Reminiscences of a trade-learner , journey to become a PRO

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Wat is d most popular trading strategy executed by Advanced Level Traders...Trading Tops ,Trading Bottoms,Breakouts,Bull/Bear Traps...?..
I think they hav their own secret trading strategy not found in books.

After all big institutions hire pros..to compile Algorithms which r best kept secret....hence the pro get huge bonuses u talked abt.
 

oilman5

Well-Known Member
Wat is d most popular trading strategy executed by Advanced Level Traders...Trading Tops ,Trading Bottoms,Breakouts,Bull/Bear Traps...?..
I think they hav their own secret trading strategy not found in books.

After all big institutions hire pros..to compile Algorithms which r best kept secret....hence the pro get huge bonuses u talked abt.
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YES,
But some of good traders r given hints.Definitely that will be written later.
Once in a OTA thread i have written that(the thread later erased,wiping out the notes)
video series by Martin cole, and he teaches how we need to participate in market along with market makers (link given by JAHAN)
2aspects.............a successful trader, with a high skill + programmed that with objectivity r put forward.(FORD has collection of some of them)
But HEAD ..........definitely is oppurtunist .He utilizes them as per market condition perceived.
Similar video on trading(ofcourse low grade qualititively r given in corporatebridgeacademy but they may not open to individual ) on advance TA some hints r given- if u like can see free one first after registration.
........................................
Infact hints r use of Orderflow, sector rotation, demand-supply pivot pt,trend+ gap,-combination of them.
Actually money management+ execution algorithm,with different person as risk manager creates a far superior approach.
 

oilman5

Well-Known Member
Now as promised 3 great trader's comment shall come. Most of their study /method valid in market
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trading and investing is different. I am a trader using TA. If you are interested, here are suggested readings on swing trading.
1. Come Into My Trading Room: A Complete Guide to Trading - Elder
2. Dave Landry on Swing Trading
More to read
1. Reminiscences of a Stock Operator - Edwin Lef�vre
2. Trading for a Living: Psychology, Trading Tactics, Money Management - Elder's 1st book


In TA, when you select a stock, look at the chart considering data from all years. Then compare the chart with the sector and the market. The reason I like stock pick 1 than 2 is that, stock 1 mimics the market more than stock 2. I did not compare with the sector. Ideally, the sector should also be trending. We want the momentum. We want the wind to sail easily. Avoid the harder stocks. There are so many easy ones like the stock pick 1.

Remember the saying, Bulls make money, Bears make money, Pigs get Slautered. Don't look at your paper money and be happy. Till you book your profits, you will see the money and then one day, you don't have it. Think stock trading as business. If you had profits in your business, will you continue to invest all the profits in the business?, or

you are picking good stocks and making right entries. Concentrate on the market, pick right sector and then the right stock. Take profits (always).

Again. Market, Sector, Stock, Clean Chart. I know the market is shooting. I didn't see which sector your stock is it in. I don't have to. The chart is all over the map. Its like a heart beep. beep! beep! beep!.... Like Sine curve. Avoid those stocks. Ask yourself a question. Is the market doing the same. Market is trending at an angle 40 to 70 degrees. Pick stocks like that.You don't have to reinvent the wheel.
I like Godrej Consumer Prod. Wait for a pull back around 2 to 4 days. Make sure the market has also pulled back (distinquish between pull back and sell off). Go long with a stop 10 rupees or X amount based on the volatility (determined based on the stock price and how much average it moves in a day) above previous high.

Buying high is a fool's game. When you buy high, what you are expecting is that another fool will come along and buy it from you at even higher. The guy who bought at pull back or at 50 day EMA will run all the way to the bank by sell the shares to you. You like that? So, next time, buy at pull backs or given the volatility of the current market, buy at 50 day EMA.
Positive: Having said the above, hopefully the bad times are over. 8 day EMA has crossed above 50 day EMA. MACD is showing bullish. There will be slight pull back before the stock takes off.
Negative: Trend line has been broken. It may depend also on the general market. Index is moving up. Stocks are not. See Advances versus Decliners chart comparision with Index chart.
So what we do. We put a stop. Conservative - 230. You want to give some room, 220. All depends on the market and the sector in which this stock is in. see the sector chart.

Be careful of the 50 day EMA. In this kind of bull market, stocks always test 50 day EMA and have high volatility. 50 day EMA for this stock is 369. I would put a stop at 400. Hopefully, the stock comes out of the pull back. Based on your risk (hopefull you thought at some loss, you would come out of the stock), take partial profits. Lets say, when you entered at 412, your stop was at 380 (base below previous pull back), your risk was 32 rupees. So, at 444, you would take 50% of profits, and trail the stop on the remaining shares. Hope you got the idea.
You can Buy, Sell, Short & Cover stocks. But, there is time to Buy, time to Sell, time to Short and time to Cover. Trying to pick top is a loser's game. Many tried that and lost shirts. Always first allow selling to happing first (I forgot something, Profit Taking. Do you know profit taking is different from selling?). Then, depending on the percentage of % drop (above minimum 7%. Conservative 10%), how much the stock has recovered, and based on the volume of recovery (volume must be low for recovery versus sell off), you would decide to go short.
Ofcourse, there are other patterns (Double Top, Head & Shoulder's) under which you can decide to go short.

Stock selection is most important. I mentioned, one can Buy, Sell, Short, Cover and take Profits. I forgot to mention another thing you can do with a (lot of) stock(s). Just pass on. Don't pick a stock because you see something in future or something is going to happen. You should say to yourself, let it happen. Let the stock show why I should buy it. Its like playing cards. Who will show their cards first. If you buy now thinking something is going to happen 1 month from now, you already showed your cards. You should wait for the stock to show. Then, on a pull back, you will reward the stock by buying it.
The chart by itself was not interesting. Stuck in a trading range from the last 6 months. So, if you want to buy this stock, let it come out of the trading range, go beyond the previous high aroung 120 and then on pull back, you would buy it.
Rather, look at some stocks previously, I discussed in this thread. Compare those charts with this stock. You will understand what I am after. Need a clean chart. No mumbo jumbo Sino curvo heart beto.

You need to select stocks which
a. have high average volume ( high liquidity)
b. Move a lot - high beta ( you don't want something not going anywhere. They are waste of time)

2. You need to know where to enter and where to exit. These points should typically help you make money. Thats the hardest part. Since, there is lot of noise during the day.

3. However, in this market, for the most part, they always go up. Just avoid trading when they go down. I mean to say, avoid trading when the market is pulling back

4. Use good money management. When the stock moves on your side and crosses what you risked, take 50% profits. Then, move the stop where you bought to break even. This way, you make enough income to keep you going. During day trading, the stocks typically move up and down (noise). Don't expect to see chart like what you see in EOD chart. They don't just go up. So, if the stock goes towards you, take half off. There are high chances that those profits will also go if you don't make a move. That way, you will not last long enough
What were your reasons for entering (rewarding) this stock. Its below 50 day EMA (read Bearish). Could not take previous high (Aug vs Jan at 130). The market is pulling back. So, ask yourself why you entered this stock today
how much time we need to spend studying for the opportunities of endless wealth. You need to give yourself atleast 2 to 10 years. Everyday you learn something. Start with small amounts so that you will lose less amount while you learn your lessons.

I don't remember the exact definition of MACD. Please refer the books. But, the way it works: there are 2 EMAs. Short term EMA (9) and Long Term EMA (12,26). Short term EMA tells what is happening right now. Long Term EMA tells you what has been happening for some time. Difference between these EMAs will give you the divergence (Present - Past), shown by MACD histogram. MACD is a very powerfull indicator. It can tell you what is happening underneath the price movement. As with any indicator(s), MACD may not be usefull all the time. For instance, if the stock is any trading range, MACD is not useful. MACD Histogram above 0 will tell you bullishness and below bearishness. This is useful to compare how strong bullishness/bearishness between 2 points.
Nothing replaces the experience though. Continue to look at the charts. You might have seen earlier that I have just been trading for only last 2 years. So, you might wonder how I got so much knowledge. I almost spend each day looking at charts. I might have looked at thousands of them. Stock Market is my passion. I continue to read books along the way. This is important to not forget the basis in the midst of fear and greed.

As Elder says, in stock market, 3 Ms are important. Mind, Method and Money Management. Control your mind from fear and greed. Have a methodology (Tripple Screen, Swing Trading etc) and follow it in every trade, so that the probability works in your favour. Have a money management plan to allow the maximum risk (typically less than 2% of your principal amount) you want to take in each trade. Keep this risk constant and change the position size you are going to trade based on the stock price and loss stop.

Example, if you are following Tripple screen (I am not going to go through the methodology). decide on the risk. Lets say, your principal is 1,00,000 (1 lakh). You want to risk 1% on any trade. You would risk a maximum of (100000 * 0.01) Rs1000 per trade. If the stock price is 100, your determine stop at 90 (based on volatility/support), your risk is Rs10 per share. So, at max you can trade position (1000/(100-90)) 100 shares. If the stock price is 1000, stop is 900, your position is (1000/(1000-900)) 10. This way, the amount of money you risk is constant.

Basically, this technique of money management rewards you to trade more when you make money. Similarly, it would reduce your position when you are losing. Hope I made a point.

I am not a break out player. I am a kind who ask, let it breakout and then I will think about it. Playing breakouts is a risky game. There are a lot of false breakouts.

Not trading is most important part of trading stocks
I want to stress on simplicity. Don't think there is always secret behind the price movements. Specially, there is none when the market is so strong. Don't go after all those indicators (DMI, RSI etc etc). What is most important is Price and Volume. Price tells whether there is demand for it or not. Volume gives us the value for that demand. Every thing else is a derivative of this data.

I use Price, EMA(8), EMA(50), EMA(200), Volume on top. In the middle, I use MACD. Last box, I use Williams or Slow Stocastic (if I don't have Williams). I am using EMA to get a feel for the average price. MACD is used for divergence (I already explained in this thread). Williams, I use it for overbought and oversold condition (Try not to buy where this indicator is above 80%. Don't sell (short) when this indicator is below 20%).

EMA(200) is for fund managers buy point. Anything below that are the fallen ones (dogs, don't touch them in this market). EMA(50) is a buy point for lot of fundamental stock investors. Avoid shorting at this point (wait for it go below this point and pull up). Stocks display elastic band effect over here. EMA(8) is the short one, which gives us the heart beat check of the current price.

Volume can help us for confirmation. If you are buying, look at the volume. For example, if the price is going up, volume is drying, we don't want to buy that stock. This is also divergence (secret underneath the price )

Stock selection:
When you look at a chart, if you spend more than couple of seconds, then its not worth it. Skip it. Chart should not be complicated. It should be simple. Take a look at NIFTY chart. It should be simple as that. There were couple of stocks (SATYAMCOMP) mentioned in this thread. Look at them. Simplicity is the key.

It all depends on your methodology. If you are person buying at 200 day EMA (always), why not. Look at the stock. If fundamentals (thats what fund managers look at 200 EMA) are good, but the stock is down for some temporary reason, they go in.

MACD is slightly turning positive, which in itself is not a big thing. The big thing over here is that this stock has lost lot of points and is at 200 day EMA. I looked at ROC indicator. It is going up. So what. I don't think you want to go just based on that. As I said, you have to be careful in using the indicators. You have to know their applicability, given the price movements.

Don't use indicators only to justify your entry in to the market. When I say that I mean, be consistent in using indicators. If you are using ROC for entry, use that always. Don't use ROC one time and the next stock use RSI. On the other hand, you can see lot of indicators for confirmation of information your regular indicator has given. (I always use MACD and Williams. Thats it).

For this stock, I will go for it (if someone is forcing me with a gun) based on the following reasons:

1. If my methodology warrants me to buy. Most important. Don't change your methodology in order to trade different stocks. Overall results will be skewed. I discussed this before in this thread.

2. Fundamentals look good at the long term. I admit I am bad (nor interested) at looking at fundamentals.

3. This stock technically uses 200 day support. Look at the chart on 2005 April and 2005 Nov. Both the cases, the stock jumped after trying 200 day ema. Hopefully, it does that this time too.

4. Draw a trend line joining 3 points (2005 April, 2005 Nov and current price). Trend line is not breached.

Negatives (I would not buy this stock for the following reasons):

1. This stock does not follow the regular market. Compare this stock's chart with nifty. No comparison! Nifty is above 8, 50 and 200 EMA. This stock is not. Select stocks that mimic the market (haven't I repeated myself enough already). Are you asking why? Because, you need stronger wind to sail. If nifty is the wind, the sector is the breeze. You need these to sail fast to reach your destination (money ). You don't want to stay in the middle of sea all by yourself right? (how do you feel if the market moved 100 points and your stock didn't even move 5 rupees. Even worse, it goes down).

2. For me, I am not a 200 day EMA player (Unless the market i.e., nifty is also at 200 day ema). I am a kind looking for stocks above 50, 200 ema. Need to mimic nifty. Simply said, my stock filter would be,
52 Week High and minimum 2 day Pull back.
I will go long above the 2nd day pull back.


Pull back,

Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.

Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.

1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You ). This will lead to stock losing some points. How much, depends on the stock price. Based on the experience, you will figure it out.

2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Trigger your stop. Then don't take off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your position. Don't micromanage. Once you are in the stock, give it a chance. Think before you go in. Not after.

3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.

Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take the bite.

Thats it. Is that easy or what. Thats what I mean about simplicity.
You observe something from the above. Its not the problem with the stocks. Its a problem with you. Please stop trading. Go back to basis. Read books. Come back later. You can always make money. But, at least do your homework. Know what you are doing. Winning or Losing is not the question. They are part of the risk of trading. But, if you follow certain methodology, mentally prepared, follow specific money management, you have chance of reducing losses versus winnings. Even if you lose, at least you can take home that you gave your best shot. What I mean to say is, You Will Not Feel Like a Loser.

I suggested not to enter before it comes out of the trading range. You see couple of stocks discussed above. They have been stuck in trading range for 6 months to 1 year. What a waste of money's time. Rather, in this bull market, you need to find stocks like Pidilite which are nicely trending just like the market.

You might be wondering why I want all data chart. Before I trade a stock, I like to know its history. I always look at all the data. If there is noise in daily data, I look at weekly chart to get feel for the stock. Each stock is different like each of us. They display different patterns. By looking previous data, you can rationalize how they acted before. So, you can decide how its going to doing now.
You can take 3 approaches.
1) Don't predetermine the market. Let the market determine by its movement. This is what I mean

a. If the index is going up, the stocks are not doing the same, you should find less no of entries. Obviously, you will be trading less.
b. If the index is going up, the stocks are going down and you are getting stopped out. Isn't market telling you something.

2. If you are not comfortable with the market (indicators are telling you or for whatever reasons), reduce the position size. Lets say your money management formula requires you to trade 200 shares. You would only trade 50% (or whatever) of the position, i.e., 100 shares. You can take this approach if you feel the market conditions are not ideal.

3. Your idea is not bad either. Nobody would penalize you for not trading. Atleast we know that for sure, you would not lose money by not trading.

But, just because something is going up doesn't mean it is going to come down pretty soon. I want to stress on "pretty soon". Thats the issue with the stock market. Anybody can predict whether some xyz stock will go up or down. The question is when? Time is the question. That is why peers suggest not to try to pick top or bottom of the stock. Trail your stops and let the market tell by its movement whether you need to be there or not.

Disclaimer: My suggestions are based on Trading versus Investing. Please take them at your own risk. Above all, as anything else, I feel trading is common sense. If you can make sense out of what I say, use my advise. If not, avoid
Read all charts....Let me do the best I can.
When you start looking at these charts, it looks foreign at first. You read books. Understand various terms. Continue to read charts. You will go through several phases. That is the reason, I suggested it would take 2 to 10 years to be really good. All along, you will learn something every day.

Each day, you will become better trader. But, the question is, do you have interest. There are several ways to make money. Some do job, business etc etc. We can opt for the one which gives us lot of money. But, if that line is not of interest, can you continue year after year. So, I suggest you to ask yourself if stocks are of interest to you. If it is, then spend time and eventually you will get it.

Its like byke/car driving. At first, it is so hard. You tend to observe everything. Once you get a hang of it, you don't even think about it. Some part of brain automatically takes care of it. Same thing with charts.

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Pattern: Acceleration and Persistent Pullback
previous movement was 5 to 10). This means, the stock is accelerating.
2. The new trend is parabolic. I some how feel it is not sustainable. You know, feelings and hope have no value in stock market.
3. The new trend is giving only 1 day pull back. But, don't use Friday's pull back to enter. Let another day pass by to have at least high of the day below previous high. See for example, on March 28. Enter with a buy stop above high (stop = today's high + 4).
4. What I like about this stock is, when going down, its volume was low. Going up, volume is high. It picked up good volume on the new trend.
5. Please check the sector. I couldn't find it. Once you know the sector, check the chart of the index (in BSE) to be trending and this stock is comparable to the sector. I gave the link to look at the sector and index charts in the
People who read my thread might be considering me crazy when I ask them to wait for pullback. This is the reason. When you buy at top, you feel uneasy when the stock is below your mark. Its like going to the market and buying something at high price, when you know you can wait for day or two and get it at low price. Please practice to wait. Sooner or later we need this behaviour.
Right now, don't panic. I don't know how much did you calculate for stop loss. I suggest you put sell stop under previous base, which is 200. Hopefully, it will continue with the new up trend.

For All
I want you guys to look at the nifty chart. Look at the volume when going down versus going up. Just an observation

what price you entered. That way, my analysis would be to the point and useful to you. If not, I am shooting in the dark.

All I can tell you is the probability of stock going up or down. We just trail the stop. If the stock goes up, our stop goes up. We do that as far as stock goes. We don't care how far up the stock goes. In the mean time, we do take partial profits to generate income to our account

like to be counted in the short term to intermediate trader group. My hold can be from 1 day to a week to a month to a year(s). At the same time, I don't believe in buy and hold philosophy. I don't buy a stock and think, ok, let me wake up after 1/2/3/4/5 years, the stock is waiting for you to take profits.

My Methodology?
Basic underlying pattern is pullback. The question is after what scenario the pullback is of interest to me? I can give you one scenario which is useful in the current market. 52 week high and pullback. Ofcourse, clean chart with a trending stock.
When I enter, I never enter directly in to stock. I enter with a buy stop above the yesterday's high (given that there was a pullback). The value above the high depends on the stock price and volatility. Once I enter, I determine my risk and initial profit target. I keep them same amount value. The risk depends on the stock price or chart pattern.

Once the profit hits, I sell 50% and move the risk stop to where I bought. At this point, I am breakeven and will be playing with table's (read other's) money. As the stock goes up, I move the stop. When, I do this, I don't move the stop close to the current price. I use bases to move the stop up, giving lot of room to the stock. This should be ok since we are already in the profit. Our goal should be to get the max out of the stock. Therefore, you choose not to micromanage at this point. So, thats the reason, I am more of a intermediate player.

Book the profits ...
In most cases, I don't sell all the shares directly. I sell in chunks when there is huge movement in the stock. For example, from the above you know I will sell 50% when the initial profit hits. Then, on further movement, if I decide that the stock has run good enough, I may sell 10 to 20%. I trail the remaining 30% with a stop. This may continue.

Another question ---- it is a bull market. Will we get such clean charts at bear market?
In a bear market (why do you think about it? Really!! Are you missing it already), you will have to go by sectors. What I mean is, there will still be some sectors which will trend. So, you will choose those (At this point, you would also short). In the worst case scenario (Lets say, if the market is in trading range, which is no no for us who believe in trend is your friend philosophy), you will choose sectors that trade independent of the market. For example, metals and oils. I hope bear market is long way to go.

Voltas
I do like the chart. But, looks like it is going through some minor correction due to change in gears, which....
however one can be assured of the underlying fact that a clean chart with good volumes fairly indicates strong fundamentals-----

Thats the whole point. A price of the stock already contains the fundamental information (somebody has done the homework for us. Remember, we want to make money easy way.) + what people speculate its future value is. Since there is speculation for future and future is not predictable, stock's price is adjusted once the future is known ( + again the future speculation). This goes on.
. No matter what methodology you use, (it gives u money from market)as long as you follow it in all your trades (no exceptions) and use sound money management, you can make money. Simply put, do the following for success:
1. Control Your Mind (don't feel left out and jump into a trade. Think before you trade).
2. Select a methodology that suits you and you believe in. Use it for all the trades.
3. Have a sound money management so that you are in the game in spite of loses. No one loss should take you out of the market.


#8
6th August 2009, 11:33 AM


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Before we delve into anything below, I want to touch on the market in general. Please avoid new positions for now. We will have to adopt wait and see approach with the market. Stick to the stops you have (for traders). Don't move them as the market approaches your stops. Elder calls them losers, who move stops down.

can u tell me how to use volume. i am actually stuck on this.
what is "overhead supply", good volumes(relative to what), iilquid stocks etc.
is volume also subjective to the time frame v are seeing
--- As I mentioned before, price and volume are the most important elements to look for in the market. Everything else (indicators) are there to remove the daily noise and see clearly what is happening (with crowd behaviour). For example, SMAs, EMAs, MACD etc.

Overhead Supply
--- Lets pick a stock that is beaten down (say its current price is 50% of its high). Some part of the crowd thinks this stock is at value. They think this stock was 100 3 months back, now its 50. They say its cheap. What they are forgetting is a group of people who bought all the way from 50 to 100 3 months back. This group is called Overhead Supply. This group is just waiting badly for the stock to go up so that they can dump (sell) theirs. Elder gives a perfect common sense example for these kind of stocks. Think about 2 scenarios.
Scenario 1: Falling down 3 stairs. U just wipe your butt off and there you go.
Sceanrio 2: Falling down 10 stairs. U will first check whether you can breath. Then check whether hands and legs are fine. Then look for people to help you (sector action). Then try to get up. You will fall down. This repeats couple of times. Finally (assuming that you didn't end up in hospital with broken hands/legs/ribs), you will get up.

From our perspective, these kind of stocks have a lesser probability to make you money (from Buying point of view) than a stock which has just made 52 week high and has no overhead resistance. Just like water, stocks go the path of least/no resistance.

good volumes(relative to what), iilquid stocks etc.
is volume also subjective to
volume also subjective to the time frame v are seeing
--- When you see a chart of a stock (picked for more review. Please look at my previous reply), you look at the complete data (for all years and different time frames). You will look what happened to the price of the stock. Similarly, u will look at the volume and indicator Average Volume (to remove noise/sudden spikes in a day). When they say "good volumes", what them mean is price action supported by increase/decrease in volume (average volume). That there is really a demand/no demand for this stock.
--- Average volume can help to filter low volume stocks. Low volume stocks are hard to liquidate (sell) your positions. U will put a sell order and no one is there to buy. This means, you will have to reduce your price and then try again. This results in high volatility of the stock and lot of gaps. U need to pick stocks that have good (based on Ur confortability) average volume. That do not have lot of gaps (they result in lot of difference in buy vs. ask price). Stock elimination is as important as stock selection. When in doubt, leave it.
--- Volume Time Frame: Definitely. Lets say a stock's volume has gone up last 2 days. When we see that, our immediate thought is, something is going on. Why are people interested? How about 5 days volume spike. There is really something going on. How about 3 weeks. 3 months? 6 months? As the time frame increases, your confidence on the price action supported by volume data increases. You will trust the price action better.

may I buy Factor alloy now at 2.60/?
No. Don't go after low priced stocks. They can be easily played by market makers. They suck you in.

Also give some word about National steel and agro.
I don't like the charts for new entry. Are U are already in? If you are, trail the stop below previous base.
If the market goes down, individual stocks are nothing. Doesn't mean you should relinquish your position. Because, we don't know whether the market is going to continue the downward path tomorrow. Stick with the stops. Let the market determine its next step

No matter what I say below, I suggest No Entry to any of stocks. Wait for the market to show the direction. It is still in the break down mode.

JPAssociates
-- Pullback has stretched into the short term trading range below. Let this condition improve. I think this is true for most of the stocks (look at Wipro). These conditions will improve when the market improves.

Day Trading (Volume, MA, Medium Liquid Stocks, Price Movement Manipulation)
-- Please read my earlier reply(s) on day trading. In day trading you need the following to excel:

1. Avoid looking at too many things. You will have very less reaction time and attention span. More on this in the next few points.

2. Have a tool which can execute orders fast. Don't have some thing which takes you to another page for confirmation and then executes the order. Those are good for End of day trading.

3. Bargain for low commissions on day trading. You need low commissions because U will be trading a lot as U will get lot more signals in day trading.

4. Determine before hand (before sesson starts) what stocks you will day trade. Use volume, beta (volatility) of the stocks as the criteria as the selection. You need high volume, medium price, medium to high beta stocks. Further, determine what direction these stocks have chance of trading. U do that looking at EOD data on a daily chart using EMAs. I talked about it in previous emails. Also, look at the charts I am attaching. U will have an idea. Basically, what I am saying is, U need to decide whether to go long or short before hand for a stock.

5. Restrict to only 2 stocks for watch list. If you don't see any movement for couple of hours, then start looking at another 2 stocks. Not at any point of time you will be looking at more than 2 stocks. Try to restrict looking at 10 stocks in general. That way, Ur mind will get tuned with their price movements. After a while, U will know them more and your actions will get aligned with their movements.

6. Avoid looking at 1 minute chart in a day chart. Its close to imposible to make decisions on 1 minute chart because of noise.

. Now, coming to what indicators you will be using.

a. Look at 5 day chart. I don't know whether you have the tool which shows 5 days of data. In this, use 1 minute time frame. I know U are confused at this point based on what I said on point 6. But, here we are looking at 5 day chart. Read next how this makes a difference.

b. U will be using EMA(8) min and EMA(50) min. Since we are using 5 day chart instead of 1 day chart, this effects the EMA calculation. They will take out the noise.

c. U will be using MACD with line and Histogram (atleast histogram). Again, hopefully Ur tool has these.

8. Methodology (I tried to avoid revealing this info. in earlier replies. I was tempted though). My friend will kill me if he knows I am revealing this info. But, its ok. I am not doing it any more.
Hope, you will make money of it. Hey, atleast can you keep this a secret? (Ya right!!! ).

a. As in EOD trading, we need enter and exit points that make you money. But, unline EOD trading, you have less time to make decisions and there is lot of volatility. So, you need clarity.

b. We will be using crossovers for this. When 8 min EMA crosses above 50 min EMA, you buy. Similarly, if 8 min EMA crosses down 50 min EMA, you will sell short. When the ema crosses over, wait for pull back (pull up in case of short). Patience!Patience! Patience! before triggering. It is better to avoid then do it wrong. Crossover is Ur ultimate test

. If you want to be 80 % correct, then U will confirm the crossover using 5 min timeframe on 5 day chart. Remember, it will take some time for the crossover to appear on 5 minute chart after it appears on 1 minute chart. What this may mean is that you will enter at higher (lower for short) point than you would do using 1 minute chart. But, it will avoid false crossovers. So, you might make less money, but U will make consistently. 1 minute chart can be used to help you get ready for upcoming crossover.

d. MACD histogram is also helpfull for confirmation. Lines above the 0 bar means bullish. Below bearish (I know U know). So, when 8 crosses above 50, we are going from bear to bull. See whether it is happening in MACD for confirmation.

e. So, I have talked above about entry. How about exit. As in my EOD trading, U need adopt immediate 50% profit booking methodology. When U enter, U immediatly decide at what price the reverse crossover is going to happen (approximatly). This is your stop point.

f. If the stock moves in your direction, U should take 50% profits and move the stop where U entered for break even. Without this U will not survive. Because, in a day, the stocks show lot of noise. What goes up in the morning, comes down in the evening. U will be left withnothing on your plate, inspite of your hardword. U need income to continue for next day, just like people working in office do. Final exit will come when the reverse crossover happens.

9. In order to make money in day trading, U have to be a perfect person. U should not have fear or greed (applies to EOD too). You have to follow methodology to the core. No exceptions. Believe me, this is going to be hard. U will get greedy once U start seeing the money flowing.

10. Never trade when U are tired. Day trading will suck lot of your energy. If you are tired, take a break. Further, if you have lost a lot of money (% of capital), don't trade for couple of weeks.

Price Manipulation
-- This is a given thing. We can restrict it by picking stocks that have good average volume, medium price and no gaps in price movement. If you want to know price manipulation, read The stock operator book, biography of Jesse Livermore.
I have mentioned to use only Price, EMA, Volume, MACD, Williams indicators. Just read them on line in investopedia.com.

sudden increase in vol at particular price ,intraday.
--- Stocks behave like us. Why? because WE operate them. An WE are made up of same stuff and think a like for most of the cases. So, when we put a stop, WE all tend to put it at same point. Same for buy, sell decisions. As a result, there are lot of orders waiting to be executed at a same point. As a result, you will see lot of volatility with high volume at some price points. For EOD traders, when you put a stop, place couple of points high/low than what you think should be to avoid being stopped out.
--- Other scenario is, when you place stops, the market makers can see them. For low volume stocks, then can manipulate for a moment and hit your stop and come back (it will if there is no demand at the point). That is the reason you will see this huge bars in daily charts.
--- Another scenario is gapping down at the beginning of the day. If you carry stops overnight to next day, the market makers in the early morning gap the stock down, hit your stop. Since, there is no demand at the stop point, the stock goes back to previous day's trading region.
--- Having said the above, don't get paranoid from EOD trading stand point of view. It would be great if you don't carry stops overnight. Specially, if the stop is close to the current price. If the stop is far, it will be hard to manipulate. If you don't have time to do it, that should be fine too. The chances of occuring are low that you can disregard.
--- For day trading perspective, disregard volume info. You cannot do anything with volume in a day. Understand this. With all the TA, we are trying to read crowd behaviour on an average basis. You cannot make a valid judgement based on spike in volume in intraday. So, leave the volume info.

Also, yr comments reg Bse stocks,ICSA(531524) & Ankur drugs,both from investment point of view & intra day trading.
---ICSA, couldn't take out previous resistance at 750. So, should wait for it move up above this point.
---Ankur drugs, its been trading range between 120 and 160 for more than a year. Avoid.
---For
will pass for now. Look for stocks having min. average volumes 3,00,000. More the volume the better.

stopped out of ITC, Hindalco, GE Shipping, SSI, ICICI Bank, Rolta, and Wockhardt.......At what levels do you suggest that I should re-enter?
---We have to wait for the market to improve. Individual stocks improvement will come automatically. Right now all the stocks are breaking down. I will attach ITC chart.

For Day Traders:
--- Practice acquiring high Will Power. The crowd pull will be very high. The magnetic force is 100 times more than for EOD traders.
--- Don't count the money. Count the no. of times you used the methodology (crossover) to enter. Try to get this 100%. Money will flow as an after thought.
what do you think about Infosys now that the results are out and bonus announced? What are the probable scenarios?...
---Our basis is TA. So, disregard the news for all purposes. Are U saying why?
1. The news is already discounted in most cases. We are at the end of the food chain. Before we know, so many people already know about it. The rupee value of the news at the point we know is negligible.
2. Have you ever observed the stock movement opposite to the news. The stock goes down inspite of good news. The stock goes up when the news is bad. This is because of expectations or for unknown reasons. But, observe this. The movement in most cases happen in the direction of the trend.

So, the lesson is, don't use news as the reason for trading signals. You signals should be entirely based on your methodology. No exceptions. Even if you know U can make money easily if U can make 1 time exception. U should not.

Money (greed) should not drive your signals. Your methodology should. This is required for your long term survival. U should come into this market thinking that U will be there for long time to come. You should accumulate money slowly. Do you know how many get busted in the 1st year? Do you know why? Greed!!!!!
you can't define cheap in stock prices. Wait for the market to become better. We will have lot of entries. Wait!!. Waiting is the most importing part of trading in stocks. You have to wait like cheetah waits for its prey. It doesn't pounce until it is certain. We have to do the same.
Picture speaks thousand words. Wait till we see better picture. If you are already in and not stopped out, I will give it a chance
don't want to short this market.
---I don't think any body should. Its long way for us. But, for somebody who don't know what shorting is or is sceptic on the whole idea of shorting (oh they say, there is no limit on the upside before covering), I recommend looking into it.

I wait till 3200, start looking for picks and make the positions by 3100-3070, i.e if i get the prices. At this level what will be the stop loss?, on Nifty or Sensex.
-- I personally feel that should be it. 3200 is 50 day support. 3200 is the previous pullback support after the gap on March 9th or 10th. But, as I said in earlier posts, feelings have no value. Our attitude should be, 'let the market make the next step. I will look at it and place my next step. I would not reveal my step before the market's'. Having said that, it is a nice idea to think through the various support and resistance levels and what U are going to do. Isn't this like a chess game!!

Ideally, you want the market to test the support successfully. "Successfully" is the key. We want the market to test the support, pull up and pull back but not go below the support. When it pullsback, thats when you would enter above the pullback. Ofcourse, I am talking about my methodology.

I think on the upper side i can do the same if markets sustain 3425 on closing. plz gide me if 3425 is the correct level

---Looks like you are expecting it to go above 8 or 10 day EMA. That would be nice too. But, I will wait for "Successful" test to happen. This will eliminate false breakouts and daily noise. My methodology doesn't trust breakouts. Too much money is lost in false breakouts.

1. Is it suitable for a beginner like me to get into this book?
---Oh Ya. I am your example. Why are wasting time. Just delve into it. You will never stop.
gain. Give the methodology a chance. If it works in a time span, you keep it. From time to time, U can tune it to suit Urself or based on market changes. More important, U should like it, should make sense to you and therefore U believe in it.

What about balance of Reliance? Shall i sell these as well 'cos market is going down or shall I place a Stop Loss? Is s/loss of 829 suitable?
---As we don't know whether the market is going down, we don't know whether the market is not going up. We just know that the conditions are not ideal for new stock entries. So, the existing entries should be dealt with stop loss. Let the market determine its next move. If it goes down, it will hit your stop loss. If it goes up, do we have a problem?

I would keep the stop at 783 (where U bought. Now U have booked 50% profits and have no loss no gain on the remaining shares i.e., breakeven). Let the next base clear up. When the stock moves up from this base, I will move the stop to 815. This is how I do on every stock. If you put the stop at 829, U are just asking for it. A daily noise can take it out. If you are unconfortable or feel you are going to lose money, take more partial profits. Its all about how you feel about the position. But, don't change how U put the stops.
Market: It was a nice come back. Lets wait for the follow through.


So can we say that the Key here is an unsuccessful attempt to breach the support levels, after a breakout?
--- Ya. We are looking for a pull back. We want to make sure that pull back does not go back to previous point from where the breakout has happened. If it does, they call it a false breakout.

Print the 6 month chart (if you can), put it on the floor. Standing, look at the chart and see where is safer to put the stop. Thats the test. Don't go into details. If we micromanage, we will lose the longer play. Our objective is to get the max out of the trade.

I have said earlier, we shouldn't prejudge the market. Thats the reason, we shouldn't come out of existing positions. The reason is, there is always be noise. That shouldn't change our existing plans. But, for new plans (entries), we definitly want to see better conditions.

With 1 day upside, the market has changed the charts. I now feel, probably, the previous downside was a deeper pullback. This can happen intermediate to several smaller pullbacks. From our perspective, can we take new entries considering the market was a pullback
for short and longer term ...
Please explain what U mean by these terms. If you are losing badly would U keep in long term case? Or if you are making money, U will sell because U thought it was short term!! I don't believe in short term or long term. I look at a stock's chart. If its good and has an entry point I enter. I give it a chance with a stop loss. If it hits, I come out. I can't take the pain thinking this is long term. Similarly, if its winning, I ain't stupid to come out.
Tracking 5 to 10 stocks:
For beginners that should be it. Just track them. Wait for pullback and enter. Don't go around 100s of them. U go around and comeback, these 10 are gone (Isn't there a saying One rabbit in your hand is better than 10 around the bush). Once U get hang of it, I suggest use a scanner to program patterns U like the stocks to exhibit. Once U get the result of the scanner, U should be able to judge based on the charts.
don't remember changing much. I modified the EMAs to use 8, 50, 200. Added another window (Shift + F12) to use MACD. Added another Window to use Williams. Added Volume as overlay to Price (Unfortunately, it doesn't show up in the zoomed version). If U want, you can play with the color settings using Indicator Settings menu.

Formula: 3 month high and pull back
highest_close[5] = highest_close[65] AND M_PriceFalls
>=2 and Close > 100 and MAVOL > 100000

U can tweek the nos to include/exclude subset of stocks.
Considering the market (All sectors except Metals and Oils) putting up Double top, try not to take new positions for a day or 2, till we have a better idea.
Sensex 12000, Nifty 3573 ... what now? What do the charts tell?
--- Nothing definite. Sometimes thats what it is. We definitly don't want to take new positions. The indexes have been rallying straight 4 days (+ Friday even though it was a down day, indexes did not give much back). The parobolic move suggests, there might be some pull back pretty soon.

Looks like too many people are expecting a correction. Too much bearishness makes the market bullish. If it doesn't come down pretty soon, all the people who got stopped out recently and sitting in the sidelines waiting for the correction will jump back. This may lead to even more parabolic move in the indexes.

Sectors:
MIDCAP & SMLCAP & AUTO : Still have double top
IT : came down from double top ( WIPRO, SATYAMCOMP, TCS, INFOSYSTCH )
OILGAS: 1 day pull back after acceleration. Hopefully, we will find entries in this pretty soon.
METALS: we need it to come down more.
BANKS: forget this sector till it comes out of the trading range

Maintain your existing positions inspite of people advocating correction. That talk should only deter U from entering into new positions. In not ideal conditions, if you want to go in, reduce Ur position size to 50% or 25%. Some of the good runs what we discussed recently are Reliance, Morarealty. ITC is looking more like a double top. Mcdowell-N was stopped out and was set yesterday for a short (I did/will not advise though at this time).
Lesson: Stocks give you at least 1 chance to get out (in my observation). Lets say you did not honour Ur stop (I don't want U to do that). The stock will give you another chance to get out. But, in most cases, we don't get out. We get greedy and think there will be follow through. My suggestion to you guys is, when in doubt, execute 25% or 50% of position, either on the sell side or buy side. Atleast U will not be 100% wrong. Don't try to get every thing right. Don't be hard on Urself. Accept the fact that there will be mistakes made (even if U are a pro) and we will learn from them.
My suggestion to U is, if at any time a position makes U tense from being Urself, that means the position size was not right with respect to the stop loss (this comes under money management issue). So, ask yourself what position size would make you confortable if a loss happens. Once U know, reduce the position.
U could have shorted using MACD divergence. Look at MACD histogram bullishness for each of the peaks. At the last peak, MACD went negative. That shows that as new each new high was being made, the stock had lesser strength. An short entry point over here has higher risk as well as higher reward.

A higher probability trade would be using First Thrust Pattern. After making a new high, the stock falls down more than 10% and pulls up. Right now, its still falling down after making 52 week high. Wait for it to pull up. Also, note the 50day EMA. Many people buy at 50 day EMA. So, it would be nice if the stock goes below 50 EMA and then pulls up.
About shorting, at this time, understand the general market momentum is upside. In this kind of market even cats and dogs jump. Shorts have less probability of making U money compared to Longs. So, avoid going shorting at this time
.................................................. ................................
It has good chart. I came out from major trading range and has momentum. It is testing 50 day EMA. Stocks do that after a run up. I don't know how U want to play this. Normally, I would wait for it successfully test 50 day, pull up and pull back. I would enter above pull back. When I say Normally, in those cases, stocks take around 10 days to touch the 50 day EMA. In this case, its just 4 days. U can consider it just a pull back and enter at 93. Have stop below 50 EMA around 83.

Stock Entry: Above previous day's high (high + x) where x is based on stock price and volatility
U should always enter into a trade above previous day's high. Why, just look at all the stocks suggested yesterday. Look at Bajaj Auto. I suggested entry at 3000 above previous day's high (2989). Since, there was no up tick, our entry was not triggered. Using this technique, U can avoid some good trades that turn into bad ones. They call it, No Ticky No Tacky.

The downside to this is that U may enter high of the day. But, going so far, taking out previous day's high, the stock showed its potential of turning back from pull back.

Count the no. of day's its been down continuously. Total 10 days. In the last 11 days, only 1 day was an up day. I remember recently reviewing this stock for a short. At that time, the stock was still in the trend. In the last 2 days, the trend line has been broken. Today was the nail in the coffin. All the guys on the upside are caught now. They never had a chance to get out. They are waiting to get out. What they need is couple of updays. That is when we enter for short. They will give us the impetus for the next leg down.

I currently do not scan for the stocks under this pattern (First Thrust). The market does not support the shorts. The only way we can make an exception is if the sector would setup as short. Lets follow this stock and Siemens

Market:
Considering that it still is a pull back, lets look at some stocks. In case the market goes down another day, we have to reconsider. It might be in trading range or correction (I doubt).

This is a good scanner U can use. Lets see what we want based on the market.

1. 52 Week high
2. 3 days lower
3. Price between(User specified, in Indian Rupees(Rs.)) 100 - 5000
4. 10 day simple moving average above 20 day sma Yes
5. 20 day simple moving average above 50 day sma Yes
6. 50 day simple moving average above 200 day sma Yes
7. Volume between(User specified, in 10000 multiples) 10 - 100000

Other Indicators I would Play with:
1. Price Changes
2. Price closed above 10/20 day moving averag (instead of crossovers)
3. Volume changes
4. MACD
5. Support Resistance levels
Siemens ended above the neck line. When I say test the neck line, I am expecting a pull up. U don't want to short when it is going down. It is already down. Whom are going to sell (short) it too? So, we need couple of up days. Right now, it is above neck line. Lets wait for another day to see if it is just noise. But, why are U bent upon shorting. The market is shooting up. Why don't U go Long. I will recommend some.
Hopefully, you are not asking this question for argument sake. Because, I am not interested. We are here to make money. My trading philosophy (as I stressed in most of my replies) is that no methodology is wrong or right. You test it in the real market and you make money, then use it. Thats your edge. Every body should find their own edge (what they can do their best) and use it repeatedly (this is the key).

What I meant about the statement is, make trading simple. When you start trading initially, we come to the market with some pre-concieved notions. That you can easily make money and fast (read greedy). When you don't, you think people who are making money know something you don't know. They are using indicators and waves etc etc which you are not using. Thats the reason you are losing money. If you didn't have this thought, thats fine. I am talking in general.

Then you go after reading books, using new indicator for every new trade, change methodology etc etc. In the mean while, your portfolio still doesn't improve. I have done this like anybody else. Ultimatly, what I found is that, trading is just common sense. It is using probability to make your chances of winning high. Accepting the fact that there will be losses and it is the business risk. That winnings are going to compensate your losses and make you profits.

In essence, don't try hard. When you see the chart, it gives most (80%, to give a value) of the information. The remaining 20% may not relevant in most cases. So, why work hard going after that 20%. Since, you are leaving 20% (or whatever info) you may get some losses. But, assuming that you are following your methodology to the core, the losses may be minimal compared the effort you are not putting. Just make life easier. Don't spend more than couple of seconds (max 1 min) looking at a chart. Within that time, if you like it, study more like
1. Look at all the data (Ofcource, 1st thing you want to make sure is the overall index is doing good). Check it fits your methodology (this was the reason you picked this stock for detailed review)
2. Look at the sector
3. Check whether your position in this stock fits your money manangement plan
4. Make a go or not go decision.

Having said the above, nobody is stopping you from researching. You can continue to do that. I decided I am not going to do it. Its just personal. I found my edge and my final truth ( I spent my time before). I will just stick to it.

hi...do not get paranoid...that question was asked to have insight into your mindset............i request u not to be judgemental....................................... .......as book of ELDER was recommended by u,I asked the question to know whether that idea had any application,it can not be called "research".....don't u think that u should have answered it in straight forward way


NO NEW ENTRY means, I am suggesting to all readers that I do not approve these stocks for new positions. Based on my analysis, I don't want somebody to think (based on stops) I am suggesting to buy them. Now, if U have already took positions in these stocks, there are couple of options.
1. Exit for profit if the stock chart is really bad.
2. Gracefully exit for no loss no profit.
3. Give a stop for last chance for the stock to make it.

U know, it is easier to read charts that are good than the bad ones. All these charts, I wouldn't spare a millisecond (infact thats the test). Now, trying to understand them and make meaning out of them is hard.

About my suggestions, right now, I am not recommending any new entries because of market and sector conditions
NO NEW ENTRY means, I am suggesting to all readers that I do not approve these stocks for new positions. Based on my analysis, I don't want somebody to think (based on stops) I am suggesting to buy them. Now, if U have already took positions in these stocks, there are couple of options.
1. Exit for profit if the stock chart is really bad.
2. Gracefully exit for no loss no profit.
3. Give a stop for last chance for the stock to make it.

My expertise is not with low priced stocks. Please see the chart attached. A triangle has formed. A decision soon will come, up or down. We can keep this stock if it goes up (no brainer). If it goes down, how far will it go down (already 35). The stock has to be evaluated based on fundamentals more than technicals. How about asking the guy who suggested you this stock
The time has come. It broke out. Wait for pull back, which will not go back to the trading range. What I don't like is the volume using which the breakout has happened. I couldn't find the sector. It is considered in sector All. I also don't like the general market condition to suggest a new entry. But, U asked for the RCVL. Here it
start with how stock prices go up or down. This is due to the demand for buy or sell. Lets take an example of RCVL. This has broken out of the trading range recently and closed at 320.60. If no demand exists for buying above 320.60 (no buy orders above 320.60) and sell orders exist below 320.60, the stock price will come down. I think so far U already know.

Now imagine some good news comes for RCVL. There are lots of traders who buy on news. They jump on news and put in buy orders. Most of them give market orders (they don't want to miss the action). The market makers (MM, who execute all the buy and sell orders in our behalf) see so many buy orders for RCVL and increase the buy price. Since these are market orders, they get executed no matter what the price is. Lets say more buy orders come in. MM see this as an opportunity and increase the price (On the intra day chart, U will observe a long open and close tick). They will push it so high till a point where no demand exists. Once U have this scenario, open a daily chart. The tick on that will have huge high (tail) low range. What we should read from the tick is that there is no demand at this high point and go for a short next day. Elder talks about the levels and stops for doing this. Similar is the case when the stock goes down.

Now, identifying the Kangaroo Tail is tricky (infact, I used to argue with my friend all the time. He used to look at some volatility on a day and say, there goes the kangaroo), just like using any indicators. Huge range can be there on any day. But, Kangaroo tail only applies on extremes. For example, when stock on a bad news is going down. After several days of sell of, U see a huge down bar, now thats a Kangaroo Tail. Why, because, the stock has been going down so low and at some point the MM tried to sell the last bit and found no orders to sell below that point. Similar is the case of upside.

I don't think that applies in this scenario (ofcourse its my opinion). The stock should have been going down or up for lot of days. This should typically happen because of an event (which will determine this sharp break up or down). If the stock has been going flat, I don't know how much this applies. The pattern is more based on
Any way, I don't trade on this pattern. Not that U can't make money on it. It doesn't fit into my methodology of pull backs.

Market is still in trading range. Avoid new entries for now till the market successfully comes out of the trading range

This stock is below 50 day EMA. 200 day EMA acted as support. Let it cross above 50 day EMA and then pull back. A safer bet would be after crossing 950 Resistance
did not look at all the indexes before. Here is the good news on other indexes. Most of the indexes broke out of the trading ranges. Lets see what are those.

BSE100
BSE200
BSE500 (This is better index to trust than SENSEX, which has just 30 stocks)
BSEHC
AUTO
BANKEX
OILGAS
METALS (Was not in trading range. But, really going good)
MIDCAP
SMLCAP

Still in bad condition
IT

Now what? Ideally, we would want the indexes to go up and pull back (not going back to trading range). Thats when we enter. However, if U are a aggressive player and want to go in now, consider stocks that are already in pull back and check if U can safely enter those without a wider stop loss.
did not look at all the indexes before. Here is the good news on other indexes. Most of the indexes broke out of the trading ranges. Lets see what are those.

BSE100
BSE200
BSE500 (This is better index to trust than SENSEX, which has just 30 stocks)
BSEHC
AUTO
BANKEX
OILGAS
METALS (Was not in trading range. But, really going good)
MIDCAP
SMLCAP

Still in bad condition
IT

Now what? Ideally, we would want the indexes to go up and pull back (not going back to trading range). Thats when we enter. However, if U are a aggressive player and want to go in now, consider stocks that are already in pull back and check if U can safely enter those without a wider stop loss.
U know what, I thought the same when I saw that. The question is how do we take advantage of that. We need to scan for that pattern. But, as I said earlier, I don't whether this is a high probability trade. What is the chance the sector of the stock doing the same. And what about the market in general. We need to have criteria for stock selection that mimics the General Market. The general market is all time high. Pick stocks that are comparable to the market. Be in a sector that is going along with the market. If not, U will end up with lot of stocks to trade. Which one do U take.

