Scalping vs Swing vs Intraday – What’s the Difference?

Stock trading can be very profitable, especially if you stick with it for a long time. To be successful, it's important to understand things like a company's financial health and its real value.

Trading has been around for a long time, starting with the barter system where people traded goods directly with each other. This old form of trading laid the groundwork for the modern stock market.

The stock market is a place where people buy and sell shares of companies. These shares represent part ownership in the business. The first modern stock exchange started in Amsterdam in 1602, where people traded shares of the Dutch East India Company.

Derivatives, which are contracts based on the value of an asset, were first traded in 1607 by a single company. Dividends, or profits shared with stockholders, were given out a few years later. Amsterdam was also the birthplace of futures and options trading.

Today, more and more people are getting interested in the stock market, even those who don’t have much experience. Many see trading as a good way to grow their wealth.

Staying consistently profitable in trading is the goal of every trader, but the journey isn’t always smooth. However, by following some proven strategies, you can increase your chances of staying in the green. Here are ten tried and tested trading strategies to help you stay in profit, explained in simple language.

1. Set Clear Goals and Stick to a Plan

The foundation of successful trading is having a clear goal and a solid plan. Before you even make your first trade, know what you want to achieve.

• Define your trading objectives: Are you looking for short-term gains, or is long-term growth your goal?
• Create a plan: Outline your entry and exit points, how much you’re willing to risk, and how you’ll respond to market changes.
• Stick to the plan: It’s easy to get swayed by emotions, but staying disciplined is key to long-term profitability.

2. Use Stop-Loss Orders

A stop-loss order is a tool that automatically sells your stock if it drops to a certain price, preventing further losses.

• Set your stop-loss: Determine the maximum loss you’re willing to take on a trade and set your stop-loss accordingly.
• Protect your capital: By using stop-loss orders, you can prevent a small loss from turning into a big one.

3. Diversify Your Portfolio

Diversification means spreading your investments across different assets or sectors to reduce risk.

• Avoid putting all your eggs in one basket: Invest in various sectors like technology, healthcare, and consumer goods. If one sector performs poorly, others might do well, balancing your overall returns.
• Include different asset types: Consider adding bonds, ETFs, or mutual funds to your portfolio for added stability.

4. Follow Market Trends

Trend trading is a strategy where you make decisions based on the direction of the market.

• Identify the trend: Use technical analysis tools like moving averages to determine whether the market is trending up, down, or sideways.
• Trade with the trend: If the market is going up, focus on buying (going long). If it’s going down, you might consider selling (going short).

5. Practice Risk Management

Risk management involves controlling the amount of money you expose to potential loss on any given trade.

• Use the 1% rule: Don’t risk more than 1% of your trading capital on a single trade. This way, even if a trade doesn’t go as planned, it won’t significantly impact your overall portfolio.
• Balance risk and reward: Always aim for a higher potential reward compared to the risk. For example, risking ₹10,000 to make ₹30,000 ensures that even if you lose occasionally, you’ll still come out ahead.

6. Keep Emotions in Check

Emotions like fear and greed can cloud your judgment and lead to poor trading decisions.

• Stay calm: Don’t let short-term market fluctuations affect your trading decisions. Stick to your plan and avoid making impulsive trades.
• Avoid emotional trading: If you feel overly stressed or emotional, it might be best to take a break from trading until you can approach it with a clear mind.

7. Regularly Review and Adjust Your Strategy

Markets are constantly changing, so it’s important to review your trading strategy regularly.

• Analyze past trades: Look at what worked and what didn’t. Learn from your mistakes and successes.
• Adjust your strategy: If market conditions change or you notice a pattern in your trading performance, don’t hesitate to tweak your strategy to better align with your goals.

8. Learn to Identify and Trade Support and Resistance Levels

Support and resistance levels are key concepts in technical analysis that can help you make better trading decisions.

• Support level: This is the price level where a stock tends to find support as it falls. Think of it as a floor that the price has trouble falling below.
• Resistance level: This is the price level where a stock often faces selling pressure as it rises, acting like a ceiling.
• Trade near these levels: Buy near support and sell near resistance for better profit potential.

9. Use Technical Indicators

Technical indicators like moving averages, Relative Strength Index (RSI), and MACD can provide insights into market trends and potential entry and exit points.

