Trader and Trading Sentiments
Trader and Trading Sentiments

We can understand the rise or fall of the company's stock in the stock market. But it is very important to have a good knowledge of technical analysis. Without technical analysis, we cannot read the movement of the stock market, so if a trader or investor has to read the movement of the market, then it is necessary to have complete knowledge of it.

In technical analysis, we need to take special care of some important points, only then you can understand the rise and fall of the stock of any company like

  • Market trend
  • Overbought and oversold zone area
  • Bottom and Top (Reversal Candlestick Pattern)
  • Divergence Formation
  • buyers and sellers tug and war volume
  • Bullish zone area and bearish zone area
  • Trendline Sentiments
  • and technical analysis based on your personal strategy, etc.

Short selling in a stock market means selling any stock. The way you earn money by buying a stock, in the same way, you can earn money by short selling.

Like suppose - any stock is XYZ which is going on price 100rs now your view is that now this stock will go up, then you buy it at @ 100 rs and assume it reaches 150 and your profit (100 – 150) = 50rs.

Now suppose you have a view in the same XYZ stock now that it will go down, then you can also sell the same stock as if you sold that stock at a price of 100rs and now it comes to 50rs. So, you have (100 – 50) = 50rs in that stock.

As you know a stock market is the business of demand and supply

First, you bought XYZ stock at a price of 100 rs, then someone must have sold at the same rate only then your order was reached and the market reached from 100 to 150 means your view was perfect, and there was demand and market went up And those who made sell positions there were harmed.

And in the second case, you sold the same stock at the rate of 100. Your view is made of short sell. So if you sold at the rate of 100, then someone must have bought there, then your order was executed and the market has now come to the 100 rates 50, that means your research was perfect, then that rate came down in this case supply created and those who bought thinking that the demand is coming, they lost.

In this way, you to make your research in this business stronger so that you can know when the demand is going to come and when you supply, then only you make the decision to buy and short sell in that stock.

You do an example and BUY a stock:

  • BUY 100 rupees
  • SELL 150 rupees
  • Position closed = profit 50 rupees
  • And if you sell a short stock then
  • SELL 100 rupees
  • BUY 50 rupees
  • Position Closed = Profit 50 Rupees
  • Meaning if you buy first, you will close the position by selling and book profit or loss.
  • And, if you sell short before then you will close the position by BUY and book profit or loss.