Stock selection (elimination) is the greatest challenge, once U gain knowledge of TA. Because, once U run a scan, U will get lot stocks in result. Which one U go for finally?
That is the reason, I suggested for it come below 5500 for a short. Now a new pattern is emerging. Wait for MACD crossover and then look for pull back to enter long.
previously mentioned negative about banks. They are breaking out decisively. Since they were in trading range for some time, hopefully, this is going to be good rally. Lets watch couple of bank stocks that are going along with the Index.
got a lot of stocks in the scan. I like most of them for entries. I am not suggesting any. I am waiting for the market to pull back. But, if U want to take it, here is the list. I like the metals. The index has been down .
Trend line is OK. Is it a buy based on MACD crossover? It depends. If you always buy on MACD crossover, then probably OK. For buying, MACD crossover itself is not enough. The cross over happens so many times. However, in this case, the signal applies.

For me, MACD cross over and histogram gives information about the goodness of a stock trend. After that, I wait for pull back. Pull back is the ultimate pattern for me to enter. Reason, I don't want to enter when the stock is going up. If I do, my stop loss will be far. And when people start taking profits, I will feel uncertain, unconfortable the stock getting close to my stop.
When U say entry after pull back,is it a different method other than trading the channels?
Also when we consider stop loss, Elder indicates a formula,considering Average down side penetrations.Can we adopt it as a main method of placing stops?
Again for taking profits,in Ur earlier charts U indicated booking 50% profits almost the same way towards the treand as to the stop loss.
Please give some details on these
FYI
In general, market goes in 3 stages.
1. Value of market < Fundamentals. At this point, nobody really cares about the stock market.
2. Value of market = Fundamentals. People start observing. Still no talk.
3. Value of market > Fundamentals. Speculation Stage. Everybody knows. Wherever U go, there is a talk. Any one U talk is in the market. Every body is dreaming of lots of money.

If U think something is over valued and not participate, U will miss lot of action. My philosophy is, not to prejudge the market. Let the market tell by its price action. That is the reason, stick with Ur stops. If cement stocks are going down, Ur stop will hit.

Currently, how many people predicted correction in the market (I was effected by that talk too). Every Tom Dick and Harry was expecting correction. I was talking to my brother-in-law who doesn't know ABCD of stocks. He was talking about correction. What happened? No correction. It is so much better not to heed to the news. Just observe the price action. If the price action gives the signal (based on Ur methodology) to buy, go ahead.

from you. Earlier, correction would occur or stay during 1-2 or 2-3 months period, where the sensex would go down by say 200-300 points. Now, these few days we have seen lot of volatility. Somedays the sensex would go down by 100-200-300-490 points. Till here I am right. Isnt it?

Then cant we say that this was a correction? Is it necessary for Correction to usually take a period of 1-2 or 2-3 months? Cant it occur during a single day?

Correction:
A loss of 7 to 10% can be regarded as correction. This can happen in 5 to 10 days. There after, the market or stock can continue to lose points or start a new trend. From our point of view, we need to avoid new positions, take profits and trail stops for existing positions. We just need to differentiate between normal profit taking verses sell off.

Good analysis. Thats what my objective was. To provide a list. Then, we all analyze it. Come up with the best, that we agree upon. If we don't agree, we have a choice. Either go for it or skip it, feeling there is a reason not to. As I said always, when in doubt (even an iota), leave it. Its like leaving a ball while batting in cricket. Just choose the best one to hit. Leave the bad balls.

On Ur analysis, I see about the jump. It made almost doubled in the matter of a month. Can it sustain. Probably not. Will it be in a trading range? Based on the pattern, looks like it has more chances for it to be in a trading range. The current pattern looks different. It has lot more momentum then previously. It made 100% jump. However, as I said before, can it sustain? May not. So, lets skip it.
The chart looks good. The stock is in overbought condition. Wait for pull back to enter.
Stock Entries:
The market has been up 7 days in a row. Still waiting for a pull back. If we go in, we will be entering at overbought condition. If we don't go in, we might miss the move. Do we? I was looking at my previous scans. Most of them are still in pull back mode. Thats the surprising part. Stocks are pulling back. But, the indexes are up. Only Metal index is in kind of pull back mode. Banking index is 1 day down. On further pull back, we can look at couple of bank stocks identified before. I have 2 metal stocks for entry. To be on conservative side, U can avoid entries in other sector stocks.

Hindustan Zinc Lmtd - I like this better. I am putting the stop Rs170 more. I don't want the noise to get it. I would get out on a loss of Rs 100 (Rs970). But, there should be atleast 2 decisive ticks. Use discretion on the stop based on Ur confortability
purposely did that. Yesterday's tick did not have a lower low. So, I wanted it to test day before yesterday's tick. U can go with yesterday' low. There is no right or wrong. It is just that if U think nothing has happening (no profit taking effect) with the current day's tick, U buy above previous day's tick.

I didn't get the data feed for current day. I see on the web that it has lost some points. We need to take a look at it as well as the index. I will have another post on it.

Others
-- I will get back to U.

Quickly on some stocks I already know/was looking at them in the scan.
RCVL - This is good stock to enter. I was looking for it to pull back a little more for entry. So, far no, just like the market. But, if it does pull back, I will strongly recommend this stock. About long term (if that means, U don't care what it does in the next 30 days), I will recommend this stock to enter. I am getting interested in new issues. Ofcourse, those have to be trending. I remember see some in my scan. I will look at it again.

Market moved a little bit. Based on its action, it looks close to its pull back. Can never predict though. Again, we have an option to sit out and manage existing positions. If U want to trade, metals are still in pull back mode. Banks appear as pull back. If U want to enter any stocks, I have a list.

Previous day's entry on Hindustan Zinc still holds good. Adjust the entry point. I was look at some stocks which are cheap. Below Rs100. I got 1, attaching the chart. I advise caution when U buy cheap stocks. They are prone to manipulation. Why I like Litaka Pharamacy?
1. It has good volume, which will make manipulation hard.
2. It has a nice trend with a pull back.
3. It had a opening gap reversal today.
I was waiting for pull back. It happened. I am expecting at least another day, given the upside we had. Whether we have it or not, its another question. We will adopt having an entry buy above yesterday's high. If the market goes up, we are in. If not, on a further pull back, we reduce our entry point. Thats what we are going to do with RCVL.

3) Let me know whether the Stock Entries I suggest are useful and U are taking them. If not, I am wasting time. I will rather spend time answer the questions about stocks. Let me know.

4) On stocks I am following
--RCVL pulled back further. I wanted it happen. Its prime for entry. I will be happy if we have another day of pull back in RCVL
................................. know something, I thought U were asking for buying now. I just saw U are asking for hold or exit. I don't know why U want to exit. When U enter new issues, U should like the company and its business. I don't think anything has changed in the last 2 weeks that U should exit. I don't know where U entered. Logically, I would suggest to put a stop at 16. But, rather, I would put a stop at 10, to avoid the stop getting hit in the noise. In fact, I suggest not to put stops for these low price stocks. If U do, U are asking for them to get hit. Moving a cheap stock down is not hard for market makers.
It is in the first day of pull back. There may be 1 or more pull backs. U have to sit tight. This should be a lesson for U not to catch something which is going up. Wait for pull back. I know it is hard to see something flying and U are not part of it. The waiting is hard part. But, what is other option. U buy at high point, see the stock going down and U are very uneasy about it. Ur stop will be too far now. U are looking at 1000 or to be safe at 950
numeric power system
-- Crossed previous resistance of 420. It is pulling back mode now. After another day of pull back (hopefully today), U can buy it above day's high + x.
BILT is Ballarpur Industries and its NSE code is BILT.
---This goes in a channel. The low end of the channel is the 50 day ema. When it touches 50 day ema, buy it. Upper end of the channel is the upper bollinger band. If U choose, U should sell it over here.
some order/pattern in the chart. Why? The chart shows data about thinking of people. U want to put Ur money on a stock which attracts like minded orderly people. So that we can predict some event (stock going up/down) with a degree of confidence (Do U remember probability in Math). For example, lets look at 2 charts:
1. Jai Prakash Associates
2. elgi thread
Let me know what U think. Where would U put Ur money. Which one will U trust more. Which one U can say confidently its going to go up or down.

Normally, U will look at a chart on an average couple of seconds. If U like it, write it down for further analysis. Don't force a position on a stock. If the chart is not good or chart is good but it is in over bought condition, skip the stock
It is a bull market with high valuations. There is lot of volatility. Combined with it, there are Market Makers who look at your close stops. They move the stock, touch your stop and go back (since there is no demand to sell further or there is high demand to buy at that point). So, when you put Ur stops, U have to consider:
1. Volatility of the stock. How much it can go down in a day. High - Low.
2. Whether the risk will fit your money management plan or Ur confirtability. The stock may be good for entry. But, if the stop has to be far, move on to the next one.

The reason I have the stop far than it should be is to avoid getting hit due to daily volatility. When I say 2 ticks, I am trying say, the stock should really go down. Not thru manipulation. However, if U can't look at the stock in day time, i.e., hands of approach, give actual stop. In this case, something below 500.

Triangle Pattern
--- I already have it in the chart. By, explosive, I mean, the base is not formed. Normally, the base is formed and tip is not formed. At the end of the tip, the stock has to make a decision to go up or down. In this case, the end of the current pattern comes when the stock no longer is forming the base of the triange.
Can you please tell me if TFCILTD has formed a double bottom?. Is it safe to enter now?.
Scrip - Tourism finance corporation of india
Code - TFCILTD.NS
-- Avoid the stock. Still in downtrend. Draw a line joining points 24, 20, 17. Further, avoid cherry picking in the current market. I don't know whether U read about my anology of falling from steps. If U have not, here it is.

Imagine U have fallen from 10 steps. U are trying to recover. U are about to get up. But, U see this gush of wind in the proportion of cyclone. Can U guess what will happen to U. Will U get up or fall down. If U do fall down, how long will it take to get up again after that hit.

The reason I gave U that analogy is, the market had a bad hit today. It has come back to the previous trading range. This is bad. When market loses so many points, these beaten down stocks get killed more. At this point, its just not this stock, avoid entries to all stocks. I will cover this further below.


Market Commentary:
When it had 2 days pull back, I thought, this is what I wanted on Friday night. But, looking at world markets, I had a bad feeling on Sunday evening. But, I did give benefit of doubt to Indian Bull Market. I can't say I was not surprised the way it happened. At this point, lets adopt wait and see approach for couple of days to get better understanding what today's price action means. Hopefully, 50 day EMA will act as support for Nifty and Sensex. If U have existing positions, take partial profits or/and trail Ur stops to make Urself comfortable. Avoid new entries for now.

About the positions I suggested with entries and stops:
RCVL, Reliance, Hindustan Zinc and fedder Llyod did not hit the buy point. So, we are saved by the bell. This stresses the importance of not buying directly into a stock. Try to buy at a point where U feel the stock really has scope for turning back. This is called, 'No Ticky, No Tacky'. Its like saying to the stock, 'If U don't perform, U will not get rewarded with my money'. Ofcourse, there will be times, where Ur buy point will be hit and then the stock comes down. Didn't I say in my previous reply that there is no full (fool) proof method. We just do the best.

Originally Posted by rahulg77
Hi VV,

Agreed our buy point did not hit so we will reduce our buy point. now our buy point will be if tomm it goes above todays hi. If the correction continues will we keep reducing our buy point like this? what if the indicators turn negative or it goes below previous pivot low...do we wait for it to make an uptrend again or we still buy knowing that the pull back was cause of overall market and not stock specific. also we buy above the previous high during same trading day or it should close above the previous high.

Rgds
Rahul

When U decide to buy a stock (based on a tip or scan), Ur analysis starts with the market indexes. U will do the following.
1. Look at BSE500 (Look at others too: BSE200, BSE100, BSE30-sensex)
2. Look at Nifty
3. Identify industry and sector of the stock. Sometimes, U will not be able to get the charts for these. There are BSE indexes for some sectors. Look at chart of the sector.

Our objective in looking at overall indexes and sector is to get a feel for the market conditions. We are trying to understand how all the traders are thinking.

Based on the above reading, if U feel the conditions are good, then compare the stock U want to buy with the sector. The stock should be comparable to the sector. Then U will make a buy or no buy decision.

I know the process feels long. But, thats what I call principles/methodology. It should be a repeatable process. Then, U can evaluate the results with some certainty. Try to take out degree of guessing, affected by greed and fear. Avoid gambling.
we still buy knowing that the pull back was cause of overall market and not stock specific.

When a Tree (market) falls down, what happens to the branches (sectors) and the leaves (stocks)? Hope I answered Ur question.


Quote:
also we buy above the previous high during same trading day or it should close above the previous high.

Looking at the pull back in the evening, determine Ur entry point based on our strategy. On the trading day (next day), if the buy point is reached, enter. The buying point does not have to be previous day's high + x. If U look at the charts I have given previously, U will notice that in some cases, it was couple of days back high + x. It all depends on the change happened in a day and the volatility of the stock. U will get that with experience.

So, looking at the current market conditions, I am adopting a wait and see approach for next few days. If the market indexes improve from these current levels, we will look at new setups. For tomorrow, I suggest no entries
 

oilman5

Well-Known Member
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The market in the hindsight will have a deeper correction (more than a pull back). So, be carefull and have stops

any slight downturn, can make people jittery and leave their positions. Result, deeper correction and heavy losses.
Remember, We can always make money. But, never make adjustments on how We do business. What I mean is, never move stops. If we do and lose money, we are not just losing money. we will lose confidence. This will affect the outcome of decisions on other positions.
……………………………………………………………………………….
Give it a stop of 150. Today, it gained 6 points. It may have 1 or 2 more updays. When it does, please take your partial profits. This thing is going down. Its a matter of time. And others too. Please book partial profits. When in doubt (at this point in market, I have few doubts), do it partially. This will help U to get partially right or wrong rather than the whole position.


Market Commentary:
What I didn't want to happen, it happened. The markets trend line is broken. We are in for correction. I will hold this view, till it comes back to the trend line or forms another trend. But, I sincerely suspect. Market is going to setup for First Thrust pattern. Meaning, selling follows by more selling. At some point, it will be in oversold condition. Then, there may be couple of days of buying, which will be followed by more selling (by those who missed selling now). Given this view, I suggest avoid buying till we see better conditions in market.
What happened today is very good. Market went down by 400 points. Could find buyers to end up positive. This is really good. The trend is intact. Going in tomorrow, it is one of those days, as a buyer we have an edge. As a buyer, U can say, 'I have a high probability of making money tomorrow'. So, we will have a list for buying. In that, the best will be RCVL (Reliance Communication). I will put up a chart. In the mean time, here is the entry for U to look at.

FYI: Just like the market, RCVL had a reversal too. It tested previous trading range and closed at high. This is really bullish.
The books I have read and with the foundation I have in stock market, there is no term called 'Long Term' in my dictionary. I don't think it is wrong to think in terms of 'Long Term' investment. But, I can't do it. I have tuned my mind not to do it. It is very hard for me to go back. It is very hard for me to see the stock going down beyond my stop point thinking, 'this is for long term'. The stocks I am suggesting are short to intermediate plays.

When U say long term, look for fundamental analysis and research.
1. Personally, I think its good that U lost money. At this point U might be cursing me. Let me explain.

Think in terms of TIME. Today, U have just lost Rs5000 (50 shares * 100 points). How about this. What if U made money now. U rejoice and make a similar GAMBLE (Yes, what U did is Gambling, not Trading, not Investing). This time, U put 200 shares (U think, it easy to make money). U lose 200 points (U think, didn't it go up after losing 100 points. So lets wait. So U end up with 200 points). So, now Ur loss is Rs.40000. Do U think U will let go here. U will not. Because, U tasted success 1st time. It got to work again. So U try again. U lose again.

2. Do not use money that is necessary for livelihood. What I mean to say is, use money that is after U had enough savings. That way, U will not be desperate.

3. If this is going to add solace to U, I too lost money on my first stock. Many lost just like U. U are not alone
Market Analysis:
I know its too late know. U guys already know what to do. Still, for some, who are ever optimistic, some words. PLEASE DON'T OPEN NEW POSITIONS. On existing positions, if U are short to intermediate player, take partial profits/losses (Ya, taking loses is making profits) and trail the stop. About, long term, I don't think I .........
Do not put any more money into the market. U are not ready for it. If U are serious, read a book (there are online links to books on this thread. Use search menu item) first. Do some paper trading on the stocks I suggest. Read Saint thread on TA.

First make paper money. There are paper trading sites like Moneycontrol.com. There is a section for this in this group. Give Urself minimum 6 months. Market will be there for U. And don't forget that U are competing against best minds on the other side. They are there to grab Ur hard earned money. This ain't lottery ticket to free money. If it is, everybody will leave their jobs and start trading.

If U insist in participation in the current market, I will suggest using Funds. Put money on a monthly basis. In that, U will not care if the market goes down or up. This is what I called a long term strategy. Because, U are doing cost averaging. Once U make enough money over here, in this time, U will also be prepared. Then U can start trading.

Existing Position:
I searched for comments from Chidambaram. I could not find the link. Give me the link. I don't believe in news. I believe in price action. Lets see tomorrow what is in storage for U. If U feel optimistic about recovery, I suggest do the following.

1. Take partial losses at the current price. Hey no pain no gain. How much U want to take out its up to U. I suggest 50%, around 20 shares
When market falls, there are no reasons why individual stocks fall. Its the sentiment. Don't reason with the tape. Just follow the price action.

Isn't that hard. U know why? We are brought up in life to reason things. We are human beings with emotions and try to find reasons whether good or bad. I have learnt in the stock market to not find reasons (disregard the financial papers' reasons. They will find anything to write). Thats hard.
1. How good is this company? Is the company going down in business?

3. Market is in oversold condition. That doesn't mean it is not going down Monday. It just means, it has faily good chance it may experience slight rebound. If it does, Ur stock improves (don't wait for break even), get out. Get out on the second day of rebound. To be catious, take partial out on the 1st day of rebound.

4. Finally, understand the main reason why this market is going down. Its because of METALS and OILS. Thats the correction. They had a huge run. Gold, Silver, Steel, Aluminium etc had huge run up globally. Gold is all time high, seen earlier in 1980s. Right now, it is (was a week back) in speculation stage and had get corrected. However, they are not going down. It is just a correction till they come close to 50day EMA.

5. Why did I point 4? because, yours is a steel stock too.

Based on 1 to 5 points, decide on the stock. Biggest thing we learn in stock market is decision making against time. Whether we lose or make money. We make decisions. Those who make better decisions (which may not necessarily make money all the time, but are made on set of principles) win the race.
might be wondering why every stock is setting up for a short. Look at BSE500 or nifty. The market itself is setting up for a short. There are still no indications of stop in downtrend. Answer to the question of adding or holding, it depends on your strategy. If U are a long term investor, I will not suggest U what to do. Because, I don't believe in such thing called long term. If U are not a long term player, why are U still having positions? About adding new positions, no for short to intermediate term, considering the current market conditions.
Looks like Ur confusion is, U did not make a determination of what kind of a player U are (long term, short/intermediate). Its high time U did that before the confusion costs U. If U (or All) want suggestion, go for short to intermediate term. For long term approach, use Funds to that.

Research on the funds. Even in the funds case, there is an exit strategy. On the weekly chart, if 8 Week EMA is crossing down 200 Week EMA, then exit out of the fund (if this happens, market should be in worst condition). Look for a good company holding the funds with long history. Look for funds that give 10 to 30 percent or more consistently year after year. Invest in funds on a monthly basis to leverage cost averaging. Thats what I call a long term approach, where U don't care these market corrections.

Now, coming to the stocks, its very hard to say what is the right thing to do. U will be damned if U do it, U will be damned if U don't do it. For short term approach, in this condition, I resort to taking partial positions of the table. Atleast, U are partial correct or wrong. If further drawdown occurs, take more of the table. For long term, they say, keep it and hope it corrects. I feel the market comes back too. But, I just don't like to hope. We may escape now. But, one (dooms) day, there will be a final trap.

When do U know the market is going to come back? One pulse to check is, people start recommending stocks to buy in this thread . Other would be the market makes a double bottom or has MACD divergence and goes up with considerable volume.
was expecting some more updays. Can't imagine how negative things have turn out. Hopefully, things will be better.

With the expectation of updays, people will try to bail out. If there are no updays sooner or later, the reaction will be more severe. I don't believe in that case right now. About shorting, I do trading in Geogit. They don't offer shorting , keeping the stock more than a day. The only other option is to do options. I am not in options at. U can (should) use this line of thinking in day trading. Because, we want to use the direction of easy path to sail our boat. In market conditions like these, avoid taking long signals when market pulls up in day trading. Rather take shorting signals when the market is set for shorting.
think the more upside dint happen because the natural fall was stopped & the market is being artificially propped by auth. This could I believe make matters worst...

have not read it. My gurus are Elder and Dave Landry. Elder goes through basics. Thats the foundation. Dave lays out the different rooms of the building on the foundation. He gives various patterns that are realistic. For day trading, use Marcel Link's book - High Probability Trading.

I see that U have started a new thread on day trading. No matter which book U go, no body will layout the methodology and money management techniques (I think Elder talks about a little bit, different from mine though). What I gave U is the one I followed. It is practical and U will not find it anywhere in any book.

For day trading, U don't need TA. U don't have time for TA. What U need is identifying sleek entry and exit points. U only need EMAs and MACD (again based on EMAs). Don't see double bottom, trending lines, divergence etc etc in a daily chart. They don't work. They work on lot of data. More data, more effective these indicators and Ur analysis. In a day, there is too less data for them to work.

That is the issue with these indicators. Beginners struggle with them. They look at all these indicators and consider them as toys or candies. They don't know what to do with them. They don't understand that the complexity is not with the indicator but, in its application. U got to know where and when to use them. More importantly, be consistent with their use, in getting Ur signals to trade. When a signal is not given for a day, don't go for a new indicator to get signal.
Yes. U are right. But, most of them struggle to make money in day trading. Leave alone getting greedy. For my friend with whom I developed this methodology, he has problem with greed. Our methodology worked fine. But, he would never get happy with the money he was making. Lets say he makes Rs5000 on a day, he wouldn't quit on that day. He would continue to trade and end up with Rs500 at the end of the day.

He had also problem with position sizing. They were giving unrealistic losses when stops get hit. And sometimes he moved the stops hoping the stock would come back. The biggest problem he had was that he was applying EOD TA to day trading. He would confused with both. The reason I point these is, these are common issues U come across in day trading.

I don't know when U started day trading. If U are starting, my advise is to reduce position size. Smaller position eliminates fear and provides objective thinking. U will stop thinking about money and think what is right thing to do. Money should flow as an after thought. Slowly, U will see things clearly and develop Ur own method for trading (lets say fine tuning existing method). Thats what I call Ur edge. Till then, do it small. So, that Ur loses are minimal.
Yes. Look for only shorting while the market is in downtrend. Avoid long signals as they fetch less reward versus high risk. But, follow my methodology of crossover. That way, when the market is pulling up (short covering), U will not get shorting signal. When the 8 min ema crosses down 50min ema, then short. Cover when 8 crosses up over 50. Please read my methodology in my thread. Search the thread on day trading
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Looks like Ur confusion is, U did not make a determination of what kind of a player U are (long term, short/intermediate). Its high time U did that before the confusion costs U. If U (or All) want suggestion, go for short to intermediate term. For long term approach, use Funds to that.

Research on the funds. Even in the funds case, there is an exit strategy. On the weekly chart, if 8 Week EMA is crossing down 200 Week EMA, then exit out of the fund (if this happens, market should be in worst condition). Look for a good company holding the funds with long history. Look for funds that give 10 to 30 percent or more consistently year after year. Invest in funds on a monthly basis to leverage cost averaging. Thats what I call a long term approach, where U don't care these market corrections.

Now, coming to the stocks, its very hard to say what is the right thing to do. U will be damned if U do it, U will be damned if U don't do it. For short term approach, in this condition, I resort to taking partial positions of the table. Atleast, U are partial correct or wrong. If further drawdown occurs, take more of the table. For long term, they say, keep it and hope it corrects. I feel the market comes back too. But, I just don't like to hope. We may escape now. But, one (dooms) day, there will be a final trap.

When do U know the market is going to come back? One pulse to check is, people start recommending stocks to buy in this thread . Other would be the market makes a double bottom or has MACD divergence and goes up with considerable volume
didn't understand what you have meant by "Frst Thrust Pattern". Can you explain in detail for me.

regards
chachi

These patterns are explained in Dave Landry's (my current Guru) book. According to this pattern, the stock makes a new high and then collapses more than 10 percent. The way the stock makes high and collapses should be dramatic. Dramatic in the sense, fast and shocking, so that the longs are caught in the trap. When the pull back happens, the longs should look to exit in herds.

So, far, the index (and tons of stocks as listed from my scan) is set as in the text book. I would have liked to see the index losing more points today in confirming the outcome of the pattern. But, sometimes, it just takes time for the pattern to complete. Longs might have thought, the market will continue to go up. Seeing it go down today, lets see their reaction tomorrow.

About Head and Shoulder (H & S) pattern in day trades:

I believe for any pattern to work/trust, U need more data. Why? We need to read group behaviour over a period of time. Group behaviour over a day or two is not trustable. Just use EMAs for day trading. That too, not for reading group behaviour. What I mean is, if 8 min ema is going up in a day, does not mean is stock is doing good. I use 8 and 50 min ema to take out noise. To have points (when they cross) as entry and exit points. If not, these emas can turn up or down in 5 minutes.
They are looking good. Bucking the market trend. If U want, I can give U such list to too. But, don't buy now. Give respect to the market. It is in downtrend. If U just buy stocks, step aside. If U can short, go ahead. But, don't buy it now. What U can do is, keep the list of these stocks and come back to them once the market bottoms out. I saw couple of articles from Fund managers saying the market should bottom out now. They are really feeling the pain. They will say anything to save their _ss. Disregard the news and just look at the chart. Bottom! NOT AT!!
Different people follow different strategies in the market.

What most of the traders using technical analysis would want to do is follow a trend. Currently the trend is definitely not up. May be side ways or down as VV has indicated. So if you want to follow the trend, you will not be thinking about buying now, If one would not or cannot short at least one can stay on the side lines, waiting for a uptrend to show itself.

Bottom picking is some thing trend followers will always miss out, but that is because they strongly believe that it is not easy to predict tops or bottom for the market.

Using fundamental analysis one may try to do value investments but this is not a thread about that.

I think most get confused with methodology versus making money. Its just as in life. U can make money money several ways. But, do U do that? Or do you stick to your priniciples?

Other confusion is about a stock being cheap versus expensive. Most don't understand that neither a stock is cheap nor expensive. It is above when you buy versus when you sell. The difference is all that matters. The question is how do you choose those points. What are your guiding principles that let you choose those points. Can you make exceptions to those principles? (Can you make an exception in life's principles and take bribe to make money)

These are some thought provoking questions one need to answer. One can experience. Buy 5 shares of a stock. Feel the experience. How do you feel when you make an exception to your principles and buy shares. How do you feel when you follow principles and buy stock. Even though people say its all about money, seriously its not. As in real life, its about how you make it. How you make it consistently. It has to be a repeatable process. If not, you can make a 1000 today, lose 5000 tomorrow. Consistency and Repeatability are the key.

I think I took it far. Most of the people don't have set of principles to trade. What they are after is making quick money. They don't understand that trading stocks is the most challenging art in the world. Its about snatching money from the other guy. If you are not smart, somebody else will grab the money from you. Until they lose, they don't realize. Experience is everything!!
You are right that not everyone can be wise and prudent. Hence, there is money gained or lost. It is also due to the fact that each person looks at the data and analyzes differently. Then, you have money from Funds that make the large chunk of the market. Their reasons are different.

Coming back to the question of nifty. Hopefully we see some signs of bottoming out. Till then, we all wait.
Right now, the market is in oversold condition. Its testing 200 day EMA. It may bounse. If it goes below 200 day EMA, thats more bearish. It all depends on how it does, rather than just noise.

If you are short, you had enough downside that you should take partial profits. And on the remaining shares, trail the stop down. But, are you not day trading when shorting?
In this bearish market situation,

1. Stay away from the market if you are a trader ( Go by technicals than
fundamentals).
2. Buy good stocks if you are an investor (Go by strong fundamentals rather
than technicals)

Value/valuation is relative, today we are back to the index levels that we scaled in Feb 2006. Its just 4 months is't it?

If a scrip is 30% below its all time high but 60% above its 52 weeks low, how do decide the fair value?

The Gr8 WB said "The investor should be happy to get lower prices on browses, are we happy to find lower prices.., to quote him again

"Markets are the place to transfer wealth from the impatient to the patient
As I said yesterday, market bounced. U can attribute this to oversold condition or double bottom or support at 200 day EMA. U will see lot of stocks in this pattern. For ideally conditions, the market will continue to go up from here. For me, I will wait for a pull back after it goes up. Obviously, I will be looking for change in trend.
Market Analysis:
Market is at a point of reflection. It can take it from here and move on up. Can go sideways there on, before going up. Given the double bottom and MACD divergence, U can trade if U want. But, have a tight stop below the double bottom. And be sure to take profits as it comes. Don't wait for the whole thing to happen.

There will be lot of stocks in this pattern. I don't have any scan right now for double bottom. But, most of the stocks display this pattern. So, I pass on writing any code to do the scan at this time.


use 8, 50, 200 EMAs, Bollinger bands, MACD and Slow stocastic. I used to use Williams before instead of stocastic for overbought and oversold conditions information. I replaced that with Stocastic before, it does that as well as gives you buy or sell information based on the crossover.

What U can do is, start from these indicators. Change them according to your analysis. For example, 8 day short term EMA may not be right in all cases. If you look at sensex, it is more based on 10 or 15 day ema. So, play with the indicators. But, once you decide on them, have for some time before making a change. Don't change them every day to get buy or signals
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Market Analysis
--- Those of U who have taken the buy signal based on double bottom, have a tight stop. Don't make an exception and release the stop. Trying to pick a bottom is high risk and high reward play. When it goes against U, be ruthless in taking out the position swiftly.
Double bottom buy signal goes awry. That is the reason I stopped taking this signal. Even though it is high reward, there is high risk attached to it. Initially, when I read Elder's book, I got so excited about this pattern. Latter, through experience, I started avoiding double bottom and double top. There are prone to high risk. If U do take them, if U to be very strict with the stop. If U smell any thing against, run!!! Don't wait for confirmation.

General Market...
Stay Out. Let the dust settle. Wait for the storm to be over. Then join in reconstruction.

What makes it worse is, the global market going down. Stock market is more of sentiment. Sentiment right now is bearish.
I would not do that. Did you see my BSE500 chart? Until the arrow points up, I am not buying. Even if I want to buy, my methodology requires either MACD divergence (I don't trust this in all cases) and/or stock being above 50 day EMA. If there are not, I don't know what to do with the stocks. Leave alone telling U what to do.

U should be posing this question to Long Term Investors. My take on this rally is, it is just a correction. Use this correction to take out partial/full loses. Do not buy stocks. Give it couple of days. It will start coming down soon. But, I wish I am wrong.
Just an experiment to all those who want to buy now. Throw up a knife. While the knife is falling down, try to pick it. Let me know the result. Just kidding. Don't do it. At least answer to yourself, what is the probability that U will injure yourself versus catching safely? Didn't I say in the beginning of my thread, 'Trading in stock market is Common Sense'.
This note is directed to short to intermediate traders. But, long term investors, U should read too.

Most of U have a question in your mind. If I don't buy now, when do I buy. Will I miss the move. Some stock XYZ was 150 a couple of weeks back and now it is 50. It is so cheap. So, why can't I buy it. I have couple of examples explaining why not and indicator(s) when U should.

Before I delve into the (real) examples, I just want to make a statement. Any thing can happen in the market. All options are open. They just have different probabilities.

Examples (from US market):
1. This example is from US 2000 bull market. Nasdaq was around 5000. It dropped to 3500. People thought all the stocks were cheap. So, bought more. Then it dropped further. People thought, the market was doing similar things as before. It drops and comes back. Till date, it never did. Nasdaq is around 2000 now.

2. During that bull market period, people bought a stock JDSU for $160. Now it is $3.00. After so much selling, JDSU was known more for Just Don't Sell Us. Here is the link if U want to check out the stock. Like JDSU, there are several US stocks that are no where the price near 2000 year.
http://bigcharts.marketwatch.com/int....x=59&draw.y=9

3. Here is a mutual fund from the bull market era. Was around 100 during that time. Now under 20.
http://bigcharts.marketwatch.com/int....x=59&draw.y=9

4. How about Japanese market. What a slump. Just recently, it started picI can give U more examples. But, I guess U guys got the point. Now the question is, when is the right time to enter. Just as doctors use stethoscope to check heart beat of a sick patient, we have EMAs to check our falling markets (Its a patient now). So, lets see how the market (BSE500 or Sensex or Nifty) is doing using 8 (short), 50 (intermediate) and 200 (long term) day EMAs.
1. Below 8 day EMA. Bearish for short term
2. Below 50 day EMA. Bearish for Intermediate term.
3. Below 200 day EMA. Bearish for Long term.
4. 8 day EMA crossed down 50 day EMA. I use this for shorting.
5. 8 day EMA has not crossed down 200 day EMA. So, there is still hope for the market.
6. 50 day EMA has not crossed down 200 day EMA. This comes after step 5. This is the worst case. At this point 200 day EMA is sitting above 8 and 50. We don't want this to happen.

From the above, if you scale from -5 (bearish) to 0 to 5 (bullish), the market is around -3. So, what do we want to see if the market has to become better.

1. Market must come above 200 EMA.
2. 8 day EMA must cross above 50 day EMA.

Let the above 2 happen. Then, I will put tons of stocks for U to buy. Until, then keep the powder dry. Have the cash.

Common Sense Note: Don't feed a sick patient who has lost weight. Let the patient recover from sickness. Then we feed.
king up.Then we feed.

For all the people who are investing for long term. Don't think long term means, buying and holding. Long term means, buying and doing home work at each and every step. Home work on the stocks fundamentals. Did the fundamentals change? Did the fundamentals change in the market conditions. Did U consider interest rates that are rising globally? U have to consider not only stocks fundamentals but also underlying economic conditions
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....Currently, there is nothing to write on the market. It is in oversold condition. Just as in bull market it can stay in overbought condition for long spells, in bear market it can stay oversold condition for some time. What it means to a trader:

1. Can't buy
2. Can't sell short either. I am not talking about day trading. In day trading, U can do either based on the signals. Bad thing in India is, you can't short and keep it more than a day.
3. So, the only option is keep quiet and stay out.

Therefore, coming to daily input, there is nothing to analyze. U could analyze the the levels the market will hold. But, U can do that out of interest. Other reason could be trying to determing the turn in the market. I try not to catch bottom or top. Too many traders got burnt trying to do that. I will leave that to pros. So, just relax and read books in this gloomy time.
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tool available in India, if you want to short. So, no options but, to use OPTIONS. So, I recently got 2 books to read on them.

Options are different ball game. You need to consider time. I cannot give you suggestions on them, given my recent beginnings. But, here are some pointers that can give you some perspective.

1. Market(s) has been beaten down a lot. Whenever the price deviates away from the EMAs, there will be correction to get them close (to test), specially to the 50 and 200 EMA. Again, the question you might want to know is when? Thats hard to tell.

2. In U.S., summer is bad time. Summer involves less average volume and lower prices. This also increases volatility (good for options). As U know how the indexes all over the world are dancing together.

3. When the markets are oversold, do not sell short into them for long term. Be patient. Sell into the minor rallies.

4. At the same time, whenever the prices get extended below the bollinger bands, use those to cover.

I will get back to you more after I go through the readings
1. Come Into My Trading Room: A Complete Guide to Trading - Elder
2. Trade Your way to Financial Freedom - Van Tharp (current reading. Its good)
3. Trading for a Living: Psychology, Trading Tactics, Money Management - Elder's 1st book

Swing Trading/ Patterns for entries
1. Dave Landry's 10 Best Swing Trading Patterns and Strategies
2. Dave Landry on Swing Trading

More to read
1. Reminiscences of a Stock Operator - Edwin Lef�vre (Mother of all)

Derivatives
Down Trend line has been broken. That does not mean, down trend has over. What it means is, the current trend of sharp break down has stopped.

2. Crossed above 200 day EMA.

3. MACD divergence. Again, what this is telling is, the current downtrend is not as severe as beginning of the down trend. So, there might be a bump up as there is no pressure for selling. This no way means the overall down trend is over.

MACD divergence signal works better when a stock/index has been down for long time. In that case, a long divergence can make the stock go up. But, EMA resistances are still snakes, waiting to bite the stock and send it down.

Against:

1. So far, Sensex crossed 10000 2 times. But, never ended above 10,000. Some seller made it a point to make Sensex close at 9997 at the end of the trading day, when it slightly breached 10,000.

2. 20 Day EMA (Yes 20 day EMA works better for Sensex) is acting as resistance.

3. Do U see the red down trend arrow. It is still pointing down!!! So, no buying.

So, what I see happening right now is a transition from existing sharp down trend pattern. That may mean trading range or slower trend downwards. In any case, the index is ready to go down now to test previous lows.
Attached Images BSE30.JPG (52.9 KB, 55 views)
I am in sitting on cash since the downtrend started. U could use Monthly, Weekly to determine the trend. But, follow that methodology always. So, Ur reaction to the market will be slower. This downtrend may provide you an opportunity to buy.

I did not look at these time frames. I will look at them and get back.
, what I see happening right now is a transition from existing sharp down trend pattern. That may mean trading range or slower trend downwards. In any case, the index is ready to go down now to test previous lows.
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don't know about H & S pattern forming in these cases. But, I do see macd divergence (go by case by case basis) and histogram popping up positive with lines crossover. Avoiding shorting to be on safe side or use discretion in position size. That no way means, buy signal. There are some times in the market where U just stay aside. This might qualify as one, till a decisive market direction emerges.

Before I delve into it, you should know that I suggest how I will do it. May not be right for you. Use your judgement. I will suggest you to get out of all right now as best a possible. Use this jump in market to do that.

Most of them don't realize. Markets will always be there. Traders experience a feeling of missing out. They go on buying spree when market is in downtrend. You have to play that trade differently. You have to be quick in taking profits on that trade. Do not make this short term play a long term. Markets didn't fall for no reason, if they have to go back up so fast. On the other side, you can choose to stay out of the market and come back when 8 EMA crosses up 50 day EMA or using BOW TIE pattern (crossover of 10, 20, 30 EMAs).
As you realize from above response, its very hard to say when things are so bad. I am used to seeing things in the right way. I choose when to get in and when to get out. There are no doubts in that. When presented with a chart that is different, it is very hard to say. From my methodology, you were not supposed to be in these stocks. If you are, then you need to get out with as little damage as possible. Use approach of taking partial loses and trail on the remaining ones using the low of last 10 to 20 days.

--------------------------------------------------------------------------------Ability to give up a chance even though you know you can make money is a trait you need when trading. You want to do that if the winning trade is against your methodology. Even though in short span, you might make money on a trade or two of this sort, but, overall you stand to lose more.

Don't concentrate on the money. Concentrate on doing it right. You should make money as an after thought. Overview of my methodology says,

1. Trade along the market direction.
2. Trade along the sector direction.
3. Trade the stock that follows the sector direction.

Since market direction is down, you have 2 options: Short, Stay aside. That does not mean you short a stock that is going up. In case of Tata Tea, it is setting up for a short. But, wait for the market to do that too. Lets see after Monday. Nifty is going to test 50 day EMA.

For us to go Long on the stocks, there is some more time. If the indexes continue to rise, it may require atleast 1 to 2 weeks.
As always your explanation is simply great. What you said is very true, sometimes if you really dont know what can happen, its better to sit out and watch than loosing money.

If you don't want to short, just stay aside like me. If the market is so good like every one is saying, we will join them too. Just a little late. Our risk is less than theirs, so are our profits.
Money Management
I always used to follow percentage risk methodology for position size calculator. This was based on Elders suggestion. After reading Van Tharps book, Volatility did make sense for consideration.

No matter what methodology you use or even random entry, you need position size calculator for money management. I am attaching a file to do the same. Feel free to modify.
1. You can change parameters identifying % risk, % volatility, % total risk etc.
2. Add more conditions, like money limit per trade, in addition to % risk and % volatility.

ATR stands for Average True Range, which gives the volatility of the stock.

Market:

I was looking at some leaders. I am seeing positive things about them. I like Reliance Industries. We need to wait for pull back for entry. Hopefully, we will get that next week
recommend you to read Van Tharp's book, 'Trade Your Way to Financial Freedom'. This book has various systems to choose from. Or you can use Elder's Tripple Screen system. Any system you develop should give you:

1. Setup Criteria
2. Once the setup is there, Entry Criteria
3. Stop Exit
4. Profit Exit
5. Position Size Strategy (You could use the Excel spreadsheet attached in the previous reply)

You could have several other exits (like Time Exit) as outlined in Van Tharp's book. Search in this forum if you can find a link for soft copy.

My current setup criteria are based on Dave Landry's patterns. Entry criteria is always pull back. For example,

N_MonthHigh setup :
1. Market is trending up
2. Sector is trending up. Stock follows sector.
3. 3/6/9/12 month high + 8 day EMA above 50 day EMA above 200 day EMA
4. Volume > 1,00,000 + Price > 100
First Thrust setup
1. Stock makes a 3/6/9/12 month high and loses 10% in the last 10 days
2. Market has turned direction
3. Sector has turned direction. Stock follows sector.
4. Volume > 1,00,000 + Price > 100

For Stops: I used to use Dave's strategy based on value of the stock. After reading Van's book, I am planning to use 3 * ATR (Volatility of the Stock). I am also looking at Chandelier's exit stop loss.

For Profits: I used Dave's reverse position sizing strategy for taking profits. i.e., once risk is reached, take 50% position off. Set the remaining = buy point. I am considering of changing it based on my reading of Van's book. I want to test the strategy of trailing stop with multiple of ATR, reducing the multiple as more profits are reached. I am looking at several things right now and I may test them to see how they work.

So, there is no direct answer to your question. Only direct thing that you can use is the Position Sizing Calculator. No matter what strategy you use, you need this to be successful.

You can start with Tripple Screen system. Google it. And don't look at the history of a stock and think what you missed. Thats the enigma with these stocks. History looks so easy. Once you step in, things are different. So, train yourself not to think about history. If you were not there, thats not yours.
Interest Rate increase is due this Thursday. I think this is already adjusted in the market. SP500 is testing 200 day EMA. I don't think anything will happen till Thursday afternoon 2:30 PM. I was sceptical last week. But, now my bias is upwards. But, you never know till 200 day EMA is taken out.

Indian markets so far are doing good. Looking at the charts, there should be a pull back this week. MACD has nice divergence and it worked. Hopefully, the markets will pickup after the pullback and cross above 50 day EMA.
visual soft:

Use http://www.icharts.in/charts.html to see chart from year 2000 to current date. The chart has 4 peaks. Now it is at the base of the 4the peak. Until 100 is taken, I would not enter this stock. Why 100? Draw a line touching all the bases. This line will end up close to 100. Incidentally, 100 is also 50 day EMA point, which is resistance right now. In the short term, MACD histogram is positive. Hopefully, in the next 2 weeks, depending on the market, the stock crosses 100. But, expect drawdown in the mean time.

How do you know it is overbought or oversold. Use oscilators like Williams or Slow/Fast Stocastics or RSI etc. Or, something has been up for 3 or more days, avoid buying. Wait for 2 or more down days (< 7) to buy. Similar for shorting in the opposite way.
did not like the reversal today with high volume. This might be attributed to the stake sale news. Lets wait for couple of days more to see whether it will recover from the reversal. You could use the slow stochastic crossover to enter.
It does not matter if you use MA or EMA. What matters is you using the indicators consistently to get buy or sell signals. When you make 10 trades, each trade signal should have been taken based on same indicators. For this, define how and when you buy/sell a stock. What conditions should exist before you consider a stock. What should happen there after for you to buy. How will you determine the risk you are going to take. How will you take profits. Here is the example, why SAIL has come to your consideration.

A. Lets say you had this Buy Criteria written down (This is called SETUP):
1. Market is trending up or turning with MACD divergence
2. Sector is trending up or turning. Stock is following sector.
3. 8 day EMA crosses up 50 day EMA
4. Volume is above 1,00,000
5. Stock price is above 50

B. When will you pull the trigger? From the above, the stock is identified based on your setup criteria. Here is what you wrote down should happen for you to pull the trigger.
1. Stock should pull back a minimum of 2 days and less than 7 days.
2. Enter above yesterday's high + x. If today's close is close to yesterday's high, then day before yesterday's high + x.

C. What is the risk?
1. You will be using 3 * ATR (Average True Range equivalent to average of High-Low for last 10 days, baring gaps)


D. How much position size should you use. You use the Excel I attached in previous reply.
1. You will be using 1% risk of your Principal.
2. Max 3% risk open positions
3. You willing to take volatility of Principal per day for a stock = 0.5% of Principal

E. How will you take profits.
1. Will trail stop at 3 * ATR from price. Once 1R (R - Risk) is reached, stop will be trailed to 2 * R.

This is an example on how you take trades. Take out guess work. Even if you make 3 positive trades out of 10 trades, you will make money. Concentrate more on Position Size and Exits (Risk and Profits) than the setup and entry. Most traders do the other way. They are more worried about setup than the exits. They think about exit after an entry. Sometimes, they never have an exit strategy. Abimanyu Style!!

It does not matter you lose on 1 stock. 1 stock does not verify your strategy. You have to look statistics of 10 or 20 trades which have been made consistently. Then you can determine your strategy is working.

Sail is looking good. Buy above yesterday's + x. Don't forget to think about exits.
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So, indexes did go up. There are very few instances in the market, where you can say it will go in a direction with some confidence. In fact, one of the objective in trading is to stay in the market. i.e., play small, risk less and focus on accumulation. This will help you stay longer in the market to take advantage these easy moments. If you risk more, you will get busted. And you will bust anyone who mentions STOCK word thereafter (you might have come across people who are anemic to STOCK word by now).

I was following Reliance Industries and wanted to recommend. I forgot. Recently, I did not recommend any stocks because, the market has still not reached a point of confirmed trend. I am looking for 8 day EMA crossing up 50 day EMA for indexes. When I recommend some stock in this thread, I am cautious and want to make sure there is high certainty. I did not scan recently. I will do that and put up a list if you want to choose.

EMA check
-- There is a reply if you go back 4 or 5 pages on checking health of the market. I use 3 EMAs. Short term EMA (8), Intermediate term EMA (50) and Long term EMA (200). Uptrend is confirmed when EMA 8 > EMA 50 > EMA 200. In other case:
EMA 8 < (crossed down) 50 - Bad (Down Trend started)
EMA 8 < (crossed down) 200 - Worse (Down Trend Confirmed)
EMA 50 < (crossed down) 200 - Bear Market Confirmed

I use the above criteria to look for trends. I like Reliance Industries for
1. EMA 8 > EMA 50 > EMA 200.
2. It is in Oil & Gas sector which trades independently of the market.
3. Had a nice pull back for entry couple of days back.
stock can be overbought or oversold condition for long time. Normally, stocks move in waves (like waves in ocean). You buy when the wave is down (pull back). When there is strong demand, the stock continues to stay in overbought condition. But, eventually, there will be profit taking and the stock pulls back.
you buy when EMA 8 > EMA 50 > EMA 200, you can avoid lot of false signals. What this may mean, you are not catching the trend early. You are not catching the bottom. Risk is less. I don't know about reward. You can make money when you follow this technique too, instead of catching bottom. Now you are asking why people buy at bottom. People who do that fall into different category players.
1. So called Long Term players. They look at P/E ratio of a stock and buy some shares.
2. Short term traders who look at the oversold market and make short term trade.
3. Amateurs/Gamblers who look at a price of a stock and compare before the stock has fallen and think it is cheap and buy it. But, they don't have an exit plan.

When do you sell/profit. This has to be defined by you. Stop/Profit exits must be based on your risk level and comfortability. For example, I could use risk based ATR, support, % risk, loss amount etc. Similarly, profits can be taken by trailing stop and let the market hit your stop. Or using % profits. Please read Van Tharp's book on 'Trade Your way to Financial Freedom' on Exits.