• Moving Averages: These smooth out price data to create a trend-following indicator.
• RSI: Helps identify whether a stock is overbought or oversold, which can indicate a potential reversal.
• MACD: Shows the relationship between two moving averages and can help signal buying or selling opportunities.

10. Stay Informed and Adapt to Market Conditions

The financial markets are influenced by various factors, including economic data, geopolitical events, and market sentiment. Staying informed helps you anticipate potential changes.

• Follow market news: Keep up with the latest financial news, earnings reports, and economic data releases.
• Be adaptable: Markets can change quickly. Be ready to adjust your strategy or portfolio if necessary to align with new market conditions.

Conclusion

Trading for profit requires discipline, knowledge, and the right strategies. By setting clear goals, managing risk, following trends, and staying updated, you can increase your chances of consistent profitability. Remember, no strategy guarantees success, but these ten tried and tested methods can significantly enhance your trading outcomes.

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Price Patterns are shapes or formations on charts that can be categorized and used to predict future price movements.

These patterns have been seen repeatedly across different charts and times, proving their reliability.

• Duration: Price patterns can last from a few days to several months or even years. Longer patterns usually lead to more significant price moves.
• Price Targets: The targets from these patterns estimate how far the price might move, but they are approximate.
• Interpretation: Analysing patterns involves both skill and flexibility. Patterns may not match the textbook description perfectly but can still be valid.
• Considerations: Always look at the price behaviour and the time it takes for the pattern to form to get a complete picture.

Classification of Patterns

Reversal patterns are important signals in trading that suggest a current trend (whether it's going up or down) might soon change direction. They usually appear after a long period of a particular trend. These patterns help traders predict when a trend might be ending and a new one might start.

Common examples of reversal patterns include:

1. Head & Shoulders
2. Double Top/Double Bottom
3. Triple Top/Triple Bottom
4. Broadening Formations
5. Rounding Bottom/Rounding Top or Cup & Handle Pattern

Continuation patterns are signals in trading that suggest a brief pause in the current trend, but the trend is likely to continue in the same direction after the pause. In other words, the trend takes a short break and then keeps going.

Common examples of continuation patterns include:

1. Flags
2. Pennants
3. Triangles: Ascending Triangle/Descending Triangle
4. Rectangles:

Both Continuous and Reversal Patterns

Rising/Falling Wedges

In this blog, we will have a brief look at how these patterns look.

Double Top : A Double Top is a bearish reversal pattern that signals a potential end to an uptrend. It forms when the price creates two high points (highs) at nearly the same level, separated by a period of time.

• Prior Trend: There must be a strong upward trend.
• First High: The price reaches a high point and then pulls back slightly.
• Second High: The price rises again to a similar level as the first high but on lower trading volume.
• Pattern Completion: The pattern is completed when the price drops below the lowest point between the two highs, confirming a trend reversal. This drop should happen with an increase in trading volume.

Tip: One will find double top developing often in stocks but one must look at the prior trend and volume to rely on the formation.

Double Bottom

A Double Bottom pattern is a bullish reversal pattern signalling a potential end to a downtrend.

• Prior Trend: There must be a strong downward trend
• First Low: The price hits a low point (low) and then starts to rise.
• High: After the first low, the price climbs and forms a high point (high), which may look slightly rounded.
• Second Low: The price drops again, creating a second low at a similar level to the first, but with lower trading volume.
• Pattern Completion: The pattern is completed when the price rises above the highest point between the two lows, indicating a reversal of the downtrend. This breakout should occur with increased trading volume.

Triple Top

A Triple Top is a bearish reversal pattern that indicates the potential end of an uptrend. It features three distinct high points at roughly the same price level. Here’s a simplified explanation:

• Prior Trend: There must be a strong upward trend before the Triple Top forms.
• Three Highs: The price reaches three highs, each at a similar level, and these highs are well-spaced, marking turning points where the price starts to drop after each high.
• Volume: During the formation of the Triple Top, trading volume usually decreases, with the highest volume at the first high and lower volume on the following highs. However, when the price finally breaks below the support level (the lowest point between the highs), volume should increase, confirming the pattern.

Tip: Pattern is complete when the both lows have been broken on heavier volume.

Triple Bottom

A Triple Bottom is a bullish reversal pattern that signals the potential end of a downtrend. It features three distinct low points at roughly the same price level.

