Rise and fall? Whats the catch?

Trading
1

I have been trading in this market in equity segment for quite some time. Now I have a question. If anyone has any idea, please share.

As soon as I buy a share its price starts falling and when I sell a share it starts raising again. This I have seen multiple times. Now, why this happens? Some people can quote reasons like fear, greed, human psychology. But what is the accurate reasoning behind such change? It is not clear to me. As there are many intellectuals present here in this forum, can any one give me proper step by step reasoning.

Thanks.

2

Hi @Sherry_Seaan,

It’s very common among traders who try to chase rallies. Take a look at your past trades and see if that is the case.

To rectify this issue, try to buy at/near the support and short near the resistance. This approach requires more patience and better understanding of the technicals but it would certainly give much better entry points.

-Neha (vrdnation.com)

3 Likes
3

You have got to tell us what you are doing when … and I would love to take the opposite side.

Just kidding … There is a very simple explanation -

In the short term - stock price movement is random.

So when you said “multiple times” it is precisely 50% of the times.

And people spend a lot of time even years, trying to figure out a pattern or rationale … but actually they are simply getting fooled by randomness.

2 Likes
4

Dear friend just go with MACD and stochastic with 1 min heinkinashi chart. With with buying only when all indicators on going upward from downward ( MACD oscillator should be on positive side when buy)
Use this intraday trick and forgot all fear.

5

I had the same question , ( today i had this problem with the stock Infibeam ), There may be many reasons , one thing i figured out about this problem is that , rapid rise & fall happens to a stock during its consolidation period , especially when RSI flattens out and also as mentioned by @Risk.Money , " simply by randomness. ’

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No its simple. First book small profits. After u exit with profit never look back that stock

When in loss until min one year don’t book loss

While buying only buy half shares. Buy after some dips again

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As others mentioned above, it happens mostly when you chase rallies.

Becoz if a stock jumps 2% suddenly, its next move is to come down 0.5% (in most cases). But what retailers do? When they see stock jump 2%, they run and buy it at market price. Same while shorting.

So instead of chasing rallies, one should buy a stock before its rally, if you find a good stock near low levels. But even that is risky. What if there is some bad news which u dont know, just like that no stock goes to lower levels.

So better thing is to increase your time horizon and keep quantity low. So even when you buy and stuck at wrong position, you can wait instead of just booking loss.

1 Like
8

Only trades where you will not find the problem you mentioned is in stocks like RCOM, PCJEWELLER

Or when stocks like TCS rally on news, i remember few months ago it received some big orders and it kept going up entire day

Where there is so much strength in one direction, all the operators and biggies are trading on one side

That you can enter at any price and still see green on your intraday trade

For e.g. when PCJ rallied from 98 to 250, and when RCOM went 70% up in one day

But such stocks are also more risky than others. Sometimes they show false breakouts also.

9

I get your point. It is very annoying. You start thinking that the market is playing some cruel games with you. But don’t worry, your luck will change. Just remember that, Dawn always comes after Dusk. I hope you understand.

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I get your point. It is very annoying. You start thinking that the market is playing some cruel games with you. But don’t worry, your luck will change. Just remember that, Dawn always comes after Dusk. I hope you understand.