8 EMA crossing down 50 day EMA is an absolute sell condition. Most people buy at 50 day EMA. If that buying did not salvage that stock, then it is going down. Holding that stock doesn't make sense. Think about it. If people used this simple technique, they would have been saved in last months downslide. 200 day EMA is a buy for funds. They might help. But, you should wait for the stock to come back with 8 crossing above 50 for buying again.

RIL cannot be said to have overbought codition, as there was a pull back recently. Overbought condition can be seen using oscillators liek Williams, Stocastics, RSI. If the stock remains above 80 for some duration, it can be considered overbought
You can determine the market strength based on the no. of stocks that come up in the scan. A month back, I used to get tons of stocks ready for entry. I had to look on how to eliminate the stocks from the list to display the best. Now, I only got 7 stocks as setup, not even ready for entry. This explains the strength of the market.
Elder is different. I just pointed what is missing in his Tripple Screen Methodology. He does not consider market and sector into consideration in this methodology. Not that he does not look at them when he actually trades. But, if some one followed the methodology based on his previous books, they would not know to look first for market and sector direction. Neither he talks about how to put stops and take profits. So, Elder's first 2 books are a good start. You should read Dave Landry's books for Setups and Van Tharps book for Money Management and Exits.

I didn't understand your question about 'HOW TO HANDLE LOSS'. What do yo u mean by that. When you enter a stock, you know how much you are risking. You are accepting that risk. If you are not accepting that risk, then you shouldn't be in that stock. You should accept loss or gain as same. Remember, just because you made gain in a stock doesn't mean you are running away with the money to the bank and never coming back. You are still in the game and playing again. For example:

Lets say in a span of 6 months you made 20 trades. To make it simple, lets say you made 15 wins and 5 loses (this is hard to achieve). You might be happy when you made those 15 wins. But, if you do not have good trading strategy, money management and mental strength to stick with your defined methodology, you might give back what you gained in the 5 loses. The example is to show you how the result of not 1 trade matters but over multiple trades.

So, strive to achieve consistent results, risking less and focus on accumulation. In the initial stages, defining and streamlining the process is more important than making money. Don't gamble. Use smaller positions

Dabur's ATR is Rs9. RIL ATR is Rs47. Each stock has different volatility. You need to choose a stock that you are comfortable with its volatility. That is were position sizing will come into play. Volatility based position sizing for Dabur will give you more size than RIL. For example, if you are comfortable with a swing of Rs500 per stock in your portfolio, your position size for Dabur is 500/9 = 55 shares. For RIL, 500/47 = 10 shares. Further, you may choose to filter your selection based on volatility. You may choose not to trade stocks that have ATR < 20 and > 100. Thats up to you. Everyone has to customize the system based upon themselves. You need to understand who you are to do this. Are you a low/medium/high risk taking person?

There is nothing in ITC or RIL that makes me think they are going to pull back. In general, a stock has to pull back. It cannot go up forever. Somebody has to take profits. RIL 2 days earlier was in pull back. There is no way to tell when they will do it (other than if they cross Bollinger Bands). Just follow the market. If it pulls back, then identify stocks that also pulled back. Then enter.

About RIL. You should understand one thing about trailing stop and profit exit. If you want to make money, you need leave money on the table. When you trail stop, you are leaving some profits. But, this is essential if you want to make more. So, trail the stop = 3 * ATR = 3 * 47 = 141. So, your stop = 1079 - 141 = 938. Or you could put a stop below previous base at 970. Its up to you. As the stock goes up, raise your stop to capture profits. If it goes down, do not change the stop.
You need enough capital to withstand drawdown. This is more important if your timeframe is long term. You will not have the luxury of taking out the trade when it goes bad like the short term players. If you are long term, if the trades goes down, you might consider buying in more rather than taking out. So, you need more money. Minimum 5,00,000. More is better
Do not buy any of these stocks. The bull market is no to fly these dogs along with. Wait the market to pass the transition. If the bull market continues, then consider these low priced stocks. Until then, if you can't keep your hands off, consider below leaders.

1. Reliance (Wait for pull back)
2. ITC (I don't like the V pattern with a narray channel. How long this pattern can continue?)
3. Dabur (Nice Pull back. Ready for entry.)
4. RelCapital (Enter above last 8 days high)
5. Wipro (Nice pull back. Ready for entry)
6. SatyamComp (Wait for 1 more day before entering)
7. Infosys (Wait for 1 or 2 days before entering)
8. Amarajabat (Enter about 6 days high).
9. Colgate ( I would have liked for it pull back more. But, still ok to enter).

These are the stocks I have been following. I did not run the scan recently. If I get more, I will add to
Normally (in a ideal situation), everyone (should) start(s) with mutual funds. Put your hard earned money in the funds. Contribute monthly. When enough money accumulates, use that money to buy stocks. If you lose, atleast you will be losing what you made in mutual funds, not your hard earned money.

Research on mutual funds that return > 15%. Pick company (that manages mutual fund) with reputation and history. Given India's growth story, select funds that give you exposure from high to medium risk. Distribute the percentage based on your comfortability.

The key is not putting all the money in the fund at a time. You have to add monthly. You will be using Cost Averaging advantage. So, do not add 25,000 at a time. Split the money to add on a monthly basis. Once 25,000 is over, continue to add more money monthly.
Technically, you could buy this stock if
1. It takes out 2 days high. or
2. If the Slow Stochastic crosses up and MACD does not cross down

I will look to sell the stock if
1. Takes out my stop based on 3 * ATR, if I used point 1 to buy.
2. If MACD crosses down, if I used point 2 above to buy.

See, when you enter a stock, you need an exit strategy. An entry will never determine whether you make a loss or profit. An exit will!!!. Inspite of this information, most of us only concentrate on Entry than Exit.

Having said the above, I will take this trade based on positive MACD, coming out of divergence. From here on, it depends on the general market condition. If the market continues to go up, you could see this stock going up from pull back
See the attached charts.
Sectors that are doing good:
1. IT (Leaders - Satyam, Infosys, Wipro, TCS)
2. OILGAS (Reliance)

Sectors that are OK:
3. Metals

Sectors that are still lying down:
All the others including
1. BANKS
2. AUTO
3. Consumer Durables
4. Capital Goods
5. Health Care
6. MIDCAP
7. SMALLCAP

Overall, market is still in transition stage. Except some leaders, most of the stocks are down. This can be seen through MIDCAP and SMALLCAP index. Only exception has been IT and Oil sectors. So, trade cautiously in sectors that are performing better.
None of the stocks are interesting. Some are in transition stage, like the general overall market. Wait for couple of weeks more to see the actual market trend before jumping in any of the transition stocks.
Pull Back for entry:
As you might have read already, there are 2 levels you need consider before you open a position in a stock.
* Setup
* Entry

Setup
Setup tells you the scenario under which you will consider that stock for opening a position.

eg:
1. If you are trend follower, you will select a stock only if it is trending up or down. You will avoid stocks if they are in trading range.
2. If you are a break out player, you will only consider a stock if it has been in trading range for some time.
3. Various Patters: Double bottom, Double top, First Thrust, Head & Shoulders.

Entry
Specifically tells you how you will open the position (buy/short) in a stock.

eg:
1. If a stock is trending, you will buy at pivot point.
2. If a stock is trending, you will buy after a pullback and above today's/yesterday's high + x.
3. If a stock is in trading range, you will buy 1 day after breakout.
4. Each pattern has a way to enter a position after the pattern is complete. For example, in Head and Shoulder's patter, after the right shoulder forms, a line is drawn touching the lower shoulder, neck and right shoulder. You need to enter when this neck line is tested.
Determine what suits you and what makes sense.

One of my criteria for entry is Pullback. Pullback makes sense to me because,
1. I don't want to buy at high.
2. I am ok with missing action in the mean while.
3. I am not ok knowing that somebody is making profits by selling to me at high price.
4. According to Elder: Buying at recent high is believing in fools theory. Because, when you buy, you plan to sell to somebody at even high price. So, if you buy at high price, you are believing some other fool will buy from you at even high price.

After a pullback, Second criteria for my entry is buying above today's or yesterday's high + x. I use this criteria because,
1. I want to make sure there is still upward movement in the stock.
2. I want to buy when the stock is going up and not down.
3. You can never determine the end of downward pull. As the stock goes down, you reduce your buy point.

No criteria is full proof. There are downsides to the above Entry criteria.

1. Inspite of today's/yesterday's high + x, the stock might trigger and reverse.
-----One way to avoid some of these wrong take offs, is not enter position if the open price of a stock is greater that your entry price on that day. So, at the beginning of the day, make sure the stock does not have a open price more than your entry price.

2. Pull back may continue. You should consider based on the stock/market pattern whether it is still pull back based on profit taking or sell off. It is prudent to avoid pull backs that are more than 5 days.

Most important as I was say (preach) is, select a way to do things repetitively. Try out on atleast 10 trades and see how it works. Modify to suit yourself. Don't make changes for each trade.

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I don't understand what you mean by bottom testing. The pull back is to enter as a buy or short, depending on whether the stock is in uptrend or downtrend.
Can be seen that way. If we do believe downtrend is going to start, what is our condition for shorting and when will we exit?

Shorting Condition
8 day EMA is testing 50 day EMA for nifty and sensex.

OR MACD crossing down (this will come little late)

Exit Condition
If 8 day EMA will cross up 50 day EMA, will get out.

OR if you use MACD crossing, then getout if crosses back up.

Profit Target
Previous Low will be your first target. Obviously, if it did reach there, I am sure it is going down more.

I must admit, this is low risk and high reward play. But, make sure you do exit if indexes cross or some other criteria as set by you before you take position. Remember when trying to determine turning points. Run on the first sign of trouble. Don't wait and hope.

On another Note based on U.S markets crashing:
Be careful on the long side. Its ok to miss an entry. If the market continues to go up, we will find lots of entries. Its better to be wrong than lose money. Or you could play with smaller position
That was huge pull back. RIL volatility is 47. On friday, High - Low = 68, with a reversal, opening at high and ending close to low. It took 5 days to go from 1020 to 1100. It took 1 day to come back from 1100 to 1020. This tells you the balance of power between upside and downside. Sometimes, this may be in the heat of over all market and just fade off next day. So, in these conditions, we wait for next day or two to see if the stock recovers and is in pull back mode rather than sell mode. All this text is for new entry. If you are already there, your stop is in place. If the stock hits the stop in the next couple of days, you are out. Let the market hit the stop rather than you take it off. Why, because, no body knows it is going down until it goes down. Daily noise should not make you change previous plans.

Dabur
--It had reversal too. But, not bad like RIL. Today I was looking at the volume. On the upside, volume is low, compared to the May month's downslide. Thats something to take note off. Even though there have been 7 days of pull back, there has been not much downside in the last 3 days. An entry above the high of last 3 days + x is still valid
Given the drawdown in RIL on Friday, it is prudent to wait for 1 more day. If it recovers on Monday, we will revisit it.
How much pullback? I currently do not follow %. I just eye ball the chart. Looking at a chart, I can tell if it is just a pull back or sell off or can go either way. When it can go either way, like RIL, I wait next trading day for more light.

I agree with you that Dabur is not suitable for day trading.

My suggestions are not for day trading. They are for short term trading, holding for couple of days to weeks.
See, when you enter a stock, you need an exit strategy. An entry will never determine whether you make a loss or profit. An exit will!!!. Inspite of this information, most of us only concentrate on Entry than Exit.

Having said the above, I will take this trade based on positive MACD, coming out of divergence. From here on, it depends on the general market condition. If the market continues to go up, you could see this stock going up from pull back.[/quote]

--Look at the chart. I was not confortable with the narrow channel. That doesn't mean it will not go up in that channel. Observe there is an outlier channel. Friday draw down was due to market in general. If it goes down below Friday's low, I would be little concerned. If it does, may be it is changing the narrow channel trend or it is going down. That only time is going to tell. As long as 8 day EMA is above 50 day EMA, our bias should be upwards. Try the chandelier stop 159. ITC ATR (Average High - Low) is 9. At stop of (range between 2 to 3) * ATR should be OK. Chandelier uses 3 * ATR.


1. Look at the volume from May 1st to June 26th. This was the time of its drawdown. Compare this volume to period June 27th to today. Volume during drawdown was low compared to specially high volume during recent updays.

2. Belongs to Oil Sector, which is one of the 2 best performing sectors (the other being IT sector).

3. It does not have the V like pattern. I am looking slower transformation from the recent downtrend. This stock has it.

4. 8 day EMA crossed up 50 day EMA. This is my condition for going long.

5. Its setup as First Thrust pattern to go long.

Suzlon has ATR around 70. Lets use stop = 3 * 70 = 210. So,

Setup: First Thrust Pattern
Entry: 1100 (above today's high + 25)
Stop: 890 (1100 - 210)
Initial Profit: 1310 (1 * Risk = 1100 + 210 = 1310. 1310 is close to May's highs. Ofcourse, we will be looking for multiple of Risk. I will follow on with an update to the stop as the stock moves.)
Position Size: Please use my calculator Excel Spreadsheet. It takes into consideration stocks Volatility. Don't use fixed position for each stock.

Note: If the stocks gaps up above 1100, wait for first 15 minutes to allow the stock to form recent high. Buy above the recent high formed in the 15 minutes. If the stock does not go above the recent high, avoid buying. It might be a reversal.

I will update the stop info after I get the update for my database. I will also add more am still sceptic about the market. Except some leaders, other stocks have been low. You can read it as not so great market (unlike the bull we have seen before) where only the best/blue chips do good. Others stay low. So, continue to concentrate on the best sectors and stocks in those sectors. Avoid others. Hopefully, these leaders pull the others overtime.
entries for other stocks I am following

am still sceptic about the market. Except some leaders, other stocks have been low. You can read it as not so great market (unlike the bull we have seen before) where only the best/blue chips do good. Others stay low. So, continue to concentrate on the best sectors and stocks in those sectors. Avoid others. Hopefully, these leaders pull the others overtime.
I don't enter directly into a stock. I want the stock to go up enough to trigger my entry point. This triggering point's objective is to make sure the stock is continuing the upward move after the pullback. This way, you can avoid those pullbacks that lend themselves into sell off. This triggering point can be either of the following:

1. today's high + x. If the stock's today's volatility comparable to its ATR (average volatility over 10 days) and ends up close to Low of the day, you can use. Choose x so that High + x - Close = (70% to 90%) of ATR.

2. If today's high + x is close to previous day's high, use Previous day's high + x. Here x should be below 25% of ATR. Look at Colgate. Friday's high + x provides better proof net than today's high + x.

3. N day's high + x. Use this if there was a failed attempt on Nth previous day to go up. Buying above this failed attempt gives you a sense of security of the stock going up. Again, choose x to below 25% of ATR. Look at RelCapital. Going above June 27 high is better option. Look also at amarajabat. Using this techinique would have avoided you in buying these stocks.

x is more of an approximation to assure yourself that the stock has enough will to go up. Consider stock's ATR in calculating x.
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The Position Sizing Price Graph Bar allows one to automatically view ATR, 3* ATR Stop Loss how many shares should be purchased based upon a 1% or 2% Risk Management Rule while using Average True Range as a basis for stop losses

copy paste of VVONTERU P68
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Either way, I don't trade breakouts. It requires different method of trading. There tends to be lot of false breakouts. Requires trying multiple times with low stops. You may have lot of small losses (consider also commissions for buying and selling) and may do good once in a while. Don't get me wrong. Trading breakouts still can make you money. It just needs different approach.

Rather, what I look for is, after the breakout, the stock pulls back and does not go back in to the trading range or triange in this case
Couple of things:

1. I know some of the stocks have been mentioned by other members for buy. If you are comparing with my take on then, you will be confused. Each of us have different trading methodologies. Each will produce different results. For example, my way of trading may produce 3 winners out of 10. But, when they do, they may erase the money you lost. Other trading methodologies may produce 7 winners out of 10. But, they may result in less profits then mine. So, each of us have different way of looking at things.

2. Like stock selection, stock elimination is as important. We have so many stocks. How do you pick the right one. What constraints do you use for eliminating those stocks that have less probability of making you money. Following constraints help me focus on few:

a. One of the constraint I use for going long is short term EMA (8) cross up Intermediate EMA (50) day EMA. This condition will virtually eliminate lot of down stocks. It also makes you buy close to 50 day EMA (when the stock pullsback), which is a sweet spot for many traders.

b. Other condition you can use is to pick a stock in the strong sector. In effect, you are eliminating all the other sector stocks.
It all depends on where you entered. If you just bought, use 350 (below previous base). ATR (Volatility of Sterlite) = 37. Consider trailing stop 3 * ATR. As you make profits, consider locking profits by trailing stop by varying (reducing) the multiple of ATR.

Avoid dogs for now. Consider only leaders in IT sector for now. If you can't afford them, may be you are undercapitalized. Undercapitalization will fail you, inspite of good system.

i really need to erase some loses!
-- Trading is a mind game. Try to forget the past. Don't trade to regain loses. If you do, your analysis will be skewed. Trade objectively, with no emotions. Trade because a stock gives you a signal based on set of conditions set forth by you. Ofcourse, this applies to every body (including me. I slip into that trap now and then).
If a stock opens higher then the previous close and then thats the high of the day, its called reversal (not exact def'n). If you want to buy a stock tomorrow, and a stock gaps up open and does reversal, you should avoid the stock. How can we do that. Wait for first 15 minutes to see if the gap is bullish gap. If the stock continues to go up above the opening price, then it is ok to buy.

Why does the reversal occur? Mostly done by the market makers. If they see lot of buy orders at a point, they open the stock up high and get everything. If there is no demand, the stock eventually falls down. But, can't explain why there are so many in this stock. Might be played out daily.
wonder how you guys get ideas about these stocks. For a change, why don't you guys give me explanation why you even consider this stock. If I have seen this stock's chart, I wouldn't have spent a split second. So, why are you drawn to this stock? I want to know your view point.
like Indian Hotels. There was a pull back recently. You could have bought into that.
NTPC looks like going sideways. We can consider it later.

Lack of follow through is a concern in the Market right now. This may be due to geopolitical reasons, U.S market, increase in interest rates etc. Trade minimally.
But, I am worried about the market in general. Lets consider couple of scenarios.

1. Market goes down south from here. Lets use Nifty index for sell condition. If Nifty goes below July 7th sell the stock.
2. 100 is close to previous base of GujAmbCement. Put the stop for break even.

.................................................. .................My bias is downwards. Nothing in the indexes is telling me that. I am looking at U.S. markets to come to the judgement. They are really doing worse. Couple of observations.

1. Nasdaq is at worst levels. 200 EMA long gone. 50 day EMA crossed down 200 EMA long ago. Recent support level of 2100 (1 month support) broken.
2. Health and Utility stocks are rising. These sectors only rise in recession time.
3. Geopolitical suddenly changing to worse. Iran, Korea and now Gulf war.

Now, this may not happen to Indian markets. But, since there is not follow through to Wednesday rally, chart is not rosy either. Hopefully, Indian markets show resilience. That time will only tell. So, I am adopting wait and see attitude on Indian markets scenario.

I have to get back to you on Reliance Communication. But, Reliance and Dabur are still doing good. You are in the best stocks in the market. I would tighten the stops below the latest bases. As in my previuos reply, set points based on Indexes where you will come out. Again, my judgement is biased with no data support from Indian stock indexes
Until the market makes the move, lets not take short position. However, we can identify at what point the downward move will be confirmed. Notice the low volume the recent uptrend of Sensex and Nifty. Please confirm the validity of data.

We will use the following to identify the start of downtrend. Since, we are determining the turning point, our stop will be close to exit otherwise.

1. If Sensex goes below July 7th. This is the low of the recent base and also the high of previous pull back on June 26th.
2. If MACD crosses down. After June 19th crossing up, it never crossed down.
3. If 8 day EMA crosses down 50 day EMA.
4. Depending what signal we use, we will use the opposite to exit. In case of signal 1, we will use 11000 to exit.

Same can be pointed in case of Nifty.
Market turned. Point 1 came true. This will be followed by Point 2 and Point 3. Major support is at June 14th. At that point, it will be double bottom. If that doesn't save, then the market is doomed. However, there are intermediate smaller supports. If the market stops at these levels, we may for trading range.

Can you short? Market is not yet oversold (RSI = 50). Lets see if we can find stocks that already made a move. Our stops will be far, since we missed the moved today. Or else, we can wait for next pull back. By that time, we will have a better picture. Consider the following for short:

When market goes down south, nothing holds, except Health Care, Utilities and commodity related stocks (Oil & Metals). Cements are doing good. Can they resist the storm? Also, consider 8 day EMA crossing down 50 day EMA to get out.

Based on oscillators (RSI, Williams, Stocastics ....), still it is not oversold. Around 45 for RSI. Still worse is MACD crossing down with histogram negative. There is a chance to attempt to go up after 5 days down. But, thats daily noise. Overall, the trend down is confirmed. Lets consider Down as long as MACD is negative.

Do not open new short positions now. You shouldn't have covered shorts either. The downside just started. However, it depends on your trading strategy. My strategy is to get lot of gains with less number of trades taken and higher risk. Another strategy may be to get lot of winning trades with small gains and smaller risk. Either is fine as long as U fine tune it with no. of trades taken and consistency with risk.
Here is my suggestion for you to consider. There are two steps you need to think about before taking a position. They are:

1. Setup
2. Entry

Does not matter if you are using Technical Analysis or Fundamental Analysis. Lets take Fundamental Analysis, since I know you use it. You look at a company's fundamentals and find that company provides multiplied growth quarter after quarter and year after year. You like the management of the company. Its P/E ratio is low compared to stocks within that sector. So, you determine that it is a well run company and available at low cost. You determine that you want to invest in it. So far, you just have a SETUP.

Now you need determine the condition when you will enter a position in the stock. You don't want to enter when the stock and its sector is tanking. When the market itself is tanking. At that point, it does not matter how good the stock is, how cheap the stock is etc. The conditions have to be right. I will get back to you with some examples if there are any entry conditions from Fundamentals perspective. I know from technicals point of view if you want to consider.

1. Buy only at 50 day EMA. 50 day EMA is the heart beat of the stock.
2. Buy only when 8 day EMA crossing above 50 day EMA. This is more stringent than 1.
3. Buy when some stocks in the selected sector are also having condition 1 or 2 satisfying. Using this condition, you are making sure your stock is part of the group. More safety net.
4. Buy when Market Indexes are satisfying 1 or 2. More safety net in addition to 3.

I like to follow conditions 4, 3 and 2. But, you could choose to be lax only select one of the above conditions. Thats fine.

I like to give example of farming. Farmer determines to use a particular seed because of its high growth and higher output (SETUP). But, the farmer chooses conditions of season and weather to finally plant the seed (ENTRY). He doesn't do it in summer when there is no rain. If he does, inspite of the seeds higher output, he may get lower result or nothing. Why, conditions have to be right!!!

Enough said. TVS Motors has been in continuos downtrend. Draw a trend line from peak of 170 to current price. The stock is below the trend line. Until it crosses this trend line, there is no hope. If it does, we can see some change in trend. May not be up. What is different in this downtrend versus other stocks is, the downtrend is slower along 50 day EMA. That means, less chances of correction. More the stock goes away from 50 day EMA, high chances of correction.

Aftek:
Read above about Setup and Entry.
Draw a trend line between 140, 120 and 100. If that line is broken, then consider for Entry. For your current position, get out if the stock comes down from current trading range between 50 and 60. If it goes up, consider point around 70, where the trend line touches. That may act as resistance. If it goes beyond 70, then you got your multibagger. If not, it comes back to trading range of 50 to 60, I would come out of the stock.

For condition 3, IT index. Be sure to check stocks that are part of IT index. Recently, I bungled with OILGAS index. Index was showing good only because of 1 stock, i.e., Reliance. Thats no good. You can get information on the stocks in a index from BSE or from NDTV site. Search in this thread on NDTV.

For condition 4, follow BSE500. Sensex only tracks 50 stocks. Thats no barometer to check the entire market. Infact, I got side tracked and started following Sensex. However, since Sensex and Nifty are followed through in general, be watchful of important levels. Like 10,000 for Sensex.


Quote:
You have explained BUY in a great way. Can you please explain the SELL consideration in similar manner.

Stops and taking Profits are something I am still struggling with. I have come along and learnt the following:

1. There can be multiple SELL conditions to get out of a position. Consider the following:
1.1 STOP gets hit for loss or profit.
1.2 TIME STOP gets hit. You give a stock certain time frame to move. If it doesn't you take out the position.
1.3 At each end of day, you look at a stock chart. If its not behaving the way you want it to, you take it out. Or should we?

2. STOP has to be a minimum 2 * ATR. ATR is the average true range which captures the daily volatility of a stock. Think about it. You have choosen a stock from SETUP. Don't you want to give benefit of doubt. You don't want it to be taken by daily noise. You STOP's first objective is to not be taken by daily noise. Secondly, your STOP has to be at a point where you feel the SETUP doesn't exist anymore. Using this theory, I like to use STOP below previous base.

3. I found Chandelier logic of STOP. It does well with handling STOPS but not so good with capturing profits. It is based on 3 * ATR.

4. Profit taking: I used to follow 50% profit taking when initial risk is met. You would read this at the beginning of my thread. Recently, I read Van Tharp's book (One of the best book I read so far. Setup and Entry are clearly explained). I stopped taking 50% profit. I am experimenting with moving the stop with 100% position. Once the profit target is reached, I reduce the STOP to capture the profits.

..WE R CONTINUE OUR LEARNING FROM GREAT VVONTERU
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Stop below previous Support (thats what I call base) is a good approach. Not previous low. I used to use previous low in the beginning. Used to get stopped out a lot. Then the stock would go in the direction I intended leaving me with bad taste in my mouth. If you don't have at least 2 * ATR for stop, you are not giving any room to the stock for noise.
you placed a stop at 450 (below the recent base and taking into consideration the volatility of the stock and below its 50 day EMA). Right now, the stock is at 650. so, you had more than the risk run. I would take 50% off, and move the stop to 530 (break even). So, now you can let the stock run on table's (read others) money. As the stock moves up, move the stop. Make sure you put the stop below 50 day EMA, around 100 rupees (volatility based on price of stock) less than current price and below a recent base.




Stock for short.

Stock: Bank of India (BankIndia)
Sector: Banks (They are the weakest to go after)
Market: Pointing down. MACD crossed down. 8 day EMA crossed down 50 EMA
Setup: 8 day EMA crossed down 50 day EMA. Below recent major support 95, now major resistance.
Entry: 2 days of pull back. ATR 6. Recent low 85.25. Previous low 82. Lets make an entry at 81 below previous low.
Stop: minimum 2 * ATR = 12. But above resistance 95. 95 - 81 = 14. Lets make it 100, around 3 * ATR. However, closing above 95 desively should give us hint to get out.
Profit: There is a major resistance at 80, thats were the stock recently found support. After that, it has minor supports at 60s and 50s.

If you have taken SAIL for short, its close to profit target of 60-65. Other stocks too moved, except Classic. Cements are not doing good. Neither do other stocks like reliance, ITC, tech stocks. I don't lose hope over here. Until the market indexes break major resistances, they can still recover. But, if your Stop gets hit, get out.
ATR
-- I use 20 EMA of ATR(15). It does not have to be exact. The idea is to understand how much the stock swings in a day. So that your stop doesn't get hit before you test your strategy for atleast 2 days. Thats why I suggest a minimum 2 * ATR.
Broadly, a system consists of Trading Strategy and Money Management (Position Size Calculation). Trading Strategy consists of
1. Setup Criteria
2. Entry Criteria
3. Risk Criteria
4. Profit Taking Strategy

There are hundreds of stocks. As a trader, initially you will ask, which one stock should I buy? Setup should tell you that. A simple example would be Channel Setup. In this setup, you consider a channel of N no. of days. You will consider a stock if it goes above that channel. Lets say you are conservative buyer. You will only consider to buy a stock if it breaks out of 52 week channel.

Once you select that stock, now you have to decide at what point/price you will enter. You can just enter as the stock breaks out of the channel. There are numerous false breakouts. Either you are willing to attempt numerous times these breakouts or use other strategy to buy into the stock. I use pullbacks after breakout to avoid false breakouts.

Most important whether you will make it or not is decided by Position Size calculation and Exit strategy. If you don't have a sound exit strategy, you can make a winning position, losing position. Or a losing position into a more losing position. If you don't have Position Size strategy, you can succeed 11 months and lose all of it in 1 month because you took high risk trades in that 1 month and used same position.
Minimum Stop = 2 * ATR
Maximum Stop = 3 * ATR
Actual Stop = Use previous support/resistance

So, your stop will be between 2 * ATR and 3 * ATR.

ATR(14) is ok.If waiting/holding for 1 year will help stocks popup, then everybody will do that. Buy and Hold is a pre-2000 thinking. By 1 year span, if you are trying to convey to me that you are a long term player, you should know what the stock must be doing within the 1 year. How low or high can the stock go. What fundamentals will help the stock go up in a year. You need to validate these along the 1 year. Just holding and hoping will not help!!!

I am a short term player. I don't have the expertise to tell you where the stock will be in a year. I can only tell you in the next couple of weeks. You should ask some other member who depends on fundamentals.
Each of us wish the stocks trend. But, after a huge fall, stocks take their time to form a trend. Until then, they just move in trading range. If you are a trend follower, it is safe to be out during this time. If not, you will get burnt during the choppy trade.
Looks like that. In any case, it is just a setup so far. Entry condition is that, SENSEX goes above the neck line and pulls back to test the neck line successfully.

I would suggest you guys look at all the banks. Something sure is going on with all the banks with high volumes breaking out of the trading range.

Set Up 8 dma Crossing 50 dma : All the stocks except Ranbaxy have crossed this set up 12 to 14 days ago and started pull back with in 2-3 days for 6 to 7 days. Then they have started moving up again for 5 to 6 days and have gained around 8 to 12 % from their lows. Now we need to wait for pullback to take a position.

Was the set up favourable to take a position 4 days ago during the pullback or the sector analysis did not favour it. Or it went unnoticed.
I think you use dma. I use EMA. For CIPLA, 8 day crossed 50 day 2 days back. If you are following dma, thats fine. You could enter the stocks if you get signal based on DMA as long you use it all the time, like I do EMA.

Looking at the action in indexes, I was not comfortable in recommending a buy. Indexes are still churning. A move above or below the trading range of the last month is desirable, unless the stocks can trade independently of the general market.
Having 8 day EMA crossing 50 day EMA satisfies the SETUP condition. That includes the sector action. Wait for Entry i.e., pull back. Lets also wait for the market indexes to cross the recent trading range. There might be slight pull back tomorrow. But, overall indexes are taking time and resisting downfall.

slope of 50 day EMA vs. crossing
-- U can use any strategy as long as you follow it all through for signals. Any setup + entry condition should give more than 50% probability when you test. Because, we don't need to even think to get 50% success. It is either Buy or Short like heads or tails when you flip a coin.
Decision Time. Up or Down ?

Sectors Up:
-- Banks (Good Volume. We have 1 day pull back after almost 10 day's of upside)
-- Cement
-- Pharma

Others:
Trading Range like BSE500
Initial leaders like IT are stuck in trading range now.
The fact that the indexes were up inspite of US stocks downward path is encouraging. However, the indexes are still range bound, just stopping at the top of the range. Tomorrow's upward movement will get them out of the range.

So, you have couple of choices. Sit out till the indexes come out of the range. Or, if you don't want to miss in case indexes come out of the range tomorrow, buy stocks at CLOSE + 75% of their ATR (ATR is available in iCharts.in). Logic is, if indexes move up, your stop gets hit and you buy into the stock. If the indexes move downwards, you will not buy into the stock. Stocks in pull back mode:

Note on Selection Of Stocks:

One of the problem facing traders is selection of stocks. Rather I would say elimination of stocks to remain with a few for consideration. That is the reason I have strict setup criteria. Why do we need few for consideration. Because, currently my position sizing algorithm lets me have only 3 open positions. So, how do I select 3 stocks from so many. Not that others don't go up. But, I can only expose my capital so much, unless I increase my capital or risk criteria. But, I am only comfortable with the risk I have for the current capital.

The reason I am providing so much verbiage is, you need to customize position sizing algorithm to suit yourself. Some are willing to risk 2% on a trade. I can only do 1%. Some are confortable with swing of 1% capital per day. I am only comfortable with 0.75%. With the variables I have in the Excel sheet, determine how many trades you can have open. Then, have a setup criteria to select the best. If you can trade 10 stocks, your selection criteria must be lenient than mine. Because, a setup criteria must suit the system you have. A setup criteria must end up giving you enough trades to fit your risk criteria. Finally, the amount of profit depends on the frequency and no. of trades with the system you developed.

Can you give me the best 5 of those to comment on. Add to your setup criteria to limit them to 5. Or if you have to trade, which 5 will you trade.

Market,

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52 week high or 3 month high means you are selecting the channel length. You want to consider stocks above/below the channel. Higher the channel length, stronger/weaker the filtered stocks. Stock market consists of tons of data. There are alway attempts to filter the price and volume data. All the indicators are just filters of price and volume data. 52 week high or 3 month high is another attempt to filter out those stocks that fall with in the channel.

You have picked good momentum stocks overall. I have ranked them. Always restrict to 1 stock per sector. Concentrate on Banks, Cements and Pharma. Wait for the indexes (BSE500, SENSEX, NIFTY) to come out of the trading range. If they don't go above the trading range next week, do not go long on stocks.

Dave is suggesting minimum channel length as 2 month for filter. If you start from stocks that made high compared to yesterday, 1 week high, 2 week high .... 1 month high .... 2 month high, Dave is asking to consider 2 month high. Channel length depends on your descretion and the market in general. After the recent downfall in May and June, if you have asked for 2 month high in July, you might get nothing. In that case you have to try 1 month.

Channel is not some concept, but just a name for setup criteria. Think channel as 2 parallel lines, 1 top and 1 bottom determined by the period (2 month or 12 month etc). There are stocks that fall between the 2 parallel lines and those fall above and below. From the 90s, they has been general understanding that buy stocks that make new highs and short stocks that make new lows. So, those stocks that appear above the top of the channel are considered for buying. Similar is the case for short for stocks that fall below the bottom channel line.


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also does "bollinger bands" comes under the channel length concept,
for acco. to elder in "come into..", buy stocks on the SMA of Boll B., sell at the upper channel or when it is going below the upp.channel, and buyback when it again reaches the SMA. how is it related to volatality?

Bollinger bands are drawn considering the volatility of the stock. I use it to avoid buying (rather sell) when a stock goes above the bollinger band
Elder likes to buy stocks when they come between two short term sma/ema. For example, if a stock comes between 10 and 20 ema. He calls it sweet zone. Stock always go up and test the emas now and then.


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also, how do we know that the trading range is over, does it means that it breaks above the resistence level?

kindly oblidge as u always do.

regards,
sonu m.

Yes. However, there are false break outs. Dave suggests to wait for pull back after the break out. Currently, the indexes are hovering around the top of the trading range. Same with U.S indexes. All are waiting for Tuesday's Federal Resever Interest Rate Hike. If there is no hike, you can expect a big rally. So, I advise wait for Wednesday. You will get hint from tuesday's U.S market.
Based on overbought condition. No body can say what market can do in the next day or week or month. It is just the probability of pull back after an overbought condition increases. With stock market, we are just dealing with probability. If you have not read probability in Math, it is time for you to revisit.

Sometimes you can predict based on fundamental or news. For example, look at how indexes are just dancing around the top of the trading range. If you go and put money now, you will scratch your head as they go up and down ... It is common sense that they (big money) are waiting for something to happen before making decision either way. Closest event is the Fed increase of interest rates on Tuesday.

In affect, when trading, think at high level. Look at market indexes. Look at what sectors are doing good and bad. Look at economics of the market, like interest rates, inflation etc. I know it is lot of work. But, thats what it takes
RSI, Williams, Mommentum, MACD, Stocastics etc are categorised as Oscillators. EMA is a Trend Indicator. Anything which as boundaries (eg: 0 - 100) is an Oscillator. You can use 10 or 15 period for oscillator. Normally, anything above 80 is considered overbought and below 20 is oversold. Now, these numbers depend on period you choose and stock/index you are looking at. Look at the history to get the number suitable for overbought and oversold indicator. Recently, I found another way to look at overbought and oversold indicator. If you have data, find out Percentage of Stocks Above Moving Average 20, 50, 100, 200 etc for Today, Yesterday, Last Week, Last Month. If these percentages go above 80, then considered it overbought. If the percentage of stocks go below 20, then consider it oversold.


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3. dave says, that even though that market is falling, go for sectors that
are strong, and then strong stocks in that sector, what is
ur view on this?

sorry for posting such long questions, plz guide as u always do

regards,
sonu m.

If you can only go long, ya why not
I guess you are far away from what Trading means. You are more into investing mind frame. Stops doesn't make sense anymore. Talk to someone who knows fundamental analysis. Ask them what to keep and what to drop.
-10 Oscillator is a price oscillator of 3 day and 10 moving average similar to MACD. You can construct it by using OSCP function or change the parameters of MACD from 12,26 to 3,10. Oscillates above and below the Zero line.
I understand your frustration. I couldn't give you any suggestion. Because, if I were in your place, I wouldn't know what to do either. Best I would do is take the major loses. Take 6 month break. During the break, read books, develop a methodogy with money management. Do some paper trading. Then come back. But, I couldn't give that advise as it requires complete overhaul.

Every major player in today's market has gone through what you are going now. Its like Jesus (was it Jesus?) asking, show me anyone who has not erred in their life.

However, good news for you. Market indexes are showing positive. They have crossed the trading range. We are going up to tackle 2 more resistances. If they can do it, you can regain the money. So, watch the indexes.

Sectors Up
Banks
Cement
Pharma
Consumer Goods (came out of the trading range recently)
Health Care (came out of the trading range recently)
IT
BSEPSU (came out of the trading range recently and tested the top of trading range successfully)
Sectors Still in Trading Range
Consumer Durables
MIDCAP
SMALLCAP
AUTO
METAL
OILGAS (ONGC is doing good
Rolta
-- Can't argue with what happened today on high volume. Hope there will be follow through. When you add more to a position, here are my suggestions.

1. Never add more than 50% of your existing position.
2. Consider adding after multiple of Risk is reached. If you have risked 20 points, wait at least the stock has gained 20 or 40 or 60 points above your buy point.
3. Add only on pull backs. So, don't add now. Stock went above its normal volatility (above upper bollinger band) and may slightly fix in the coming days. Look at LUMAXIND for idea.

The idea is, never make a winning position a losing position.

Aftekinfo
-- You are right. The stock lacks momentum right now. You should have entered after the stock cleared the trading range. One of the reason I go after the sector is for momentum. Look at Banks sector. How they are flying. For short term traders, momentum is everything.

Don't you think good, a consistent (or sudden) above average volume in a stock is a sign of something immenent---a sign of some dramatic change in the price movement---upwards or downwards movement in the stock price. I want to buy into stocks before they make a upward correction in the stock price, not just find a good trading range.

I agree buying into stocks that get above average volume.
Everyone wants to buy into a stock before they make a upward correction. There is underlying risk of picking the bottom. Today the market has recovered and may make you feel that way. What if the market went down. Rather, have a consistent approach that defines when you will buy, that gives you an edge. That way, you might have failures. But, overall, the success should override failures.

Guys, look at the stock CLASSIC (Gems sector). Its amazing how it is flying. It doesn't it even give chance to enter. Still, I wouldn't enter until it has a correction.

Currently, we don't have tools that can display sector charts. Only website that offers sector data is http://www.ndtvprofit.com/bb/default.asp?Pass=Indices. I had to go through so much strain in getting sector data. I wrote java code to scrape sector info from websites. Every day, after I load data, I run AmiBroker code to generate sector charts. When I talk about sector performance, I am not talking about 1 day. I am looking at the sector just like a stock.

use ADX for scanning. For volatility of a stock, I use ATR. U can get ATR of a chart from icharts.in.

The idea is, never make a winning position a losing position.
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I took position in this stock because of the following reasons:

a) Its quarterly and yearly results was expected on the 8th Aug. Around 1-2nd Aug. The trading volume had started increasing in the anticipation.

B) Low valuation: It was in the range of 220 to 280 for many months.; and the fundamentals have seemed to have improved. Like all good stocks it had corrected.

c) IT companies had reported good results: trong dollar.

I'll keep in mind your advice about re-entry and adding more
agree buying into stocks that get above average volume.
Everyone wants to buy into a stock before they make a upward correction. There is underlying risk of picking the bottom. Today the market has recovered and may make you feel that way. What if the market went down. Rather, have a consistent approach that defines when you will buy, that gives you an edge. That way, you might have failures. But, overall, the success should override failures.

Thanks for ur encouragement. whatever i have learned is from u, the books u have suggested are real gems

the site i visit is twonahalf.com, i suggest u to visit that site. it provides basic information of which stocks are in uptrend, candelstick bullish/bearish patterns
52 week high/low, speed of trend,etc. register urself first, they send u an activation number, activate ur account, and get started.

although i do not entirely follow their recommendations, i do go to icharts.in
and do my own discretional analysis. i think some member in traderji has started that site, i got the site info from here itself, so for more information,
visit http://www.traderji.com/equities/762...ight=twonahalf

what is ur opinion on "historical volatility" that dave suggests, do u use it?
u said u use ATR, from what i have learned, u use 3*ATR as ur initial risk R.
This i think u use it for stop loss, however i dont' know how do u use it to
measure volatility of stocks? what range tells u it is highly volatile?

2. does the 3/10 oscillator that dave suggests, is MACD value of FAST 3 EMA,
SLOW 10 EMA, smoothed by 1 EMA, i.e 3,10,1. If this calculation is right,
can u suggest any indicator similar to "HISTORICAL VOLATILITY" and its
values?
Market has come out of the trading range. It is up 3 days. Will pull back pretty soon. At that time, consider these stocks for entry.

Day Trading Info
-- http://www.traderji.com/44907-post62.html
Its been a while I read it. Historical volatility can be calculated using EMAs of ATR. You know stock's volatility by comparison to another stock. A stock that has ATR = 100 is more volatile than a stock that has ATR=10. Volalitility is about how much swing (High - Low) in a day. You need this to place a stop and also to calculate position sizing.

Lets say you are buying a stock that that has ATR=20 and close = 100. If you are putting a stop between 80 and 100, you are basically asking for the stop to be hit. U are not giving the stock a chance to test your methodology. 3 * ATR is used to give the stock atleast 3 days to prove U are wrong. You could reduce it to be between 2*ATR and 3*ATR based on previous support.

U need stock's volatility for position sizing. If you buy 100 shares of a stock that has ATR 100, you should expect a swing of Rs 10,000 per day. U need to ask yourself the question, are U comfortable with that kind of change to your porfolio. If not, how much swing can you take in principal per stock per day.


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2. does the 3/10 oscillator that dave suggests, is MACD value of FAST 3 EMA,
SLOW 10 EMA, smoothed by 1 EMA, i.e 3,10,1. If this calculation is right,
can u suggest any indicator similar to "HISTORICAL VOLATILITY" and its
values
A stock can be bought or short. Only 2 options. So, flip a coin before you buy or short. Heads or Tails. That gives you 50% probability to win or lose. Most setup and entry algorithms have less than 50% chance of making you money. What makes your trading success or failure is the Position Sizing (money management) and Stop Exit (risk) and Profit Exits (trailing stop mechanism). Do not evaluate your strategy over 1 or 2 trades. Evaluate over 10, 20 or 30 trades. The key is making trades using the same strategy over and over again. Thats really hard. Thats called high probability trading. Read book, 'Trading in the Zone' by Mark Douglas. The book is little bit boring, but does help in this perspective. The author challenges readers to make 10 trades consistently based on a predeveloped setup and entry criteria
thing is, it does not matter. Think about. If you got 90% success trades over a span of 1 year with 10% failure. The success made Rs 10,000 profit. 10% Failure made 8,000 loss. How will you evaluate this system. How about this. A system produced 70% failure and 30% success. Profits are 10,000 and loss is 5,000. Did the percentage success matter.

So, success or failure are just outcomes of a trade where you don't have control over. Market is dynamic environment which is constantly changing. By selecting a setup and entry criteria, you try to give more than 50% probability of success. If it fails, so fine. Your position sizing algorithm already gives you how much you are constantly risking. If its a success, you want to make profit more than the risk. U only have control over what loss you can take when the trade fails and what profits you can make when trade succedes.
No. Most of what I write are my understanding of the market and my readings. I constantly read books along with my trading. They keep me in the loop. If not, as you trade, there is a tendency to move away into the greed/gambling stuff.


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Also, Should I buy only if there is a buy signal on the previous day or is it fine if I buy if buy signal is generated say 3-4 days back also?

As long as U are not trying to catch up. Feeling of missing out is always there. U should try to get out of the feeling as there will always be opportunities. If you do take it, don't forget to change the entry and exit points in the Position Sizing Calculator to use the new position size.
Market is kind of overbought. But, different sectors are having different timing. Pharma has been down for some time. Look at Ranbaxy. I know from some of you that it is fundamentally a good stock (if it helps setup, why not). It has nice crossover with pull back. What I am not liking about the pharma and cement stocks is low volatility. But, sometimes that is good too. Low volatility compared to its historical volatility leads to higher prices. During the low volatility, consolidation may take place
have 5 updays. I wouldn't buy it now until crossover and pullback. If U already have it, hold on. Market's new uptrend is confirmed. What that means is, most of the stocks will come up.

In the recent days, MIDCAP and SMALLCAP have come out of the trading range. As U see (if you have followed me), we started with couple of sectors in July in uptrend with now, most of them in the uptrend. I am seeing lot of stocks in setup. If market pulls back couple of days, there will be tons of them for entry.

can give you tons of stocks showing this pattern. No doubt because most of the sectors are up. This is the good time to put your money as it is the start of new uptrend and your entry will be closer to 50 day EMA
Nice break out with good volume. Right now above the bollinger band. Let it pull back before entry.
whenever u buy stoaks, first and foremost consideration has to management quality
Market:
I would have liked pullback. Are they not going to give us??? Alright, lets look at some of the stocks.

Ranbaxy nicely went off but, came back. Amarajabat did ok. Its not like in text book isn't it!!! As far of now, I am very positive in the market. As long as you pick stocks in right sector (didn't they all come up?) and with good tradeability/trending you should make money.
Here are my reasons for me being positive about the market.

1) Look at all the sectors. They are all up except Metals.
http://charting.bseindia.com/charting/index.asp
2) My scans are giving high no. of stocks.
3) Most of the stocks are showing above the 50 day EMA with good volumes with few exceptions.
4) Indexes are up more than straight 5 days.
5) Look at Advances versus Decliners and other charts at http://www.icharts.in/breadth-charts.html

You are right that market is overbought. It might pull back. I would have agreed with U that this market would go down if the sector action wasn't good. Or if the advancers vs decliners showed divergence. Or volume in the stocks is low in the uptrend. But, they do not. So, till I see any negative price or volume action in BSE500 and sectors, I will remain positive.

In the end, it is always about what methodology U follow. Simple put, what criteria U are looking for before U take a position. My setup criteria is:

1) Market Indexes (BSE500) should have at a minimum 8 EMA cross up 50 EMA
2) Sector of the stock should have at a minimum 8 EMA cross up 50 EMA
3) The stock has at a minimum 8 EMA cross up 50 EMA.
Criteria 1 is satisfied. Criteria 2 is satisifed for all except Metals. Criteria 3 will depend on the stock. If my methodology gives me a buy, I buy. It does not matter even if I feel I will lose money. Similarly, I will not buy a stock if my methodology doesn't give me a buy, inspite of my feelings of making money.

I (or Neither U) do/should not fear losing. Loss and Gain are just outcomes of trading a stock, which I or U do not have control over. However, we do have control over how we manage loss or gain. We limit loss by constant risk, increase gain with muliple of risk. Difference of this is going to make U winner.
What is this Swing trading? Will it be helpful in trading Nifty futures?
-- Swing trading is synonymous for short term trading with a span of 1 day to couple of weeks. I have never been into futures. Probably U could.

1. If A Particular Sector Has 20 Stocks, Out Of Which 10 Stocks Are
"top Gainers" And 2-3 Stocks Are "top Losers" For The Last 63 Days,
And For The Last 7 Days , If The Proprtion Of "top Gainers" Has Increased, Does That Mean The Sector Is At Intermediate Uptrend?
-- U ask tough questions. May be. I normally look at an index of the sector or the aggregate chart of sector. I peak into some of the stocks in the sector to see the trend. Normally, U would want the chart of the stock coincide with the sector chart. Look at BANKINDIA and BANKNIFTY for example.

