RRG: Tool To Track In­vest­ments And Iden­tify Op­por­tu­ni­ties

Chartist Karan Bho­jwani ex­plains metic­u­lously how Rel­a­tive Ro­ta­tion Graphs not only help in­vestors pro­tect and book prof­its at the right time but also help iden­tify in ad­vance which stocks and sec­tors may do well

Dalal Street Investment Journal - - SPECIAL REPORT -

The stock mar­ket is a place where there are large num­ber of stocks to choose from for trad­ing or in­vest­ment pur­pose. Also, there are num­bers of sec­tors to choose from. Hence, the stock mar­ket be­comes a jig­saw puz­zle for traders or in­vestors as they fail to draw the con­clu­sion which sec­tor or stocks are best for in­vest­ment or trad­ing pur­pose out of the huge uni­verse of the sec­tors. His­tor­i­cally, we have seen that a par­tic­u­lar sec­tor may per­form well dur­ing a par­tic­u­lar pe­riod and it may be a leader, but the same sec­tor may be a lag­gard in a next in­vest­ment cy­cle. The lat­est ex­am­ple which comes to mind when we talk about lead­ers turn­ing lag­gards is the phar­ma­ceu­ti­cals sec­tor. Since the year 2011, the phar­ma­ceu­ti­cal sec­tor had saw a bull run and it out­per­formed the mar­ket hands down.how­ever, since the sec­ond half of the year 2015, things turned gloomy with is­sues of reg­u­la­tors and in­spec­tions hurt­ing the sec­tor and, as a con­se­quence, turn­ing this sec­tor a lag­gard. So as an in­vestor or trader, it is im­por­tant to un­der­stand when to ro­tate in or out of a par­tic­u­lar sec­tor, be­cause in in­vest­ing or trad­ing it is im­por­tant to be with the trend, since if you go against the trend you’ll blow your ac­count. So, now comes the crit­i­cal ques­tion: how do you know when to ro­tate in or out of a par­tic­u­lar sec­tor? To help our read­ers un­der­stand the most cru­cial piece of the puz­zle, we have penned down a spe­cial re­port which will give you an idea when to ro­tate into or out of a par­tic­u­lar sec­tor.

Tra­di­tion­ally, the con­cept of rel­a­tive strength has been one of the most pop­u­lar ways of de­ter­min­ing which sec­tors are worth watch­ing. Ba­si­cally, the rel­a­tive strength is cal­cu­lated by tak­ing the ra­tio of one se­cu­rity’s price over another. We need to point out that this should not be mis­taken with Rsi—rel­a­tive Strength In­dex. RSI is a sin­gle se­cu­rity in­di­ca­tor which mea­sures strength of that se­cu­rity against it­self,whereas, RS— Rel­a­tive Strength is used to mea­sure the strength of two se­cu­ri­ties or In­dices against each other. It com­pares two in­dices or two se­cu­ri­ties and, there­fore, it is also known as “Com­par­a­tive” Rel­a­tive Strength. Another tool that in­vestors

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