• Prior Trend: There must be a strong downward trend before the Triple Bottom forms.
• Three Lows: The price hits three low points, each at a similar level, and these lows are well-spaced, marking turning points where the price starts to rise after each low.
• Volume: During the formation of the Triple Bottom, trading volume usually decreases, with the highest volume at the first low and lower volume on the following lows. However, when the price finally breaks above the resistance level (the highest point between the lows), volume should increase, confirming the pattern.

Head & Shoulders

• Prior Trend: For a Head & Shoulders pattern to be a reversal signal, there must be a clear uptrend before it forms. Without this uptrend, the pattern can't signal a reversal.
• Left Shoulder: During an uptrend, the price hits a high point (left shoulder) and then drops a bit. This drop usually stays above the trend line, so the uptrend continues.
• Head: After the drop from the left shoulder, the price rises again, reaching a new high (the head). After this high, the price drops again, creating a low point that helps form the neckline.
• Right Shoulder: From the low of the head, the price rises again but doesn’t reach the height of the head. This high (right shoulder) is usually around the same level as the left shoulder. The final decline should break the neckline, completing the pattern.

Inverse Head and Shoulders

The Inverse Head and Shoulders, signals a potential change from a downtrend to an uptrend. Here’s how it forms:

1. Prior Trend: There must be a clear downtrend before this pattern can signal a reversal. Without a downtrend, the pattern doesn’t work.
2. Left Shoulder: During the downtrend, the price drops to a low point (left shoulder) and then starts to rise.
3. Head: After the rise from the left shoulder, the price drops again to a lower point (the head), then rises again, creating a high point that helps form the neckline.
4. Right Shoulder: The price drops from the high of the head to form another low (right shoulder). This low should be higher than the head and usually around the same level as the left shoulder. The final rise should break above the neckline, completing the pattern.

When the price breaks above the neckline, it suggests the downtrend may be ending, and the price could start rising.

Broadening Formations

Broadening Formations are patterns where the price creates an expanding triangle. Unlike regular triangles, where the trend lines come together, broadening formations have trend lines that spread out, making the shape of an expanding triangle.

In simple terms, as the price moves, the highs and lows get further apart, creating a pattern that looks like an expanding triangle.

Broadening Bottoms

A Broadening bottom looks like a megaphone and appears during a downtrend. It features:

• Higher Highs and Lower Lows: The price makes progressively higher highs and lower lows, creating a wide, expanding shape over time.

This pattern is a bullish reversal signal, meaning that after it forms, the price trend is likely to shift from down to up.

Volume: Trading volume is often uneven but tends to rise when the price goes up and fall when the price goes down.

Broadening Wedges Ascending

A Broadening Wedges Ascending is a bearish reversal pattern where:

• Trend Lines: Two trend lines slope upwards and get wider apart over time.
• Volume: Trading volume usually increases as the pattern develops.

This pattern indicates that the current uptrend might be ending and a downtrend could begin

Broadening Wedges Descending

A Broadening Wedges Descending is a bullish reversal pattern where:

• ‍Trend Lines: Two trend lines slope downwards and get wider apart over time.‍
• Volume: Trading volume typically increases as the pattern forms.

This pattern suggests that the downtrend might be ending and a new uptrend could start.

RISING WEDGE

A Rising Wedge is a bearish pattern that forms when prices start wide at the bottom and gradually narrow as they move higher. This pattern slopes upward and signals a potential drop in prices. Here's a simple breakdown:

• Bearish Bias: A rising wedge generally indicates that prices are likely to fall, even though the pattern slopes upward.
• Continuation Pattern: If the wedge forms during a downtrend, it suggests the price might continue to fall after a brief upward movement.
• Reversal Pattern: If the wedge forms during an uptrend, it signals that the upward trend may be ending, and a downward trend could begin.

Regardless of whether it's a continuation or a reversal, a rising wedge usually predicts a drop in prices.

Falling Wedge Pattern

A falling wedge is a chart pattern that looks like a downward-sloping cone. It starts wide at the top and gets narrower as the price moves lower.

• Bullish Signal: It’s considered a bullish pattern, meaning it suggests the price might go up after the pattern forms.
• Continuation Pattern: If the price was going up before the falling wedge, it means the wedge is just a pause, and the uptrend is likely to continue after the pattern completes.
• Reversal Pattern: If the price was going down before the falling wedge, it indicates that the downtrend might end, and the price could start going up.