2. Or, If A Stock Is At 63 Days High, Does That Mean The Sector Is Also In An Intermediate Uptrend? If Yes, Then Why Is It Necessary To See A Sector If The Stock Is Trending?
-- A sector is important because of the crowd behaviour. U are trying to do the best in selecting a stock. Sometimes, it acts as a limiting agent. If not, U will have so many stocks to consider for entry. At that point, U want to pick a stock which is part of the crowd that is going up/down. It gives the stock legitimacy. That does not mean a stock that does not follow a sector will not go up or down. As I said earlier, U are trying to do the best.
There is resistance at 85. If not, it is prime for new entry. If it is going up, why would you want to take it out. Trail stop at 70 (2 * ATR). Once the current base clears i.e., goes above 80, move it to 74. Let the winners run!!! And remember, in order to make profits, you need to put some money on the table. Like business. U can't make money out of nothing!!!

Market:
Indexes are nicely consolidating the recent gains. Thats good for the next leg up.

Here are some links I follow. They pertain to US stocks. But, methodology isn't different.

Elder Website: www.elder.com
Dave Website: http://www.tradingmarkets.com/.site/...y/dlstoutlook/
Kirk Website: http://www.thekirkreport.com/
Other: http://financialsense.com/Market/wrapup.htm
Nice Article on Stop Loss:
http://www.traderji.com/trading-psyc...s-my-boss.html

Market:
My feelings (fear) tell me it is going Czar way. But, until 3200 of Nifty is taken out, lets be positive. If you have taken a position recently, honor your stop loss.
Not so easy!!! I am bearish on U.S markets due to thin volume and sector action. They are going up to be shorted. But it is different in case of Indian Markets. Good sector action and good volumes in stocks in the recent uptrend. But, I admit anything can happen till it happens.

Look at some stocks in OIL sector.

BPCL
HINDPETRO

As usual, pick only 1 as they both belong to OIL sector. Look at those volumes in these stocks in the recent uptrend.

Hi VV,
Thanks for ur reply. I am not after the "Holy Grail", as i know, no such thing exist in the market. As u have mentioned earlier, when we enter, our probability to win is 50%, no matter how perfect is our system. I find ur system simple, scientific and effective. That is why all of us are hooked to this thread, because ur response is not biased, u encourage to learn ,and finetune our trading system.That is what i tried to do.This was just another way to look at ur system. I hope it works and is benficial to other members.

For stop loss, i liked ur "volatility based stop system". i.e.,
3*ATR = R (initial risk), as it eliminates the risk of market noise to hit ur stop, if we place stop at 5% below ur entry price, as DAVE LANDRY suggests. But i would like to add, "Always put ur stop,below the recent
pivot low or "3*atr or 2*atr", whichever is lower" and check the pivot low in "weekly chart", which gives a strong support area.

For position management, I use "percent risk model". Divide % risk u will take on the stock by 3*ATR, which gives u total no. of shares. For example, i want to risk 2% of my trading capital of 1 lac. 2% = 2000.Suppose 3*atr = 10
Then , 2000/10 = 200 is the no. of shares i will purchase.

On trailing stop loss, I think Traderji's method to put stop at previous 3 bar low, if u r long and previous 3 bar high, if ur short, is very effective. Still i am researching new methods and will update u with my findings.
Lets be frank with ourselves. This stock has good momentum. It pains to be not in it. So, why question whether its too late to enter. Because, it is not the point when we (I) enter a stock.

You might make money if you enter now. But, is it consistent in the way you trade. Definitely it is a qualified candidate that satisfies any trader's setup condition. But, does it satisfy entry condition at this point. Or do you feel you missed the entry couple of days back.

As I said earlier, be consistent in the way you trade. You might make money in the short term by trading arbitrarily. But, you will lose on the long run. Have conditions written down for
1. Setup: When U will consider a stock for buy
2. Entry: When U will actually enter that stock
3. Stop Loss: How U will determine stop loss
4. Profit: How U will sell to make profit


Repeat trades with these conditions without emotions. Once you are comfortable with these conditions, don't change them until U apply for 10 to 20 trades and U can assess the results.
this case, it did work. I understand the reasoning behind what you are getting at. What U are looking for is, if difference between short term ema (8) and intermediate term ema (50) is reducing compared to difference between 50 day ema and 200 ema, then a correction can be expected.

But, if go and look at the chart earlier to May, there were several times MACD(8,50,1) went below MACD(50,200,1). This did result in correction, but not a lot like in May.

MACD(3,10,1) also looks good. Good work.
If you are not using or entering trades in the position size excel, you are not serious as a trader. One of the hard and boring part of trading is book keeping. But, if you don't, how do you analyze your profits and loses. Can you do business without book keeping
. Look also ATR of nifty and sensex. From high of mid May to present, ATR of the indexes and the stocks have been falling. Ideally, a breakout from lows should be with high volume with higher ATR. Lower ATR might mean 2 things. Either its consolidation followed by higher volatility or we are going down. How and when do we know this? Future price action. Lets not predetermine change in market direction
It is worth to look at what Timtomlee has come up with. MACD(3, 10, 1) is good. It does very good in buy signals when line crosses 0. It also gives sell when line crosses back. But, the sell signal may not make you money all the time. It works very good when the stock is trending.

For example, look at Sensex with this indicator. From 2005 Nov to 2006 May, there were only 2 cross downs below 0. One time was in Jan'06 when there was a deeper pull back. The other one in May when sensex came down heavy. So, look at for each stock whether it makes sense. I think it does very well in providing entry point. It provides signal earlier to crossover. Look at how the signal would have worked for:
1. Reliance.
Why do you feel that? Having feelings is ok. But, don't act on those feelings until you see some positive happening for the stock in the direction of your feelings. TA says nothing great about the stock. Why bother about this stock. Why don't U select better trending stocks.
TA: Stock still looks good, even though I admit last 2 days have been bad. Not because of price action, but because of Negative Volume. Remember, buy before news, sell after news. That is the reason it went down after the news. I don't trade based on news. Because, by the time we get the news, its tradable value is reduced. We are at the end of the food chain for news.

This is more of a MIND question rather than a TA question.

Think hard before U get in. Not after!!!.

One of the reason you need to track trades is to specify buy and sell conditions. When you make a buy, write down the reason why you are buying and what will make you sell. Once you hold the position, continue to see whether conditions have changed.

So, I ask you why you bought the stock. If the answer is NEWS, then did that change in the last 2 days. Or is the downturn in the last 2 days has made you fearful of loss. If you get swayed by a tick up or tick down, it will be hard to trade. Do not have emotions for failure or success. One trade will not matter. Even if you make a success in this trade, what guarantee is that you will be positive at the end of the year.
Use the points below in changing how you trade.

1. An outcome of 1 trade does not matter.

2. If you make 40 trades a year, think how your portfolio can be positive after those 40 trades.
U could have 20 loses straight. But, you could also have 5 gains straight that make up 20 loses. What is the point in pondering about 1 trade loss.

Let me give an example. Let say you have 15 gains and 25 loses in an year. Lets use marbles of 2 colors, green and red for this example. Green, win, red a loss. Put these marbles in a bag. Draw each marble out of the bag.

Q) What are the chances of drawing a red or green marble. If the probability of drawing a red marble is more, then did that change the portfolio amount at the end of the year.
Q) Is it possible to draw 10 red marbles out of the bag straight.
Q) Similarly, is it possible to draw 10 green marbles straight.
A) Yes, it is possible, probably both with a lower probability.

The key in this example is, the marbles are constant, the action of drawing (trading) is constant and the risk (stop loss) is constant for either green or red marble. Can we do that with stocks? Stop Loss! yes with position size management. No matter what stock trade we lose, our loss should be constant. Position size should only change. Trading methodology should be constant. Don't trade arbitrarily. If not, results will be skewed.
3. Before you put a trade, assess the loss using Stop. If you can't take the loss, pass the trade. Because, once you put a trade, nobody can determine its outcome.

4. If you can't think in terms of total trades in a year, probably you are trying to gamble. Remember, there is no easy money in stock market. U might have realized this already in the last couple of months
. I look at price chart. Question: Is it in trading range or trending?
2. Answer: trending, then go to 3. Trading Range, avoid the stock.
3. I look at the volume chart. Question: Does the the recent uptrend has good volume?
4. Answer: yes, then go to 5. No, avoid the stock.
5. Look at MACD. Question: Is there divergence against the trend?
6. Answer: No, then go to 7. Yes, avoid the stock.
7. Look at Williams oscillator. Question: Is the stock in overbought condition?
8. Answer: No, then stock is selected for setup. Yes, avoid the stock temporarily.

At each of the step above, I am constantly asking myself why I should (not) trade this stock. Once a stock is selected based on setup condition, I look for my entry condition to satisfy to put a trade. Hope the steps will help you.

Why would any one buy above the bollinger band. Either way, if you have chosen to trade intraday, why did you keep beyond that. It tells me you just gambled. You thought you can just make a profit. You were not prepared for the loss. You never had a exit plan. Please read my earlier comments on Mind game.

TA: I am not worried about the price action today. I am more worried about the red volume. There were many trades that took profits. And why not after gaining 40 points in one day. There may be another down day to make it come below bollinger band. Other than that, chart still looks good.
Stock looks good by price and volume action. 180/190 is resistance. Should you hold it? You should have thought about that before you bought it. CMP is 173, exactly where you bought. What changed?

Now, it all depends on how you trade, what your expectations are etc etc.
Couple of options based on your trading methodologies profit taking:

1. Take half after 1 * ATR is reached and set the stop to break even. If you adopt this method, when a stock makes a high bar, continue to take % of shares for profit. This is the reverse of buying in small lots.

2. After 1 * ATR is reached, continue to trail the stop to 2 * ATR to capture profits. Here you are not taking partial. You are holding on to 100% of the position.
Ofcourse, there are variations to this. You can rate your profit trade based on 1 * ATR - C, 2 * ATR - B, 3 * ATR - A. If 3 * ATR is reached, you can completly take out the position since you have attained A rating for your trade.

3. And there may be other way to do it based on your objectives.

Before I used to follow Option 1. Recently, I changed to Option 2. Whatever option you choose, stick with it. Do not chose option 1 for a trade and use option 2 for another trade. If you are using Option 1, then you should have taken profit for ExideInd.

Stock Tips:
I did not run through the scan due to boring index action. I am just looking at some stocks I am following. Look at CLASSIC for entry. Refer to previous post
This stock is lagging the general market (majority of stocks). If the market was also at this position, I would say, yes, this stock has real scope. But, as U know the market has passed this phase. For this stock (or any for that matter) to move up, the market has to continue to go up. For U, it does it matter. Just trail the stop. If U are considering adding more, I would advise to not do that. At this point, there is more risk of making your winning position a losing one. U should let this winner run for this moment. Lets consider it again after couple of weeks
Ranbaxy
-- If any has taken a position in this stock, don't forget to trail the stop higher to 380. This is a perfect example why U need a minimum of 2 * ATR stop. Stock patterns have less and less becoming what they are shown in text book. After your entry, they may take their own time and swing against you. If U don't give them enough space, they hit your stop and then go in your direction Just like the indexes, its going slow, looking sideways more than upside. Its got a major resistance at 1000. Volume has been drying up in the last couple of weeks. My personal opinion is, stay away. The low volatility in the indexes and stocks is looking more like a puzzle to me. I am stopping short of saying, there is something fishy going on. Is this lull before the storm or just business as usual. This accompanied by low volume in some stocks.

Now, that doesn't mean we go around and short. If we don't learn any thing from our history, lets get this one right. DO NOT TRY TO DETERMINE THE TOP AND BOTTOM. Too many people have lost their shirts from 1900. This is straight from the mouth of Jesse Livermore (so they say. Book was not written by him).

leaving U frustrated

That depends on how U normally go long. Here are some of the options for buying on pullback. These do not apply if you are a breakout player.

1. Long at pivot point. Low of the pullback.
2. Long after stock takes out pivot successfully. On Friday, SIEMENS took out the pivot point successfully.
3. Long between two short term EMAs. Choose either 10 and 15 or 8 and 13. Whenever the stock pullsback to between EMAs, buy. Probably on Thursday. U should note that some stocks have different pattern and may not pull down rather than create a base. SIEMENS is a perfect example. It created more of a base than a pull back.

Depending on what option you choose, results will vary. As I always say, stick with one option for all trades. Don't change between trades.

I want U guys to think the other side of the trade and ask why not. Thats how we together improve our trading.
We need different opinions, with a basis. Thats how we learn. As a trader, we need to think like a lawyer. We need to think other side of the argument (trade) and check if we have an edge
see the difference between mine and theirs. They are going in detail. I just eye ball the chart. I am looking for easy ones. How about this. Look at the stock chart I recently suggested: Godrej Industries. Compare that chart to these charts. Reading their analysis looks convincing. But, I think the charts (ICSA) are not. Ankur is good as long as the stock clears the pull back.

My criteria for stock is based on KISS methodology. Keep It Simple Stupid. Why? because U want to repeat the process. If U can't repeat the process, probability will not work for U. Having such a detailed analysis will make it hard to repeat the process.

Another thing I noted from their analysis is they use Weekly charts. That kind of takes out the noise in daily charts. Its good and bad based on what time frame U base your decisions on. So far, how did they work out for U. Do they give help on position and stop loss management
observed that stocks kind of go in 3 stages. Most of the time, at the 3rd stage, they cannot keep up the previous momentum (buyers don't want to buy so high and sellers had enough profit) and either correct or go sideways before they continue up. Thats what is happening to CLASSIC and so many stocks. What are our options if we are already in the stock.

1. Stay in the stock till its corrected.
2. Use MACD cross down to get out of the stock. Get back in after MACD cross up.

I don't need to tell U that the options will have different results. Try to follow only 1 option all the time.

I am positive about the stock. Compare the volume in July when it reached 200 versus now. Stock has prospects.

U are picking good stocks. Thanks for sharing. Let us know how U are coming up with these stocks to help others
don't know if its the right time to short. Indexes had a good day on Monday. So far they are going up, why really short. Unless U want to use overbought conditions in indexes and short them. At this point of time, resist shorting individual stocks. U should have plenty of stocks to fill your portfolio on the long side. Pick one from each sector.

Reading indicators is tricky as they don't work all the time. MACD does not work if the stock is going sideways. It shows negative histogram and crosses down. Nothing bad at that point. Can go bad or the stock may resume the trend. Don't make a decision using just MACD if the stock is going sideways. MACD is a trend following indicator.

Some stocks are joining the party late. Buying at the beginning of the trend is the low risk high reward play. Ofcourse, determining the beginning is the key. I use crossover to determine the beginning. There may be other ways U could explore.
There is no mystery: I look for good fundamentals, good financial results (past records); more importantly---as far as imminent share price appreciation is concerned---consistent above average volumes and good technicals (this I've started to learn recently); of course, one also needs to consider the market sentiments and the its current trend.
I've picked these things from here and there---thanks to you, Saint, Amitbe, and others!

Short Term (I used daily time frame for 6 months duration)
-- Looks good. Today, it came out of the pull back decisively with good volume.

Long Term (I used Weelky time frame for 1 year duration)
-- Came out of the pull back on weekly too. MACD crossed up and histogram is showing positive indicating up trend. One thing that worried me is the volume. Last 5 weeks, volume has been decreasing.

I am a short term player. I am not good at saying some stock will be there at X position in 3/6 months. I believe any stock can go anywhere as long as good environment exists. U trail the stop. If it goes up, move your stop up

Thanks. I will take this opportunity to recap what I have given and where we want to take this thread in future. Here are the most important aspects I think I have given.

1. Be consistent in whatever U do. Have a trading plan.

Trading is a small cycle. Write down the trading plan and following it consistently. Do not be swayed by the market. Market always lures into taking different paths. Do not get swayed by it. Your trading plan is the Tree which you use it as support in the cyclone of the market.
Do you know about Odysseus and Sirens story. See the attached image. The mast is your plan. Sirens are the market. You drowning in the sea represents loses.

2. Use Position Size for Money Management.

Use the calculator I attached earlier. Without using this, there is no hope for your success. Remember, with one Win you are not going to the bank and taking your money. With one loss, you are not going bankrupt. If you are serious, you are there day in day out for many years. Position sizing with constant risk is the key to winning on Long Term.

3. Stop Loss and Profit Taking

Devise a strategy for exits. Exits are the key to your winning. If you look around on Traderji, most people are bothered about entries. We are looking at the wrong place.

4. Continue to read.

Give yourself many years. Accompany trading with reading. Continue to experiment and improve.

As I suggested in the recent replies, from now on, I want this thread to have your viewpoint. Specially, I like to hear contrary view points. This is what I want to know.

1. I like to know views on pull back methodology.

2. New techniques for Stop Loss, Profit Taking methodologies.

3. When I suggest a stock, I want your pros and cons of taking the trade.

Basically, I want to avoid TUNNEL view. Lets share and improve our trading.


Consider EXIDEIND for entry.



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-------------------------
Looks good. Look at the weekly chart for entry and stop due to the sideways action in daily. I think entry should be CMP.

Other way for entry based on daily is to use MACD crossup. We need this if a pull back turns into short term sideways action.
Entry into Exide Ind should be ok. Do not compromise on Stop Loss. Reduce position size instead.

Pros: Good trending stock with better price action.

Cons: U can see from the chart that it is overextended. It might get corrected to test 50 day EMA.

If U have questions on what approach to take, just choose one. Stick with that approach when similar situations arise.
woudn't lose hope at. Once U put a position, stick with it using a stop loss. Unless U have preset conditions that will tell you to take out the position prematurely. And U follow these preset conditions always.

To start with, I have to admit I am not good at Long Term analysis. Whatever I know is for short term, only using TA. Poor (lazy) in doing Fundamental Analysis. Its not practical for me to check fundamentals for so many stocks either
think we discussed about what options we have for profit taking. If U are a partial profit taker, go ahead and take out partial position profits. If U carry 100% position, trail the stop. When trailing stop, make sure U have atleast 2* ATR. If U grade yourself based on multiples of R and they have reached, then take out the position. As U might have observed, results will vary.

Lets take EXIDEIND for example. Lets say Ur trading plan says U will carry 100% position. But, U saw on August 29th, EXIDEIND hit 375. U got tempted and took out 50% profit at 375. Today EXIDEIND is 385. And hit yourself hard because you don't have the 50% position as the stock still has momentum. So, my friend, do what Ur plan says inspite of how market is behaving. On the long run, you can atleast look at your trades diary and see what is working and what is not.
Great. Thats the mark of a serious and successful trader. Elder stresses so much on keeping trading diary. Not many traders realize this. In addition, you should do a monthly checkup on your trades. Check why a trade successfully worked while the other didn't work. See how you could have done differently. Beware that the market can be a bad teacher. It can award you for bad trades and punish you for good trades. Keep that in mind when you change your trading plan. Avoid frequent changes.
See chart with settings

1. Weekly
2. Year duration.

You will see the downtrend is intact. May be its starting a new trend. But look at BANKNIFTY and compare. This stock has been lagging like YESBANK. Right now banks are as high as there were in May before the fall. Watch BANKINDIA, PNB, ICICIBANK, SBIN.

hi vv, some little birdie told me that stocks which hit 52 week high are more attracted to go higher. And same is case with 52 week low, they tend to go lower. How far is this true????

Isn't that true. A stock will hit 52 week high because its got demand. Every one wants to own it. That is the reason its going up. Similarly, a stock is 52 week low because no one wants to have it. All of them are selling it. Ofcourse, this understanding is at high level.

That is one reason you see websites recording stocks that hit 52 week high and 52 week low. Sometimes, there is speculation that can drive the stocks up. Once that speculation is over, stock drops like a thud.
If U think about it, it works both ways. Lets do the 52 week low again.

Everybody is selling. Stock has been falling for long time. After some time, a stock is worth something that reflects the companies value: its cash flow, technology, real estate etc. So, at that point, is it worth going and shorting. Why do we want to sell a stock when its value is equal or less to that of the company.

Similarly, a value of stock as it goes up happens in 3 stages. In the 1st stage, the value is less than the fundamentals of the company. At this point only few people know about this fact. In the 2nd stage, value is equal to the company's fundamentals. In the final stage, value is greater than the company's fundamentals. The final stage is called the speculation stage. Everybody knows about. Like the stock CLASSIC. Recent example is also GOLD prices.

http://bigcharts.marketwatch.com/int...x=32&draw.y=10

Speculation stage is a good and bad. Good because the stock price increases faster as many people know about. Bad because, sooner or later, there will be correction as the prices get too out of hand. Those people who join late will be hurt. How do you know this stage. From TA point of view, the momentum should tell. From fundamentals, Trailing and Forward P/E of the stock compared to industry and other stocks in the industry.

As I said in earlier posts, its very hard and risky to catch bottom and top. U may forsee stock or market is going to fall. Timing it is very hard. Rather approach it based on your objectives. Be it either entry or profit taking.
Even though 52 week high is good for buying, the risk to reward is much better if you buy close to 50 day EMA. This also depends on the general market. Before May downfall, if you were waiting for a stock to buy at 50 day EMA, you would have been waiting for ever. Right now, most of them are trading close to 50 day EMA. So, there is no straight answer.

This market has been going up. Inspite of that, there are some elements that need improvement. Specially, VOLUME. Also, I see stocks rolling off or going sideways. Rolling off in IT sector: WIPRO, SATYAMCOMP, INFOSYSTCH. Sidways in most of the stocks. Is it consolidation or leg down. Only future can tell. Lets wait for the signs
As U might have realized it by now, day trading is hard. Trading itself is a hard game. Day Trading multiplies that. I have a reply in my thread about day trading techniques using cross over, stop loss and profit taking. % profit taking method makes more sense in day trading due to lot of volatility in a day.

Is there a correlation between open, high,.... Sometimes there is. For example, when reversal (open=high, close is near low of day) occurs, U can predict next day stock to go down. I rather suggest you to use crossover technique. It works in all cases. Gives you concentration. Let me know if U have any questions.
Speculation stage is a good and bad. Good because the stock price increases faster as many people know about. Bad because, sooner or later, there will be correction as the prices get too out of hand. Those people who join late will be hurt. How do you know this stage. From TA point of view, the momentum should tell. From fundamentals, Trailing and Forward P/E of the stock compared to industry and other stocks in the industry.

As I said in earlier posts, its very hard and risky to catch bottom and top. U may forsee stock or market is going to fall. Timing it is very hard. Rather approach it based on your objectives. Be it either entry or profit taking.

Even though 52 week high is good for buying, the risk to reward is much better if you buy close to 50 day EMA. This also depends on the general market. Before May downfall, if you were waiting for a stock to buy at 50 day EMA, you would have been waiting for ever. Right now, most of them are trading close to 50 day EMA. So, there is no straight answer.

This market has been going up. Inspite of that, there are some elements that need improvement. Specially, VOLUME. Also, I see stocks rolling off or going sideways. Rolling off in IT sector: WIPRO, SATYAMCOMP, INFOSYSTCH. Sidways in most of the stocks. Is it consolidation or leg down. Only future can tell. Lets wait for the signs
got the sign. Avoid longs for now. Don't compromise on stops and profit taking.

Cut your loses!!!. But how? This is one area I am currently working. In many books you read, 'Cut your loses and let your winners run'. But, they don't tell how you cut your loses. I sent a mail to Dave Landry once about how we can cut loses. His opinion was that it is hard to cut loses due the recent stock price action. Stocks are not going up immediatly after a pull back as they used to. They take their own time, going sideways before going up. So, here are some questions that we need to answer. And we should be able to use the answers consistently without guesswork.

* how do you differentiate between a stock going up versus going sideways versus going down?
* When can we lose trust in a stock before it hits your stop
* Should we continue to hold a stock when you see a clear signal from the indexes like we saw today

I recently was toggling with MACD cross down as a signal to take out the position. MACD cross down occurs due to stock being not able to keep up with earlier momentum. After the crossover, the stock can trade sideways and go up or go down. We have 2 options.

Option 1:
Cut loss when MACD cross down and avoid that stock until next pull back.


Option 2:
Cut loss when MACD cross down. Get back in when MACD crosses up. This happens if a stock is going sidways and then goes up.

Downside using MACD:
If using Option 2, U might have multiple crossovers if stock is going sideways. However, you could use last N day high to enter again.

Application:
Choose a particular option. Don't change them between stocks.

Your Comments?

Look at Sensex and Nifty. See MACD(12,26,9) and MACD(3,10,1). See Anything? Any difference between MACD(12,26,9) versus MACD(3,10,1) in how they provide information?

......................
1. Be consistent in whatever U do. Have a trading plan.

Trading is a small cycle. Write down the trading plan and following it consistently. Do not be swayed by the market. Market always lures into taking different paths. Do not get swayed by it. Your trading plan is the Tree which you use it as support in the cyclone of the market.
Do you know about Odysseus and Sirens story. See the attached image. The mast is your plan. Sirens are the market. You drowning in the sea represents loses.

2. Use Position Size for Money Management.

Use the calculator I attached earlier. Without using this, there is no hope for your success. Remember, with one Win you are not going to the bank and taking your money. With one loss, you are not going bankrupt. If you are serious, you are there day in day out for many years. Position sizing with constant risk is the key to winning on Long Term.

3. Stop Loss and Profit Taking

Devise a strategy for exits. Exits are the key to your winning. If you look around on Traderji, most people are bothered about entries. We are looking at the wrong place.

Continue to read.

Give yourself many years. Accompany trading with reading. Continue to experiment and improve.

As I suggested in the recent replies, from now on, I want this thread to have your viewpoint. Specially, I like to hear contrary view points. This is what I want to know.

1. I like to know views on pull back methodology.

2. New techniques for Stop Loss, Profit Taking methodologies.

3. When I suggest a stock, I want your pros and cons of taking the trade.

Basically, I want to avoid TUNNEL view. Lets share and improve our trading.
Cut your loses!!!. But how? This is one area I am currently working. In many books you read, 'Cut your loses and let your winners run'. But, they don't tell how you cut your loses. I sent a mail to Dave Landry once about how we can cut loses. His opinion was that it is hard to cut loses due the recent stock price action. Stocks are not going up immediatly after a pull back as they used to. They take their own time, going sideways before going up. So, here are some questions that we need to answer. And we should be able to use the answers consistently without guesswork.

* how do you differentiate between a stock going up versus going sideways versus going down?
* When can we lose trust in a stock before it hits your stop
* Should we continue to hold a stock when you see a clear signal from the indexes like we saw today

I recently was toggling with MACD cross down as a signal to take out the position. MACD cross down occurs due to stock being not able to keep up with earlier momentum. After the crossover, the stock can trade sideways and go up or go down. We have 2 options.
Option 2:
Cut loss when MACD cross down. Get back in when MACD crosses up. This happens if a stock is going sidways and then goes up.

Downside using MACD:
If using Option 2, U might have multiple crossovers if stock is going sideways. However, you could use last N day high to enter again.

Application:
Choose a particular option. Don't change them between stocks.

Your Comments?

Look at Sensex and Nifty. See MACD(12,26,9) and MACD(3,10,1). See Anything? Any difference between MACD(12,26,9) versus MACD(3,10,1) in how they provide information?

Can we use MACD(3,10,1) for cutting loses?

Hi! I am the new kid on the block! I must tell ya one thing that ur tips & obsevasion regarding stocks are simpy Gr8! I have just started trading couple of months back. Sir! could you plz help me by giving me info abt "srf 'and "indiacement'. Ihave bought srf @ 232 and indiaceme @ 193. what is the best time to book profit and their support and resistance.is there any tip regarding any good share.Thanks
Please Tell Me The Parametres Of The Indicators To Be Used As U Have Given For Macd.please Give Values For All The Indicators With Their Implications I.e Whether To Buy Or Sell As Per That Indicatior.please Explain It As A One Time Explanation For The Benefit For All.i Positively Want A Feed Back On Said Issue From U And Please Dont Refer To A Link.regards

EMAs: 8, 50, 200
MACD: 12,26,9 (currently I do look at MACD(3,10,1))
Slow Stocastics: standard settings
Minimum Volume: 100,000
Price: > 100

Setup: Trend Trading
Entry: Pullback

Objective: Select a stock that has liquidity, is tradable and is trending. Liquidity is defined by the average volume and the ease with which you can buy and sell stock. Tradability can be ensured by avoiding stocks that have lot of gaps or have huge bars. A trend can be identified using EMA crossovers or just looking at a chart.
Its a different story with the trend in this stock. It has been going up. But, look at the volume. Its been going down for last 2 months. I have been saying this for last few weeks about the low volume. We were waiting for the price action. We got from indexes today. So, this confirms the low volume. Again, its up to you to pull the trigger.

One hint I will give U though. Survival in the market is more important than making money. Survival is all about preservation of capital
Thats a very broad question. Here is my take. Planning, Consistency, Will Power, Knowledge of Probability theory and be the best person in real life. Trading is all about what you are made off. It shows all your weakness once U enter a trade. Trading requires U to be the best person U can be.


Quote:
Hi vv, When u speak about MACD cross down/up which do u mean specfically..
MACD(12,26,9) or MACD(3,10,1).?? And Crossover 0(zero) or any other value?

for MACD(12,26,9) - cross of signal line over EMA(9) line
for MACD(3,10,1) - cross of 0 line


Quote:
can you help me by explaining me how to read the future trends in chating?

Broad question. U could use trend lines, EMAs (& other tools) to read the future direction of a stock with certain confidence level. U have to understand that if there is 70% chance of stock going up, there is still 30% chance the stock going down. We can't achieve 100%.

Even though I suggested a chart is good or bad, I don't want you to take my word in exiting the stock. Each trader's objective in exiting a trade is different. When U entered the trade, what was your exit strategy. Please follow your plan. Here is one of the trading rule that fits what I am saying. http://hellotrader.com/2006/07/15/to...rules-5-of-12/

Some Interesting Links from www.kirkreport.com

1. http://hellotrader.com/category/top-12-trading-rules/
2. Rob Hanna on Admitting Trader's mistakes: http://www.tradingmarkets.com/.site/...-Rob-Hanna.cfm
Market:
Its impressive how the indexes came back. Even better is the action in banks (BANKNIFTY). Will there be a follow on to this? Will the volume and volatility be better this time? Lets wait and see.

Link on Keeping Ego Out of Your Trades:
http://us.rd.yahoo.com/finance/exter...mp;cm_ ite=NA

This tenet was told by my friend before I started trading. When you have big paper loss, you are not only losing money on that stock. But, more importantly, it will affect your current and future trades till you close the paper loss trade. So, take the loss and move on.

Here is the example of daytrading using EMA crossovers. Use % profit taking method to take profits. For example, by looking at a chart if you feel the EMA cross down will happen in Rs10, thats were your stop will be. If the stock goes in your favour, then you take profits as multiple of R is reached.

R = 10

1st R = 50%
2nd R = 25%
3rd R = 15%
4th R = 10%

Ofcourse, change the % to your convinience.

U need some improvisations to fine tune the no. of trades. U need to use 10 min, 15 min and hourly for selecting the direction of the trade.

Entry:
After crossover, try to enter when the price touches 8 EMA. Better if U enter when price touches 50 day EMA. Thats the low risk high reward play.

Exit:
Use bollinger bands. Don't forget to take % profits when price moves above the bollinger band. And never enter when price is above bollinger band.
Split V in the middle. U have left \ and then right /. Left represents stock going down. Where they meet is the low point. Right represents stock going up. I am saying, buy low, but don't buy when stock is going down. Buy when stock is going up from low. See the attached image.

can't help you in terms of setting your portfolio. I can give you following advice though.
1. Have only 1 stock per sector.
2. Limit to 5 stocks. No. of stocks depends on your capital amount. But, 5 should be good enough to manage.
3. Try choosing momentum sector stocks. Look at banks. I don't see a bank stock in your portfolio.
Long bars. Careful with stops. Weekly chart looks better than daily. On daily, there was an extended pull back. It will take couple of days to week to see better chart. So, if U say long term, lets apply weekly time frame. I think it looks good with MACD cross up, histogram positive and with nice pull back for entry. Volume is not so great during period June to Sep compared to earlier times.
RSI is an oscillator, used in Trading Range. Use that for entry condition. For setup, ema1 (8 days) > ema2 (22 days) > ema3 (200 days) + MACDSignal, you should get plenty. Recently, due to steeper index action, there might some going of the net due to MACD cross down. I suggest taking MACDSignal out of setup criteria when scanning. But, when U are looking at the chart, then apply. MACD works best when the stock is nicely trending. When the stock is consolidating, MACD doesn't work. Let me attach what I got from Amibroker. You should find more of these files in my thread.
I would advise U to read some books. Play with low amounts. More time U spend learning to trade, better Ur results will be. Good Luck.

Very nice chart. Perspective for next week. Market indices (Sensex & Nifty) have been up for a 4 days with good volumes. They are in overbought condition with some price resistance. Ideally, I would like them to go past the resistance and then pull back. Still nothing is lost. I am still bullish on the market.years back I realized I loved trading. Trading is something I never get bored. I can take a trading book and read several chapters in a row. I look at charts of stocks one after another. I can and I am doing this day in and day out. Still I am not bored. So, that keeps me going. Everyone should find in their life some kind of interest. I think I found that interest in trading. I will see how long it will last. Having said that, I am taking a break from this thread for next couple of weeks. See U later. Good Luck with your trading.
Entry:

Your one of the filter criterian for the entry in the stock:
stock having 8EMA > 50 EMA. ( I am not saying it is right or wrong.)

- 8 trading days means apprx 2 weeks. 50 trading days means apprx 2 months. What is the relation of price and volume during these 50 days and last 2 weeks?
- Does chart talk to you?

You can find many of filters. e.g. 2 months high, 20 day breakout, 10-20-30 set up etc etc.

In software terminology, these filters are nothing but wrappers over P/V relation.
A relation between price and volume is the most important factor.

If one uses filters ignoring P/V then it is just like driving a car without understanding how the car works.

Only thing where filters can help in is to provide a psychological check.

Initial Stop:

Volatility based stops work better in trend following system. Volatility based stops are prone to drawdown. During the drawdown, the equity at risk has to be adjusted.

Most of the time stock/market is not trending. If one wants to succeed in trend following then one needs to look at multiple markets. To do all this, it needs tremendous descipline. That is what famous TURTLES did.

Do you sense something? Are you drifting away from swing trading to trend following?

Exit:

What if stock is trending?

What if stock is ranged?

What if there is a stiff resistance on higher time frame?
Position size:

Let us say R is a initial risk.
If one is already having a postion in the stock then,

if profit reaches to 1R,
should we add another pie of position?
should we book half of the profit?

Expectancy:

E = % of win * avg money win - % of loose * avg money loose.

How E can be greater?

These thoughts are just like fuel to propell you further
As long as you have a plan for them and take those trades as part of your trading. For example, your trade plan for this trade can be:

Setup Condition:
Stock goes outside the bollinger band. You can make this more stringent condition if you get many stocks. Stock Open is above the bollinger band.

Entry Condition:
Days close of the tick which is above the bollinger band.

Exit Condition:
Days high + X

Profit Condition:
Trail the stop above previous day's tick high + x or 10% profit met.

The above is just an example and change according based on your liking and experience. This kind of trade is a CONTRA Trade. Going against the trend. You should be quick in either getting stopped out or taking profit. You will make lot more trades and will have lower loss and lower profits. Time frame for most of these trades can be 1 day to a week. Hope you are getting the point. Each kind of trade has a character to it. No trade is wrong or right as long as you have a plan as above. And you execute that plan to take those trades when you get them.
from oilman5...THIS IS GIFT OF VVONTERU...
 

oilman5

Well-Known Member
Some idea i shall compile from Raunak who is selflessly teaching
...............................
All credits go to that man & problem if any to mine
.................................
List of Trading Strategies (This list will be updated as new strategies are posted).
Trading strategy using TA ...........by Raunak

Intraday Strategies

1. Rectangular breakout for Intraday Purpose (With AFL)
2. Using 5-Min Charts for Profit (Ascending triangle)
3. 15 - Minute Chart Breakout
4. 15 Min Intraday Setup
5. Classical Gap Setup for Intraday Trades
6. RSI and Bollinger Band Setup on 60 Minute Time Frame

Daily Strategies

1. Retangular Consolidation Pattern
2. Failed double top - Daily Pattern
3. 5 Day Momentum Trading Strategy (With AFL)
4. RSI Divergence Strategy using Daily Chart
5. Dual Time Frame Momentum Strategy
6. Using a trending Indicator (ADX) efficiently
7. Trading Positive Divergence on Daily Time Frame
8. Swing Trading with MACD and Stochastics
9. Trading Setups by Apurv

Weekly Strategies

1. 2-3 Week Swing Trade Setup
2. 3-4 Days Swing Setup (With AFL)
3. EMA Cross Over System
4. Turtle Soup Plus One (With AFL to spot the pattern)

Other Useful Posts

1. Position Sizing in Investments
2. Importance of Data Validation and Data Accuracy
3. Importance of Getting in and Getting out of Trades
4. The "What If" Syndrome
5. Futures or Equities
6. Picking the right kind of stocks for Swing Trading
7. Setting Stop Losses
8. Position Sizing Techniques
9. Setting Stop Losses Using Historical Volatility
10. Focussed Approach versus Diversified Approach
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I would certainly provide you with the kind of sources you want. But I'd like you to specify what you exactly want. As far as I am concerned, I use some standard setups for each time frame.

Weekly trades: I rely a lot on rectangle patterns clubbed with MACD, ADX, Trendlines, Volumes

Daily Trades: I rely on classic A-B-C pattern clubbed with MACD, Volumes and ADX

Intraday Trades: I use two setups (Rectangle pattern and Sure trend pattern) with MACD and MA.

As I explained the weekly setup in my previous post, I will be explaining the daily and intraday setups in the following posts.

So to understand what I do, you will require basic understanding in,

1)Candlesticks
2)Macd
3)Adx
4)Volumes
5)MA - Moving Averages
6)Basic technical patterns
7)Trendlines
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RECTANGULAR PATTERN ON WEEKLY BASIS


Tools – Candlestick/Bar Chart, ADX (14) and MACD Oscillator with standard settings

Trade Setup – The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. The pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either direction. This pattern is extremely effective and provides with good risk/reward ratio. I chose high beta stocks to cash in on the moves as quickly as possible.

Time Validity - I trade this pattern only on weekly charts. The reason behind this is simple. The more the data, the more reliable the pattern. Thus data and patterns on monthly charts are certainly more reliable than weekly chart. Some analysts do say that the weekly pattern should not extend beyond certain weeks. However, my research indicates that this condition may or may not hold true. Personally, I prefer the formation rather than the time frame.

When does it occur - This pattern can be found during consolidations, new highs and new lows. Some books do indicate that these patterns are typically consolidation patterns but I have found these patterns effective in nearly every situation.

How to trade it - Refer to the chart below. What we see is that HCC forms a bottom by forming a rectangle pattern. Usually there must be 4 points of contact in the pattern (as marked in the figure). However, in some extreme cases I have seen points stretching to 6-8. Volumes during the pattern should diminish and the NDI should be greater than PDI. Though NDI is greater than PDI, the stock instead of falling further consolidates in a range. This usually is the first clue for the stock validating the pattern. As the pattern develops and begin to show strength, the volumes, ADX (14) and PDI all start to pick up. This is usually the second clue and beyond this only the breakout confirmation is required. The breakout confirmation is usually recommended as validation of pattern breach. However, I personally prefer to see a gap up breach (check chart). I have found that gap up along with the previous clues mentioned works exceptionally well for this pattern. The stock usually runs up quite fast and doubles in near term. Though the gap up is rare, but if you find one, then latch on to it. Keep in mind the slope of MACD while buying. It should be positive and should have an upward bias.

Target - Add the range of the rectangle to the breaching level. This is the minimum target that can be achieved. The maximum cannot be predicted.

STOPLOSS - I would prefer not to refer to stop loss levels as every trader is different in having his own rules of money management. Please use your own rules for managing equity.

Usage - This pattern is effective in weekly and daily trades. However, I have also had considerable amount of success using it on intraday basis. If someone wants, I'll post how to use this in intraday setups.


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Raunak Agarwal

What makes trading so fascinating and, at the same time, difficult to learn is that you really don't need lots of skills; you just need a genuine winning attitude.
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RECTANGULAR PATTERN ON INTRADAY BASIS

This is the "heart" of my day trading. And I hope it will benefit all.

Tools – Candlestick/Bar Chart (5 Minutes), MACD Oscillator with standard settings, Support and Resistance levels on 5 Minute chart

Trade Setup – The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. The pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either direction. This pattern is extremely effective and has occurred nearly 70 times in the past 11 months on Nifty. On an average one can find at least 3-5 trading days in a month where this pattern forms. The average points to capture on one particular move are about 20-60. These figures on based on Nifty analysis. However, with 50 high beta futures stock, this pattern is bound to occur in many stocks on daily basis. Top 48 beta stocks exhibit this pattern atleast 1-2 times. So on different days you might get different stocks exhibiting this pattern.

Buy Setup – A typical buy setup occurs when the entity breaks out on the upside after trading in a horizontal range for most of the day. Buy at the closing of the ‘breakout’ candle and keep a stop loss at the low of the previous candle. MACD slope in this setup should largely be up. The risk reward ratio of this setup is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25-35 points.

Sell Setup – A typical sell setup occurs when the entity breaks out on the downside after trading in a horizontal range for most of the day. Short at the closing of the ‘breakout’ candle and keep a stop loss at the high of the previous candle. MACD slope in this setup should largely be down. The risk reward ratio of this setup is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25-35 points.

Important Notes – Look at the slope of MACD when you enter the trade. Also, always take a note of where prices are trading with respect to their support and resistance.

Have patience and you will see this pattern occurring regularly.


I am posting two out of many examples I have for NIFTY alone. If you want to see this for individual stocks then let me know.
Trailing stop - If one wants, in a short sell setup, the moment the current candle's high is taken out, the position can be squared off. However, the drawback with this is that often prices tumble again and the good move is missed out. I have researched 3 years of Intraday data and what I have found is that it is better not to keep a trailing loss. Instead what I do is that for NIFTY I keep a target of 20 points and keep the market running down. If the market turns around, then I square off the position the moment my 20 points profit is in threat. So this way, the minimum I make is 20 and the maximum is what luck throws at you.

Exit - Again this is subject to the choice of the trader. Out of 183 times (in 3 years) that this pattern has occurred, the NIFTY has fallen in the range of 20-30 '63' times and rest results vary. Hence, the minimum would be 20. I have a lot of trading capital and hence I take up huge positions in order to compensate for any loss in potential points. Hence, as a trader one must decide how much points he wants. For some 10-15 points is too much and for others sky is the limit.
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Dinesh .. As far as I am concerned ... I don't use oscillators on such small time frame ... the reason is simple ... over the period of time, the more data you plot your indicators on the more accurate results you get ... Hence going by this logic, how can you expect a 5-min chart based oscillator to give accurate results ...

One thing that you must remember is that Oscillator values are the effect ... they themselves are not the cause for price to move ... only when 'price' moves does the value of oscillator change ...

Hence Price is the cause and oscillator values is the effect ... unless and untill you are a swing trader there is no point looking in oscillators for such small time frame ...

But if still you want to know ... then I would use 13 and 5 for MACD and 3 for signal line ... however you will get many whipsaws out of such small time frame ... if you are a swing trader ... either switch to 60 Min chart or 30 min chart .. nothing less than this ...

If you want to use a 5 - min chart ... then trust price patterns and volumes activity on such smaller frame ... I will be posting how to use 5 min chart frame for profits ...
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Ascending Triangle on 5 - Min Chart

Tools – Candlestick/Bar Chart and Volume(Color Coded). Since 5-min chart is extremely small time frame, I prefer not to use any oscillator or indicator.

Trade Setup – The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (futures based stocks) or the Index. The pattern to look out is usually a horizontal range on the top and higher lows on the bottom. This pattern is extremely effective and provides with good risk/reward ratio on 5-min chart. Essentially can be used as an effective swing trade strategy.Those with sizable cash in portfolios can choose futures stocks for this pattern (leverage advantage). I'll use a very recent example to demonstrate the use of the pattern.



Time Validity - I trade this pattern only on 5-Min chart. The reason behind this is based on my own research. Ascending triangles which occur on daily or weekly charts either dont complete fully or give false breakouts. On analyzing 5-min charts I found that these patterns are highly effective on this time frame.

When does it occur - This pattern can be found during consolidations when a stock pauses before moving higher. Higher bottoms in this pattern indicates bullish momentum being built up.

How to trade it - Refer to the chart below. What we see is that Aditya Birla Nuovo has recently finished a ascending triangle pattern. It formed a nice horizontal base (A,B and C) around 895 levels with it constantly forming higher bottoms (1,2,3,4,5,6,7). The stock eventually broke out from these levels and is trading at 909 currently. The ideal setup would be to buy on breakout only when there is huge increase in volume activity around breakout levels (refer chart).

Target - Add the range of the ascending triangle to the breaching level. In this case it would be the vertical distance between point 1 and A (roughly about 35 points).

STOPLOSS - Use point 7 as stoploss levels. We would ideally want the triangle to fall out completely before deciding that it is a false one.

Important Points - Along with the standard points mentioned above, there are a few points I would like to share in order to judge the strength of the pattern.

1) Strength of Horizontal Top Line - Ideally there should be atleast 2-4 points of contact made with the horizontal top line. In this case we have had 3 point of contacts marked as A, B and C.

2)Strength of Trendline - Number of point of contacts made with the trendline determine the strength of it. In our case we have 7 point of contact. This is brilliant. Ideally I would like to see 3-4 point of contact.

3) Strength of the points (A to C and 1 to 7) - We need to check whether these points are of any use or not. Plotting points is not difficult. However testing them is difficult and important. A simple way to do this is to monitor the volume activity. Look below each major point (1 to 7) how volume acivity picks up as soon as the price reaches the trendline. High volume at these points resemble force (demand) and hence make these points important. I have circled the volume activity underneath each point.

4) Strength of Pattern - When the above mentioned points are in place, then the only thing left to verify is the time of the breakout. Ideally the pattern must breakout before the lines converge. At point 7 the pattern is 70-75% complete and hence this is the right time of breakout.

Ultimately always remember that no pattern is fool proof. In this particular case we have found a very healthy pattern and we can just hope this blossoms into profit. I have huge positions in this stock. Hope this works




Those interested in using Moving Average systems (Price crossovers) to trade can use these Parameters for ADITY BIRLA NUOVO (5 - min chart only)
Buy Average:60 EMA
Sell Average: 30 EMA
Short Average: 35 EMA
Cover Average: 5 EMA
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Originally Posted by bunny
Not always true, I have seen an ascending triangle breaking downwards on many occasions, and similar behavior with descending triangle too.

Well said ... The way I see it ... if a pattern fails ... its an awesome opportunity ... some of the best trades (in the opp direction) occur when patterns fail ... In every faliure there exists an opportunity ....
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i am talking about the normal market behaviour. in norm market behaviour the ascending and descending triangles work, but when on peaks and bottom can reverse any times... Reversals are always there...to identify them you need to include more studies...for eg. If you consider the ascending triangle to be good buy signal in overbought stochastics, declining rsi and crossing averages then no body can do any thing. Then nothing can be done .so its better that we introduce the methods one by one if it is a beginners data...and thn move on to next step...the reversal of ascending or descending triangle can be predicted by various method including divergence, volume etc. But some things are rather learnt practically and step by step. it is much better if you try to figure the formations ur self....it will give you practice and help identify the trend for this patter....try to identify it on various time frames like on intraday, daily or weekly charts....try to figure out what they do on specific movement...if opposite is occuring in the formation then try to look for the reason for opposite movement....hope you will find the answer....more you will analyse more you will kno.w....just do your homework.....later ............The problem with MACD is that it plots an average of an average of an average.
This is an extremely lagging indicator. As price moves first and MACD
second it is much more useful for longer-term trends. As a rule of thumb it
is lagging 5 periods on a candle chart. Consider using this on a 10-minute
chart, it is lagging 50 minutes. How useful can this be in day trading? However,
when picking out a longer-term trend, a five-day lag may not be too
harmful considering the time you intend to hold the position
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15- Min Breakout Setup

Tools – Candlestick/Bar Chart

Trade Setup –This pattern is very similar to the horizontal intraday pattern discussed earlier. The difference lies in the time frame (15-Min). Since the pattern forms over 3-4 days, it is more reliable than the intraday setup. The pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either direction. It is not necessary to select high beta stocks in this case. The pattern completes (breakouts) on a single day and the position for the same can be closed out as the day progresses.

