In an interesting session as a part of the highly popular Face2Face series, conducted by Elearnmarkets, Mr Vivek Bajaj, Co-founder of Elearnmarkets, invited Mr Premal Parekh, a successful stock market investor, to decode the Powerful Relative Strength Technique.
Here, Mr Parekh will bring a theoretical viewpoint to how StockEdge and its scans can help multiple retail investors create profitable trades.
We will first discuss the basics of the relative strength index and its importance to traders. Then, with practical examples and StockEdge, Mr Parekh will show us how to use the scans and features of StockEdge to practically apply this technique to make the best possible trades.
What is Relative Strength?
Relative Strength measures the stock’s performance compared to its benchmark or another stock. RS compares the performance of stock “X” vs “Y”, measured over a period. For example, “X” may increase more or less than “Y” in a rising market, or “X” may fall more or less as compared to “Y” in a falling market. It is one of the tools for momentum investing.
This measure helps us identify both the strongest and the weakest securities or any asset classes within the financial market. Usually, the stocks which display strong or weak RS over a given period tend to continue going forward.
Where can we get RS Indicator?
You can trade with this indicator in Tradingview by searching this indicator in the public library as shown below:
After selecting, you can change the settings like whether you want to compare the stock with some specific index or sector and also the periods of this indicator.
How to trade with RS Indicator?
Mr Premal Parekh teaches us how to trade with this indicator with the help of an example- Reliance Industries Ltd.:
One should note that when the RS line crosses above 0, we can say that the stock is outperforming the index, and when it crosses below 0, the stock is underperforming the index. So, from the above chart, we can see that on 24th March, how the RS line crossed the 0 lines when the bullish phase of the stock started.
This shows that the stock is getting strong and outperforming the index as the prices increase. As a result, traders can ride the trend and gain profits until the RS line goes beyond 0.
But the question comes how we identify the stocks that crossed the 0 lines and are either outperforming or underperforming the index or the sectors. For that, we can take the help of StockEdge.
Trading with RS using StockEdge
StockEdge helps us in filtering the stocks which are either outperforming or underperforming the index or the sectors and other Relative Strength scans as shown below:
For example, the Strongly Outperforming Benchmark Index scan gives us the list of the stocks that have RS>0.1 and denotes that the stocks are outperforming the index.
After clicking on this scan, we get a list of the stocks outperforming the index, as shown below:
Thus, with the help of these scans, we can easily identify those stocks that are either outperforming or underperformed the index or sector in the last 55 days.
Webinars by Mr Premal Parekh
You can watch webinars conducted by him on Elearnmarkets:
1. Identify MASTER BLASTER Stocks with “Relative Strength”
This unique webinar will discuss using concepts of Relative Strength, Adaptive Relative Strength & Comparative Relative Strength. Concepts which clearly define baseline rules of Economics – Identifying Demand & Supply.
Learning these concepts will help the viewer find MASTER BLASTER stocks that consistently outperform the Benchmark Nifty 50. Participants will be able to easily analyse stocks and build conviction for scaling up with trends & initiate larger positions.
2. Become a Blazing TENDULKAR with Relative Strength (RS)
One can successfully trade the stock markets if he has a strong understanding of price movement. Price can give the best probable direction. This webinar will equip the participants to identify stock ideas that have the highest chance of success. It will discuss the concepts of Relative Strength, Adaptive Relative Strength & Comparative Relative Strength in detail.
3. Using RS more efficiently: A step ahead mastering TENDULKAR way
A clear understanding of using Relative Strength & Comparative Relative Strength. A Crowd Beating Strategy which gives the Investor the first-mover advantage.
Understanding of Sector Analysis and Introduction to Spread Charts & CRS. To give practical hands-on experience through LIVE examples and charts for implementing these strategies.
You can watch the entire video here
Bottomline
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Happy Investing!
