A number of trading strategies exist to make money in stock market and one of these strategies is to set the chart settings to 5-min candlestick charts for any indices or for any stock.
- Now the action plan requires you to spot the most recent candle with the highest volume. Let us call it as 1st candle.
- Now one has to have the patience and w for the NEXT candle, say 2nd (to the 1st candle) is fully complete.
- Just remember that if the body of the 2nd candle is clearly above the body of 1st candle, the momentum is likely to continue. The thumb rule is that 2nd candle is fully complete before you undertake this check. So having a patience is a must to be successful with this strategy and thus do give it a time to complete it.
- Make sure that you buy on a decline. As a thumb rule remember that stop-loss is to be always placed below the low of the 1st candle.
- If the 2nd candle fails to maintain above the body of the 1st candle, it is likely to be a blow-off pattern which is a termination pattern.
- Sell(short) the stock on a rally and keep a stop-loss above the high of the 1st candle. Remember, in this case we are going against the trend and hence a stop-loss is compulsory.
- When the stock is in a downward momentum, the same rules apply but in the opposite direction.
- Keep booking profits continuously in small chunks as none has gone broke booking the profits.