Time Validity - Time validity of this pattern is extremely effective on 15- Minute charts. This range is built up typically every month on stocks which are seeing a consolidation or range movement. Once you get an eye for this pattern, you will see it occurring on a regular basis.


How to trade it - Refer to the chart below. ABAN gets in a range for 3-4 days continously. Then it eventually breaks out on huge volumes. This is a typical setup and the stock should be bought at the breakout. I have not used any indicator on purpose as there is no need to complicate the pattern.


Target - I dont believe in predicting the target. Hence, what I do is I square off my position once the stock moves 1-2%. For those who believe in targets, you can add the range of the pattern to the breakout point. The stock usually goes to that level. In ABAN's case, the range is 33Rs and it breaksout at 1186. Hence add 33 Rs to 1186 and that should be your target.

STOPLOSS - I would prefer not to refer to stop loss levels as every trader is different in having his own rules of money management. Please use your own rules for managing equity. I split the range of the pattern into half and the number of points I get is my stoploss.

Usage - This pattern is effective 15-Min chart. Every now and then you will find stocks which exhibit this pattern. I usually look at all the stocks that are in the futures segment.


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2-3 Week Swing Trade Setup

Requirement – Basic Knowledge of Candlestick chart with Stochastic Indicator (8,3,3) Settings. Simple moving Avg (22 period) and Simple Moving Average (50) Period.

Brief Introduction – I came across this setup while reading a book on trend trading. This setup is extremely useful for weekly swing trades. At first this setup might look confusing, but I assure you once you master this, it is going to be one of the most rewarding setups you have come across. In some books this is also referred as the "Pullback Setup". What we need is a trending stock in either direction of the market. Trend can be identified by the slope of 22 and 50 day moving average. I will explain the buy side of the setup as once you understand this, you will easily apply it on the sell side as well.

Trade Setup - Pick a stock which is trending upwards with the slope of 22 day SMA and 50 day SMA being up. A typical setup occurs when the stock runs up a bit and then traces back to these averages. In some cases this stock might trace back to the 22 day SMA while in others it might trace to 50 day SMA. To identify which is the valid entry point, we need to have basic knowledge of candlestick patterns. We enter a stock WHEN the stock retraces back to either of the averages with stochastic (8,3,3) buy signal below or at 30 and with "doji", "bullish engulfing" or "hammer" being formed. All these conditions have to be validated before entering the setup. My experience says that most of the time a "doji" or a "hammer" is formed.

Example - In an example shown below, YesBank has been in an uptrend since early May. The stock has 22 and 50 day SMA in an uptrend. Notice how the stock has retraced to the 22 day SMA and formed a "doji" or "hammer" with the stochastic(8,3,3) giving a buy signal at or below 30. However, the slope of the averages must be largely up even during the retracement. I have marked the entry points with a circle where doji or hammer is formed with prices retracing to the averages and the stochastic (8,3,3) signalling a buy. All these CONDITIONS must be satisfied.

STOPLOSS - Unlike my other posts, here I would like to emphasize how to set a stop loss. If you are trading from a swing perspective, then keep a stop loss of 2% on the trade. I say 2% because when the trades are right, the gains are usually 5-8%. If you are trading from long term perspective then keep stoploss at the previous swing low.

Usage - This pattern can be used on DAILY charts for weekly swing trades or on daily charts for long term trend trading.



Please feel free to ask any doubts and if you want I will post one example for the same setup for shorting stocks.
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These parameters are not for intraday ... but they work well for 2-3 days time frame ... whipsaws will always be thr till MA exist ... but these parameters take care of most of em ...

Buy: When Close > 0.5% above 45 period SMA
Short: When Close > 0.5% below 70 period SMA

Parameters work particularly well for NIFTY.

.................................................. ....

1. How to select stocks for swing trading
2. Can we use bollinger bands along with this
3. If we can use means, what is the setup for that

Thanks in advance

1. I had mentioned how to select stock for this strategy. The slope of MA(50) should be up. It should not be sideways.
2. You can use bollinger bands with it. However you will have to research on which setup would be best for the stocks. The method given above by me works well in our market.
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think you want to bottom pick stocks (to buy) and Short the stock at peak. There is no sure shot way to achieve this. However, I will post a high probable technique from which you can do this.

............................
.e. for short: instead of 70 days sma , will it not do with 45 or 50 . I mean to short when close > 0.5% below 50 days sma.

Well, it might or might not ... I mentioned 70 days because I regularly use it ... and have back tested results with it ...

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Originally Posted by daitya
Which timeframe...target price and stoploss should be used..??

5-min Chart Time frame ... Am not a expert in setting targets ... so I dont know about it ... but typically u can use fibonacci "extensions" for it... and stop loss is something which depends on the risk apetitie of every trader .Hence follow ur own money management rules....

Remember one thing .. how much ever you try ... whichever "system" or strategy one comes out with ... making money in intraday trades is still difficult ... Using intra-day chart for 3-5 days is fine ... but opening and closing the position on the same day is never easy ...

Why run behind Nickels and Dimes when you can outrun the Dollar ??? Ask this to yourself.

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3-4 Days Swing Setup

Requirement – Candlestick chart/Bar Chart with MA(150), Stochastic Indicator (6,3,3) and RSI (3).

Brief Introduction – This is a typical forex system setup which works well in the stock markets as well. I dont quite remember but I think I saw this setup once on Alexander Elder's DVD presentations. This setup works well in trending market and like all other systems, fails in range bound markets. The advantage of this setup is that it assumes a maximum loss of 1.5-2.0% (you can use your own momey management rules) on a trade and hence can loose less. If there is a gap up or gap down against your trade, then like other systems, even this system would give you losses. Usually when the trade goes right, the returns are good and in a span of 3-4 days. This pattern does not work well on all stocks. On some stocks though, it works like charm.

Trade Setup (Buy) - Pick a stock which is trending upwards with the slope of 150 day SMA being up. We enter a stock WHEN the stochastic (6,3,3) gives buy signal (cross) below 30 and with rsi(3) being below 20. All these conditions have to be validated before entering the setup. .

Example - In an example shown below, YesBank has been in an uptrend since early May. There are two signals chosen of this stock. In one case the stock did give the signal, but got stopped out. Eventually though in 2 days time it did move up significantly. In other case, the stock gave a buy in December at 246 and moved to 272 in a matter of 3-7 days. Why I chose Yes Bank? Well, I love this stock. Pretty active and gives good set-ups for swing trades.

STOPLOSS - This set-up usually picks out bottom/top of a trending stock. I usually use a stop loss of 3-4%. Which might be huge for some traders, but it suites my risk appetite. You can use a stop loss of 1.5 - 2.5%.

Usage - This pattern can be used on DAILY charts for 3-5 day swing trades.

..................However I have two points to make.

Firstly, you are using Robert Miner's Dual time frame strategy. Now you haven't taken into consideration ABC correction phase and time retracements. In my opinion you are missing out on very important factors. You have to consider ABC correction wave and time retracement. It's like driving a car without steering and brakes. ABC correction phase (is steering; tells you whether market is in correction or trend) and time retracement (is brake; it tells you when to stop). Hence, I will encourage you to use these two important points in your trade. It's better to master a setup rather than mastering a part of it.

Secondly, since you are relying on fibonacci retracement, I would advise you to use trend lines with it. Using trendlines, fibonacci and candlesticks together give some of the most amazing trades. Once you master this setup, you will start buying much lower and will make larger gains. If I were you, I would have entered the trade once the prices would have retraced back to zone 'A' .
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Raunak, when you enter a 3-4 days swing trade, do you go for a fix target or you square off your position on 4th day at whatever best price you get...

That's a very subjective question to which I have no simple answer.

What I do is go behind my gut instinct. I rather rely on the 'Feel' of the stock. I keep most of my trades till the 4th day... While making a loss, I exit on day 1.
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1. Robert Miner's Strategy is really good. Among the few strategies I have seen, the dual time frame strategy does make sense and does generate profits. Infact, try and use it in intraday trades too. It will benefit you. Any system (even as basic as a MA corssover system) is good till the concerned person using that has discipline.

2. Dynamic Trader software - See, any software is good till it has basic TA tools. TA software is not a magic wand. It is just a tool. It is you who has the magic. Till you are using Amibroker/Metastock/TradeStation you should be fine.

3. Time retracement in Amibroker is present as Fibonacci time zones. It's not actually a retracement tool. I had mistakenly written it as time retracement. What Rober Miner has written about (I think in chapter 5) can be implemented by using fibonacci time zones.

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5 - Day Momentum Trading Method

Requirement – Candlestick Charts/Bar Charts with Stochastic Indicator (8,3,3) Settings and ADX (14), PDI (14) and MDI (14).

Brief Introduction – This setup belongs to Jeff Cooper known as one of the finest momentum traders. The setup is simple to understand and implement. This setup is typically for trending markets and will work fine with uptrending and downtrending markets. Please note that, while uptrends, IGNORE short signals and while dowtrends IGNORE buy signals. The success rate of this setup is 50%. However, since the losses are so small, you will have trades with large gains.

Trade Setup - Pick a stock which is trending upwards. A typical setup occurs when the stock runs up a bit and then retraces back (typically between 38.2 and 50% level). To identify which is the valid entry point, stochastic (8,3,3) should give a buy signal below or at 30 and ADX(14) should be above 35 with PDI (14) greater than MDI (14).

Example - In an example shown below, Allahabad Bank has given a buy signal on 8th of October 2009. Stochastic has crossed below 30 with ADX(14) greater than 35 and Positive divergence (14) greater than Negative divergence. Buy on 9th October above the previous day's high and suqare off the position typically on the 4th or 5th day.

StopLoss - Stoploss is below the low of the buy signal day.

Usage - This pattern can be used on DAILY charts for 3-4 day trades
-------------------------------------------------
//5 Day Momentum Method. Modify Accordingly
// Stop Loss set at 2%. Please follow the stop loss mentioned in post

Buy = ADX(14)>35 AND PDI(14)>MDI(14) AND Cross(StochK(8,3),StochD(8,3,3)) AND StochK(8,3)<30;
Sell = Ref(Close,4);
Short=ADX(14)>35 AND MDI(14)>PDI(14) AND Cross(StochD(8,3,3),StochK(8,3)) AND StochK(8,3)>70;
Cover=Ref(Close,4);

Filter = Buy OR Short;
AddColumn(IIf(Buy,High,Null),"Buy Only Above",1.3);
AddColumn(IIf(Buy,High*0.98,Null), "Buy Stop Price",1.2);
AddColumn(IIf(Short,Low,Null),"Short Only Below",1.2);
AddColumn(IIf(Short,Low*1.02,Null),"Short Stop Loss",1.2);
AddColumn(ADX(14),"ADX (14)", 1.2);
AddColumn(PDI(14),"PDI",1.2);
AddColumn(MDI(14),"MDI",1.2);
AddColumn(StochK(8,3),"StochK",1.2);
Sell = ExRem(Sell,Buy);
Cover = ExRem(Cover,Short);
PlotShapes(IIf(Buy, shapeSquare, shapeNone),colorGreen, 0, L, Offset=-20);
PlotShapes(IIf(Buy, shapeSquare, shapeNone),colorLime, 0,L, Offset=-30);
PlotShapes(IIf(Buy, shapeUpArrow, shapeNone),colorWhite, 0,L, Offset=-25);
PlotShapes(IIf(Short, shapeSquare, shapeNone),colorRed, 0, H, Offset=20);
PlotShapes(IIf(Short, shapeSquare, shapeNone),colorOrange, 0,H, Offset=30);
PlotShapes(IIf(Short, shapeDownArrow, shapeNone),colorWhite, 0,H, Offset=-25);
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Yes, I asked for high probable level. I understand no one can give sure 100% high and low levels. Thanks.

try to understand the price working with various indicators....also the price and volume movement....you will get your answer....
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15-Min Intraday Setup

Requirement – Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)

Brief Introduction – I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.

Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between 20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high. Enter a short position at this point and book profits according to your own appetite.

Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.

StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.

Usage - This pattern can be used on 15Min charts for day trades.

1) Firstly, there is NO TRADE which is a lucky trade. Give yourself some credit for this wonderful piece of analysis.

2) Now, since you are using Robert Miner's Dual time frame Strategy, I will show you how to execute it with greater efficiency so that you can enter the trade early. Also, with this point, you will know that it wasn't luck that favoured you. But it was your analysis. Look at the chart below, I have marked three letters A,B,C. THIS is the key to the setup. At point 1, there is a new swing high. From there on there is the first swing low (marked as A). Then the prices rally a bit to form mark B. Now to determine whether the markets will move higher, the low at A should be taken out and new low should be formed. Then, after the new low is formed, the market must again move back in the range of A. When this happens, then, just above B you must enter the trade and hold on to it. This is what actually happens. Market from B forms a new low at C (low is a low even if it is just few paise below). Then from C, the prices move back to A range. This signifies that the new high is probably going to be made. Once B is taken out, you must enter and ride the trend. You entered at 145.5, whereas according to Rob Miner's work, you should have entered at 144. Hope you got my point.

3) Your usage of E-Wave and retracement was very good. Whether or not the ewave will complete is difficult to say. But once the A,B,C thing happens, it is more than likely that the new high is going to be formed. Targets as you have done can be measured from APP and Fib extensions (Internal and External). I hope you used the dual momentum setup with stochastic of two different time frames. You can plot both the stochastic on the same chart. Will be easier for you to analyse trades.


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could you please why ABC correction happening in market ?

The way I think, ABC is a way for uncertain traders to be driven out of the market. Now, lets say someone is not sure of this trade. The moment a new low is made (C), he will think of unwinding the position. Had he been an informed investor with faith on his analysis, then he would have seen the prices go back again in the 'A' range and would have profited. Those who are unsure about their own analysis and those who do not trade pragmatically are eventually driven out at point C.

could you please comment on mass physiology behind all popular setup like Bollinger Band etc ?[/B]

What exactly do u want to know ... please elaborate ..


one more question,please tell how to set two different Time Frame stochastic on same window in Amibroker?


Now if you are using 5min chart for smaller time frame, select the stochastic indicator and this will be stochastic for 5-min chart. Now if you want to use 30 min chart (larger time frame) and want to see level of stochstic of this then save the attached file in your indicator list as "Stochastic 30 Min" and then select indicator and press insert linked. Now you get two stochastic (one of 5 min chart and other of 30 min chart). Below is the code for stochastic 30 min (8,3,3).


// Save this afl as indicator in your C:/program files/ amibroker/formula/indicator folder ... name it stochastic 30 min
TimeFrameSet(2*in15Minute);
Plot(StochK(8,3),"Stochastic K 30 Minutes",colorRed,styleLine);
Plot(StochD(8,3,3),"Stochastic D 30 Minutes",colorBlue,styleLine);
TimeFrameRestore();
.................................................. ..
Failed Double Top - Daily Pattern


Tools – Candlestick/Bar Chart (Daily), Colour Coded Volume, 21 and 50 SMA

Trade Setup – This is a very powerful EOD setup which I came across during my early days of trading. It is one of my favourite EOD trading strategies. To walk you through this setup, I am going to explain it to you in various steps.

1. Trend Determination - There has to be a 'trend' in place for an effective reversal to kick in. Hence, the first step of this setup is to identify stocks which are trending. You can either do this through a trend line or you can use the method which I use. I usually plot 2 SMA (period 21 and period 50) and determine the trend of the stock by the slope of these averages. If 21 SMA and 50SMA do not touch for a while and both exhibit slope greater than 25 degrees, then the stock is in a very strong up trend. These are the kind of stocks we want to choose for this particular strategy.

2. The Pull-Back Phase - After, a descent run up, the stock forms a new high (1st Top) with heavy volumes and retraces back to the 21 SMA or 50 SMA. Usually the stock does not touch the 50 SMA. The stock usually forms a candlestick reversal pattern and head's off to make a new high.

3. The Trap (Top) - As the name suggests, this is the phase where a New High is formed. This is a new high, which is formed on very light volume and convinces many traders as a genuine high (breakout). It is here when many traders enter long positions in anticipation of a price rise. What essentially happens is that the prices fall back below the first top (within 2 days) and continue to slide down to the previous swing high. This dents the confidence of those who went long on the new highs and usually panic selling kicks in. The gain is quick in the set -up and the risk reward ratio is amazing.

Example - Oriental Bank recently formed this pattern. The stock was in an uptrend from september as determined by the slope of averages. The volumes at first top were high whereas at the second top they were low. The stock price fell below the previous top within 2 working sessions. Finally it fell back to the previous swing high.

Important Notes – Do NOT forget to look at the trend of the stock and the volumes. Finally, the prices must fall back within 2 days below the first top.

Stop Loss - Keep a strict stop loss of a close beyond the high of the 2nd top.


__________________
Raunak Agarwal
................................................. ..........................................
Now look above. How about an ascending triangle ?? Look at the black lines.

The key here is the present leg of wave being formed. This will determine whether we r in a horizontal range or ascending triangle. As of now just wait and watch. My gut feeling is that Yes Bank is trading a bit weak. If it takes out the current high on good volumes then the price would (and should) rise dramatically. But since it is little weak (not too much though) on daily charts, I'll wait n watch this script carefully.

One more thing ... your horizontal range isn't right .. thrs one bar (around 1) which is out of the range. Though some may say this is allowed, I'll still tell u this is not that valid. Rest time will tell .
....................
83.4 is the current swing low ... now it is trading above that level but also in symm triangle zone. One the price breaks down from the symm triangle, wait for 83.4 to be taken out. If on retracement the prices do not re-enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it should be a good trade.

...............................
if previous swing low or high taken out
by progressing complex correction .then
it is end of complex correction?

Yes. You will have two factors on your side.
1. Triangle breakout (strong sign)
2. Prev Swing low taken out (again a strong sign)

Add up volumes to check validity
.................................................. .................
had told you guys that I was trying a system which I had mentioned in My Stock Watch list thread. Well, since this is in testing phase, I'll post my list here.

The beauty of this system (mixture of Trend Following Systems and Mean Reversion Systems) is that it gives returns within 1-4 day of trades. It's a real time scan system and hence positions have to be taken between 15.15 - 15.30. I have got in house development done for the system's software. I'll be posting my results live here and will certainly release the system (with software) once it is successful. Results on backtesting the data were very good. But it is necessary to see if it works in real time. At times this system generates contradictory signals. Eg: If it gives BUY for a security on 4th Jan and then short for the same on 6th Jan, then earlier position have to be closed and new positions should be added. At present am tracking only 40(high beta stocks). I hope it works. Here are results for January along with today's results. CMP indicates closing price of signal generation day. Stop Loss is based on EOD prices.

[12 jan'2010]This is the final list as of 15.15 - 15.20

Banks and sugar stocks are looking weak.

For Short - BAJAJHIND, BANKINDIA,RENUKA,CENTURYTEX,IBREALEST, ICICIBANK,TATASTEEL

For Long - Wipro


Testing phase is on. Please don't trade.

Signals are based on closing prices. So, since we r seeing these at 15.20, It might be that (in very rare case) we might get one false signal.
__________________
--------------------------------------------------------------------------------

Since this is a T + 1 to T + 4 system (Maximum holding till 4 sessions), I am uploading performance of signals generated on 4th and 5th of this month. Four day cycle for these are over. On 6th and 7th there were no signals. And the next signal was on 8th, 11th and 12th (today). Will be uploading result when 4 day cycle ends for them.

--------------------------------------------------------------------------------

Signals for Today. I had posted these at 15.20. Just doing them again in proper format. Keep SL 5310 for NIFTY. Rest SL at 2.5%




CMP is the market price on the SIGNAL day
.................................................. ......
i had a query. the nifty short call was initiated at 5210 with a sl of 5340. so shoul we expect a fall of at least 200 points nifty considering the sl to be 130 points?

Watcher right above the image I had mentioned SL of Nifty as 5300 ... coz thts the next major level ... I think u missed this line ... refer back to the original post.. also today was T + 1 of the signal ... the signal takes maximum T + 3 to validate ... if not it has to be ignored ... still testing to lets see if we can modify a few things here n thr ...

These are the signals generated in 2009 for Nifty. As you may see, this strategy is effective (30% net return deducting brokerage at 0.03% each side + extra costs) for Day 1 trade. So, what I do is, if the Buy Nifty is generated today at 15.15, I buy the nifty and hold only for '1' day. If it gives me profit, then fine else I close my position at end of the day. In no circumstance do I take a loss of beyond 2.5%. I manually square off the deal. This is just a BTST or STCT strategy. You can see the list and get an average target. Hope this helps.


__________________
As per your 2-3 week swing trading set up, I have screened two scripts. Please let me know if my selection of stocks are correct as per your strategy.

1) INDHOTEL------uptrending stock with a pullback, hammer candle pattern formed on 13/01

2) SAIL----------uptrending stock with a pullback, I hope its bullish engulfing candle pattern on 13/01

Waiting for your reply.....

Sail has not given a Engulfing pattern .. it is more of a piercing one ... and in Indhotel I would have wanted the hammer to be a little more ideal (long shadow) ... for Indian Hot the patterns have formed at 38.2 retracement level ... it would have been good had it formed at 50% retracement ... for Sail though it has formed at 50% retracement ... which is good

Sail especially is looking good on the broader note ... Displaying more strength than Indian Hotel ... stop loss of 215 and 232 looks good ...
__________________
Do you mean fibanacce retracement level should be 50% and above for strong buy signal. Am I right in understanding your message. Please clarify me.

Finally regarding the entry price, target price and stop loss methods explained and followed by you in simple english will be really helpful.......

Yes it should be at 50 or between 38.2 and 50 ... for Sail it is exactly at 50 ...

Entry - if you are planning to take up 100 positions ... then first do a probe test ... this means .. first buy only 20% of your position once the stock crosses previous day's high ... If you then continue to see the stock showing strength over the past 2-3 days, then increase your position. This way, even if the stock goes against you, you will have less loss as you have invested only 20% of your position at first...

Target - I dont believe in target's ... so it's upto you when you want to exit .. or you can use your strategy ...

Stop loss - previous swing high ... or you can take 61.8% fib level
.................................................
Honestly I don't bel in back testing results ... there r so many dynamic things in the market (plus the human element) that back test results do not incorporate ... hence am testing it live .. lets see ...

......................................
Classical Gap Setup - Intraday Trades

Tools – Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)

Brief Introduction – Now, Let’s take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below indicates that today the market opened lower. Hence, the bidding today started much lower than yesterday’s lows. This means traders are expecting the market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same goes for upward gap.

Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative strength is when a stock is compared with a base entity (let’s say an index; Nifty). By using Comparative Relative Strength we compare whether the stock is outperforming NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to short stocks which underperform NIFTY.

Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT position when there is downward gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.

Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up in a stock that has reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.

Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.

Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.

Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money.




__________________
Raunak Agarwal
Punjllyod is giving a lot of false signals ... it is common for a stock to do so if its not trending ... we r planning to incorporate a trend identifier in the system so that better results can be given ..
prefer desktop based applications like Amibroker, Metastock , Tradestation ...

I can tell u how to add Comp Rel Strength indicator in them ...

..............................
promised the AFL is ready. AM posting the results of the strategy (3-4 Swing trade setup) and I must say results are pretty good.

Since you know I don't believe in giving targets, hence I measure the performance of the strategy in days. Here, since it is swing trade, i have measured the performance in two durations; 5 days and 10 days. I must say the results are pretty satisfying. In 2009, this strategy has generated 72 Buy signals and in 5 days from day of trade, the success rate has been 73%. When performance is measured in 10 days from trade, the success rate is 86%. Results are based on stocks trading in the Futures and Options segment. As mentioned, this strategy works well in Strong Trending stocks. Will be posting the AFL in sometime.

2009 ---> 5 day hold --> Trades 72 ---> Success 73%
2009 ---> 10 day hold -> Trades 72 ---> Success 86%

................................Entered SAIL at 242.95 (2-3 Week swing strategy). Closed at 240.85. Lets wait and watch.

Why did u exit ??? din u do a probe test ... U had a valid reason to enter ...

But did u have a valid reason to exit ??? I had a look personally at Sail .. its not looking bad at all

You had a swing trade for 2-3 weeks ... then y did u square off based on one day ...
__________________
I guess slope of 22 SMA ---Lupin----is flat, instead of up. Please correct me if I am wrong.

Tata motors -----satisfies the rule----however, I see that this script has ended in red last couple of days, even though market ended green last couple of days.

Your views on this Raunak.

Yes that was one of the reasons why Lupin is little weak compared to Tata motors ..

Tata motors meets requirements and though the stock has closed in red, I would still prefer it ... however since it is results season, I'd definitely do probe test entry in both stocks... the day previous day's high is taken out, entry should be made in small quantities.
__________________
Rajputz for EOD Stochastic 8,3,3 or 6,3,3 with a bullish candlestick pattern does give good next day results ...

.............................
RSI and Bollinger Band Setup

Tools – Candlestick on Hourly Time Frame and RSI (14)

Trade Setup – I just can't recollect where I read this setup. But, it is a very useful one of you apply it correctly. If you identify the stocks on which this setup works, then it is going to be very profitable. Usually, you should pick weak stocks for this setup. Stocks which are under performing the broader market or which are in intermediate down trend. Else you can get many false signals.

How to trade it - Look at the chart below. Bharti has been under performing the market for quite sometime now. If you look closely. The prices have crossed and closed above Bollinger band (upper) two times. On both occasions the RSI(14) was not above 70. Now, RSI is an indicator of strength and despite the price closing above the band, the RSI remains below 70 (does not exhibit strength). Hence, we then look for some sort of bearish confirmation on candlesticks (Doji, Hanging Man, Bearish Engulfing). The moment you get this confirmation, short the stock with stop loss being the highest price (of the previous two candles). In case of Bharti, in the first case we got a Doji whereas on the second case it was a variation of bearish engulfing pattern.

STOPLOSS - Stop loss is the highest price (high) of the previous two candles.

Usage - Can be used on 60 Minute time frame chart. You can use 15- Minute chart for entry.


__________________
Raunak Agarwal
--------------------------------------------------------------------------------

Stocks giving Buy signal According to our swing strategy

Sasken, GHCL, Nucleus, Jet Airways, LML, Lupin, SpiceTele, HDFC Bank, Religare

Please Do Not trade these signals ... Let's observe as everything is under test [15jan'2010]
.................
What Mr. Savant gives is not a blind proposition for investment. If you have the patience of going through his threads, you will indeed learn a lot. His returns are more than 100%. However the time duration is much longer.

What we do here are small trades and quick trades. These trades look attractive, but are only effective if you are an experienced trader. It is not to say that you won't make money here, but all am saying is that monitor these strategies for some time before committing even a paisa into them. Hence, what I'll advise you to do is that learn what suites you the best. But don't put in money straight away. If you loose during this, your appetite for learning will diminish exponentially. Follow Mr. Savant's stocks, invest in them and simultaneously learn from here. Once you learn and master something, then neither you will need Mr. Savant's thread nor this thread for making your own killing in the market.
.................................................. ...........
Now to identify weak stocks in Amibroker. Select comparative relative strength indicator and insert link it into the chart. The stocks which are under performing will have a negative slope ...
................................................. ..........................................
Now look above. How about an ascending triangle ?? Look at the black lines.

The key here is the present leg of wave being formed. This will determine whether we r in a horizontal range or ascending triangle. As of now just wait and watch. My gut feeling is that Yes Bank is trading a bit weak. If it takes out the current high on good volumes then the price would (and should) rise dramatically. But since it is little weak (not too much though) on daily charts, I'll wait n watch this script carefully.

One more thing ... your horizontal range isn't right .. thrs one bar (around 1) which is out of the range. Though some may say this is allowed, I'll still tell u this is not that valid. Rest time will tell .
....................
83.4 is the current swing low ... now it is trading above that level but also in symm triangle zone. One the price breaks down from the symm triangle, wait for 83.4 to be taken out. If on retracement the prices do not re-enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it should be a good trade.

...............................
if previous swing low or high taken out
by progressing complex correction .then
it is end of complex correction?

Yes. You will have two factors on your side.
1. Triangle breakout (strong sign)
2. Prev Swing low taken out (again a strong sign)

Add up volumes to check validity
.................................................. .................
had told you guys that I was trying a system which I had mentioned in My Stock Watch list thread. Well, since this is in testing phase, I'll post my list here.

The beauty of this system (mixture of Trend Following Systems and Mean Reversion Systems) is that it gives returns within 1-4 day of trades. It's a real time scan system and hence positions have to be taken between 15.15 - 15.30. I have got in house development done for the system's software. I'll be posting my results live here and will certainly release the system (with software) once it is successful. Results on backtesting the data were very good. But it is necessary to see if it works in real time. At times this system generates contradictory signals. Eg: If it gives BUY for a security on 4th Jan and then short for the same on 6th Jan, then earlier position have to be closed and new positions should be added. At present am tracking only 40(high beta stocks). I hope it works. Here are results for January along with today's results. CMP indicates closing price of signal generation day. Stop Loss is based on EOD prices.

[12 jan'2010]This is the final list as of 15.15 - 15.20

Banks and sugar stocks are looking weak.

For Short - BAJAJHIND, BANKINDIA,RENUKA,CENTURYTEX,IBREALEST, ICICIBANK,TATASTEEL

For Long - Wipro


Testing phase is on. Please don't trade.

Signals are based on closing prices. So, since we r seeing these at 15.20, It might be that (in very rare case) we might get one false signal.
__________________
--------------------------------------------------------------------------------

Since this is a T + 1 to T + 4 system (Maximum holding till 4 sessions), I am uploading performance of signals generated on 4th and 5th of this month. Four day cycle for these are over. On 6th and 7th there were no signals. And the next signal was on 8th, 11th and 12th (today). Will be uploading result when 4 day cycle ends for them.

--------------------------------------------------------------------------------

Signals for Today. I had posted these at 15.20. Just doing them again in proper format. Keep SL 5310 for NIFTY. Rest SL at 2.5%




CMP is the market price on the SIGNAL day
.................................................. ......
i had a query. the nifty short call was initiated at 5210 with a sl of 5340. so shoul we expect a fall of at least 200 points nifty considering the sl to be 130 points?

Watcher right above the image I had mentioned SL of Nifty as 5300 ... coz thts the next major level ... I think u missed this line ... refer back to the original post.. also today was T + 1 of the signal ... the signal takes maximum T + 3 to validate ... if not it has to be ignored ... still testing to lets see if we can modify a few things here n thr ...

These are the signals generated in 2009 for Nifty. As you may see, this strategy is effective (30% net return deducting brokerage at 0.03% each side + extra costs) for Day 1 trade. So, what I do is, if the Buy Nifty is generated today at 15.15, I buy the nifty and hold only for '1' day. If it gives me profit, then fine else I close my position at end of the day. In no circumstance do I take a loss of beyond 2.5%. I manually square off the deal. This is just a BTST or STCT strategy. You can see the list and get an average target. Hope this helps.


__________________
As per your 2-3 week swing trading set up, I have screened two scripts. Please let me know if my selection of stocks are correct as per your strategy.

1) INDHOTEL------uptrending stock with a pullback, hammer candle pattern formed on 13/01

2) SAIL----------uptrending stock with a pullback, I hope its bullish engulfing candle pattern on 13/01

Waiting for your reply.....

Sail has not given a Engulfing pattern .. it is more of a piercing one ... and in Indhotel I would have wanted the hammer to be a little more ideal (long shadow) ... for Indian Hot the patterns have formed at 38.2 retracement level ... it would have been good had it formed at 50% retracement ... for Sail though it has formed at 50% retracement ... which is good

Sail especially is looking good on the broader note ... Displaying more strength than Indian Hotel ... stop loss of 215 and 232 looks good ...
__________________
Do you mean fibanacce retracement level should be 50% and above for strong buy signal. Am I right in understanding your message. Please clarify me.

Finally regarding the entry price, target price and stop loss methods explained and followed by you in simple english will be really helpful.......

Yes it should be at 50 or between 38.2 and 50 ... for Sail it is exactly at 50 ...

Entry - if you are planning to take up 100 positions ... then first do a probe test ... this means .. first buy only 20% of your position once the stock crosses previous day's high ... If you then continue to see the stock showing strength over the past 2-3 days, then increase your position. This way, even if the stock goes against you, you will have less loss as you have invested only 20% of your position at first...

Target - I dont believe in target's ... so it's upto you when you want to exit .. or you can use your strategy ...

Stop loss - previous swing high ... or you can take 61.8% fib level
.................................................
Honestly I don't bel in back testing results ... there r so many dynamic things in the market (plus the human element) that back test results do not incorporate ... hence am testing it live .. lets see ...

......................................
Classical Gap Setup - Intraday Trades

Tools – Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)

Brief Introduction – Now, Let’s take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below indicates that today the market opened lower. Hence, the bidding today started much lower than yesterday’s lows. This means traders are expecting the market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same goes for upward gap.

Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative strength is when a stock is compared with a base entity (let’s say an index; Nifty). By using Comparative Relative Strength we compare whether the stock is outperforming NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to short stocks which underperform NIFTY.

Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT position when there is downward gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.

Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up in a stock that has reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.

Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.

Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.

Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money.




__________________
Raunak Agarwal
Punjllyod is giving a lot of false signals ... it is common for a stock to do so if its not trending ... we r planning to incorporate a trend identifier in the system so that better results can be given ..
prefer desktop based applications like Amibroker, Metastock , Tradestation ...

I can tell u how to add Comp Rel Strength indicator in them ...

..............................
promised the AFL is ready. AM posting the results of the strategy (3-4 Swing trade setup) and I must say results are pretty good.

Since you know I don't believe in giving targets, hence I measure the performance of the strategy in days. Here, since it is swing trade, i have measured the performance in two durations; 5 days and 10 days. I must say the results are pretty satisfying. In 2009, this strategy has generated 72 Buy signals and in 5 days from day of trade, the success rate has been 73%. When performance is measured in 10 days from trade, the success rate is 86%. Results are based on stocks trading in the Futures and Options segment. As mentioned, this strategy works well in Strong Trending stocks. Will be posting the AFL in sometime.

2009 ---> 5 day hold --> Trades 72 ---> Success 73%
2009 ---> 10 day hold -> Trades 72 ---> Success 86%

................................Entered SAIL at 242.95 (2-3 Week swing strategy). Closed at 240.85. Lets wait and watch.

Why did u exit ??? din u do a probe test ... U had a valid reason to enter ...

But did u have a valid reason to exit ??? I had a look personally at Sail .. its not looking bad at all

You had a swing trade for 2-3 weeks ... then y did u square off based on one day ...
__________________
I guess slope of 22 SMA ---Lupin----is flat, instead of up. Please correct me if I am wrong.

Tata motors -----satisfies the rule----however, I see that this script has ended in red last couple of days, even though market ended green last couple of days.

Your views on this Raunak.

Yes that was one of the reasons why Lupin is little weak compared to Tata motors ..

Tata motors meets requirements and though the stock has closed in red, I would still prefer it ... however since it is results season, I'd definitely do probe test entry in both stocks... the day previous day's high is taken out, entry should be made in small quantities.
__________________
Rajputz for EOD Stochastic 8,3,3 or 6,3,3 with a bullish candlestick pattern does give good next day results ...

.............................
RSI and Bollinger Band Setup

Tools – Candlestick on Hourly Time Frame and RSI (14)

Trade Setup – I just can't recollect where I read this setup. But, it is a very useful one of you apply it correctly. If you identify the stocks on which this setup works, then it is going to be very profitable. Usually, you should pick weak stocks for this setup. Stocks which are under performing the broader market or which are in intermediate down trend. Else you can get many false signals.

How to trade it - Look at the chart below. Bharti has been under performing the market for quite sometime now. If you look closely. The prices have crossed and closed above Bollinger band (upper) two times. On both occasions the RSI(14) was not above 70. Now, RSI is an indicator of strength and despite the price closing above the band, the RSI remains below 70 (does not exhibit strength). Hence, we then look for some sort of bearish confirmation on candlesticks (Doji, Hanging Man, Bearish Engulfing). The moment you get this confirmation, short the stock with stop loss being the highest price (of the previous two candles). In case of Bharti, in the first case we got a Doji whereas on the second case it was a variation of bearish engulfing pattern.

STOPLOSS - Stop loss is the highest price (high) of the previous two candles.

Usage - Can be used on 60 Minute time frame chart. You can use 15- Minute chart for entry.


__________________
Raunak Agarwal
--------------------------------------------------------------------------------

Stocks giving Buy signal According to our swing strategy

Sasken, GHCL, Nucleus, Jet Airways, LML, Lupin, SpiceTele, HDFC Bank, Religare

Please Do Not trade these signals ... Let's observe as everything is under test [15jan'2010]
.................
What Mr. Savant gives is not a blind proposition for investment. If you have the patience of going through his threads, you will indeed learn a lot. His returns are more than 100%. However the time duration is much longer.

What we do here are small trades and quick trades. These trades look attractive, but are only effective if you are an experienced trader. It is not to say that you won't make money here, but all am saying is that monitor these strategies for some time before committing even a paisa into them. Hence, what I'll advise you to do is that learn what suites you the best. But don't put in money straight away. If you loose during this, your appetite for learning will diminish exponentially. Follow Mr. Savant's stocks, invest in them and simultaneously learn from here. Once you learn and master something, then neither you will need Mr. Savant's thread nor this thread for making your own killing in the market.
.................................................. ...........
Now to identify weak stocks in Amibroker. Select comparative relative strength indicator and insert link it into the chart. The stocks which are under performing will have a negative slope ...
................................................. ..........................................
Now look above. How about an ascending triangle ?? Look at the black lines.

The key here is the present leg of wave being formed. This will determine whether we r in a horizontal range or ascending triangle. As of now just wait and watch. My gut feeling is that Yes Bank is trading a bit weak. If it takes out the current high on good volumes then the price would (and should) rise dramatically. But since it is little weak (not too much though) on daily charts, I'll wait n watch this script carefully.

One more thing ... your horizontal range isn't right .. thrs one bar (around 1) which is out of the range. Though some may say this is allowed, I'll still tell u this is not that valid. Rest time will tell .
....................
83.4 is the current swing low ... now it is trading above that level but also in symm triangle zone. One the price breaks down from the symm triangle, wait for 83.4 to be taken out. If on retracement the prices do not re-enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it should be a good trade.

...............................
if previous swing low or high taken out
by progressing complex correction .then
it is end of complex correction?

Yes. You will have two factors on your side.
1. Triangle breakout (strong sign)
2. Prev Swing low taken out (again a strong sign)

Add up volumes to check validity
.................................................. .................
had told you guys that I was trying a system which I had mentioned in My Stock Watch list thread. Well, since this is in testing phase, I'll post my list here.

The beauty of this system (mixture of Trend Following Systems and Mean Reversion Systems) is that it gives returns within 1-4 day of trades. It's a real time scan system and hence positions have to be taken between 15.15 - 15.30. I have got in house development done for the system's software. I'll be posting my results live here and will certainly release the system (with software) once it is successful. Results on backtesting the data were very good. But it is necessary to see if it works in real time. At times this system generates contradictory signals. Eg: If it gives BUY for a security on 4th Jan and then short for the same on 6th Jan, then earlier position have to be closed and new positions should be added. At present am tracking only 40(high beta stocks). I hope it works. Here are results for January along with today's results. CMP indicates closing price of signal generation day. Stop Loss is based on EOD prices.

[12 jan'2010]This is the final list as of 15.15 - 15.20

Banks and sugar stocks are looking weak.

For Short - BAJAJHIND, BANKINDIA,RENUKA,CENTURYTEX,IBREALEST, ICICIBANK,TATASTEEL

For Long - Wipro


Testing phase is on. Please don't trade.

Signals are based on closing prices. So, since we r seeing these at 15.20, It might be that (in very rare case) we might get one false signal.
__________________
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Since this is a T + 1 to T + 4 system (Maximum holding till 4 sessions), I am uploading performance of signals generated on 4th and 5th of this month. Four day cycle for these are over. On 6th and 7th there were no signals. And the next signal was on 8th, 11th and 12th (today). Will be uploading result when 4 day cycle ends for them.

--------------------------------------------------------------------------------

Signals for Today. I had posted these at 15.20. Just doing them again in proper format. Keep SL 5310 for NIFTY. Rest SL at 2.5%




CMP is the market price on the SIGNAL day
.................................................. ......
i had a query. the nifty short call was initiated at 5210 with a sl of 5340. so shoul we expect a fall of at least 200 points nifty considering the sl to be 130 points?

Watcher right above the image I had mentioned SL of Nifty as 5300 ... coz thts the next major level ... I think u missed this line ... refer back to the original post.. also today was T + 1 of the signal ... the signal takes maximum T + 3 to validate ... if not it has to be ignored ... still testing to lets see if we can modify a few things here n thr ...

These are the signals generated in 2009 for Nifty. As you may see, this strategy is effective (30% net return deducting brokerage at 0.03% each side + extra costs) for Day 1 trade. So, what I do is, if the Buy Nifty is generated today at 15.15, I buy the nifty and hold only for '1' day. If it gives me profit, then fine else I close my position at end of the day. In no circumstance do I take a loss of beyond 2.5%. I manually square off the deal. This is just a BTST or STCT strategy. You can see the list and get an average target. Hope this helps.


__________________
As per your 2-3 week swing trading set up, I have screened two scripts. Please let me know if my selection of stocks are correct as per your strategy.

1) INDHOTEL------uptrending stock with a pullback, hammer candle pattern formed on 13/01

2) SAIL----------uptrending stock with a pullback, I hope its bullish engulfing candle pattern on 13/01

Waiting for your reply.....

Sail has not given a Engulfing pattern .. it is more of a piercing one ... and in Indhotel I would have wanted the hammer to be a little more ideal (long shadow) ... for Indian Hot the patterns have formed at 38.2 retracement level ... it would have been good had it formed at 50% retracement ... for Sail though it has formed at 50% retracement ... which is good

Sail especially is looking good on the broader note ... Displaying more strength than Indian Hotel ... stop loss of 215 and 232 looks good ...
__________________
Do you mean fibanacce retracement level should be 50% and above for strong buy signal. Am I right in understanding your message. Please clarify me.

Finally regarding the entry price, target price and stop loss methods explained and followed by you in simple english will be really helpful.......

Yes it should be at 50 or between 38.2 and 50 ... for Sail it is exactly at 50 ...

Entry - if you are planning to take up 100 positions ... then first do a probe test ... this means .. first buy only 20% of your position once the stock crosses previous day's high ... If you then continue to see the stock showing strength over the past 2-3 days, then increase your position. This way, even if the stock goes against you, you will have less loss as you have invested only 20% of your position at first...

Target - I dont believe in target's ... so it's upto you when you want to exit .. or you can use your strategy ...

Stop loss - previous swing high ... or you can take 61.8% fib level
.................................................
Honestly I don't bel in back testing results ... there r so many dynamic things in the market (plus the human element) that back test results do not incorporate ... hence am testing it live .. lets see ...

......................................
Classical Gap Setup - Intraday Trades

Tools – Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)

Brief Introduction – Now, Let’s take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below indicates that today the market opened lower. Hence, the bidding today started much lower than yesterday’s lows. This means traders are expecting the market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same goes for upward gap.

Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative strength is when a stock is compared with a base entity (let’s say an index; Nifty). By using Comparative Relative Strength we compare whether the stock is outperforming NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to short stocks which underperform NIFTY.

Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT position when there is downward gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.

Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up in a stock that has reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.

Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.

Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.

Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money.




__________________
Raunak Agarwal
Punjllyod is giving a lot of false signals ... it is common for a stock to do so if its not trending ... we r planning to incorporate a trend identifier in the system so that better results can be given ..
prefer desktop based applications like Amibroker, Metastock , Tradestation ...

I can tell u how to add Comp Rel Strength indicator in them ...

..............................
promised the AFL is ready. AM posting the results of the strategy (3-4 Swing trade setup) and I must say results are pretty good.

Since you know I don't believe in giving targets, hence I measure the performance of the strategy in days. Here, since it is swing trade, i have measured the performance in two durations; 5 days and 10 days. I must say the results are pretty satisfying. In 2009, this strategy has generated 72 Buy signals and in 5 days from day of trade, the success rate has been 73%. When performance is measured in 10 days from trade, the success rate is 86%. Results are based on stocks trading in the Futures and Options segment. As mentioned, this strategy works well in Strong Trending stocks. Will be posting the AFL in sometime.

2009 ---> 5 day hold --> Trades 72 ---> Success 73%
2009 ---> 10 day hold -> Trades 72 ---> Success 86%

................................Entered SAIL at 242.95 (2-3 Week swing strategy). Closed at 240.85. Lets wait and watch.

Why did u exit ??? din u do a probe test ... U had a valid reason to enter ...

But did u have a valid reason to exit ??? I had a look personally at Sail .. its not looking bad at all

You had a swing trade for 2-3 weeks ... then y did u square off based on one day ...
__________________
I guess slope of 22 SMA ---Lupin----is flat, instead of up. Please correct me if I am wrong.

Tata motors -----satisfies the rule----however, I see that this script has ended in red last couple of days, even though market ended green last couple of days.

Your views on this Raunak.

Yes that was one of the reasons why Lupin is little weak compared to Tata motors ..

Tata motors meets requirements and though the stock has closed in red, I would still prefer it ... however since it is results season, I'd definitely do probe test entry in both stocks... the day previous day's high is taken out, entry should be made in small quantities.
__________________
Rajputz for EOD Stochastic 8,3,3 or 6,3,3 with a bullish candlestick pattern does give good next day results ...

.............................
RSI and Bollinger Band Setup

Tools – Candlestick on Hourly Time Frame and RSI (14)

Trade Setup – I just can't recollect where I read this setup. But, it is a very useful one of you apply it correctly. If you identify the stocks on which this setup works, then it is going to be very profitable. Usually, you should pick weak stocks for this setup. Stocks which are under performing the broader market or which are in intermediate down trend. Else you can get many false signals.

How to trade it - Look at the chart below. Bharti has been under performing the market for quite sometime now. If you look closely. The prices have crossed and closed above Bollinger band (upper) two times. On both occasions the RSI(14) was not above 70. Now, RSI is an indicator of strength and despite the price closing above the band, the RSI remains below 70 (does not exhibit strength). Hence, we then look for some sort of bearish confirmation on candlesticks (Doji, Hanging Man, Bearish Engulfing). The moment you get this confirmation, short the stock with stop loss being the highest price (of the previous two candles). In case of Bharti, in the first case we got a Doji whereas on the second case it was a variation of bearish engulfing pattern.

STOPLOSS - Stop loss is the highest price (high) of the previous two candles.

Usage - Can be used on 60 Minute time frame chart. You can use 15- Minute chart for entry.


__________________
Raunak Agarwal
--------------------------------------------------------------------------------

Stocks giving Buy signal According to our swing strategy

Sasken, GHCL, Nucleus, Jet Airways, LML, Lupin, SpiceTele, HDFC Bank, Religare

Please Do Not trade these signals ... Let's observe as everything is under test [15jan'2010]
.................
What Mr. Savant gives is not a blind proposition for investment. If you have the patience of going through his threads, you will indeed learn a lot. His returns are more than 100%. However the time duration is much longer.

What we do here are small trades and quick trades. These trades look attractive, but are only effective if you are an experienced trader. It is not to say that you won't make money here, but all am saying is that monitor these strategies for some time before committing even a paisa into them. Hence, what I'll advise you to do is that learn what suites you the best. But don't put in money straight away. If you loose during this, your appetite for learning will diminish exponentially. Follow Mr. Savant's stocks, invest in them and simultaneously learn from here. Once you learn and master something, then neither you will need Mr. Savant's thread nor this thread for making your own killing in the market.
.................................................. ...........
................................................. ..........................................
Now look above. How about an ascending triangle ?? Look at the black lines.

The key here is the present leg of wave being formed. This will determine whether we r in a horizontal range or ascending triangle. As of now just wait and watch. My gut feeling is that Yes Bank is trading a bit weak. If it takes out the current high on good volumes then the price would (and should) rise dramatically. But since it is little weak (not too much though) on daily charts, I'll wait n watch this script carefully.

One more thing ... your horizontal range isn't right .. thrs one bar (around 1) which is out of the range. Though some may say this is allowed, I'll still tell u this is not that valid. Rest time will tell .
....................
83.4 is the current swing low ... now it is trading above that level but also in symm triangle zone. One the price breaks down from the symm triangle, wait for 83.4 to be taken out. If on retracement the prices do not re-enter the sub 83.6 levels , then short it. MRPL is relatively under performing the NIFTY. So it should be a good trade.

...............................
if previous swing low or high taken out
by progressing complex correction .then
it is end of complex correction?