Overall, whether it’s a continuation or a reversal, a falling wedge generally suggests that prices are likely to rise after the pattern finishes.

Rounding Top

• The price trend slowly curves downward over time, creating a rounded shape.
• Bullish Signal: This pattern is known as a bullish consolidation pattern, which means it suggests that after this gradual downward curve, the price is likely to start moving up

Rounding Bottom

A rounding bottom pattern is a bullish consolidation pattern where the price trend gradually curves upward over time, resembling the shape of a cup. This pattern suggests that the market is slowly gaining strength and is likely to continue rising after the consolidation period.

FLAGS & PENNANTS

Flags and Pennants are short-term continuation patterns that show a brief pause in a strong price move before the trend continues in the same direction. These patterns appear after a sharp rise or fall in price with high trading volume.

Flags look like small rectangles that slope against the trend. This pattern looks like a small rectangle that slopes against the main trend. Volume usually decreases during the formation, then picks up again when the price breaks out of the flag.

Pennants have a triangular shape. This pattern looks like a small triangle with converging trend lines and resembles a short symmetrical triangle. Like flags, volume typically decreases during the pattern and increases when the price breaks out.

Both patterns indicate a short break before the price resumes its previous direction, whether up or down.

Rectangle

A Rectangle is a continuation pattern that forms when the price moves within a set range during a break in the trend. It looks like a rectangle because the price has two highs and two lows that create parallel lines at the top and bottom.

• Highs and Lows: The price hits similar high points and low points, creating a trading range.
• Other Names: Rectangles are also called trading ranges, consolidation zones, or congestion areas.

This pattern shows that the price is pausing and is likely to continue in the same direction once it breaks out of the range.

Rectangle Top

Bullish Rectangle Pattern: This is a bullish reversal pattern where the price also moves within a horizontal range, with two horizontal trend lines. When the price breaks above this range, it usually indicates an upward move.

Rectangle Bottom

Bearish Rectangle Pattern: This is a bearish reversal pattern where the price moves within a horizontal range, forming two horizontal trend lines. When the price breaks below this range, it often signals a downward move.

Symmetrical Triangle

A Symmetrical Triangle pattern forms when two trend lines come together and create a triangle shape.

• Upper Trend Line: Slopes downward, connecting lower highs.
• Lower Trend Line: Slopes upward, connecting higher lows.
• Apex: The point (intersection) where the two trend lines meet.

As the triangle forms, trading volume usually decreases. The pattern indicates that the price could break out in either direction when it reaches the apex.

Ascending Triangle

An Ascending Triangle is a bullish pattern that generally forms during an uptrend. It features:

• Horizontal Top Line: A flat line at the top, showing consistent resistance.
• Rising Bottom Line: An upward-sloping line connecting higher lows.

This pattern often signals that the price will keep rising after the triangle forms. It can also appear at the end of a downtrend as a reversal pattern, but it's usually a continuation pattern that shows the price is likely to keep going up.

A Descending Triangle is a bearish pattern that usually forms during a downtrend. It has:

• ‍Horizontal Bottom Line: A flat line at the bottom, showing consistent support.
• Downward-Sloping Top Line: A line sloping downwards, connecting lower highs.

This pattern often signals that the price will continue to fall after the triangle forms. It can also appear at the end of an uptrend as a reversal pattern, but it typically indicates the price is likely to keep going down.

Conclusion

Price patterns on charts, whether reversal or continuation, play a vital role in predicting future price movements in the market. Reversal patterns like Double Top, Double Bottom, and Head & Shoulders signal changes in the direction of the current trend, while continuation patterns like Flags, Pennants, and Triangles indicate a brief pause before the trend resumes. Understanding these patterns helps traders make informed decisions about when to enter or exit trades, maximizing potential profits. By analyzing the shape and volume accompanying these patterns, traders can gain insights into market sentiment and anticipate price shifts.

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Swastika has reported stellar growth in Q1FY25, with significant improvements in all key financial metrics compared to the same period last year. Here are the highlights:

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Key Highlights:

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Net Profit: ₹6.27 crore, up from ₹1.72 crore in Q1FY24

Revenue: ₹38.52 crore, a strong increase from ₹22.08 crore

EBITA: ₹10.63 crore, a significant rise from ₹3.63 crore

This impressive performance underscores Swastika's strategic initiatives and strong market position. As we continue to innovate and expand, we remain committed to delivering value to our stakeholders.

