PNB, you get a list of scripts, select PNBK with the Indian Flag logo. To check whether you are on the Indian version of www.investing.com site, look at the right upper corner, there should be the Indian flag logo beside red arrow.
After this, click on Technical Chart tab as indicated by red circle in the picture below — -
Let us expand the chart by clicking on tab indicated by red arrow — -
Ensure that the chart is set at “1D” as indicated by the green arrow in the picture. “1D” indicates that the chart is built on daily closing prices.
Now, Click on the tab “Indicator” as shown by red arrow. The list of technical indicators unfurls. In the search box of this list, type “Exp” as indicated by an orange arrow and the list removes all items and only technical indicator “Moving Average Exponential” is shown in the list as indicated by a green arrow and click on the indicator two times. Two statements appear as indicated in a pink circle.
Now, click on the setting button “Format” of the first EMA and change the settings from the dialogue box. In this dialogue box, click on the “Inputs” tab and change Length from 9 to 10 and click on Style and change the “Plot” color to dark blue.
Similar changes will be done in the second EMA with Length “40” and “Plot” color as red. Now resultant chart looks like this — -
Now, we can see that there are two lines (blue and red) over the PNB share price line. We need to zoom in the right side part of the chart as we need to see the recent changes in the share prices and EMA lines.
Now, let us understand some entry-exit trading rules. In three graphs, trading rules are simplified. In graph A, the blue line pierces up the red line and rides above the red line. The stock which reflects such crossover, we can make buying decisions near the crossover days.
The graph B shows that the red line pierces down the blue line and rides on a blue line for the rest. If such crossover appears, the stock should be sold out near the crossover days.
In graph C, there are rope-like twists and turns in the crossovers. In such a scenario, there is no trend in the stock hence you should not trade into such stocks.
Now, we will judge all three stocks PNB, TCS, and RIL on these trading rules and we will evaluate in which stock we should go for buying, selling or no trade.
PNB Technical Chart
In PNB Technical Chart, we can see that the red line has crossed above the blue line as indicated by the blue arrow. The stock is in the bear phase hence PNB shouldn’t be bought.
TCS Technical Chart
In TCS Technical Chart, observe the two blue arrows and we can see that there are twists and turns of red line and blue line. In this stock, there is no trend so no trade is the decision in TCS shares.
RIL Technical Chart
In RIL Technical Chart, we can see at the arrow and observe that the blue line pierced above the red line and this indicates the bull run and purchase of this stock near this crossover would yield nice returns. In thirty days' time after purchase, RIL has given more than 8% return per month.
Bro, if you spend 2 minutes in evaluating 3–5 stocks with 10 and 40 Day EMA, you will have an edge in your trading decisions. Remember, this strategy is fallible if there is no trend in the market. When the market has a trend, Moving Average Exponential is a very smart tool.
Disclaimer: The article is only for educational purpose and it should not be taken as a recommendation of buying or selling any shares stated in this article and the reader should understand that share market investments are highly risky.