Yes. You will have two factors on your side.
1. Triangle breakout (strong sign)
2. Prev Swing low taken out (again a strong sign)

Add up volumes to check validity
.................................................. .................
had told you guys that I was trying a system which I had mentioned in My Stock Watch list thread. Well, since this is in testing phase, I'll post my list here.

The beauty of this system (mixture of Trend Following Systems and Mean Reversion Systems) is that it gives returns within 1-4 day of trades. It's a real time scan system and hence positions have to be taken between 15.15 - 15.30. I have got in house development done for the system's software. I'll be posting my results live here and will certainly release the system (with software) once it is successful. Results on backtesting the data were very good. But it is necessary to see if it works in real time. At times this system generates contradictory signals. Eg: If it gives BUY for a security on 4th Jan and then short for the same on 6th Jan, then earlier position have to be closed and new positions should be added. At present am tracking only 40(high beta stocks). I hope it works. Here are results for January along with today's results. CMP indicates closing price of signal generation day. Stop Loss is based on EOD prices.

[12 jan'2010]This is the final list as of 15.15 - 15.20

Banks and sugar stocks are looking weak.

For Short - BAJAJHIND, BANKINDIA,RENUKA,CENTURYTEX,IBREALEST, ICICIBANK,TATASTEEL

For Long - Wipro


Testing phase is on. Please don't trade.

Signals are based on closing prices. So, since we r seeing these at 15.20, It might be that (in very rare case) we might get one false signal.
__________________
--------------------------------------------------------------------------------

Since this is a T + 1 to T + 4 system (Maximum holding till 4 sessions), I am uploading performance of signals generated on 4th and 5th of this month. Four day cycle for these are over. On 6th and 7th there were no signals. And the next signal was on 8th, 11th and 12th (today). Will be uploading result when 4 day cycle ends for them.

--------------------------------------------------------------------------------

Signals for Today. I had posted these at 15.20. Just doing them again in proper format. Keep SL 5310 for NIFTY. Rest SL at 2.5%




CMP is the market price on the SIGNAL day
.................................................. ......
i had a query. the nifty short call was initiated at 5210 with a sl of 5340. so shoul we expect a fall of at least 200 points nifty considering the sl to be 130 points?

Watcher right above the image I had mentioned SL of Nifty as 5300 ... coz thts the next major level ... I think u missed this line ... refer back to the original post.. also today was T + 1 of the signal ... the signal takes maximum T + 3 to validate ... if not it has to be ignored ... still testing to lets see if we can modify a few things here n thr ...

These are the signals generated in 2009 for Nifty. As you may see, this strategy is effective (30% net return deducting brokerage at 0.03% each side + extra costs) for Day 1 trade. So, what I do is, if the Buy Nifty is generated today at 15.15, I buy the nifty and hold only for '1' day. If it gives me profit, then fine else I close my position at end of the day. In no circumstance do I take a loss of beyond 2.5%. I manually square off the deal. This is just a BTST or STCT strategy. You can see the list and get an average target. Hope this helps.


__________________
As per your 2-3 week swing trading set up, I have screened two scripts. Please let me know if my selection of stocks are correct as per your strategy.

1) INDHOTEL------uptrending stock with a pullback, hammer candle pattern formed on 13/01

2) SAIL----------uptrending stock with a pullback, I hope its bullish engulfing candle pattern on 13/01

Waiting for your reply.....

Sail has not given a Engulfing pattern .. it is more of a piercing one ... and in Indhotel I would have wanted the hammer to be a little more ideal (long shadow) ... for Indian Hot the patterns have formed at 38.2 retracement level ... it would have been good had it formed at 50% retracement ... for Sail though it has formed at 50% retracement ... which is good

Sail especially is looking good on the broader note ... Displaying more strength than Indian Hotel ... stop loss of 215 and 232 looks good ...
__________________
Do you mean fibanacce retracement level should be 50% and above for strong buy signal. Am I right in understanding your message. Please clarify me.

Finally regarding the entry price, target price and stop loss methods explained and followed by you in simple english will be really helpful.......

Yes it should be at 50 or between 38.2 and 50 ... for Sail it is exactly at 50 ...

Entry - if you are planning to take up 100 positions ... then first do a probe test ... this means .. first buy only 20% of your position once the stock crosses previous day's high ... If you then continue to see the stock showing strength over the past 2-3 days, then increase your position. This way, even if the stock goes against you, you will have less loss as you have invested only 20% of your position at first...

Target - I dont believe in target's ... so it's upto you when you want to exit .. or you can use your strategy ...

Stop loss - previous swing high ... or you can take 61.8% fib level
.................................................
Honestly I don't bel in back testing results ... there r so many dynamic things in the market (plus the human element) that back test results do not incorporate ... hence am testing it live .. lets see ...

......................................
Classical Gap Setup - Intraday Trades

Tools – Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)

Brief Introduction – Now, Let’s take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below indicates that today the market opened lower. Hence, the bidding today started much lower than yesterday’s lows. This means traders are expecting the market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same goes for upward gap.

Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative strength is when a stock is compared with a base entity (let’s say an index; Nifty). By using Comparative Relative Strength we compare whether the stock is outperforming NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to short stocks which underperform NIFTY.

Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT position when there is downward gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.

Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up in a stock that has reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.

Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.

Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.

Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money.




__________________
Raunak Agarwal
Punjllyod is giving a lot of false signals ... it is common for a stock to do so if its not trending ... we r planning to incorporate a trend identifier in the system so that better results can be given ..
prefer desktop based applications like Amibroker, Metastock , Tradestation ...

I can tell u how to add Comp Rel Strength indicator in them ...

..............................
promised the AFL is ready. AM posting the results of the strategy (3-4 Swing trade setup) and I must say results are pretty good.

Since you know I don't believe in giving targets, hence I measure the performance of the strategy in days. Here, since it is swing trade, i have measured the performance in two durations; 5 days and 10 days. I must say the results are pretty satisfying. In 2009, this strategy has generated 72 Buy signals and in 5 days from day of trade, the success rate has been 73%. When performance is measured in 10 days from trade, the success rate is 86%. Results are based on stocks trading in the Futures and Options segment. As mentioned, this strategy works well in Strong Trending stocks. Will be posting the AFL in sometime.

2009 ---> 5 day hold --> Trades 72 ---> Success 73%
2009 ---> 10 day hold -> Trades 72 ---> Success 86%

................................Entered SAIL at 242.95 (2-3 Week swing strategy). Closed at 240.85. Lets wait and watch.

Why did u exit ??? din u do a probe test ... U had a valid reason to enter ...

But did u have a valid reason to exit ??? I had a look personally at Sail .. its not looking bad at all

You had a swing trade for 2-3 weeks ... then y did u square off based on one day ...
__________________
I guess slope of 22 SMA ---Lupin----is flat, instead of up. Please correct me if I am wrong.

Tata motors -----satisfies the rule----however, I see that this script has ended in red last couple of days, even though market ended green last couple of days.

Your views on this Raunak.

Yes that was one of the reasons why Lupin is little weak compared to Tata motors ..

Tata motors meets requirements and though the stock has closed in red, I would still prefer it ... however since it is results season, I'd definitely do probe test entry in both stocks... the day previous day's high is taken out, entry should be made in small quantities.
__________________
Rajputz for EOD Stochastic 8,3,3 or 6,3,3 with a bullish candlestick pattern does give good next day results ...

.............................
RSI and Bollinger Band Setup

Tools – Candlestick on Hourly Time Frame and RSI (14)

Trade Setup – I just can't recollect where I read this setup. But, it is a very useful one of you apply it correctly. If you identify the stocks on which this setup works, then it is going to be very profitable. Usually, you should pick weak stocks for this setup. Stocks which are under performing the broader market or which are in intermediate down trend. Else you can get many false signals.

How to trade it - Look at the chart below. Bharti has been under performing the market for quite sometime now. If you look closely. The prices have crossed and closed above Bollinger band (upper) two times. On both occasions the RSI(14) was not above 70. Now, RSI is an indicator of strength and despite the price closing above the band, the RSI remains below 70 (does not exhibit strength). Hence, we then look for some sort of bearish confirmation on candlesticks (Doji, Hanging Man, Bearish Engulfing). The moment you get this confirmation, short the stock with stop loss being the highest price (of the previous two candles). In case of Bharti, in the first case we got a Doji whereas on the second case it was a variation of bearish engulfing pattern.

STOPLOSS - Stop loss is the highest price (high) of the previous two candles.

Usage - Can be used on 60 Minute time frame chart. You can use 15- Minute chart for entry.


__________________
Raunak Agarwal
--------------------------------------------------------------------------------

Stocks giving Buy signal According to our swing strategy

Sasken, GHCL, Nucleus, Jet Airways, LML, Lupin, SpiceTele, HDFC Bank, Religare

Please Do Not trade these signals ... Let's observe as everything is under test [15jan'2010]
.................
What Mr. Savant gives is not a blind proposition for investment. If you have the patience of going through his threads, you will indeed learn a lot. His returns are more than 100%. However the time duration is much longer.

What we do here are small trades and quick trades. These trades look attractive, but are only effective if you are an experienced trader. It is not to say that you won't make money here, but all am saying is that monitor these strategies for some time before committing even a paisa into them. Hence, what I'll advise you to do is that learn what suites you the best. But don't put in money straight away. If you loose during this, your appetite for learning will diminish exponentially. Follow Mr. Savant's stocks, invest in them and simultaneously learn from here. Once you learn and master something, then neither you will need Mr. Savant's thread nor this thread for making your own killing in the market.
.................................................. ........
Following are the stocks for "Investment". Start accumulating small quantities on dips. The stop loss for the stocks will be low which just goes to show the growth these stocks can have over the period of time (usually 12-24 months).

1. Hold these stocks for Investment purpose only. These are not swing trades nor they are scalping trades. These are purely investment based trades based on numerous factors.

2. Maximum loss that we will take for a particular stock is 10 - 15%. Again, the stop loss is deep but these stocks can give amazing returns. For some stocks stop losses are more deep. However, this is only because these stocks are showing good long term momentum.

3. Buying criteria is based on a weekly technical system (neither a trending system nor a mean reversion system) and long term fundamental - economic system.

I'll be really grateful if someone could assist me with updating this list of stocks on weekly basis.

I'll be posting the list in this same post in sometime ... Will be updating the stocks as I find new investment opportunities ..

.............--------------------------------------------------------------------------------

AvgRange = Sum( abs(O-C),15 )/15;
Doji = IIf(abs(O-C)<=0.1*(H-L),1,0);
HAMMER = IIf( (H-L > 1.5*AvgRange) AND (C > (H+L)/2) AND (O > C),1,0);
Cond1 = Cross(StochK(8,3), StochD(8,3,3)) AND StochK(8,3) <30;
Cond2 = RSI(3) < 30;
Cond3 = Close > MA(Close,150);
Buy = Cond1 AND Cond2 AND Cond3 AND (Doji OR HAMMER);
Sell = BuyPrice*1.05;
Filter = Buy;
AddColumn(Buy, "Buy", 1.2);
AddColumn(Close, "CMP", 1.2);
AddColumn(BuyPrice*0.97, "SL set at 3%", 1.2);
AddColumn(IIf(Buy,100*((Ref(Close,5)-Close)/Close),100*(Close-Ref(Close,5))/Close),"Profit% on Day 5",1.2,3,width = -2);
AddColumn(IIf(Buy,100*((Ref(Close,10)-Close)/Close),100*(Close-Ref(Close,10))/Close),"Profit% on Day 10",1.2,3,width = -2);



// Have included performance tracker in percentage terms (%) after period of 5 and 10 days

// Stop loss is set at 3%. Please suit your own risk levels

//Stochastic setting are at 8,3,3 You can modify it to 6,3,3 as per original settings. However it does not make much of a difference. Since you have the AFL now, I'd advise you to follow it first without putting in the money. Keep a note of all the dummy trades and see what exit policy suites you better ... Backtest the afl and see what sort of gains it gives ... It is YOU who has to be comfortable with the system ...

Personally, I never take a loss of more than 5% on any stock ... and I do wait for end of day closing prices ... Stock may be down 7% on intraday but for me closing price matters.

Today nucleus was down 6 % but when it closed, it was not down so much ... hence i held on to the trade ...
__________________
Watcher, we all work with probabilities .. sometimes we r right ... sometimes we r wrong
.................Originally Posted by watcher
Slowly but steadily I am maturing to the fact that TA gives you more chances of winning, keeping your losses in check. Like all other methods it is not 100% foolproof, but it is always better to go with structured probability rather than our whims.

Oh certainly .. Knowledge gives you an edge in everything ... I'll soon be starting a fundamental analysis thread where I'll teach how to analyse firms fundamentally from scratch ... I aim to give out atleast 100 strategies here for TA ... Once am done with it ... I'll switch to fundamentals ... Do not fear developing your own technical system ... Failure comes first ... and then comes success ...

............................

I know one thing which leads to a wipe out ...

Too much of leverage coupled with lack of knowledge of the risk involved in doing so with absolutely no stop loss (risk management rules).
...................................
exited sail at 232 since it trigerred stop loss...

tatamotors is doing good......

just a learning experenice for me.....since real money was involved, there was more concentration of everything about the scripts....price, volume, indicators...etc.

I was not able to get the same concentration on paper trading.....

hope would stick to some strategy with less risk and less profit.....

Good going ....

If you identify a strategy that works, give at least 50 trades (small quantities) to see whether it works or not in real time ...

Tc.
.....................................Have taken short positions (5230) in the NIFTY with a stop loss of 5260 .... This is an extreme high risk trade ... will post the details later as to why I have gone short for the shorter time horizon ...

Please DO NOT trade this signal
......................................Ok, now's the time as to why I was short on the market ...

1. Asian market's have been weak from the past 3-4 trading sessions and Indian market's have been in the range of 5200 - 5260.

2. Majority of Asian market's have not made new highs and have been falling on momentum. India in this case has made a high on low momentum.

3. US market's have had earnings been reported with majority of earnings still showing signs of concerns.

4. China over the past week has started controlling the credit outburst and their markets are rightly correcting gradually.

5. Technically, we are looking a little weak for the short term and hence a correction at this stage would be very healthy.

I had posted one article on Jan 6th ... Its a pure technical view about short term correction ... Do refer it ...

http://www.traderji.com/equities/369...ding-down.html
................................................. had shorted the Nifty at 5230 as previously mentioned and I squared off 70% of my short positions today. At present, I want to tell you how I am trading the nifty. Refer to the figure below. The nifty had violated Trendline 1 (marked in white) and hence shorting was a good opportunity. Now, after two days of volatility, the Nifty has taken support at Trendline 2 marked in Red. Till this support prevails, I will look to be long in the market with fewer short positions for restricting loss. Support at trendline 2 was formed with hammer-like formation and support has a good chance to hold.


EMA Cross Over Weekly Trades


Tools – Candlestick/Bar Chart (Daily), 150 EMA, 70 EMA and 20 EMA

Trade Setup – This is a trend trading system which gives enormous returns while trending markets and many whipsaws in non trending markets. Keeping our economy in view, this is going to be a profitable system in coming years as we are in an age of trending markets (either up or down). In this system we make use of 3 EMA; 150 EMA (Long term average), 70 EMA (Medium term Average) and 20 EMA (Short term Average).

Buy Setup – A typical buy setup occurs when the Short term average (20 EMA) crosses over the 70 EMA with the 70 EMA being above the 150 EMA. Same principle (but reverse) goes out for short trades.

Sell Setup – Exit the trade once the short term average (20 EMA) crosses the medium term average (70 EMA) form above.

Important Notes – To use this system effectively, exit the positions once you get returns in the range of 50-70%. Start offloading the positions once 50% return is on the cards.


__________________

__________________
Accumulation is always on the cards watcher. However one has to weigh in the current scenario. Markets are not going anywhere. Investment opportunities will always arise and the one with patience will be rewarded.

At present the markets are a bit heated. It might run up to new highs and hence missing out on the rally also seems unwise. What I have done at present is committed only 15 % of my cash. I was in the market sub 2800 levels and now I am waiting for a reasonable dip before starting to commit more funds.

IIP numbers for the country have exceeded everyone's expectations by atleast 1.5%. Inflation rates are rising and the credit demand is picking up. Credit growth usually lags behind the industrial growth by about two quarters. Hence by keeping this view in mind, the RBI is almost likely to increase the repo rate and reverse repo rate.

I am waiting for the rate impact and the budget impacts on the market. During this duration, we will get a good entry price and I would then increase the position.
..............With reference to EMA setup for weekly trade, is it EMAs crossing each other or price crossing EMAs ? I checked with 20, 70 & 150 EMA for most stocks for last one year period. There is hardly any crossover of EMAs in most of them for last one year whereas this set up is supposed to be for weekly trade. In other words if EMSs donot cross, trade will not be initiated in the first place. Kindly clarify

Cheers !!!!

Alok Tewari

Alok, the 20 EMA crosses the 70 EMA. I have put this in the weekly setup because I have not created a monthly category on the 1st page. This is a monthly trade if you actually test it. Returns are good when held on for months. Such setup happens once a year (if it is successful, its returns are good).

Almost all the trending stocks this year have given this setup between Apr and May ...


...........................Actually, I was never vouching for the markets to crash. I was expecting a fall before 5300 is breached. See, corrections like these which happened in last two days are healthy for the market.

I totally agree with you on the points you had mentioned earlier. Hence, untill something major happens, our markets will continue to do well. My only concern is that the price structure of Shanghai, Hangseng and now Taiwan is not looking good. Whether this scenario spills to our markets or not, we have to see that[23 jan2010] #308 28th January 2010, 02:00 AM - Add Post To Favorites
raunakagarwal
Member Join Date: Nov 2009
Location: Pune
Posts: 2,127
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Re: How I am trading the Nifty

--------------------------------------------------------------------------------

Quote:
Originally Posted by raunakagarwal
I had shorted the Nifty at 5230 as previously mentioned and I squared off 70% of my short positions today. At present, I want to tell you how I am trading the nifty. Refer to the figure below. The nifty had violated Trendline 1 (marked in white) and hence shorting was a good opportunity. Now, after two days of volatility, the Nifty has taken support at Trendline 2 marked in Red. Till this support prevails, I will look to be long in the market with fewer short positions for restricting loss. Support at trendline 2 was formed with hammer-like formation and support has a good chance to hold.



Now, the markets have broken the trend line 2 mentioned in the chart above. This leads us now in the 'wait and watch' period for the markets. The markets from here can either fall or can stagnate. Bounce from these levels is almost likely. However, I will be very circumspect regarding the rallies in the market. I am still accumulating shares in very small quantities for my long term portfolio. However, I am completely out of the market's as far as trading is concerned.

An ideal market participant has to switch roles in the market. Currently, the 'investor' role is likely to be more profitable as the market's may witness great deal of volatility which may lead to losses for traders.

Here's the updated view of the market. If the Market's don't claw back and hold on to 4900+ levels, then it can tank down to 4650-4700 levels.


.........................I use a different system for swing trades Nimish ...
There are few things I wanted to say,

1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.

2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correction recently ?? As traders and investors we should not draw conclusions so early.

3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over. The recent changes in US policies do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspective. The transition of growth and benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.

4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there are no apparent signs of any weakness.

5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a bad idea to accumulate stocks. If the market signals a bear move ahead, then we can liquidate always. But anticipating what the market is going to do is always fatal.

The earlier short signal at 5300 was given by my positional system ...
 

oilman5

Well-Known Member
Most of the softwares offer one and the same thing. I would suggest you to be with Amibroker as you have familiarity using it.

It is our tendency to feel comfortable with familiar things and moreover amibroker is in no way less efficient than metastock. Both are equally good.
...........................................
1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.

2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correction recently ?? As traders and investors we should not draw conclusions so early.

3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over. The recent changes in US policies do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspective. The transition of growth and benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.

4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there are no apparent signs of any weakness.

5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a bad idea to accumulate stocks. If the market signals a bear move ahead, then we can liquidate always. But anticipating what the market is going to do is always fatal.

.................................................. ......

For Investment Purpose Only.

Stocks selected here are not based on any system mentioned in the thread. This is based on my own personal system which I use for my trades. Unfortunately, it is not an AFL but a customized application. Hence, I cannot release this on the forum.

P.S. Please select stocks out of these lists suiting your own investment criteria. These are pure technical play outs and I don't know whether they are fundamentally strong or not. [31 jan'2010]
......................................RSI Divergence Strategy Using Daily Charts

Tools – Candlestick/Bar Chart, RSI(15)

Trade Setup – On Daily chart frame, this strategy is going to give out extremely good results if you continue to stick with it. The setup is fairly easy, but you do need to monitor selective group of stocks to get a feel of their levels. Hence, this strategy does require some subjective analysis.

Time Validity - I trade this pattern only on daily charts. I use this particular time frame because divergence is more easily visible here. Once the trade is initiated, I carry forward the trades for 2-7 days.

When does it occur and How to Trade it- This pattern occurs when a stock or an index runs up quite a bit and retraces back to some level. From there on, the stock/index ralies again and makes a significant new high. It is during this high that we need to look at the RSI level. If the RSI level is significantly low than the previous high's level, then initiate short position with High of the rally as a stop loss. I have particularly used this strategy to short the Nifty recently at 5300 level which I had disclosed on this thread.

Examples - I have provided example of Nifty. Refer to the chart below to understand the setup properly.


__________________rdeb, though I have provided some setups on Intraday, I personally don't use intraday that often in stock market's. In forex though, I am mostly a day trader and hence I avoid carrying positions forward.

I'll advise you to pick one intra day setup and master it. While doing so you'll automatically realise the screening procedure. Screening procedure is not entirely mechanical.
....................................
Though these are tough times, I still believe we are in a long term bull market. However, I will change my mind once 4540 and more importantly 3900 get's taken off. My long term system has indicated closing off long positions on Nifty but has not indicated short positions.

It may seem surprising but I am still accumulating stocks in small quantities for my long term portfolio. Rather than believing news going around, I am trusting the level's reflected in charts. So, I am comfortable till 4540 and 3900 holds.

At present, I don't think we need a system to tell us what's gonna happen in near future. Thing's are getting ugly on global front (just look at currencies, commodities and stock market's) and I think same is going to happen to us. At this stage I can't take a call on very short term movements.

Tc
..........................................
Nimish, I hope you are not looking for people in TJ to support your thinking. As a human being, we are tuned for this...i.e.to see the people around us with similar thoughts like ours. Unfortunately, that is demaging trait in trading.

If you have already setup your max pain limit of loss then take action when that limit is hit. You might be able to take loss of 5Lac that doesn't mean u shd wait till it reaches that level. After big loss, recovery would be difficult.

If you are not able to take the pain, then my suggestion will be to atleast cut your position partially, rather then fully. Try to see historical pattern in chart, and observe
- how much steep a fall could be
- what happens after that
- how much worse can it get in short term etc.
- what signals appear that indicate bounce is fizzling out and downtrend is again building up.

Based on that draw your OWN strategy to play in the market.

In my observations, all global markets have fallen 5 to 10% in last 5-6 days with no real bounce. Selling after selloff is typical trait of novice /immatuare traders. Even if market has to goto 4k level, it will not happen in one wave.. there will be bounces in between.

After such steep fall, bounce is inevitable but can't predict whether this will happen tomorrow or in next 4 days. Hence DON't be contrarian and build long position until u see some signs of bears disappearing. Bulls will keep showing up but they get beaten down again.

There could be bounce which might help you in cutting your loss. If my post make u think then do keep in mind that there are same 50% chance that the pain might get worse before it can get better. Nimish I agree with what AW10 has said. If your system told you when to enter, you must trust it for when to exit. By taking my views or any other user's view, you are cluttering your mind with too many things.

Things are going to get tough today. We have to see where we go from here. For your future reference I'd suggest you to practice the probe test buying technique.

As far as your current positions are concerned, you might well be selling off in a typical "Sell off" situation. You might get a bounce back.

If your stop's have been triggered, it's always better to exit. Else, I will stand by the system (assuming that your system is back tested with good results).

.............................................
trading is not a game... its a business...
Before entering any business You should have good knowledge about it and how to manage it.. bez in trading lots of risk involved...
good luck....
......
Stocks for Investments Only. Keep away from low volume stocks. The average given here are of 15 week Volume. Here's a complete list of stocks for investment purpose earlier posted on this thread. Add the above list to this list........................................
#68
27th November 2010, 05:15 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Dual Time Frame Momentum Strategy

Tools – Candlestick/Bar Chart, Stochastic (8,3,3) Daily and Stochastic (8,3,3) Weekly

Trade Setup – This setup was made popular by Robert Miner. The basis of this setup is to use momentum of 2 time frames to get into trades. Though Robert Miner also showed how to use E-wave and fibonacci with this setup, we will essentially stick only with the basic dual direction momentum setup.

Trading the Setup - Switch to the daily chart mode to use this setup. Below the main price window, you must have Stochastic (8,3,3) daily time frame and Stochastic (8,3,3) weekly time frame. It is absolutely essential to have both the stochastic windows (one for daily time frame and other for weekly time frame) on the same time. We enter the trade when the Weekly stochastic has crossed over in the oversold range (usually should have crossed around the 20-30 range) and is pointing up. We then pay attention to the daily stochastic and then buy when the daily stochastic crosses on the same mentioned range. When the daily crossover happens, the weekly stochastic should not be in the overbought range. Best signals in this setup occur when both the weekly stochastic and daily stochastic cross together. One such example, in the case of DLF has been explained below.

Target - Continue to hold the stock till the daily stochastic indicator does not signal a typical sell signal (that is, bearish crossover).

Stoploss - Stop loss in this strategy is fairly simple. Either this strategy works or it fails. Thus whenever the signal comes, do not take loss of more than 3% on the trade or keep stop loss of previous swing low. This strategy has a success rate of about 60%.

Note - This is not an investment strategy. Hence, do not continue holding the stock. This is pure momentum play. Buy it and exit once you get good gains and when the sell signal emerges. For better understanding I have cherry picked this example. Like all the strategies, even this is fallible.

Time Frames - You have to pick out proper pairs to execute this strategy. Here I have used Daily - Weekly pairs as I don't believe too much in shorter time frame trades. You can experiment by using 30 Min - 5 Hour pair or 5 Min - 30 Min pair. But bear in mind that there will be a lot many false signals as you continue to shorten the time frame.


__________________
Raunak Agarwal
the main point in this setups is that when bvoth daily and weekly stochastic hook out of the oversold zone...above 20 at the same time...only then we should enter the trade
????????? Simultaneous crosses and moving out of zones give the best signal ...

Otherwise even if weekly has moved out earlier (but not overbought) and daily gives you a buy currently ... even thn u can enter. ...
////////
As a coincident, I read this book at the moment. My target is to read at least one book about trading every month and this month it is that one.

Last month was a book about selling strategy's on options on futures from John Summa.

.................................
Watcher that's going to be very difficult to do. See, its a complete portfolio and I cant specify which one's are the strong one and which are the weaker one's. All stocks are buy's based on various parameters. Minimum holding period is 1 year. So, it may be that they are not performing now, but they might begin to perform in coming days.

....................................
Watcher, am not an avid supporter of support and resistance hence I wont give you any level. But, I am looking for 4540 as a critical point. Not because it is some major support level but due to its relevance in determining the structure of the market. I will begin to worry when this level is taken out. Hence, till this happens, I will continue to hold on to my positions. It is better not to anticipate in this scenario.I invest equally in every stock that gives a buy. That way, investment gets diversified and investments remain small and well divided.

As of today, most of the stocks are giving better entry points. I will continue buying till the market does not show me structural changes. No matter who the chartist is, till the market shows me the change, I will never react.
..............................
Appreciate it. What I appreciate most in you is not the conviction but the clarity of thought. Because the former is the effect and the latter the cause.
Thanks and regards
__________________can any one tell me metastock explorer formula for RSI(9) AND SMA (9) CROSSOVER ON A DAILY CHART.
AND HOW TO MAKE FORMULAS FOR EXPLORER ?
......................
Accumulate PIRhealth and Glaxo for LT portfolio.[2nd march2010]
Preserving your capital is more important than capital appreciation
...............Ticker Date Entry As of 06th March 2010 Percentage Change
ABGSHIP 28/01/2010 279.8 256.85 -8.20%
AMBUJA 28/01/2010 102.75 109.25 6.33%
ACC 28/01/2010 889 969.3 9.03%
GESHIP 28/01/2010 287.75 292.9 1.79%
ABB 25/01/2010 815.9 822.2 0.77%
CENTURYTEX 25/01/2010 521.8 511.5 -1.97%
ROLTA 01/02/2010 203.2 180.1 -11.37%
GTLINFRA 01/02/2010 42.53 41.95 -1.36%
DISHTV 01/02/2010 41.95 40.3 -3.93%
ZEEL 01/02/2010 261.4 270.8 3.60%
RELIANCE 01/02/2010 1040.85 1009.8 -2.98%
POWERGRID 01/02/2010 112.4 108.25 -3.69%
FINANTECH 01/02/2010 1539 1526 -0.84%
COLPAL 05/02/2010 702 705.25 0.46%
DABUR 08/02/2010 175.9 169.95 -3.38%
GLAXO 26/02/2010 1707 1741.8 2.04%
PIRHEALTH 26/02/2010 421 411.4 -2.28%
ORIENTBANK 05/03/2010 302 309.05 2.33%
Net Gain/Loss % -0.76%I would be keeping an eye on Rolta right now. It is looking weak. Let's see.
..........................
Idea did very well today ... Up almost 5 %

Stock is showing tremendous strength. [18 march2010]

.............................dear it's a positional system (usually 1 to 9 months). All are delivery based. No leverage.

I hav a separate system for swings trades ... I use futures for swing trades ...

............................
Anyway I am posting it again here ... u will have to adjust it according to 9 AM opening ....


//AFL FOR HORIZONTAL RANGE PATTERN (INTRADAY SETUP)
isRth = TimeNum() >= 094500 & TimeNum() <= 095459;
isdRth = TimeNum() >= 095500 & TimeNum() <= 130000;
aRthL = IIf(isRth, L, 1000000);
aRthH = IIf(isdRth, H, Null);
aRthLd = IIf(isdRth, L, 1000000);
DayH = TimeFrameCompress( aRthH, inDaily, compressHigh );
DayH = TimeFrameExpand( DayH, inDaily, expandFirst );
DayL = TimeFrameCompress( aRthLd, inDaily, compressLow );
DayL = TimeFrameExpand( DayL, inDaily, expandFirst );
Bars = BarsSince(TimeNum() >= 094500 AND TimeNum() < 095959);//,BarIndex(),1); // AND DateNum()==LastValue(DateNum());
x0 = BarCount-LastValue(Bars);
x1 = BarCount-1;
DayHline=LineArray(x0,LastValue(DayH),x1,LastValue (DayH),0);
DayLline=LineArray(x0,LastValue(DayL),x1,LastValue (DayL),0);
Range = DayH - DayL; //For Fibonacci Retracements
isdc = TimeNum()>=152800 & TimeNum() <=153000;
adc = IIf(isdc, C, Null);
DayC = TimeFrameCompress( adc, inDaily, compressHigh );
DayC = TimeFrameExpand( DayC, inDaily, expandFirst );



/************************************************** ************************************************** ************************************************** **********/

// Buy_Short_Sell_Cover Criteria

Buy = C > DayH & TimeNum() >=130000 & TimeNum() <= 140000 ;
Sell = TimeNum() >=152500;;
Short = C < DayL AND TimeNum() >=130000 & TimeNum() <= 140000 ;
Cover = TimeNum() >=152500;

/************************************************** ************************************************** ************************************************** *********/
// Plotting
_SECTION_BEGIN("Price");
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );

Plot(DayHline,"RH",colorOrange,styleLine);
Plot(DayLline,"RL",colorOrange,styleLine);
Plot(Range*1.272 + DayL,"UT 1", colorBlue, styleDashed);
Plot(Range*1.618 + DayL,"UT 2", colorBlue, styleDashed);
Plot(Range*0.618 + DayL,"R1",colorDarkRed,styleDashed);
Plot(Range*0.500 + DayL,"R2",colorDarkRed,styleDashed);
Plot(Range*0.381 + DayL,"R3",colorDarkRed,styleDashed);
Plot(DayH - Range*1.272,"DT 1",colorRed,styleDashed);
Plot(DayH - Range*1.618,"DT 2",colorRed,styleDashed);
BuyArrow = Buy * shapeUpArrow;
SellArrow = Short * shapeDownArrow;
PlotShapes(BuyArrow ,colorGreen, 0,L,Offset=-15);
PlotShapes(SellArrow, colorRed, 0, H,Offset=-15);
_SECTION_END();
Buy =ExRem(Buy,Sell);
Sell=ExRem(Sell,Buy);
Cover=ExRem(Cover,Short);
Short = ExRem (Short,Cover);

/************************************************** ************************************************** ************************************************** ********/
//Exploration
Filter = Buy OR Short;
AddColumn( Close, "Close", 1.2 );
AddColumn( Buy, "Buy Price", 1.2 );
AddColumn( Short, "Short Price", 1.2 );
AddColumn( DayH, "Day's High", 1.2 );
AddColumn( DayL, "Day's Low", 1.2 );
AddColumn( Volume, "Volume", 1.1 );
AddColumn(MA(Volume, 35), "Average Volume", 1.1);
AddColumn( DayC, "Day Close", 1.2 );
AddColumn(DayH - DayL, "Range", 1.2);
AddColumn(C*0.005,"Volatility",1.2);
/************************************************** ************************************************** ************************************************** ********/
//Alerts
AlertIf( Buy, "SOUND C:\\Windows\\Media\\tada.wav", "Buy",2);
AlertIf( Short, "SOUND C:\\Windows\\Media\\notify.wav", "Short", 2);
__________________
Raunak Agarwal
#69
27th November 2010, 06:05 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Using ADX to Profit

Tools – Candlestick on Hourly Time Frame , ADX (14) and MA 20 period

Trade Setup – A 14-period ADX must initially be greater than 30 and rising. This is mainly done to identify strongly trending market. Once the initial job of identifying a strongly trending market is undertaken, then look for a retracement in price to the 20-period moving average. When the price touches the 20-period moving average, buy above the high of the previous bar and ride the trend. The buy signal should come within the next two trading sessions. If this does not happen, then the pattern is void.

Example - Below is an example of Auropharma which has been one of the trending stocks in the current run (look at the 14 period ADX below). I have highlighted three areas where the price has touched the 20 period average and formed the pattern mentioned above. Everytime the prices touched the MA 20 period average, the next bar high has given the entry signal. Profits usually should be taken once the price moves 5-10% away from the moving average. This pattern is extremely effective but works only with strong trending stocks.

STOPLOSS - Stop loss is if the price closes below the 20 period average. Also previous swing low can be used.

Usage - Can be used on Daily time frame chart.


__________________
Raunak Agarwal
15-Min Intraday Setup

Requirement – Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)

Brief Introduction – I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.

Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between 20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high. Enter a short position at this point and book profits according to your own appetite.

Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.

StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.

Usage - This pattern can be used on 15Min charts for day trades.


..........................
--------------------------------------------------------------------------------

Markets have potentially entered an 'iffy' period. I don't know how long this would last. But as of now I am not adding long positions. I would particularly wait now for the previous high to be taken out (5330). This would be a good point to go long. As of now though, I am sitting with tight trailing stop loss waiting for the market's to show me what to do.
................................
Market’s globally have rallied for quite sometime now. In particular if we speak of India, investors have got a healthy return of over 70% on the index alone. There has been no notable period of correction in this one year period. Probably equity markets were having their best time last year as a result of low interest rates, low P/E multiple and the positive growth story of India. However, at this juncture, things don’t look that positive. World market problems are beginning to creep up, commodity and oil prices are rising, dollar is continuously falling and the inflation rates are heading north. Typically these scenarios are never good for stock markets and I feel now it is time to book profits and have cash in hand (atleast 75%).

The current price rise and the currency appreciating is a sign of problems to come in the stock markets. The RBI which will meet this month for monetary policy review is already hinting at hiking interest rates. The IIP numbers have been good in the past and on Monday if the numbers turn out to be more positive, then it would almost ensure a rate hike in coming few days. Moreover, if one observes the market action closely, Capital good sector and Basic material sector is beginning to do well. These sectors usually do well in middle expansion phase of economy where rate hikes are part of the economic scenario. On 13th April 2010, Infosys is going to declare it’s results and guidance. It is perhaps going to set the tone for the markets. Even if the market’s continue to rise, I would personally be very skeptical regarding the rally. Upside may indeed exist, but the risk to reward ratio does not favor a trade currently.
__________________I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Sai, last week I squared off 40% of my portfolio. In the coming week, on Monday, I am going to offload another 40% or so. See, I am not positive on the market, because technically and fundamentally it is not the right time to be investing. I'm willing to miss out on another 1000+ rally but I am not willing to go against what I am thinking. In the mean time I will be undertaking swing trades so that even if market's correct, I am not hurt badly. On an average I have had a very good return on my portfolio and I don't intend to be too greedy for another 10-15% or so. Once I am comfortable with the market's, I'll return back to commit funds.

But for me, as of now, swing trading seems to be the flavor of the month.[11april 2010]
.....................

Yes Prst Swing trading essentially means staying in stocks which show good momentum (upwards or downwards). Swing trades may or may not be based on news. I personally dont care about the news. I have a system/methodology for swing trades and i follow that.

If Nifty closes around these levels or it closes below current levels (5350) but not higher than 5380, then we could be potentially forming a tweezer top or harami pattern on the candlestick chart. The fact that this will form around good resistance level will make it more meaningful. Let's see how Nifty spans out. [12 th april2010]
__________________


Tools – Candlestick/Bar Chart

Trade Setup – This pattern was popularized by Larry Connors and Linda Bradford. Now everyone knows the original turtle trading system where shorts were initiated when new 20 day lows were made and longs were initiated when new 20 day high was made. The problem with turtle trading system was that it had many false signals. This pattern tends to capitalize on these false moves.

Buy Setup - The typical buy conditions are as follows. The market makes a new 20 day low with the previous 20 day low being atleast 3 sessions ago. The current close should be near or below the previous 20 day low. Following this, the next day market rebounds and trades above the previous low (ideally should close above the previous low). Enter the stock by placing a stop at the previous low. This offers an excellent risk to reward ratio.

Time Validity - This pattern has to be looked for on daily charts. But the trading time frame should be of 3-5 days. Book profit after 3-5 days.

How to trade it - As most of my previous examples, I have again picked a stock which has recently formed this pattern. I recommended Balrampur Chini as a buy in my swing trading thread. And this was precisely why. Look at the chart below. Balrampur forms a 20 day low (Rs 90.3) on 25/03/2010. After this the stock rallies a bit and then again makes a new 20 day low on 1st april 2010 (Rs 87.7). Now, on the next session the stock closes at 90.8 which is above the previous low of Rs 90.3. We enter here placing a stop at 87.7 and trade on the long side. Currently the stock is trading at Rs 99 which is about 10% gain in 6 trading sessions.

Target - Target is specified in time. Book profits in 5-6 trading sessions.

STOPLOSS - Previous Low made.

.................................................. That's what I have written dear. The Turtle system was essentially built (conceptualized) on the Donchian channel system. So when this fails, turtle soup plus one and turtle soup comes into the foray.

Here's an AFL to plot horizontal lines at 10 day high and 10 day low. By right clicking on the parameters window and adjusting the value, one can plot lines for any duration. This will visually help to scan the Turtle Soup plus one strategy mentioned. Special thanks to Anant (Asnavale) for taking the time to develop this AFL.

//******** The AFL starts here *************

_SECTION_BEGIN("N_Day_HiLo");

// Set chart display parameters
// Chart background is Black,
// Date Axis displayed,
// Long titles wrapped to next line

SetChartOptions(0, chartShowDates | chartWrapTitle);
SetChartBkColor(colorBlack);

// Locate Highest HIGH and Lowest LOW in last N days

N = Param("Days to go back(Excl today)", 10, 2, 200, 1);
PriceStyle = ParamStyle("Chart Type", styleCandle, maskPrice);
LineStyle = ParamStyle("Line Style");

NDayHi = H[BarCount - 1 - N];
NDayLo = L[BarCount - 1 - N];
XH = XL = BarCount - 1 - N;

for(i = BarCount - 1 - N; i < BarCount - 1; i++)
{
if(H > NDayHi)
{
NDayHi = H;
XH = i;
}
if(L < NDayLo)
{
NDayLo = L;
XL = i;
}
}


// Define the Lines to be drawn

HLine = LineArray(BarCount - 1 - N, NDayHi, BarCount - 2, NDayHi);
LLine = LineArray(BarCount - 1 - N, NDayLo, BarCount - 2, NDayLo);

// Plot chart

_N(Title = StrFormat("{{NAME}} ({{INTERVAL}}) {{DATE}} {{OHLCX}} Vol=%1.0f\n{{VALUES}}", V));

Plot(C, "", colorGrey50, PriceStyle);
Plot(Hline, WriteVal(N, 1.0) + " Day Hi", colorBrightGreen, LineStyle);
Plot(LLine, WriteVal(N, 1.0) + " Day Lo", colorYellow, LineStyle);

_SECTION_END();

//************ END of AFL ***************
__________________
In my view, Results tell the history..i.e what happened in last 3 months / 1 year.
whereas, stock market discounts the future earning in price. So even if results are good,
current price of reliance already takes it into account.
Do you think those highly paid analysts /fund managers have not done their analysis and already know what reliance is come out with.

My common observation is, if results are good, price jumps for short time, or few days due to purchase by novice who think they are smart and making sound fundamental investment decision, and very soon, professionals come in to dump their stock and price drops or corrects.

And, CEO's are another breed of human being.. in bullish market, they are more optimistic about their projection.. and when mkt is bearish, they dump all the bad news.

One thing that my expensive education taught me was that "The best sellers in the world are not the one's who win a Pulitzer or a Booker's prize. But they are the one's who sit at Wall Street"
I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Regards
Saivenkat

As of friday, I am completely in Cash now. Have descent amount of short positions though. Don't mind missing the upmoves from here (if they happen)


Most of the softwares offer one and the same thing. I would suggest you to be with Amibroker as you have familiarity using it.

It is our tendency to feel comfortable with familiar things and moreover amibroker is in no way less efficient than metastock. Both are equally good.
...........................................
1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.

2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correction recently ?? As traders and investors we should not draw conclusions so early.

3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over. The recent changes in US policies do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspective. The transition of growth and benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.

4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there are no apparent signs of any weakness.

5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a bad idea to accumulate stocks. If the market signals a bear move ahead, then we can liquidate always. But anticipating what the market is going to do is always fatal.

.................................................. ......

For Investment Purpose Only.

Stocks selected here are not based on any system mentioned in the thread. This is based on my own personal system which I use for my trades. Unfortunately, it is not an AFL but a customized application. Hence, I cannot release this on the forum.

P.S. Please select stocks out of these lists suiting your own investment criteria. These are pure technical play outs and I don't know whether they are fundamentally strong or not. [31 jan'2010]
......................................RSI Divergence Strategy Using Daily Charts

Tools – Candlestick/Bar Chart, RSI(15)

Trade Setup – On Daily chart frame, this strategy is going to give out extremely good results if you continue to stick with it. The setup is fairly easy, but you do need to monitor selective group of stocks to get a feel of their levels. Hence, this strategy does require some subjective analysis.

Time Validity - I trade this pattern only on daily charts. I use this particular time frame because divergence is more easily visible here. Once the trade is initiated, I carry forward the trades for 2-7 days.

When does it occur and How to Trade it- This pattern occurs when a stock or an index runs up quite a bit and retraces back to some level. From there on, the stock/index ralies again and makes a significant new high. It is during this high that we need to look at the RSI level. If the RSI level is significantly low than the previous high's level, then initiate short position with High of the rally as a stop loss. I have particularly used this strategy to short the Nifty recently at 5300 level which I had disclosed on this thread.

Examples - I have provided example of Nifty. Refer to the chart below to understand the setup properly.


__________________rdeb, though I have provided some setups on Intraday, I personally don't use intraday that often in stock market's. In forex though, I am mostly a day trader and hence I avoid carrying positions forward.

I'll advise you to pick one intra day setup and master it. While doing so you'll automatically realise the screening procedure. Screening procedure is not entirely mechanical.
....................................
Though these are tough times, I still believe we are in a long term bull market. However, I will change my mind once 4540 and more importantly 3900 get's taken off. My long term system has indicated closing off long positions on Nifty but has not indicated short positions.

It may seem surprising but I am still accumulating stocks in small quantities for my long term portfolio. Rather than believing news going around, I am trusting the level's reflected in charts. So, I am comfortable till 4540 and 3900 holds.

At present, I don't think we need a system to tell us what's gonna happen in near future. Thing's are getting ugly on global front (just look at currencies, commodities and stock market's) and I think same is going to happen to us. At this stage I can't take a call on very short term movements.

Tc
..........................................
Nimish, I hope you are not looking for people in TJ to support your thinking. As a human being, we are tuned for this...i.e.to see the people around us with similar thoughts like ours. Unfortunately, that is demaging trait in trading.

If you have already setup your max pain limit of loss then take action when that limit is hit. You might be able to take loss of 5Lac that doesn't mean u shd wait till it reaches that level. After big loss, recovery would be difficult.

If you are not able to take the pain, then my suggestion will be to atleast cut your position partially, rather then fully. Try to see historical pattern in chart, and observe
- how much steep a fall could be
- what happens after that
- how much worse can it get in short term etc.
- what signals appear that indicate bounce is fizzling out and downtrend is again building up.

Based on that draw your OWN strategy to play in the market.

In my observations, all global markets have fallen 5 to 10% in last 5-6 days with no real bounce. Selling after selloff is typical trait of novice /immatuare traders. Even if market has to goto 4k level, it will not happen in one wave.. there will be bounces in between.

After such steep fall, bounce is inevitable but can't predict whether this will happen tomorrow or in next 4 days. Hence DON't be contrarian and build long position until u see some signs of bears disappearing. Bulls will keep showing up but they get beaten down again.

There could be bounce which might help you in cutting your loss. If my post make u think then do keep in mind that there are same 50% chance that the pain might get worse before it can get better. Nimish I agree with what AW10 has said. If your system told you when to enter, you must trust it for when to exit. By taking my views or any other user's view, you are cluttering your mind with too many things.

Things are going to get tough today. We have to see where we go from here. For your future reference I'd suggest you to practice the probe test buying technique.

As far as your current positions are concerned, you might well be selling off in a typical "Sell off" situation. You might get a bounce back.

If your stop's have been triggered, it's always better to exit. Else, I will stand by the system (assuming that your system is back tested with good results).

.............................................
trading is not a game... its a business...
Before entering any business You should have good knowledge about it and how to manage it.. bez in trading lots of risk involved...
good luck....
......
Stocks for Investments Only. Keep away from low volume stocks. The average given here are of 15 week Volume. Here's a complete list of stocks for investment purpose earlier posted on this thread. Add the above list to this list........................................
#68
27th November 2010, 05:15 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Dual Time Frame Momentum Strategy

Tools – Candlestick/Bar Chart, Stochastic (8,3,3) Daily and Stochastic (8,3,3) Weekly

Trade Setup – This setup was made popular by Robert Miner. The basis of this setup is to use momentum of 2 time frames to get into trades. Though Robert Miner also showed how to use E-wave and fibonacci with this setup, we will essentially stick only with the basic dual direction momentum setup.

Trading the Setup - Switch to the daily chart mode to use this setup. Below the main price window, you must have Stochastic (8,3,3) daily time frame and Stochastic (8,3,3) weekly time frame. It is absolutely essential to have both the stochastic windows (one for daily time frame and other for weekly time frame) on the same time. We enter the trade when the Weekly stochastic has crossed over in the oversold range (usually should have crossed around the 20-30 range) and is pointing up. We then pay attention to the daily stochastic and then buy when the daily stochastic crosses on the same mentioned range. When the daily crossover happens, the weekly stochastic should not be in the overbought range. Best signals in this setup occur when both the weekly stochastic and daily stochastic cross together. One such example, in the case of DLF has been explained below.

Target - Continue to hold the stock till the daily stochastic indicator does not signal a typical sell signal (that is, bearish crossover).

Stoploss - Stop loss in this strategy is fairly simple. Either this strategy works or it fails. Thus whenever the signal comes, do not take loss of more than 3% on the trade or keep stop loss of previous swing low. This strategy has a success rate of about 60%.

Note - This is not an investment strategy. Hence, do not continue holding the stock. This is pure momentum play. Buy it and exit once you get good gains and when the sell signal emerges. For better understanding I have cherry picked this example. Like all the strategies, even this is fallible.