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Conclusion-

Swastika's Q1FY25 results reflect impressive growth, with substantial increases in net profit, revenue, and EBITA compared to Q1FY24. This performance highlights the effectiveness of the company's strategic initiatives and its strong position in the market. As Swastika continues to innovate and expand, it remains focused on delivering long-term value to its stakeholders, positioning itself for sustained success.

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Disclaimer: Investment in the securities market is subject to market risks. Please read all related documents carefully before investing.

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Key Highlights

1. Net Profit
   • Q1 FY25: ₹2,643 crore
   • Q4 FY24: ₹4,838 crore
   • Estimate: ₹3,856 crore
   • Note: The net profit has decreased significantly by ₹2,195 crore compared to Q4 FY24 and is below the estimated profit.
2. Revenue:
   • Q1 FY25: ₹1.93 lakh crore
   • Q4 FY24: ₹1.93 lakh crore
   • Estimate: ₹2.07 lakh crore
   • Note: Revenue remains consistent with Q4 FY24 but is below the estimated revenue.
3. EBITA:
   • Q1 FY25: ₹8,636 crore
   • Q4 FY24: ₹10,435 crore
   • Estimate: ₹9,551 crore
   • Note: EBITA has decreased by ₹1,799 crore compared to Q4 FY24 and is also below the estimated EBITA.
4. EBITDA Margin:
   • Q1 FY25: 4.5%
   • Q4 FY24: 5.3%
   • Estimate: 4.7%
   • Note: The EBITDA margin has declined by 0.8% from Q4 FY24 and is slightly below the estimated margin

Conclusion-

The company’s Q1 FY25 results show a significant decline in net profit, EBITA, and EBITDA margin compared to Q4 FY24, with figures falling below estimates. Although revenue remained consistent with Q4 FY24, it was still lower than the expected amount. The decrease in profitability and margins suggests challenges during the quarter, indicating that the company needs to address these issues to improve its financial performance moving forward.

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For more details, visit Swastika's website.

Source: CNBC

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1. Net Profit:
   • Q1 FY25: ₹269.4 crore
   • Q1 FY24: ₹315 crore
   • Estimate: ₹392 crore
   • Note: The net profit has decreased by ₹45.6 crore compared to Q1 FY24 and is below the estimated profit.
2. Revenue:
   • Q1 FY25: ₹2,338 crore
   • Q1 FY24: ₹2,127 crore
   • Estimate: ₹2,370 crore
   • Note: Revenue has increased by ₹211 crore compared to Q1 FY24 but is slightly below the estimated revenue.
3. EBITA:
   • Q1 FY25: ₹651 crore
   • Q1 FY24: ₹553 crore
   • Estimate: ₹650 crore
   • Note: EBITA has increased by ₹98 crore compared to Q1 FY24 and meets the estimate.
4. EBITDA Margin:
   • Q1 FY25: 28%
   • Q1 FY24: 26%
   • Estimate: 27.6%
   • Note: The EBITDA margin has improved by 2% from Q1 FY24 and exceeds the estimated margin

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For more details, visit Swastika's website.Source: CNBC

Bajaj has released its financial results for the first quarter of FY25:

Key Highlights-

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Net Profit:

Current Net Profit: ₹1,988 crore

Previous Quarter (Q1 FY24): ₹1,665 crore

Estimated: ₹1,896 crore

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Revenue:

Current Revenue: ₹11,928 crore

Previous Quarter (Q1 FY24): ₹10,304 crore

Estimated: ₹11,700 crore

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EBIT (Earnings Before Interest and Taxes):

Current EBIT: ₹2,035 crore

Previous Quarter (Q1 FY24): ₹1,954 crore

Estimated: ₹2,360 crore

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EBITDA Margin:

Current EBITDA Margin: 20.25%

Previous Quarter (Q1 FY24): 19%

Estimated: 20%

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Conclusion-

Bajaj's financial performance for Q1 FY25 shows strong growth compared to the previous quarter, with net profit and revenue both exceeding estimates. The company’s EBIT also showed improvement, though slightly below expectations. The EBITDA margin increased to 20.25%, reflecting operational efficiency. Overall, Bajaj’s results demonstrate solid performance and a positive trend in its financial health, though there is room for improvement in EBIT.

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