Keep eyes on price increase of shares and corresponding trading volumes . If Price increase is significant with very high volumes before just closing the market , traders should certainly make positions in future of that stock and should square off positions on next day when market opens.This rule should be followed by every individual trader who trades in small quantity such as in one ,two or three lots.
Here it's very important to know that small individual traders has very less power to hold the stock for long duration.When small trader hold the stock for long duration and do not book the profit immediately their profit may be converted into loss within no time.
Entire practice is illustrated in the following trade
On July 04,2019 I bought 2 lots ie 1800 shares of UPL at Rs 697.80 just before closing of the market and sold it at Rs 705.05 on July 05,2019 just on opening of the market and got handsome profit.
How it happens this should be analysed at micro level.
On July 04 during market hour I observed price movement of UPL carefully along with trading volumes in cash market. It is observed that around closing of the maket UPL increased almost 7% with huge increased in trading volume in cash segment. Clearly huge trading volume was supporting the increase in price and it was the perfect situation to take buy position in derivative segment of this stock for higher opening price next day.Exactly the same was happened what I speculated.
In any trade , risk is always involved particularly when you take overnight position.But you have to take risk if you want to make money from stock market.
In the above case it might be possible that opening price is to be down to the purchased price. In that case you should hold it, there is good chance that share price will come up in green in due course of time ,so here you should wait for it.If opening price is marginally down you may again wait or you may sell it immediately and try to catch it at some lower price and again hold it for sometimes,good chance that price will come up in green.The latter is done only by smart trader.
The above analysis needs normal conditions of the market .Also stock should be liquid enough.
Here it's very important to know that small individual traders has very less power to hold the stock for long duration.When small trader hold the stock for long duration and do not book the profit immediately their profit may be converted into loss within no time.
Entire practice is illustrated in the following trade
On July 04,2019 I bought 2 lots ie 1800 shares of UPL at Rs 697.80 just before closing of the market and sold it at Rs 705.05 on July 05,2019 just on opening of the market and got handsome profit.
How it happens this should be analysed at micro level.
On July 04 during market hour I observed price movement of UPL carefully along with trading volumes in cash market. It is observed that around closing of the maket UPL increased almost 7% with huge increased in trading volume in cash segment. Clearly huge trading volume was supporting the increase in price and it was the perfect situation to take buy position in derivative segment of this stock for higher opening price next day.Exactly the same was happened what I speculated.
In any trade , risk is always involved particularly when you take overnight position.But you have to take risk if you want to make money from stock market.
In the above case it might be possible that opening price is to be down to the purchased price. In that case you should hold it, there is good chance that share price will come up in green in due course of time ,so here you should wait for it.If opening price is marginally down you may again wait or you may sell it immediately and try to catch it at some lower price and again hold it for sometimes,good chance that price will come up in green.The latter is done only by smart trader.
The above analysis needs normal conditions of the market .Also stock should be liquid enough.
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