Time Frames - You have to pick out proper pairs to execute this strategy. Here I have used Daily - Weekly pairs as I don't believe too much in shorter time frame trades. You can experiment by using 30 Min - 5 Hour pair or 5 Min - 30 Min pair. But bear in mind that there will be a lot many false signals as you continue to shorten the time frame.


__________________
Raunak Agarwal
the main point in this setups is that when bvoth daily and weekly stochastic hook out of the oversold zone...above 20 at the same time...only then we should enter the trade
????????? Simultaneous crosses and moving out of zones give the best signal ...

Otherwise even if weekly has moved out earlier (but not overbought) and daily gives you a buy currently ... even thn u can enter. ...
////////
As a coincident, I read this book at the moment. My target is to read at least one book about trading every month and this month it is that one.

Last month was a book about selling strategy's on options on futures from John Summa.

.................................
Watcher that's going to be very difficult to do. See, its a complete portfolio and I cant specify which one's are the strong one and which are the weaker one's. All stocks are buy's based on various parameters. Minimum holding period is 1 year. So, it may be that they are not performing now, but they might begin to perform in coming days.

....................................
Watcher, am not an avid supporter of support and resistance hence I wont give you any level. But, I am looking for 4540 as a critical point. Not because it is some major support level but due to its relevance in determining the structure of the market. I will begin to worry when this level is taken out. Hence, till this happens, I will continue to hold on to my positions. It is better not to anticipate in this scenario.I invest equally in every stock that gives a buy. That way, investment gets diversified and investments remain small and well divided.

As of today, most of the stocks are giving better entry points. I will continue buying till the market does not show me structural changes. No matter who the chartist is, till the market shows me the change, I will never react.
..............................
Appreciate it. What I appreciate most in you is not the conviction but the clarity of thought. Because the former is the effect and the latter the cause.
Thanks and regards
__________________can any one tell me metastock explorer formula for RSI(9) AND SMA (9) CROSSOVER ON A DAILY CHART.
AND HOW TO MAKE FORMULAS FOR EXPLORER ?
......................
Accumulate PIRhealth and Glaxo for LT portfolio.[2nd march2010]
Preserving your capital is more important than capital appreciation
...............Ticker Date Entry As of 06th March 2010 Percentage Change
ABGSHIP 28/01/2010 279.8 256.85 -8.20%
AMBUJA 28/01/2010 102.75 109.25 6.33%
ACC 28/01/2010 889 969.3 9.03%
GESHIP 28/01/2010 287.75 292.9 1.79%
ABB 25/01/2010 815.9 822.2 0.77%
CENTURYTEX 25/01/2010 521.8 511.5 -1.97%
ROLTA 01/02/2010 203.2 180.1 -11.37%
GTLINFRA 01/02/2010 42.53 41.95 -1.36%
DISHTV 01/02/2010 41.95 40.3 -3.93%
ZEEL 01/02/2010 261.4 270.8 3.60%
RELIANCE 01/02/2010 1040.85 1009.8 -2.98%
POWERGRID 01/02/2010 112.4 108.25 -3.69%
FINANTECH 01/02/2010 1539 1526 -0.84%
COLPAL 05/02/2010 702 705.25 0.46%
DABUR 08/02/2010 175.9 169.95 -3.38%
GLAXO 26/02/2010 1707 1741.8 2.04%
PIRHEALTH 26/02/2010 421 411.4 -2.28%
ORIENTBANK 05/03/2010 302 309.05 2.33%
Net Gain/Loss % -0.76%I would be keeping an eye on Rolta right now. It is looking weak. Let's see.
..........................
Idea did very well today ... Up almost 5 %

Stock is showing tremendous strength. [18 march2010]

.............................dear it's a positional system (usually 1 to 9 months). All are delivery based. No leverage.

I hav a separate system for swings trades ... I use futures for swing trades ...

............................
Anyway I am posting it again here ... u will have to adjust it according to 9 AM opening ....


//AFL FOR HORIZONTAL RANGE PATTERN (INTRADAY SETUP)
isRth = TimeNum() >= 094500 & TimeNum() <= 095459;
isdRth = TimeNum() >= 095500 & TimeNum() <= 130000;
aRthL = IIf(isRth, L, 1000000);
aRthH = IIf(isdRth, H, Null);
aRthLd = IIf(isdRth, L, 1000000);
DayH = TimeFrameCompress( aRthH, inDaily, compressHigh );
DayH = TimeFrameExpand( DayH, inDaily, expandFirst );
DayL = TimeFrameCompress( aRthLd, inDaily, compressLow );
DayL = TimeFrameExpand( DayL, inDaily, expandFirst );
Bars = BarsSince(TimeNum() >= 094500 AND TimeNum() < 095959);//,BarIndex(),1); // AND DateNum()==LastValue(DateNum());
x0 = BarCount-LastValue(Bars);
x1 = BarCount-1;
DayHline=LineArray(x0,LastValue(DayH),x1,LastValue (DayH),0);
DayLline=LineArray(x0,LastValue(DayL),x1,LastValue (DayL),0);
Range = DayH - DayL; //For Fibonacci Retracements
isdc = TimeNum()>=152800 & TimeNum() <=153000;
adc = IIf(isdc, C, Null);
DayC = TimeFrameCompress( adc, inDaily, compressHigh );
DayC = TimeFrameExpand( DayC, inDaily, expandFirst );



/************************************************** ************************************************** ************************************************** **********/

// Buy_Short_Sell_Cover Criteria

Buy = C > DayH & TimeNum() >=130000 & TimeNum() <= 140000 ;
Sell = TimeNum() >=152500;;
Short = C < DayL AND TimeNum() >=130000 & TimeNum() <= 140000 ;
Cover = TimeNum() >=152500;

/************************************************** ************************************************** ************************************************** *********/
// Plotting
_SECTION_BEGIN("Price");
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );

Plot(DayHline,"RH",colorOrange,styleLine);
Plot(DayLline,"RL",colorOrange,styleLine);
Plot(Range*1.272 + DayL,"UT 1", colorBlue, styleDashed);
Plot(Range*1.618 + DayL,"UT 2", colorBlue, styleDashed);
Plot(Range*0.618 + DayL,"R1",colorDarkRed,styleDashed);
Plot(Range*0.500 + DayL,"R2",colorDarkRed,styleDashed);
Plot(Range*0.381 + DayL,"R3",colorDarkRed,styleDashed);
Plot(DayH - Range*1.272,"DT 1",colorRed,styleDashed);
Plot(DayH - Range*1.618,"DT 2",colorRed,styleDashed);
BuyArrow = Buy * shapeUpArrow;
SellArrow = Short * shapeDownArrow;
PlotShapes(BuyArrow ,colorGreen, 0,L,Offset=-15);
PlotShapes(SellArrow, colorRed, 0, H,Offset=-15);
_SECTION_END();
Buy =ExRem(Buy,Sell);
Sell=ExRem(Sell,Buy);
Cover=ExRem(Cover,Short);
Short = ExRem (Short,Cover);

/************************************************** ************************************************** ************************************************** ********/
//Exploration
Filter = Buy OR Short;
AddColumn( Close, "Close", 1.2 );
AddColumn( Buy, "Buy Price", 1.2 );
AddColumn( Short, "Short Price", 1.2 );
AddColumn( DayH, "Day's High", 1.2 );
AddColumn( DayL, "Day's Low", 1.2 );
AddColumn( Volume, "Volume", 1.1 );
AddColumn(MA(Volume, 35), "Average Volume", 1.1);
AddColumn( DayC, "Day Close", 1.2 );
AddColumn(DayH - DayL, "Range", 1.2);
AddColumn(C*0.005,"Volatility",1.2);
/************************************************** ************************************************** ************************************************** ********/
//Alerts
AlertIf( Buy, "SOUND C:\\Windows\\Media\\tada.wav", "Buy",2);
AlertIf( Short, "SOUND C:\\Windows\\Media\\notify.wav", "Short", 2);
__________________
Raunak Agarwal
#69
27th November 2010, 06:05 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Using ADX to Profit

Tools – Candlestick on Hourly Time Frame , ADX (14) and MA 20 period

Trade Setup – A 14-period ADX must initially be greater than 30 and rising. This is mainly done to identify strongly trending market. Once the initial job of identifying a strongly trending market is undertaken, then look for a retracement in price to the 20-period moving average. When the price touches the 20-period moving average, buy above the high of the previous bar and ride the trend. The buy signal should come within the next two trading sessions. If this does not happen, then the pattern is void.

Example - Below is an example of Auropharma which has been one of the trending stocks in the current run (look at the 14 period ADX below). I have highlighted three areas where the price has touched the 20 period average and formed the pattern mentioned above. Everytime the prices touched the MA 20 period average, the next bar high has given the entry signal. Profits usually should be taken once the price moves 5-10% away from the moving average. This pattern is extremely effective but works only with strong trending stocks.

STOPLOSS - Stop loss is if the price closes below the 20 period average. Also previous swing low can be used.

Usage - Can be used on Daily time frame chart.


__________________
Raunak Agarwal
15-Min Intraday Setup

Requirement – Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)

Brief Introduction – I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.

Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between 20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high. Enter a short position at this point and book profits according to your own appetite.

Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.

StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.

Usage - This pattern can be used on 15Min charts for day trades.


..........................
--------------------------------------------------------------------------------

Markets have potentially entered an 'iffy' period. I don't know how long this would last. But as of now I am not adding long positions. I would particularly wait now for the previous high to be taken out (5330). This would be a good point to go long. As of now though, I am sitting with tight trailing stop loss waiting for the market's to show me what to do.
................................
Market’s globally have rallied for quite sometime now. In particular if we speak of India, investors have got a healthy return of over 70% on the index alone. There has been no notable period of correction in this one year period. Probably equity markets were having their best time last year as a result of low interest rates, low P/E multiple and the positive growth story of India. However, at this juncture, things don’t look that positive. World market problems are beginning to creep up, commodity and oil prices are rising, dollar is continuously falling and the inflation rates are heading north. Typically these scenarios are never good for stock markets and I feel now it is time to book profits and have cash in hand (atleast 75%).

The current price rise and the currency appreciating is a sign of problems to come in the stock markets. The RBI which will meet this month for monetary policy review is already hinting at hiking interest rates. The IIP numbers have been good in the past and on Monday if the numbers turn out to be more positive, then it would almost ensure a rate hike in coming few days. Moreover, if one observes the market action closely, Capital good sector and Basic material sector is beginning to do well. These sectors usually do well in middle expansion phase of economy where rate hikes are part of the economic scenario. On 13th April 2010, Infosys is going to declare it’s results and guidance. It is perhaps going to set the tone for the markets. Even if the market’s continue to rise, I would personally be very skeptical regarding the rally. Upside may indeed exist, but the risk to reward ratio does not favor a trade currently.
__________________I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Sai, last week I squared off 40% of my portfolio. In the coming week, on Monday, I am going to offload another 40% or so. See, I am not positive on the market, because technically and fundamentally it is not the right time to be investing. I'm willing to miss out on another 1000+ rally but I am not willing to go against what I am thinking. In the mean time I will be undertaking swing trades so that even if market's correct, I am not hurt badly. On an average I have had a very good return on my portfolio and I don't intend to be too greedy for another 10-15% or so. Once I am comfortable with the market's, I'll return back to commit funds.

But for me, as of now, swing trading seems to be the flavor of the month.[11april 2010]
.....................
Yes Prst Swing trading essentially means staying in stocks which show good momentum (upwards or downwards). Swing trades may or may not be based on news. I personally dont care about the news. I have a system/methodology for swing trades and i follow that.

If Nifty closes around these levels or it closes below current levels (5350) but not higher than 5380, then we could be potentially forming a tweezer top or harami pattern on the candlestick chart. The fact that this will form around good resistance level will make it more meaningful. Let's see how Nifty spans out. [12 th april2010]
__________________


Tools – Candlestick/Bar Chart

Trade Setup – This pattern was popularized by Larry Connors and Linda Bradford. Now everyone knows the original turtle trading system where shorts were initiated when new 20 day lows were made and longs were initiated when new 20 day high was made. The problem with turtle trading system was that it had many false signals. This pattern tends to capitalize on these false moves.

Buy Setup - The typical buy conditions are as follows. The market makes a new 20 day low with the previous 20 day low being atleast 3 sessions ago. The current close should be near or below the previous 20 day low. Following this, the next day market rebounds and trades above the previous low (ideally should close above the previous low). Enter the stock by placing a stop at the previous low. This offers an excellent risk to reward ratio.

Time Validity - This pattern has to be looked for on daily charts. But the trading time frame should be of 3-5 days. Book profit after 3-5 days.

How to trade it - As most of my previous examples, I have again picked a stock which has recently formed this pattern. I recommended Balrampur Chini as a buy in my swing trading thread. And this was precisely why. Look at the chart below. Balrampur forms a 20 day low (Rs 90.3) on 25/03/2010. After this the stock rallies a bit and then again makes a new 20 day low on 1st april 2010 (Rs 87.7). Now, on the next session the stock closes at 90.8 which is above the previous low of Rs 90.3. We enter here placing a stop at 87.7 and trade on the long side. Currently the stock is trading at Rs 99 which is about 10% gain in 6 trading sessions.

Target - Target is specified in time. Book profits in 5-6 trading sessions.

STOPLOSS - Previous Low made.

.................................................. That's what I have written dear. The Turtle system was essentially built (conceptualized) on the Donchian channel system. So when this fails, turtle soup plus one and turtle soup comes into the foray.

Here's an AFL to plot horizontal lines at 10 day high and 10 day low. By right clicking on the parameters window and adjusting the value, one can plot lines for any duration. This will visually help to scan the Turtle Soup plus one strategy mentioned. Special thanks to Anant (Asnavale) for taking the time to develop this AFL.

//******** The AFL starts here *************

_SECTION_BEGIN("N_Day_HiLo");

// Set chart display parameters
// Chart background is Black,
// Date Axis displayed,
// Long titles wrapped to next line

SetChartOptions(0, chartShowDates | chartWrapTitle);
SetChartBkColor(colorBlack);

// Locate Highest HIGH and Lowest LOW in last N days

N = Param("Days to go back(Excl today)", 10, 2, 200, 1);
PriceStyle = ParamStyle("Chart Type", styleCandle, maskPrice);
LineStyle = ParamStyle("Line Style");

NDayHi = H[BarCount - 1 - N];
NDayLo = L[BarCount - 1 - N];
XH = XL = BarCount - 1 - N;

for(i = BarCount - 1 - N; i < BarCount - 1; i++)
{
if(H > NDayHi)
{
NDayHi = H;
XH = i;
}
if(L < NDayLo)
{
NDayLo = L;
XL = i;
}
}


// Define the Lines to be drawn

HLine = LineArray(BarCount - 1 - N, NDayHi, BarCount - 2, NDayHi);
LLine = LineArray(BarCount - 1 - N, NDayLo, BarCount - 2, NDayLo);

// Plot chart

_N(Title = StrFormat("{{NAME}} ({{INTERVAL}}) {{DATE}} {{OHLCX}} Vol=%1.0f\n{{VALUES}}", V));

Plot(C, "", colorGrey50, PriceStyle);
Plot(Hline, WriteVal(N, 1.0) + " Day Hi", colorBrightGreen, LineStyle);
Plot(LLine, WriteVal(N, 1.0) + " Day Lo", colorYellow, LineStyle);

_SECTION_END();

//************ END of AFL ***************
__________________
In my view, Results tell the history..i.e what happened in last 3 months / 1 year.
whereas, stock market discounts the future earning in price. So even if results are good,
current price of reliance already takes it into account.
Do you think those highly paid analysts /fund managers have not done their analysis and already know what reliance is come out with.

My common observation is, if results are good, price jumps for short time, or few days due to purchase by novice who think they are smart and making sound fundamental investment decision, and very soon, professionals come in to dump their stock and price drops or corrects.

And, CEO's are another breed of human being.. in bullish market, they are more optimistic about their projection.. and when mkt is bearish, they dump all the bad news.

One thing that my expensive education taught me was that "The best sellers in the world are not the one's who win a Pulitzer or a Booker's prize. But they are the one's who sit at Wall Street"
I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Regards
Saivenkat

As of friday, I am completely in Cash now. Have descent amount of short positions though. Don't mind missing the upmoves from here (if they happen)

………………………………………….
Most of the softwares offer one and the same thing. I would suggest you to be with Amibroker as you have familiarity using it.

It is our tendency to feel comfortable with familiar things and moreover amibroker is in no way less efficient than metastock. Both are equally good.
...........................................
1. We are not in a bear market. That's why I don't think any rally here is a bear market rally. Nifty is going to make a new high this year and I strongly believe in this. The market would change it's stance from Bull to Bear when 4500 and more importantly (3900) get's taken out decisively.

2. TA assumes that the trend will continue in motion till signs emerge to suggest otherwise. As of now, there is nothing that suggests this. It is human tendency to get shaken up by such corrections and volatility. How much has been the rise since April and how much has been the correction recently ?? As traders and investors we should not draw conclusions so early.

3. What Dow is doing currently is completely different. They have a structure economic problem which is far from getting over. The recent changes in US policies do indicate that. Hence, before linking Dow with Nifty, we need to consider the economic structure of the countries in perspective. The transition of growth and benchmarking has to take place from the US to the Asian countries. Hence, the impact might be there initially, but It wont be a permanent one.

4. The RBI quarterly review released yesterday indicates that in our economic system, things are progressing well and though monitoring is still been done, there are no apparent signs of any weakness.

5. Technically Nifty has formed a high wave candle (indecision of movement) on Thursday and a strong hammer on Friday. Hence, clinging on to these levels is not such a bad idea. Volatility will be there and hence trader's should stay out. But, for long term portfolio, it is not a bad idea to accumulate stocks. If the market signals a bear move ahead, then we can liquidate always. But anticipating what the market is going to do is always fatal.

.................................................. ......

For Investment Purpose Only.

Stocks selected here are not based on any system mentioned in the thread. This is based on my own personal system which I use for my trades. Unfortunately, it is not an AFL but a customized application. Hence, I cannot release this on the forum.

P.S. Please select stocks out of these lists suiting your own investment criteria. These are pure technical play outs and I don't know whether they are fundamentally strong or not. [31 jan'2010]
......................................RSI Divergence Strategy Using Daily Charts

Tools – Candlestick/Bar Chart, RSI(15)

Trade Setup – On Daily chart frame, this strategy is going to give out extremely good results if you continue to stick with it. The setup is fairly easy, but you do need to monitor selective group of stocks to get a feel of their levels. Hence, this strategy does require some subjective analysis.

Time Validity - I trade this pattern only on daily charts. I use this particular time frame because divergence is more easily visible here. Once the trade is initiated, I carry forward the trades for 2-7 days.

When does it occur and How to Trade it- This pattern occurs when a stock or an index runs up quite a bit and retraces back to some level. From there on, the stock/index ralies again and makes a significant new high. It is during this high that we need to look at the RSI level. If the RSI level is significantly low than the previous high's level, then initiate short position with High of the rally as a stop loss. I have particularly used this strategy to short the Nifty recently at 5300 level which I had disclosed on this thread.

Examples - I have provided example of Nifty. Refer to the chart below to understand the setup properly.


__________________rdeb, though I have provided some setups on Intraday, I personally don't use intraday that often in stock market's. In forex though, I am mostly a day trader and hence I avoid carrying positions forward.

I'll advise you to pick one intra day setup and master it. While doing so you'll automatically realise the screening procedure. Screening procedure is not entirely mechanical.
....................................
Though these are tough times, I still believe we are in a long term bull market. However, I will change my mind once 4540 and more importantly 3900 get's taken off. My long term system has indicated closing off long positions on Nifty but has not indicated short positions.

It may seem surprising but I am still accumulating stocks in small quantities for my long term portfolio. Rather than believing news going around, I am trusting the level's reflected in charts. So, I am comfortable till 4540 and 3900 holds.

At present, I don't think we need a system to tell us what's gonna happen in near future. Thing's are getting ugly on global front (just look at currencies, commodities and stock market's) and I think same is going to happen to us. At this stage I can't take a call on very short term movements.

Tc
..........................................
Nimish, I hope you are not looking for people in TJ to support your thinking. As a human being, we are tuned for this...i.e.to see the people around us with similar thoughts like ours. Unfortunately, that is demaging trait in trading.

If you have already setup your max pain limit of loss then take action when that limit is hit. You might be able to take loss of 5Lac that doesn't mean u shd wait till it reaches that level. After big loss, recovery would be difficult.

If you are not able to take the pain, then my suggestion will be to atleast cut your position partially, rather then fully. Try to see historical pattern in chart, and observe
- how much steep a fall could be
- what happens after that
- how much worse can it get in short term etc.
- what signals appear that indicate bounce is fizzling out and downtrend is again building up.

Based on that draw your OWN strategy to play in the market.

In my observations, all global markets have fallen 5 to 10% in last 5-6 days with no real bounce. Selling after selloff is typical trait of novice /immatuare traders. Even if market has to goto 4k level, it will not happen in one wave.. there will be bounces in between.

After such steep fall, bounce is inevitable but can't predict whether this will happen tomorrow or in next 4 days. Hence DON't be contrarian and build long position until u see some signs of bears disappearing. Bulls will keep showing up but they get beaten down again.

There could be bounce which might help you in cutting your loss. If my post make u think then do keep in mind that there are same 50% chance that the pain might get worse before it can get better. Nimish I agree with what AW10 has said. If your system told you when to enter, you must trust it for when to exit. By taking my views or any other user's view, you are cluttering your mind with too many things.

Things are going to get tough today. We have to see where we go from here. For your future reference I'd suggest you to practice the probe test buying technique.

As far as your current positions are concerned, you might well be selling off in a typical "Sell off" situation. You might get a bounce back.

If your stop's have been triggered, it's always better to exit. Else, I will stand by the system (assuming that your system is back tested with good results).

.............................................
trading is not a game... its a business...
Before entering any business You should have good knowledge about it and how to manage it.. bez in trading lots of risk involved...
good luck....
......
Stocks for Investments Only. Keep away from low volume stocks. The average given here are of 15 week Volume. Here's a complete list of stocks for investment purpose earlier posted on this thread. Add the above list to this list........................................
#68
27th November 2010, 05:15 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Dual Time Frame Momentum Strategy

Tools – Candlestick/Bar Chart, Stochastic (8,3,3) Daily and Stochastic (8,3,3) Weekly

Trade Setup – This setup was made popular by Robert Miner. The basis of this setup is to use momentum of 2 time frames to get into trades. Though Robert Miner also showed how to use E-wave and fibonacci with this setup, we will essentially stick only with the basic dual direction momentum setup.

Trading the Setup - Switch to the daily chart mode to use this setup. Below the main price window, you must have Stochastic (8,3,3) daily time frame and Stochastic (8,3,3) weekly time frame. It is absolutely essential to have both the stochastic windows (one for daily time frame and other for weekly time frame) on the same time. We enter the trade when the Weekly stochastic has crossed over in the oversold range (usually should have crossed around the 20-30 range) and is pointing up. We then pay attention to the daily stochastic and then buy when the daily stochastic crosses on the same mentioned range. When the daily crossover happens, the weekly stochastic should not be in the overbought range. Best signals in this setup occur when both the weekly stochastic and daily stochastic cross together. One such example, in the case of DLF has been explained below.

Target - Continue to hold the stock till the daily stochastic indicator does not signal a typical sell signal (that is, bearish crossover).

Stoploss - Stop loss in this strategy is fairly simple. Either this strategy works or it fails. Thus whenever the signal comes, do not take loss of more than 3% on the trade or keep stop loss of previous swing low. This strategy has a success rate of about 60%.

Note - This is not an investment strategy. Hence, do not continue holding the stock. This is pure momentum play. Buy it and exit once you get good gains and when the sell signal emerges. For better understanding I have cherry picked this example. Like all the strategies, even this is fallible.

Time Frames - You have to pick out proper pairs to execute this strategy. Here I have used Daily - Weekly pairs as I don't believe too much in shorter time frame trades. You can experiment by using 30 Min - 5 Hour pair or 5 Min - 30 Min pair. But bear in mind that there will be a lot many false signals as you continue to shorten the time frame.


__________________
Raunak Agarwal
the main point in this setups is that when bvoth daily and weekly stochastic hook out of the oversold zone...above 20 at the same time...only then we should enter the trade
????????? Simultaneous crosses and moving out of zones give the best signal ...

Otherwise even if weekly has moved out earlier (but not overbought) and daily gives you a buy currently ... even thn u can enter. ...
////////
As a coincident, I read this book at the moment. My target is to read at least one book about trading every month and this month it is that one.

Last month was a book about selling strategy's on options on futures from John Summa.

.................................
Watcher that's going to be very difficult to do. See, its a complete portfolio and I cant specify which one's are the strong one and which are the weaker one's. All stocks are buy's based on various parameters. Minimum holding period is 1 year. So, it may be that they are not performing now, but they might begin to perform in coming days.

....................................
Watcher, am not an avid supporter of support and resistance hence I wont give you any level. But, I am looking for 4540 as a critical point. Not because it is some major support level but due to its relevance in determining the structure of the market. I will begin to worry when this level is taken out. Hence, till this happens, I will continue to hold on to my positions. It is better not to anticipate in this scenario.I invest equally in every stock that gives a buy. That way, investment gets diversified and investments remain small and well divided.

As of today, most of the stocks are giving better entry points. I will continue buying till the market does not show me structural changes. No matter who the chartist is, till the market shows me the change, I will never react.
..............................
Appreciate it. What I appreciate most in you is not the conviction but the clarity of thought. Because the former is the effect and the latter the cause.
Thanks and regards
__________________can any one tell me metastock explorer formula for RSI(9) AND SMA (9) CROSSOVER ON A DAILY CHART.
AND HOW TO MAKE FORMULAS FOR EXPLORER ?
......................
Accumulate PIRhealth and Glaxo for LT portfolio.[2nd march2010]
Preserving your capital is more important than capital appreciation
...............Ticker Date Entry As of 06th March 2010 Percentage Change
ABGSHIP 28/01/2010 279.8 256.85 -8.20%
AMBUJA 28/01/2010 102.75 109.25 6.33%
ACC 28/01/2010 889 969.3 9.03%
GESHIP 28/01/2010 287.75 292.9 1.79%
ABB 25/01/2010 815.9 822.2 0.77%
CENTURYTEX 25/01/2010 521.8 511.5 -1.97%
ROLTA 01/02/2010 203.2 180.1 -11.37%
GTLINFRA 01/02/2010 42.53 41.95 -1.36%
DISHTV 01/02/2010 41.95 40.3 -3.93%
ZEEL 01/02/2010 261.4 270.8 3.60%
RELIANCE 01/02/2010 1040.85 1009.8 -2.98%
POWERGRID 01/02/2010 112.4 108.25 -3.69%
FINANTECH 01/02/2010 1539 1526 -0.84%
COLPAL 05/02/2010 702 705.25 0.46%
DABUR 08/02/2010 175.9 169.95 -3.38%
GLAXO 26/02/2010 1707 1741.8 2.04%
PIRHEALTH 26/02/2010 421 411.4 -2.28%
ORIENTBANK 05/03/2010 302 309.05 2.33%
Net Gain/Loss % -0.76%I would be keeping an eye on Rolta right now. It is looking weak. Let's see.
..........................
Idea did very well today ... Up almost 5 %

Stock is showing tremendous strength. [18 march2010]

.............................dear it's a positional system (usually 1 to 9 months). All are delivery based. No leverage.

I hav a separate system for swings trades ... I use futures for swing trades ...

............................
Anyway I am posting it again here ... u will have to adjust it according to 9 AM opening ....


//AFL FOR HORIZONTAL RANGE PATTERN (INTRADAY SETUP)
isRth = TimeNum() >= 094500 & TimeNum() <= 095459;
isdRth = TimeNum() >= 095500 & TimeNum() <= 130000;
aRthL = IIf(isRth, L, 1000000);
aRthH = IIf(isdRth, H, Null);
aRthLd = IIf(isdRth, L, 1000000);
DayH = TimeFrameCompress( aRthH, inDaily, compressHigh );
DayH = TimeFrameExpand( DayH, inDaily, expandFirst );
DayL = TimeFrameCompress( aRthLd, inDaily, compressLow );
DayL = TimeFrameExpand( DayL, inDaily, expandFirst );
Bars = BarsSince(TimeNum() >= 094500 AND TimeNum() < 095959);//,BarIndex(),1); // AND DateNum()==LastValue(DateNum());
x0 = BarCount-LastValue(Bars);
x1 = BarCount-1;
DayHline=LineArray(x0,LastValue(DayH),x1,LastValue (DayH),0);
DayLline=LineArray(x0,LastValue(DayL),x1,LastValue (DayL),0);
Range = DayH - DayL; //For Fibonacci Retracements
isdc = TimeNum()>=152800 & TimeNum() <=153000;
adc = IIf(isdc, C, Null);
DayC = TimeFrameCompress( adc, inDaily, compressHigh );
DayC = TimeFrameExpand( DayC, inDaily, expandFirst );



/************************************************** ************************************************** ************************************************** **********/

// Buy_Short_Sell_Cover Criteria

Buy = C > DayH & TimeNum() >=130000 & TimeNum() <= 140000 ;
Sell = TimeNum() >=152500;;
Short = C < DayL AND TimeNum() >=130000 & TimeNum() <= 140000 ;
Cover = TimeNum() >=152500;

/************************************************** ************************************************** ************************************************** *********/
// Plotting
_SECTION_BEGIN("Price");
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );

Plot(DayHline,"RH",colorOrange,styleLine);
Plot(DayLline,"RL",colorOrange,styleLine);
Plot(Range*1.272 + DayL,"UT 1", colorBlue, styleDashed);
Plot(Range*1.618 + DayL,"UT 2", colorBlue, styleDashed);
Plot(Range*0.618 + DayL,"R1",colorDarkRed,styleDashed);
Plot(Range*0.500 + DayL,"R2",colorDarkRed,styleDashed);
Plot(Range*0.381 + DayL,"R3",colorDarkRed,styleDashed);
Plot(DayH - Range*1.272,"DT 1",colorRed,styleDashed);
Plot(DayH - Range*1.618,"DT 2",colorRed,styleDashed);
BuyArrow = Buy * shapeUpArrow;
SellArrow = Short * shapeDownArrow;
PlotShapes(BuyArrow ,colorGreen, 0,L,Offset=-15);
PlotShapes(SellArrow, colorRed, 0, H,Offset=-15);
_SECTION_END();
Buy =ExRem(Buy,Sell);
Sell=ExRem(Sell,Buy);
Cover=ExRem(Cover,Short);
Short = ExRem (Short,Cover);

/************************************************** ************************************************** ************************************************** ********/
//Exploration
Filter = Buy OR Short;
AddColumn( Close, "Close", 1.2 );
AddColumn( Buy, "Buy Price", 1.2 );
AddColumn( Short, "Short Price", 1.2 );
AddColumn( DayH, "Day's High", 1.2 );
AddColumn( DayL, "Day's Low", 1.2 );
AddColumn( Volume, "Volume", 1.1 );
AddColumn(MA(Volume, 35), "Average Volume", 1.1);
AddColumn( DayC, "Day Close", 1.2 );
AddColumn(DayH - DayL, "Range", 1.2);
AddColumn(C*0.005,"Volatility",1.2);
/************************************************** ************************************************** ************************************************** ********/
//Alerts
AlertIf( Buy, "SOUND C:\\Windows\\Media\\tada.wav", "Buy",2);
AlertIf( Short, "SOUND C:\\Windows\\Media\\notify.wav", "Short", 2);
__________________
Raunak Agarwal
#69
27th November 2010, 06:05 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Using ADX to Profit

Tools – Candlestick on Hourly Time Frame , ADX (14) and MA 20 period

Trade Setup – A 14-period ADX must initially be greater than 30 and rising. This is mainly done to identify strongly trending market. Once the initial job of identifying a strongly trending market is undertaken, then look for a retracement in price to the 20-period moving average. When the price touches the 20-period moving average, buy above the high of the previous bar and ride the trend. The buy signal should come within the next two trading sessions. If this does not happen, then the pattern is void.

Example - Below is an example of Auropharma which has been one of the trending stocks in the current run (look at the 14 period ADX below). I have highlighted three areas where the price has touched the 20 period average and formed the pattern mentioned above. Everytime the prices touched the MA 20 period average, the next bar high has given the entry signal. Profits usually should be taken once the price moves 5-10% away from the moving average. This pattern is extremely effective but works only with strong trending stocks.

STOPLOSS - Stop loss is if the price closes below the 20 period average. Also previous swing low can be used.

Usage - Can be used on Daily time frame chart.


__________________
Raunak Agarwal
15-Min Intraday Setup

Requirement – Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)

Brief Introduction – I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.

Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between 20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high. Enter a short position at this point and book profits according to your own appetite.

Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.

StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.

Usage - This pattern can be used on 15Min charts for day trades.


..........................
--------------------------------------------------------------------------------

Markets have potentially entered an 'iffy' period. I don't know how long this would last. But as of now I am not adding long positions. I would particularly wait now for the previous high to be taken out (5330). This would be a good point to go long. As of now though, I am sitting with tight trailing stop loss waiting for the market's to show me what to do.
................................
Market’s globally have rallied for quite sometime now. In particular if we speak of India, investors have got a healthy return of over 70% on the index alone. There has been no notable period of correction in this one year period. Probably equity markets were having their best time last year as a result of low interest rates, low P/E multiple and the positive growth story of India. However, at this juncture, things don’t look that positive. World market problems are beginning to creep up, commodity and oil prices are rising, dollar is continuously falling and the inflation rates are heading north. Typically these scenarios are never good for stock markets and I feel now it is time to book profits and have cash in hand (atleast 75%).

The current price rise and the currency appreciating is a sign of problems to come in the stock markets. The RBI which will meet this month for monetary policy review is already hinting at hiking interest rates. The IIP numbers have been good in the past and on Monday if the numbers turn out to be more positive, then it would almost ensure a rate hike in coming few days. Moreover, if one observes the market action closely, Capital good sector and Basic material sector is beginning to do well. These sectors usually do well in middle expansion phase of economy where rate hikes are part of the economic scenario. On 13th April 2010, Infosys is going to declare it’s results and guidance. It is perhaps going to set the tone for the markets. Even if the market’s continue to rise, I would personally be very skeptical regarding the rally. Upside may indeed exist, but the risk to reward ratio does not favor a trade currently.
__________________I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Sai, last week I squared off 40% of my portfolio. In the coming week, on Monday, I am going to offload another 40% or so. See, I am not positive on the market, because technically and fundamentally it is not the right time to be investing. I'm willing to miss out on another 1000+ rally but I am not willing to go against what I am thinking. In the mean time I will be undertaking swing trades so that even if market's correct, I am not hurt badly. On an average I have had a very good return on my portfolio and I don't intend to be too greedy for another 10-15% or so. Once I am comfortable with the market's, I'll return back to commit funds.

But for me, as of now, swing trading seems to be the flavor of the month.[11april 2010]
.....................
Yes Prst Swing trading essentially means staying in stocks which show good momentum (upwards or downwards). Swing trades may or may not be based on news. I personally dont care about the news. I have a system/methodology for swing trades and i follow that.

If Nifty closes around these levels or it closes below current levels (5350) but not higher than 5380, then we could be potentially forming a tweezer top or harami pattern on the candlestick chart. The fact that this will form around good resistance level will make it more meaningful. Let's see how Nifty spans out. [12 th april2010]
__________________


Tools – Candlestick/Bar Chart

Trade Setup – This pattern was popularized by Larry Connors and Linda Bradford. Now everyone knows the original turtle trading system where shorts were initiated when new 20 day lows were made and longs were initiated when new 20 day high was made. The problem with turtle trading system was that it had many false signals. This pattern tends to capitalize on these false moves.

Buy Setup - The typical buy conditions are as follows. The market makes a new 20 day low with the previous 20 day low being atleast 3 sessions ago. The current close should be near or below the previous 20 day low. Following this, the next day market rebounds and trades above the previous low (ideally should close above the previous low). Enter the stock by placing a stop at the previous low. This offers an excellent risk to reward ratio.

Time Validity - This pattern has to be looked for on daily charts. But the trading time frame should be of 3-5 days. Book profit after 3-5 days.

How to trade it - As most of my previous examples, I have again picked a stock which has recently formed this pattern. I recommended Balrampur Chini as a buy in my swing trading thread. And this was precisely why. Look at the chart below. Balrampur forms a 20 day low (Rs 90.3) on 25/03/2010. After this the stock rallies a bit and then again makes a new 20 day low on 1st april 2010 (Rs 87.7). Now, on the next session the stock closes at 90.8 which is above the previous low of Rs 90.3. We enter here placing a stop at 87.7 and trade on the long side. Currently the stock is trading at Rs 99 which is about 10% gain in 6 trading sessions.

Target - Target is specified in time. Book profits in 5-6 trading sessions.

STOPLOSS - Previous Low made.

.................................................. That's what I have written dear. The Turtle system was essentially built (conceptualized) on the Donchian channel system. So when this fails, turtle soup plus one and turtle soup comes into the foray.

Here's an AFL to plot horizontal lines at 10 day high and 10 day low. By right clicking on the parameters window and adjusting the value, one can plot lines for any duration. This will visually help to scan the Turtle Soup plus one strategy mentioned. Special thanks to Anant (Asnavale) for taking the time to develop this AFL.

//******** The AFL starts here *************

_SECTION_BEGIN("N_Day_HiLo");

// Set chart display parameters
// Chart background is Black,
// Date Axis displayed,
// Long titles wrapped to next line

SetChartOptions(0, chartShowDates | chartWrapTitle);
SetChartBkColor(colorBlack);

// Locate Highest HIGH and Lowest LOW in last N days

N = Param("Days to go back(Excl today)", 10, 2, 200, 1);
PriceStyle = ParamStyle("Chart Type", styleCandle, maskPrice);
LineStyle = ParamStyle("Line Style");

NDayHi = H[BarCount - 1 - N];
NDayLo = L[BarCount - 1 - N];
XH = XL = BarCount - 1 - N;

for(i = BarCount - 1 - N; i < BarCount - 1; i++)
{
if(H > NDayHi)
{
NDayHi = H;
XH = i;
}
if(L < NDayLo)
{
NDayLo = L;
XL = i;
}
}


// Define the Lines to be drawn

HLine = LineArray(BarCount - 1 - N, NDayHi, BarCount - 2, NDayHi);
LLine = LineArray(BarCount - 1 - N, NDayLo, BarCount - 2, NDayLo);

// Plot chart

_N(Title = StrFormat("{{NAME}} ({{INTERVAL}}) {{DATE}} {{OHLCX}} Vol=%1.0f\n{{VALUES}}", V));

Plot(C, "", colorGrey50, PriceStyle);
Plot(Hline, WriteVal(N, 1.0) + " Day Hi", colorBrightGreen, LineStyle);
Plot(LLine, WriteVal(N, 1.0) + " Day Lo", colorYellow, LineStyle);

_SECTION_END();

//************ END of AFL ***************
__________________
In my view, Results tell the history..i.e what happened in last 3 months / 1 year.
whereas, stock market discounts the future earning in price. So even if results are good,
current price of reliance already takes it into account.
Do you think those highly paid analysts /fund managers have not done their analysis and already know what reliance is come out with.

My common observation is, if results are good, price jumps for short time, or few days due to purchase by novice who think they are smart and making sound fundamental investment decision, and very soon, professionals come in to dump their stock and price drops or corrects.

And, CEO's are another breed of human being.. in bullish market, they are more optimistic about their projection.. and when mkt is bearish, they dump all the bad news.

One thing that my expensive education taught me was that "The best sellers in the world are not the one's who win a Pulitzer or a Booker's prize. But they are the one's who sit at Wall Street"
I agree, what is the cut off point will you place to exit all longs, for example your long time investment portfolio. Will you advice to exit in the event of market correcting? or will you advice to hold all longs irrespective of the fact correction setting in?

Regards
Saivenkat

As of friday, I am completely in Cash now. Have descent amount of short positions though. Don't mind missing the upmoves from here (if they happen)
 

oilman5

Well-Known Member
....................................
Trading Positive Divergence on Daily Time Frame

Tools – Candlestick/Bar Chart, Stochastic Oscillator with standard settings (15,3). Overbought/Oversold conditions used as 80/20

Trade Setup – The basics of this setup is very easy to understand. If possible, monitors stocks which move in any kind of market. Typically these are high beta stocks. However, most of the stocks traded in Futures segment should do fine. What we are looking for is a stock making a new high whereas the stochastic highs forming a lower high. That means, stock makes a higher high and Indicator makes a Lower High. This is highlighted in red lines on price and Indicator. Now once the stock makes a new high, we need to see the indicator levels. If this indicator level forms a divergence and goes back into the neutral zone (that is below 80) then we short the stock, keeping the high as our stop loss. I usually target a 5-8% move. Remember, the divergences should occur over period of 1-2 Months.

Time Validity - I trade this pattern only on daily charts. However, it can work on any time frame. Please remember to adjust your targets accordingly. On daily time frame I use targets of 5-8%. On an hourly frame, this comes down to about 2-4%.

How to trade it - Refer to the chart below. Gujrat Ambuja made a high on 3/29/2010. It then rallied in April and made a new high on 29th April 2010. There was a distinct divergence visible on the charts. We now wait for our indicator to go into the neutral zone (that is, below 80). This happens on 30th April 2010. We get filled at 121.05 and keep a stop loss of 125.8. Over the next 10 sessions Gujrat Ambuja attains the target of 5-8%. The stock goes down much lower, but we maintain out targets and exit the trade.

Adding Positions - Divergence setups usually have very good risk to reward ratio. When trading these patterns with indicators, there is always a risk for the indicators to reverse and the price to move up. Hence, we need to take use of signals which are perfect. To do this, what we do is add one more lot once the stochastic indicator goes below 50. Usually indicator reversals for perfect signals rarely take place below 50. Hence we add position here. This is depicted by Blue horizontal lines.

Target - 5- 8%

STOPLOSS - Recent high of prices

Chart –
………………………………………………………
.................................................. ................
Usually how u trade breakouts? I read that we should trade the pullbacks of breakout and not breakout.Take LT, it gave breakout on 17/05/10. I didnot enter as such a huge volume and it went up from 1474 to 1606 in a day.But two days past its still going up only. Now waiting for pullback,but missed a gud move.
So in general how we should trade breakouts?

Trading breakouts on pullback is "Ideally" the right way to do it. However, let me tell you something. Most of the breakouts which do run up quite a bit are the one's which never give a pullback. Hence you need to see how and when the break out occurs. If the stock has been negative (not so bullish) for quite sometime and then you suddenly see it breaking out of a range, then this kind of breakout will run up fast.

E.g: LT was trading weak. It suddenly broke out and is now heading high. Broke out after news hit the market.
E.g: RNRL was doing the same. But the news even was yet to be delivered. Hence you need to be careful.

Hope you get my point.
..........................................
Let me give u a small story
Once a person was learning astrology ok
after some time he tell that I know now everything about astrology
person ask him what is in his feast (hand)
He started calculation and in that it comes that there is something living thing with more then 4 legs
he tell at once wow see my calculation its OCTOPUS
he never think that it can b cockroch or ant just like that people saw only chart never see what is happening it gave 15% more then street expectations
I know few person who shorted on that day too and leter cried ohhhh my sl hit
TA is just to help think of a trade after keeping in mind everything
__________________
"Coin Always Makes Sound But The Currency Notes Are Always Silent So When Your Value Increases Keep Yourself Calm Silent"
..................................
Always stay in stocks which have good liquidity. Even during consolidation the liquidity should be good.
....................................
Had I been in your shoes, I would have kept a stop loss of 5110 (conservative) and 5180 (if aggressive). We are in high volatility environment and hence stop losses need to be wide. You are in the right side of the market and moving up would require a lot of buying. As of now, data still favors short trade.
15-Min Intraday Setup

Requirement – Candlestick Charts/Bar Charts with MACD (standard setting) and MA (50), EMA (20) and EMA (10)

Brief Introduction – I came across this setup while watching Greg Capra's seminar. I have modified this setup based on my trading experience.
I have added the MACD indicator for filtering out bad trades. The setup is simple to understand and implement. This setup is extremely effective to day trade and can get about 30-50 points on the Nifty. Please use this strategy on Nifty as I have researched this setup on it.

Trade Setup - Pick a stock which has run up quite a bit and is due for a correction. A typical setup occurs when the 50 MA slopes down (with angle between 20-30) and prices fall sharply. Eventually prices retrace back to 20 EMA or 10 EMA which also happens to be the 38 -50% retracement from the swing high. Enter a short position at this point and book profits according to your own appetite.

Example - In an example shown below, Nifty has run up quite a bit and has formed a new high. Prices start to drop off from this level. Over the period of two days, the slope of 50 SMA starts to curve down and the setup is formed. Prices fall off on 14th sharply and then retrace back to 20 EMA on the 15th. This level is also between 38.2 and 50% retracement level from swing high. MACD slope is negative and is about to turn below zero. Ideal setup for a short trade.

StopLoss - Stoploss if it breaches the 20 EMA and reaches the 50 SMA. Ideally, one can stop if the trade breaches 20 EMA.

Usage - This pattern can be used on 15Min charts for day.
..................Either keep a fixed target (range of 30 - 50) points or use trailing profit protection of price crossing and closing above the 10 EMA or 20 EMA in volatile conditions. Hope this helps.
...........................
However I have two points to make.

Firstly, you are using Robert Miner's Dual time frame strategy. Now you haven't taken into consideration ABC correction phase and time retracements. In my opinion you are missing out on very important factors. You have to consider ABC correction wave and time retracement. It's like driving a car without steering and brakes. ABC correction phase (is steering; tells you whether market is in correction or trend) and time retracement (is brake; it tells you when to stop). Hence, I will encourage you to use these two important points in your trade. It's better to master a setup rather than mastering a part of it.

Secondly, since you are relying on fibonacci retracement, I would advise you to use trend lines with it. Using trendlines, fibonacci and candlesticks together give some of the most amazing trades. Once you master this setup, you will start buying much lower and will make larger gains. If I were you, I would have entered the trade once the prices would have retraced back to zone 'A' (15 minute chart keeping stop loss of 722).

.......................
Originally Posted by raunakagarwal
Classical Gap Setup - Intraday Trades

Tools – Candlestick/Bar Chart (Hourly Time Frame), Comparative Relative Strength (Base Index: Nifty)

Brief Introduction – Now, Let’s take time over understanding this. Markets are based on demand and supply. Gap down, as shown in one of the images below indicates that today the market opened lower. Hence, the bidding today started much lower than yesterday’s lows. This means traders are expecting the market to go down and hence are not even bidding near the levels of yesterday. This is classical sign of bearishness. Same goes for upward gap.

Concept of Relative Strength - First of all, do not confuse this with Relative Strength Index (RSI). RSI is completely different. Comparative Relative strength is when a stock is compared with a base entity (let’s say an index; Nifty). By using Comparative Relative Strength we compare whether the stock is outperforming NIFTY or underperforming NIFTY. We will always want to buy stocks which are outperforming the index and will always want to short stocks which underperform NIFTY.

Trade Setup - This is one of the few setups which gives consistent returns in intraday. We enter a BUY position when there is an upward gap on Hourly time frame and the gap is sustained for one hour with the Comparative Relative strength sloping/pointing up. We enter a SHORT position when there is downward gap on Hourly time frame and the gap is sustained for one hour with Comparative Relative strength indicator sloping/pointing down.

Time and Validity - I trade this pattern only on Hourly charts. Out of 10, I must say 6 of the gap patterns are successful. If you get a gap up in a stock that has reversed or formed a base, then the pattern seems to work more efficiently. If you apply the same structure on daily charts, results can be even better.

Stoploss and Target - I have explained the stop loss in the charts. Targets may vary depending on the range of the stock.

Examples - I have given 2 very recent examples. One for Buy setp and one for short setup. Please refer below.

Note - Intraday trades are for very experienced traders. Please master some setup and paper trade it before putting real money
...........................
2. Regarding Exit - You can use price crossing the 10EMA as exit. The more number of times you use this pattern, the more better exit strategy you'd come up with.

...................................
wing and Positional trades are two different things. Hope you get my point.

