How to determine stoploss, support line and resistance line for a stock in intraday? I read many articles including zerodha varsity and youtube videos but could not able to get clear picture. can someone explain me in simple terms please.
- Support Line : It is price level where stock has met some demand which caused the falling price to either stall or reverse back in upward direction. If the price has reversed from a level in recent past , there is a tendency that it will reverse again, hence there will be anticipated demand there which will cause the upmove.
- Resistance Line : Opposite of support line that is where the stock meets some supply.
- Stop loss : Stop loss depend on either your % risk per trade or market structure. If you always risk 2000 per trade your stop loss will be (2000/no of shares) rupees away from your entry point. However, this is not an efficient way. You have to place the stop based on market structure and calculate number of shares based on your desired risk . Let’s say stop is 20 points away from your entry and if you want to risk 2000 , you should enter with 100 shares.
See the image to get the idea about Support , resistance and stop loss.
For intraday trading , Yesterday’s Open , high, low , close are good levels to watch for and see how price reacts there. You can also use pivot points and the corresponding Support and resistance lines.
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Try plotting pivot point indicator on your chart and study the interaction of price near these levels (both current and past levels). You will get an idea of where support and resistance are.
thank you all, is there any good article i can go through to understand further?
can you guys please, shed some more light on this topic.
thanks in advance.
Watch This Video It’s Very Useful In determine SL and Target Price for intraday as well as Swing Trading.