Can you tell me why you entered shorts at such low level .
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If you have a positional trade then stick with your stop loss. Weekly momentum is still not positive. Whether it will get positive going forward, only time will tell. Whatever your reasoning was, just stick to your plans. It does not matter what I or other users say. Ultimately, market's will decide where it wants to go.
.........................
M&M is in a very strong trend. Avoid shorting it. Also, the stochastic which you mention is in overbought zone now. It can remain there for a while and the stock can continue to remain up. Short weak stocks and Buy strong stocks. Avoid doing the opposite. Look for divergence in weak stocks.
...........................................
Trading Positive Divergence on Daily Time Frame

Tools – Candlestick/Bar Chart, Stochastic Oscillator with standard settings (15,3). Overbought/Oversold conditions used as 80/20

Trade Setup – The basics of this setup is very easy to understand. If possible, monitors stocks which move in any kind of market. Typically these are high beta stocks. However, most of the stocks traded in Futures segment should do fine. What we are looking for is a stock making a new high whereas the stochastic highs forming a lower high. That means, stock makes a higher high and Indicator makes a Lower High. This is highlighted in red lines on price and Indicator. Now once the stock makes a new high, we need to see the indicator levels. If this indicator level forms a divergence and goes back into the neutral zone (that is below 80) then we short the stock, keeping the high as our stop loss. I usually target a 5-8% move. Remember, the divergences should occur over period of 1-2 Months.

Time Validity - I trade this pattern only on daily charts. However, it can work on any time frame. Please remember to adjust your targets accordingly. On daily time frame I use targets of 5-8%. On an hourly frame, this comes down to about 2-4%.

How to trade it - Refer to the chart below. Gujrat Ambuja made a high on 3/29/2010. It then rallied in April and made a new high on 29th April 2010. There was a distinct divergence visible on the charts. We now wait for our indicator to go into the neutral zone (that is, below 80). This happens on 30th April 2010. We get filled at 121.05 and keep a stop loss of 125.8. Over the next 10 sessions Gujrat Ambuja attains the target of 5-8%. The stock goes down much lower, but we maintain out targets and exit the trade.

Adding Positions - Divergence setups usually have very good risk to reward ratio. When trading these patterns with indicators, there is always a risk for the indicators to reverse and the price to move up. Hence, we need to take use of signals which are perfect. To do this, what we do is add one more lot once the stochastic indicator goes below 50. Usually indicator reversals for perfect signals rarely take place below 50. Hence we add position here. This is depicted by Blue horizontal lines.

Target - 5- 8%

STOPLOSS - Recent high of prices

.................................................. .
my 2 cents on this topic.. (specailly from the way i practice it)

- Price is the main source.. and indicators are only derivative of price. So start with price chart.
- I pay attention to price pivots (or swing points - these are points where price has changed the direction) on the chart.. So any analysis is based on price pivots first..
- to identify divergence, take any two price pivots, and take the oscillator values at that time, compare them and interpret them.

- If they are diverging, then u get a nice setup..Now go ahead and look at your precise entry rules to take a trade or wait for some more bars to develop

- And if you get Convergence.. it is another signal.. Not to anticipate reversal but confirmaion of trend continuation .. so trade that as well.

- while taking a trade on the basis of divergence, keep monitring that oscillator has not negated the prev reading.. (i.e. from oscillator making lower highs, it has made new higher high).

- I don't call 0.1 or 0.5 differnece in RSI/Stoch as a divergence.. Hence define your own limits to call it divergence.. (say atleast x% of difference). Similarly, the price peaks have to few bars away.. not just the 3rd or 4th bar.

.................................................. ..........
What I was meaning -

Example - say as per EOD chart we in good up trending and intra chart (say 5 mins TF) makes a negative divergence and after that it refuses to fall for sometime, but it does enough to give negative feeling to many. Then we would get a flying move when price crosses above the high. This is because, all would have gone short seeing the divergence! The way I look for entry with trigger above high. To judge whether we are in correct trade not, you will find price would move 15-20 points minimum in next 5-10 mins in favor.
.................................................. .........
that as well.

When u don't see divergence, then ther is potential that u might see convergence.

Look at the left side of the chart that u posted. In Nov, there was small pause in Stoch around 60 level, and then it broke-out from that on stoch. at the same time price also made new high..
In Dec starting, again there was breakout in stoch as well as in price.
Only in Jan, we see some divergence coming in.
In Early March, prev div that we saw in Feb got negated, price made new high and so the stoch.. and mkt flew to new high after that.

Hope you can catch some pointers from this and bulid further on it .

-----------
as mentioned by Raunak, just pick up one system and master it. If you want to trade Stoch, then don't miss the thread by Smart_trade on trading oscillator and continuation of that by raghavcc.
.............................................
For Swing Trades targets are usually between 6-8%.

...............................
I wud like to share something from larry connors book... I have not experimented it yet and m still not sure on how this works... just sharing with you all as I happen to learn this strategy this weekend only...

1. Stock must be trading near or at 3 months low
2. Today;s volume must be double the 15 days average volume (more than double is better)
3. Either today, tomorrow or day after, stock must close above its open
4. When rule 3 is met within next 2 days, buy above the rule 3 day high
5. Initial stop loss should be placed lil below rule 3 day low.
...........................
I am no analyst nor a guy worth giving an opinion on the mkts but I feel that every transaction that happens in the mkt is a clash of opinion / ideology (the buyer wants the stock price worth a buy and the seller feels the opposite).

We can all have differences of opinion and thats the charm of the mkts and also of life. But there are civilised ways of putting forward our differences. And also when we put forward a differing opinion then we become party to a difference. Then let the Mkts in due course of time decide who is correct instead of trying to pull someone down.

I am of the opinion that there are 3 kinds of people in this mkt. The first ones (in a pathetic minority in terms of numbers, but the ones who dictate the flow) draw the graphs, the second ones analyse them and the thrid ones (read morones like me) keep pestering the second ones for their opinions.

Now I do not know of anyone (and trust me I have worked with many analysts/operators) who are always correct about the mkts.
..............................................
EMA Cross Over Weekly Trades


Tools – Candlestick/Bar Chart (Daily), 150 EMA, 70 EMA and 20 EMA

Trade Setup – This is a trend trading system which gives enormous returns while trending markets and many whipsaws in non trending markets. Keeping our economy in view, this is going to be a profitable system in coming years as we are in an age of trending markets (either up or down). In this system we make use of 3 EMA; 150 EMA (Long term average), 70 EMA (Medium term Average) and 20 EMA (Short term Average).

Buy Setup – A typical buy setup occurs when the Short term average (20 EMA) crosses over the 70 EMA with the 70 EMA being above the 150 EMA. Same principle (but reverse) goes out for short trades.

Sell Setup – Exit the trade once the short term average (20 EMA) crosses the medium term average (70 EMA) form above.

Important Notes – To use this system effectively, exit the positions once you get returns in the range of 50-70%. Start offloading the positions once 50% return is on the cards. Go long once 20 EMA is above 70 EMA only if 70 EMA is more than 150. Exit the trade once the short term average (20 EMA) crosses the medium term average (70 EMA) form above. Results are positive but still not as per expectation I request you all to post your view to get better result.

..................................
You can try and use some filters as ADX. Everything mentioned here is a start up. It is not a complete system. You can use a basic setup mentioned here and create a system of your own with various filters and rules.
...............................
Let me tell you at very first place that I m not doubting your analysis or strategy.... Just want to understand (my way of improving my knowledge and skills is to discuss) on what analysis you feel United Phosphorus is good buy???

I cud find trendline support and 50 MA near 175... was that ur points of analysis?

I hope you are not offended with this... I apologize if you are offended...

~ Apurv

Apurv,

It is based on pure price structure. Forming higher highs and higher lows. 170-180 is a good support level as there are 3 peaks there. Stock is still positive. It should start doing well.

............................................
I try not to take bad decisions. But they are inevitable.

Our Investment Firm is not too much into Fundamentals. It's more a trader oriented firm. Long term Investment decisions are based more on a LT Technical Model. No matter how good the Fundamental's are, if it doesn't move, one cannot generate money. Hence, when something starts to move, I then start getting inquisitive about it's fundamentals. More easier to follow this approach.
Your Analysis:

On 13th As you said it formed a Long Candle. Then on 14th and 15th it formed 2 black candles plus the RSI part you mentioned. Hence as you said, you squared off your position to buy it later.

Where you went wrong:

Look at the big picture first. Now I am going to reply in point terms. Look at the chart while reading it.

1. Look where I have written point 1. I have marked it at a long white candle which was the swing high in mid June. Now, lets come back to the 13th July candle. What has this candle actually done? It has surpassed the previous swing high made almost 20 days back. This entire thing happened in one session. This in itself is a very bullish sign. If ever you would have entertained thoughts of selling, it would only be below the previous swing high. That is, below 70.

2. Now see where I have written 2. I have circled it at a place where you sold because of black candle piercing. In my honest opinion, that is not a piercing pattern. The black candle started above the 13th July candle, but did not penetrate enough to be verified as a piercing trade. Please remember, piercing pattern is valid only when the black candle, starts above a previous bullish candle and penetrates deep into the white candle (closes atleast below the half of white candle).

3. I haven't marked the point 3rd on the chart. THis is because this is more of a concept. Usually when you have a long white candle, the middle part of it becomes strong support. Till the price does not penetrate the mid point of the long candle, do not entertain any thoughts to sell.

4. Make use of moving averages for trend determination. Not for trading decisions. Think about this. Does market care which moving average you look at??



What you should actually do:

1. Always look at the intermediate swing high support
2. When using candlesticks, be sure to apply the concept properly. Everyone struggles, even I did, but once you understand what works and what does not, things are going to be much easier.
3. Always and always look at bigger picture before deciding to buy or sell.
4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a buy on dip stock as of now.


Hope this helps.

Tc
__________________
Raunak Agarwal
------------------------------------------------------


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#615 16th July 2010, 07:40 PM - Add Post To Favorites
raunakagarwal
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Re: Trading Strategies Using Technical Analysis

--------------------------------------------------------------------------------

Quote:
Originally Posted by stocks.murtaza
ooh la la ... how did I miss this thread ...

Great Work Raunak and others who have joined him ...

Keep it going ...




..................................................
Checklist:

Day prior to set up day 1 has to have close greater than close of four trading session earlier: Y

Set up
9 consecutive close less than close 4 trading days ago: Y

Set up Qualifier:
Ninth day's low less than 6th day's low: Y

Countdown
13 close less than/equal to low 2 trading days earlier: Y
Countdown qualifiers:
Close of day 8 of buy countdown less than close of day 5 of buy count down: Y
Close of day 8 of buy countdown less than close of day 3 of buy count down: Y
Close of day 13 is less than/equal to close of day 8: Y


Confirmation of entry
Price flip appear on day after 13 or before stop loss is triggered Y

Cancellation
An intraday high which is higher than the highest close in setup/countdown: N
An intraday high which is higher than the highest high in setup/countdown: N
Close higher than highest close: N
Close higher than highest high: N
Close higher than highest true high: N
Contradictory set up appeared: N
.................................................. .
I am back with the dilemma of life…. This time I m in need of guidance from the perspective of money management or trade management.

What do we do when trade is not going in favor of your analysis and neither it is hitting stop loss? Shall I get out of it with minor loss especially market is at the stage wherein it can have explosive move either side? I have been holding FDC for last 20 days or so and it is not hitting stop loss and neither moving upward. I m at loss of around 1 rs per share including brokerage… shall I get out of it?

I am a short term trader and usually hold position for couple of weeks... however, I have enuf capitalization to hold position further.

This wud help many other immatured traders like me... mostly we not so experienced traders struggle with money/trade management...

Need Help,
Apurv

Apurv,

As far as I go, if a stock is not hitting your stop loss, then it is definitely going in your favor. So just hold on to the position and see. FDC is low on volatility; both on day basis and Annual basis. Hence, it will give returns with respect to its volatility. Always consider the stocks volatility (historical) before deciding upon your level of expectation. Recently the stock is trading with good volatility.

FDC should come down (consolidate) little more before it starts to move forward. Keep SL of 85-86. The double top that you see on the daily frame is as of now a fake one. Let's see. I'll track this stock. Overall the stock is in a good bullish structure.

.................................
When the number of correction candles increase, it does not always signify bears gaining control. In this case, even though the number of bearish candles are increasing, the stock is undergoing mere consolidation. The correct way to interpret this is that the "Cycle or the waiting period of the stock is increasing". This means, anyone now wishing to buy this stock, should be prepared for a little bit more holding time than the situation was on the previous minor cycle. Hope this helps.
I have been building up positions in Adani from 530 levels. Hence for swing perspective, I had a 40 point profit on average. I purely exited based on this. It may well go up and had it been for Investment purpose I would have held on to the stock. But for Swing trades I always have some % profit booking zone and Adani reached those zones. Moreover, I found Lupin on friday, and hence had built up huge futures positions in it. Was up by 4% today, so that kind of also begins to enter my profit zone.

So if you want a one line answer, here it is. "I prefer to buy at weakness and sell at strength". This is applicable to swing trades only.

.......................................
Nice piece of work. Frankly, I did not see so many things are in favor of this stock. I am more the "Feel" kind of player. If I "Feel" it is good, I just go for it. The stock is relatively weak and hence I am buying it. I'll sell it when it shows strength. Regarding stop losses, my rules are little different than what book teaches. I don't kind of look at previous swing lows that often. I monitor the prices continuously and from that I get a feel of whether the prices are going to slide or going to take support.

If you are talking from text book perspective, then I do feel the SL set by you is appropriate. On the whole Divergence part and ADX part mentioned by you does bring some value.

................................
I don't know how you pick a stock for swing trades. But for me, fundamentals don't form a part of swing trades. However, if this is the way you do it and are successful at it, then do not change your method.

As far as technicals are concerned, if markets remain healthy, ABAN should see levels of 925 and 948 for swing perspective. On very shorter time frame, the stock can also undergo consolidation. Hence, be patient.
 

oilman5

Well-Known Member
Again copy paste from Raunakji.
..............................................
4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a buy on dip stock as of now.

Waiting to enter .... was on radar ... just at the blue TL. Solid support there .. it i just retracement ... check the vols (not in the attached charts .. imo it should be on decreasing vols) and then the bounce should be super ...

.............................................
What is your holding period?

Which instrument have you invested in ? Equity or Futures

Anyway, if u have bought equity, keep holding it. Banking sector is doing very well. If you have bought futures, then you have to decide when to exit it. On short term stock is positive.
...........................

In IDEA according to weekly charts, can this be called as a possible breakout from the descending triangle formation? We had high volumes too last week(though, it was a red candle) when it broke out. So, is this valid formation?


It looks like it is a valid formation. However, I would still wait before actually buying this for investment. Let it show some strength.

Stock however is strong on momentum on lower time frames. Hence, looking good for swing trades.

.............................
My 2 paisa...

I agree... I wud wait for previous swing to be carried out if it is descending triangle.... Fundamental thought behind descending triangle is, bears r in power and pushing price down with the maintained lower highs (swing points) and bulls are also having some strength to not let price go below certain level and hence maintaining equal lows (swing points). When we got higher break out from descending triangle means, bears are getting tired and bulls have hit final stroke.. it cud be coupe de grace by bulls but what if bears are not actually tired.. They are just setting back and preparing themselves for final stroke???!!! so just to make sure who is getting control I wud wait for previous swing high to be carried out with momentum....

Had this been Ascending or symmetric triangle, I wud think of initiating trade on break out...
...................................
How do we interprete these 3 candles made by NIITTECH? 1st long bulling white candle, 2nd not so long but good sized black candle, 3rd again not so long but good sized black candle...

Per Steve Nison, many time we shud or we can combine 2 candles against first one to reach to particular pattern.... so on a similar note, can we say NIITTECH making bearish engulfing or dark cloud cover???

Kindly give your opinion from your observation on indian market for this type of patterns...

Apurv

Look at the chart below. Your chart had too many lines, so read carefully what I have written on your chart.

Look where I have marked previous resistance. It is precisely at a place where bearish engulfing was formed and this now becomes our primary support area (Resistance turning into support).

Also look at the base of a long white candle. Usually mid level and low level of a long white candle becomes important support. Hence we have two zones very close to each other which form good support levels. Also if you look below the long white candle support zone, near levels of 183, NIIT reversed ni mid of june. Hence this intermediate swing top is also a support. So you have three support zones around 190, 186 and 183. If stock goes below these, its time to exit.

These candles do not represent anything as of now. First candle is not a piercing pattern nor is it engulfing one. However, they do represent new resistance zone at 200. Hence anyone holding this stock should only add further positions once the stock is above 200 levels.

Always always and always see where is your candle pattern emerging. Ask yourself, where is the previous support. In this case strong support zone is in 180-190 zone. Stock is in a good bullish wave structure. Even if support breaks, we need to review our view again.
23.7.10
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This might sound strange. But why wait for 1:2 or 1:3 risk reward trades. To me this concept does not make sense. I go for trades with 1:1 rewards. It just depends on the setup and the probability of it running in my favor. This is contrary to what you might have read in some books. But for me, the concept of risk to reward is blown out of proportion.

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Apurv, this is completely normal. I'll advise you to develop a mechanical system first and trade it till you develop the necessary skills to analyze charts with higher probability using discretion based analysis. Hence be patient, read a book on how to develop systems and then go and build one.

Regarding RPOWER

What you are trying to do here is very effective. And amazingly this works with very good accuracy. However, ask yourself this: What does market tell you when correction bars are increasing? Can you tell me what this means? If you can't find the answer, let me know.
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Sir I think all depend on experience of traders and his pocket size
But I saw most of people when in loss stay in trade in hope and when in profit they are in a haste to book instead of trailing and I am one of them too
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When the number of correction candles increase, it does not always signify bears gaining control. In this case, even though the number of bearish candles are increasing, the stock is undergoing mere consolidation. The correct way to interpret this is that the "Cycle or the waiting period of the stock is increasing". This means, anyone now wishing to buy this stock, should be prepared for a little bit more holding time than the situation was on the previous minor cycle. Hope this helps.
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Another way is to look at the chart in a Weekly TF too ....

Price has taken resistance at 178 where some amount of supply has come in BUT follow-up supply vols are not there .. that means either the super vols in the push-up bar of breaking the resistance of 163 has liquidated somewhat .. and the stock may test 163 again once and then bounce back ....

But surely it is not in a downtrend as of now ....

Also the 163 levels were a horizontal trading range for many days and has been broken. Target for the same is 163+(163-136)=190 odd levels ...

If you see previous recent high, it is 210 BUT the body of the candle is from 194 which matches with the horizontal breakout target.

Just a matter of time and patience imo .... and those are two of the few things required in abundance for a trader/investor to get better of the market ...

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I have been building up positions in Adani from 530 levels. Hence for swing perspective, I had a 40 point profit on average. I purely exited based on this. It may well go up and had it been for Investment purpose I would have held on to the stock. But for Swing trades I always have some % profit booking zone and Adani reached those zones. Moreover, I found Lupin on friday, and hence had built up huge futures positions in it. Was up by 4% today, so that kind of also begins to enter my profit zone.

So if you want a one line answer, here it is. "I prefer to buy at weakness and sell at strength". This is applicable to swing trades only.


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What are we keeping as stop loss for Glaxo? My analysis as mentioned below kindly correct me if I m going wrong...

1> It is hovering at 20 and 50 EMAs and seems to be making base here...
2> Strong divergence from the perspective of RSI (9)
3> Contraction on 8 DMI from higher negative index getting contracted towards positive index - my interpretation is bulls loosing dominance...
4> ADX (8) coming down towards no trend strength zone from bear strength..
5> Combined interpretation of ADX and DMI - seems bear trend strength getting reduced and bulls are trying to get control and displayed as contraction of DMI...

In my opinion stop loss should be lil lower than 2000. Kindly evaluate my analysis and correct me...

Apurv,

Nice piece of work. Frankly, I did not see so many things are in favor of this stock. I am more the "Feel" kind of player. If I "Feel" it is good, I just go for it. The stock is relatively weak and hence I am buying it. I'll sell it when it shows strength. Regarding stop losses, my rules are little different than what book teaches. I don't kind of look at previous swing lows that often. I monitor the prices continuously and from that I get a feel of whether the prices are going to slide or going to take support.

If you are talking from text book perspective, then I do feel the SL set by you is appropriate. On the whole Divergence part and ADX part mentioned by you does bring some value.
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As on 27th JUL, 2010 I see that in the cash segment both FII and DII has turned -ve (22 and 222.28 Cr) respectively. In spite of that the indices were up today. For almost the last 30 days FII were +ve(most days) and DIIs consistently negative. From todays figures can we infer that the domestic retail segment is taking on the strength of the financial instituitions? Because we can all see that there is no correction worth its name coming though everyone has been predicting the same since a pretty long time.

In case you find my query to be not relevant kindly ignore it.

Thanks

PS : Was thrilled at the timing of the lupin call, but could not muster the courage to get in at these levels. I am sure that is I follow the thread we will have a plenty of such successful calls coming from you.


Esse,

FII and DII data is a bit difficult to relate with overall market situation. It works well in market extreme. But usually it does not work well in between. Hence what you can do is use the data as one of the indicators to tell you what exactly is happening. On standalone basis the accuracy of this indicator is no good than other indicators available.

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Now that the fundamentals for the company has improved, the main negativity out of the way, what is the target for the company, and does it qualify for a bullish/ swing trade.

I have gone long on the stock, today, at 885 aug fut 2 lots, added 1 lot at 900. what do you recommend that I should do.

Cheers,
Prem Kumar

Prem,

I don't know how you pick a stock for swing trades. But for me, fundamentals don't form a part of swing trades. However, if this is the way you do it and are successful at it, then do not change your method.

As far as technicals are concerned, if markets remain healthy, ABAN should see levels of 925 and 948 for swing perspective. On very shorter time frame, the stock can also undergo consolidation. Hence, be patient.
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Today and tomorrow are extremely crucial days for the Index. For shorter term, we would know whether we are going to go higher or on the way down. The bias as of now remains on the long side in shorter time frame. ..........29.07.10
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Noticed these days ...
LT was down before results were declared. After results ... bcoz they were not as per expectations .. more down .....
Mkt was down bcoz of expectations of tougher stance on credit policy etc. Since they were good .. markets rallied back ....
So maybe today they are down in expectation of bad gdp of the US and if its better than expected we move back up else we stay (no more downs) as it is already factored in ...

Just thinking aloud .. not necessary though ...

Options OI is showing bottom at 5300 though that can change in an hours time .
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Following stocks should do well in short term.

Sterling Tools
Shasun Chem
Precision Wires
Mangalore Chemical and Fertilizers
Lanco Infratech
Indian Oil Corp
HDFC Ltd
ETC Network
Dabur
Archies
Andhra Bank

The one highlighted in Bold have their respective futures in the derivative market. Rest are some mid/small cap companies which are looking reasonably good. Let's see how these work. ..............2.8.10
Statistical probability and practical application of probability are two completely different things. You need to understand this before you can understand what i write in future.
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#82
25th December 2010, 03:16 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
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I understand this is your scalped call & you squared it off as soon as you get profit.
Just wanted to know what if you would have hold it with stop loss(say5400) for day & waited till day end. OR you was of opinion that there will not be much upside for the day.
Just want to understand your logic while closing this trade.

Whenever I trade, I trade with multiple sub divided accounts. I have divided my assets into three categories. Medium term trader/Investor, Swing trader and Scalper. So when I scalp 33 points, I am essentially doing it through Scalping section of my assets. It is quite possible that on same asset I am long in medium time frame.

Regarding waiting to square off. My scalping targets are 30-40 points on Nifty and 60-80 points on Bnifty. Whenever I get it, I just get out. The sooner the better.

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All I can say is that go through this thread. You will find plenty of things that work. In some places, I have actually posted charts and have explained why they are a good buy. Most of the things mentioned here cannot be back tested as there is a lot of "relative analysis" involved. I am not entirely in favor of too many mechanical systems. Human mind cannot be replaced by some "Ghz processor". Although, you will require to train your mind to look for set -ups. With practice, it will come. Be patient.
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I can help you. But you have to do the hard work.

Don't expect some system/software to generate Buy/Sell for you everyday. Had it been so simple, then all the fund managers would have done the same. Face the reality rather than living in hopes.

If you want to learn, I can help. If you want some system, I can't.

Here's what you can do.

1. Change your attitude !!! Markets pay you to make decisions which are tough, but correct. Market's don't know who Karan Is. Hence, stop being afraid and be prepared to work hard.

2. Read these two books. Master the trade by John Carter and Trading in the zone by Michael Douglas. In the first book you will find many strategies that really work. You will need to master any one of them. But you will have to MASTER it. Second book will get you to think positively and it will help you a lot psychologically.

There's no System which can do the hard work which you have to do. I am sorry if this disappoints you. But this is the most I can help you with. I dont sell systems neither do I give tips. I believe in analysis and that is the path I can show you. I'll definitely help you if you have doubts when you read those books or for the matter any book you find resourceful. But beyond that, I cant do much and that is an honest reply.

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In my opinion, trading system is something which suites and fits individual... something like straigth fit jeans fits me better and boot cut does not... it cud b otherway round in your case...

I wud suggest from my limited knowledge and experience that build your own trading system or pick one and alter it according to your trading style.... i believe in this... "Read, Read and read a lot... then experiment and then u will automatically know what is ur trading system.."

If you can find, try to read Thomas DeMark methodologies, ADXcellence by Dr. Charles B. Schaap and RSI by John Hayden... Mostly these will solve dillema of your life...
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PTC
LT
JSW steel
Reliance Capital
Union Bank
Unitech

Those highlighted in Bold are my favorites. Let's see how these do......2.8.10
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That may be the case blackberry. Accumulation stage is not important. It is the mark up phase after the accumulation phase which holds importance. We have to see when that begins.

Tc

I agree Raunak... Mark up is the phase we should concentrate..

As it is said that practical experience is better than theories, I would like to share my experience on similar note...

I m holding Aloktext since long bought at 18.50 or so with the consideration of accumulation and then sharp shoot out... Though it gave break out but again went into consolidation... Undoubtedly I am sitting on lil more than 10% profit which is not bad at all if ur holding period is less than 3 months...

So what I am trying make point is sometimes, accumulation phase gets stretched and we may get frustrated... in today's world sometimes, accumulation phase is suddenly changed to distribution.
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Begin to tighten your stop losses. Protect your trading profits in whatever positions you hold............this is key.
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Markup phase buying and Euphoria based buying are two different things. Identification of each is extremely important for profitability.
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Keep a SL of 5575 - 5600 in mind. I doubt we will reach 5600 levels. But then, I have been proven wrong so many times that it makes me feel really old at times. This is where Risk management comes into the foray.
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Regarding setups, its better if you concentrate on positional setups first. Swing trading is something you can learn later. It is not easy to pick up swing trading. Hence once you become proficient in positional trading, you can start specializing in swing trading. I'll certainly help you with anything. Keep posting your charts and your trades and I'll take you through.

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When we measure correlation with an underlying asset, the period of standard deviation of results has to be such that error is minimized. This means that although day to day correlation between assets may not hold any value (as highlighted by SM), but long term correlation always holds very important information. This in fact is the correct way to analyze what is happening across the globe. Once we start reducing our time frame (that is, shift to day to day analysis) we are attracting more and more random noise in our decision making. Which for instance is any trader's worst nightmare.

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In the same line, I try to do my analysis of bigger picture of our market based on our chart. Market follow simple thing most of the time (except certain big changes) and it always repeats itself someway or other. We do not really need to see Dow for this.

But I too do some inter market relationship analysis. Sometime trading decisions affect this as well. It is always a complex relation, look at how many question we have to answer, before we can decide what we are going react in current day trading and on the next day (most of us are interested in these two).

1. If EU has fallen 1% in bullish market, can it bounce and trigger short covering in out market while trading?

2. If EU is negative now, can it be up tomorrow and make a bullish trigger tomorrow. Is it making shorters nervous today?

3. Dow has corrected yesterday, can it go up today?

4. Most Asia have closed down today, can those be up tomorrow?

Its a bit complex I think. Better, we look at our chart and get clue most of the time. Though, some cases, global markets do change the path of our market.

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! What I really want to talk about today is to contrast something "context" free versus viewing something contextually.

The market is a two way auction process Allocates bids and offers in an extremely fair and efficient manner(supply and demand) Searches out and
reveals market-generated information. If you will begin to think of markets as an auction process you will begin to understand that if higher prices
are attracting more bids the odds are, that the auction will continue higher.

If higher pirces are cutting off a number of bids, the auction is ending and risk of maintaining long positions has increased substantially.

Of course, just the opposite would be true: if offers were taking the market lower. The results of the auction are what we refer to as market generated
information. The three components of the auction are time, price and volume.

- Price advertises all opportunities

- Time regulates all opportunities i./e., if it is a good deal, it shuold not be there very long

- And volume measures the success or failure of the advertised opportunities

What is important to realize is that the The Market Profile is a real-time evolving database that capture sand records the market’s two-way auctions
(content of slide you see) or, as we say, it allows you to view the market in the present tense

Phil Jackson said when he was managing the Bulls, Winning results from operating in the Present Tense, not rehashing yesterday's game or playing tomorrow's game too early.

We can take some questions for Jim.

Freddy [17:06:41]> Hi Jim, am your biggest fan and have been using the profile for more than a year now - your trading concepts are terrific - one of my biggest challenge as a trader is to correctly anticipate - to the extent humanly possible (!) (and thus have CONFIDENCE in) the TYPE of day (and when there are changes in conditions invalidating such analysis) - breakouts from low volatility, failed auctions or gaps are typical clues for possible trend days, and neutral internals (breadth / volume) and no strong money flow clues for neutral days - any of your own tips you could share on that?

Also, if you don't mind , I'd like to hear you on how you use stops (on neutral and trend days) and how do you take into account the risk/reward ratio (and as well leverage) for your trades, any minimum RR you are looking for, any particular situation where you use more leverage, etc. thx Jim ! You rock

Freddy: the first thing I look for is to see if we are opening above value , within value, or below value

I look to see how much confidence there is around the opening For those who have read Markets in Profile you are aware that we describe 4 types of openings:

- Ranging from very high confidence, to very low confidence.

- Trend days, seldom occur, following an opening that takes place in the center of the previous days value.

- An upside trend day, for example, more often occurs when the market has opened above value for the previous day, combined with a high confidence opening OR

- When the market has opened below the previous days value area and particularly below the previous days lowest price and shows a high confidence opening to the upside (in the case of a long)

Once the trade is entered, it then cecomes important to monitor the trade for continuation. By this I mean, the profile should remain elongated with the
point of control that steadily migrates higher throughout the day Additionally, I would expect to see the market "one time framing" By one time framing,
if the market is trading higher, I mean that the second bar or period, does not take out the low of the first bar but does take out the high of the first
bar (30 minute charts) With this process continuing throughout the day An inside bar, where price remains totally within the bar from the prevous period,
does not negate the one time framing action

It is rare to have a trend day, where the market woudl stop "one time framing" for more then one period. This is my choice, not recommended for most: but I seldom use stops, rather, I rely on changing market structure to tell me that my trade is not developing as anticipated.

rolcol [17:13:49]> (going from CQG display & Stedlmeier observations) ..........do you have any comments on either I/J (12-1 pm cst) or M/N (2-3 pm cst) overlap periods and their tendencies?

I do not consider issues like this even though from time to time they may have relevancy. I have found that by thinking of these types of things
thinking in terms of what time periods' highs or lows are made thinking in terms of average range extension actually diminishes my mental flexibility
and has a tendency to trap me on the really important days such as trend days.

To expand on this question, when the market is in a relatively narrow trading range for the day, these type of things that you bring up are meaningful
as are more traditional technical indicators. However, on the BIG days, when the long term money is in the markets, these type of indicators get blown away and can do some serous damage to short term traders. It is not uncommon, to hear traders say they make money most of the days. However, if it hadn't been for one or two days of the month, it would have been a great month.

By focusing too heavily on shorter term indicators it is too easy to miss the changes that occur as serious money quickly enters the market place.

For more information go here : marketsinprofile.com/

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What you can do is go to "Stock to keep close eye on" thread and from there take asnavale's system. He has posted it with AFL. For a start that system should be very good for you. Just follow that till you learn and develop your own system. And dear don't worry about losses. Just be consistent. Keep your emotions in check. Everything will work out well. Stay in equities initially. Don't take a dip in futures.

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Originally Posted by Apurv7164
Hey Guys,

Kindly have a look on chart of IFB Ind. IMO, it is resuming upward journey after having lil rest and consolidation.

Break out confirmations:

1> RSI (9) breaking out of down TL as well as breaking above previous peak
2> +DMI (13) breaking above its previous peak
3> Low volume during consolidation and significantly high volume on break out
4> ADX (8) moving above level of 20 to 25

Feel free to correct me if I am going wrong anywhere...

~ Apurv

It's in a very strong uptrend Apurv. But let it cool off a bit. Accumulating it from levels of 130 would be ideal. Fundamentally this company will do good in coming years. Business model is very encouraging. 5.8.10
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understand your problem, but you want a quick fix solution to your problems. I am afraid to say, this does not exist.

I have mentioned many times on this thread that I don't trade through systems. Some times (only some times) when I scalp, I trade with systems. I am a medium term trader/investor and hence my analysis has lot to do with subjectivity. I dont have a setup/system which gives buy/sell signals. I have a customized software, which suggests whether the asset is worth investing or not based on Fundamental and Technical parameters. That software is something on which we operate our funds and i cant release it in a forum.

I suggested you Asnavale's setup because it is something that works. He has explained it beautifully. It is a positional based system. Hence that should be good for you to start with. later on you can read and develop your own system.

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It entirely depends on your risk appetite. For me, protection does not mean buying options. When I am short on Index, and the Index keeps rising, I simply open up long futures positions in stocks which are making the Index move higher. As stocks in the short run, tend to outperform the Index, I gain in long futures and if I am right shorting the markets, I gain in that too. Else, I close my positions. The key here is to know the volatility component in each instrument and choosing optimum position size to offset the losses in Index with the gain in Stock futures. Its a bit complex, but I hope you got the gist of it.
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I'll still stay away from these If's and But's. Till the price begins to move, I'll prefer to not listen to any of this. I am more comfortable in catching a trend, riding it and exiting it when I have some profits. Rather than, buying something first, sitting on it and waiting for the trend to appear. Its just more stress free.
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IMO, Objectiveness is not in system, it is in mind... When one is running high on emotions, it is really difficult for the person to be highly objective and keeps on failing... it is common across the globe no matter whether it is business of trading or any other profession.

I would like to share my own experience - when I passed out with my software degree back in 2003, I was struggling hard to get decent job (IT was just coming out of wounds). I started getting into trading just to keep my mind occupied and get lil relief from the frustration of being BEROJAGAR.. Here my point is I was not going through balanced mind set... During those days I kept on jumping on to different methods, systems, strategies and nothing worked for me....

Then eventually, I got the job in the world of software in 2005 and started getting into balanced mind set... now what I m observing is same bloody methods, systems and strategies started working for me as big as one can say WOW WOW WOW! Then I started getting feeling that it is purely luck that these methods did not work back in 2003/2004 and now in 2006/2007/2008 I am lucky and they are working.... then again they did not work in 2009 so I stopped trading with the thought that year 2009 is not lucky enough for me...

Then in early this year (2010), I accidently happened to visit one website related to meditation and attended a seminar on the subject matter of Left and Right Hemisphere of brain and its functioning...

Then I started going through thought process of why I failed in trading in 2003, 2004 and 2009???!!! Why I got beautiful success in 2007, 2008 and 2010???!!! What is common???!!! As a result I realized that during 2003/2004 I was going through professional problems in life and in 2009 I was going through personal problems in life... During both the phases I was not working with balanced right and left hemispheres of brain i.e. in simple words I was not having balanced mind set due to high degree of emotional flows.. Here emotions cud be anything anger, greed, fear, utter pessimism, utter optimism, access happiness, access sadness etc....

As a bottomline, I would say balanced mindset is key to success in trading... many new traders/readers here might be facing similar problem. Observing Karan's posts I started getting flashes of my past (No personal offense Karan, just got into some past memories)... My intention of writing this long story is to explain that be calm, cool down ur emotions, sit aside and think think think....

I can talk or write as long as you want on this subject so better now I end here with the last word... I love Thomas DeMark's statement, "Read, read and read a lot, research a lot and experiment a lot..." I personally say, reading, researching and experimenting is very helpful in cooling down emotions.
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Since this thread is related to trading strategies, I would like to share my collection which I consolidated from different books... Kindly experiment at your own risk...
Currently I am researching on use of ADX/DMI. I have selected ADX/DMI because it is not so widely used and popular and hence cud give very effective signals. I wud surely share my study after sometime.

Buy Set ups

1 2 3 4 Method
1. ADX must be greater than 30
2. 14 days +DI reading must be higher than 14 days –DI reading
3. Wait for the market to have 1 2 3 correction i.e. 3 consecutive intraday lower lows or 2 lower lows and one inside day
4. On day 4 only, buy 1 tick above day 3 high
5. Initial stop loss should be placed day 3 low.

Volatility Observations
1. Whenever 10 days volatility is 50% or less than 100 days volatility, large move is likely to occur
2. The longer the time frame a historical volatility remains under 50%, the larger the move will be
3. When these occurs look for the larger bar within last 9 days and trade in the direction of larger bar

The 8 day low reversal method
1. Day one must be 8 day low
2. Day two must trade above day one high
3. Day three or four or five or six must trade under the low of day two (this can be new low)
4. When condition 3 is satisfied, we buy one tick above day two high within next four trading sessions
5. Stop loss goes one tick below day two low

Spent Market Trading Pattern
1. Today it must make 10 period low
2. Today’s trading range must be the largest range in last 10 trading sessions
3. Today’s close must be in top 25% of the day’s range
4. Tomorrow or day after, buy one tick above today’s high
5. Stop loss goes one tick below today’s low

Sell Set ups

1 2 3 4 Method
1. ADX must be greater than 30. Higher the ADX is better
2. The –DI must be greater than +DI
3. Wait for 1 2 3 rally i.e. three higher highs
4. On day 4, sell 1 tick below day three low
5. Keep stop loss near day three high

Double Volume Topping Method
1. Stock must be trading near or at three months high
2. Today’s volume must be double the 15 days average volume
3. Either today, tomorrow or next day, stock must close below its open
4. When rule 3 is met within next 2 days, sell under the rule 3 day low
5. Initial Stop Loss should be placed at top of rule 3 bar

The 8 day low reversal method
1. Day one must be 8 day high
2. Day two must trade below day one low
3. Day three, four, five or six must trade above day two high (this could be new high)
4. When condition 3 is satisfied, we sell short one tick below day two low within four trading session
5. Stop loss is high of day two

Spent Market Trading Pattern
1. Today it must make 10 period high
2. Today’s trading range must be the largest range in last 10 trading sessions
3. Today’s close must be in bottom 25% of the day’s range
4. Tomorrow or day after, buy one tick below today’s low
5. Stop loss goes one tick below today’s high

.................................................. ..................
It is good to manage risk in markets. One way to do is with options (like you are doing) and the other way is to do it through low risk - high reward entry. This does apply to forex more where we don't have issues of gap up/gap down, But it works just fine in case of Stock Indexes.

One of the negative aspects of dealing in options to protect risk is that your profit potential gets limited. One really needs great deal of experience to know when to close an option leg so as to increase the profit points. But the point is, how many people know when to do that?

What I usually do is I prefer to enter in situations where i see a low - risk high reward trade. Say for example the current situation, I know the market is lacking momentum and hence any upmove is going to be slow. However, on the downside as the volatility picture is suggesting, Index could move down at a much faster pace. Hence, for me this is one of the parameters which makes it qualify as a low risk trade. Hence, I take positions according to my risk profile and forget about being right/wrong.

Hope this is of help
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Any idea about crash in Alok ind today? I am holding it since around 18.5 and even after today's heavy fall i m sitting on profit. Shall I book profit or today's crash is deceptive?

Bests,
Apurv

It has a base around 18, but nothing more and nothing less. Many good stocks to focus on. Better to stay out of non performing stocks. With every bad investment, even if you don't loose money, you are indirectly loosing as every investment has an opportunity cost associated with it.
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Market's have a tendency to do same things over and over again. However, every time it finds new routes to do those things. This is something we need to understand and include it in our trading plan. The reason I am writing this is because markets are testing the patience of most of the traders. I find it hard to recollect when in the past markets have been so indecisive. I can recollect the period of 2003 when markets trended up and were due for a correction. Correction came only in May 2004 surprising everyone. Currently, markets are trading extremely weak but still it is continuing to rally. I find it hard to believe that this scenario is going to last for long. It is almost the 3rd consecutive month I am so bearish, but in my defense I have found nothing to suggest otherwise.

As a trader, I still maintain bearish positions in the longer time frame and long positions in the shorter time frame. The time for short term trades seem to be running out soon as the larger time frame begins to take effect. Technically and fundamentally we are on sticky grounds. We need to see if this situation improves or worsens. My bet still remains on the bearish side.
__________________
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Whether one take's Market Profile, Indicators, Price action, Fund action or Intermarket action, all are basically suggesting one thing; Confusion

But when I look at the volatility indicators, I find it very very hard to believe that expansion in range lies on the upside. Options data or FII data can change in a day's time and hence reading too much into it would not be of much value.

I belong to the Larry Connor's school of thought. I believe that essentially volatility is what drives our trading accounts. And to some extent there is less happening in terms of price action but a lot happening in terms of volatility. Volatility based projections are suggesting a price rise of maximum 100-150 points from these levels.

Let's see what actually happens.
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#83
25th December 2010, 03:54 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
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No buddy... market it always right... Expect the unexpected that is the game of trading...!!! I m lovin it... my personal opinion and experience, we should never ever combine TA with the FA... I know I am challenging style of many people here including our most senior and experienced guru like Raunak... Please don't take it personally guys...

Here are my points -

1> When we combine TA with FA in our decision of trading, many times we end up converting our trading call into investment...
2> Many times we can't follow - "Plan your trade and trade your plan"
3> Many times it happens that something looking extreamly good on chart but fundamentally company is scrap, we dont trade and ultimately we r missing opportunity

I only mix those 2 aspects in the case of investment - if i want to invest in something, i wud use TA for the right entry time...

Folks, please dont take my challenge personally, challenging ur opinion or way or stlyle is not to be offensive, it is just raising one more point for brainstorming...

...............................I shall add further from Raunak...............
I meant to say is when we r planning our trade for trading, we need to stick to TA and shud not look at FA...

In your example - if we sell short and tomorrow we see some news coming about fundamental improvement, we don't need to still sell short further but we need to look at our initial technical plan.... in most cases, technicals and charts run ahead of fundamentals. If my trade does not hit stop loss, i usually stick to my trade unless it is taking unusually long time to run in my favor (example brandhouse, it is not hitting SL and neither it is moving in my favor....)

What i mostly do is, I most of the time don't even look at CNBC or any other business channels.. trust me, 99.99% of the time, i dont even know what company does (when i m analyzing for technical trading).... I surely study fundamentals when i have something for investment....

It may be only personally to me but mixing those two methods have always confused me... i have many examples of past wherein i bought something for short term trading and looking at their fundamentals i converted them as my investments... and as a result i many times got into liquidity crunch...

Usually, all the economic and fundamental developments are known to certain insiders well in advance which we call smart money... i mean they know it well before news get published/released in market.... Smart money start flowing in or out in other words they take action before news is declared.... and that action can be cought on chart.... I personally believe that chart is way of being ahead about internal developments... all the positives or negatives are plotted on chart before news come in public... my opinion, may be not correct.
................Look at the weekly chart and compare that with daily time frame using RSI and ADX and it was giving me feel of upswing... honestly i did not expect suddent jump...
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agree retail participation is missing. But there is onething we need to discount, and that is, retail participation in F&O markets. Retail investors are lacking the patience, they don't talk about equities now, they want participation in F&O as they feel the road to get rich quick lies in this segment. No wonder why data in futures market point towards high level of participation. How many of the participants here talk about equities? That's for you guys to think upon.

Tc

Very well said Raunakji, retail participation in stock market is to make quick bucks.... and that is why during every bull run everybody talks about stock market and during bear phase they all are gone... this reminded me high of year 2007 and 2008, everybody was talking stock market and giving tips....
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Following the previous post, I am now posting equity curve of the system I use currently. This has been tested on Index with testing period ranging from 1995 to 2010 (current). Please bear in mind that this graph and the graph posted earlier are not curve fitted. I hope experienced readers realize that curve fitting cannot yield such equity curves.

The reason I am posting this graph here is because any user building or operating a system should seek an equity curve similar to this. The key difference between this system and the system posted earlier lies in the fact of its usage. Advantages of this system remain the same when compared to the previous system. I have stopped using the previous system as the equity curve had stopped rising. But I am using this system because this system is still working as highlighted by the rising equity curve. Index has not surpassed the previous high levels, but the system gains have continued to make a new high as shown in the equity curve below.

Key taking: At the max a system should not take more than 2 years to make a new equity curve high. If it does not, then its time to review the system.


.................................................. ...........

Now This WRB's high will become strong resis for upside isnt it?

Plz some one explain how to decipher it.

Arti,

Usually on a smaller time frame you will see many WRB with heavy volume. Not every bar means a down side from those levels. Let me explain this as a WRB has developed on hourly time frame now.

At present we are witnessing a WRB on hourly with volumes. However, this should not be perceived as a sign of weakness. On hourly time frame 5360- 5380 is a pivotal support (it is also a pivotal support on daily charts). Hence, if this level breaches, we would know that the current swing move is now in downward direction. Once this happens, one can review positions there. If there is no base building evident and indicators (if one uses) are also showing the same, then one can initiate shorts.

............................

I am currently taking no longs. Be it scalp wise or swing wise. Markets have now entered a wait and watch zone. On short term, trend is turning down and if I scalp, it will be on the short side. I feel markets will see more downside in next 2-3 days unless strength is depicted. But now I am not taking any position.

Believe in your system though............16.8.10
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this for swing or scalp trading sirji? Kindly share your analysis if you don't mind....

I dont want to sound utterly pessimistic but weekly chart and weekly ADX is not giving me confidence. I may want to wait for taking mid term call on this.

-Ve
1> Price is struggling to cross 50 & 100 weekly EMA
2> Weekly +DMI(13) not gettting dominance..
3> Last ADX peak was -ADX peak and was above the ADX peak before that which was also -ADX peak telling me during last ADX peak bears were still in control. However, last 2 -ADX peaks were around or below level of 25 so that is lil relaxation and last -DMI(13) peak did not go above -DMI(13) peak right before that kindda double top on -DMI.

Positives:
1> I cud see positive on daily chart is 20 EMA cross and hold 50 EMA...
2> Also +DMI(13) holding above -DMI(13) during retracements...
3> weekly 20 EMA is crossed by price and still holding that level....
4> Some of the other infra & realty stocks has already entered in mid term bull phase so we may expect this also to join the train....
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Why not a bullish one ? Volume was on full power. Was there any bad news about this company ?

As you know, and as many others know, I do not trade any stocks.

I am a 90% technical trader and I only trade hedged futures and options and so it doe's not matter what chart or market I trade.

If it doe's not go up any more, what real strategy would you recommend and what would be the main reasons for you, to react now and not later ?

What about a synthetic put ?

As I say : I do not trade this stock, but as we are in a learning thread, what would be a real strategy to implement at this moment for this chart ?

This is the main question we have to ask our self every day, when implementing a strategy on any time frame in the market every day.

What will the market do next and what are we doing ?

What is your idea beside the synthetic put ? Is it just an idea from my side and as I know you as a " try it out " person, what other thoughts would you have on that situation ?

My questions are not mentioned to take you or any one back from any strategy you want to implement in the market. They are meant to be recognized and analyzed from the traders in this thread, with there own ideas.

As this is a thread from raunakagarwal, we know the seriousness of this thread and if I post here any thing, it stays on that level.

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I think what ST has stated could be more applicable to Weakly trading stocks. I would certainly not try and set a pivot point for a stock like Titan or Bajaj Auto at this moment. But I would definitely look into the strategy ST mentioned on Weakly Bullish stocks and Strong Bearish Stocks. One of the main essence to implementing a strategy is to classify it in which conditions and on which stocks (Strong Bullish, Weak Bullish, Strong Bearish and Weak Bearish) it works the best.

.........................
List of Stocks which should be good for day trading in Next few Sessions.

Hind Petroleum
Sterlite Industries
IndiaBulls Real Estate
Unitech
HDIL
Rcom
Idea Cellular
Sesa Goa

Kindly decide the direction of trade. These are just list of stocks which can give good move in day trading. 19.8.10
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My personal view is that Candle bars by themselves do not give us any edge. You need to interpret the duration "before" and "after" a candle pattern as well. I feel, a candlestick entry signal needs to consider the price action that occured before that specific candlestick and needs to be confirmed with the bars that occur after.

For example: That Doji, had it occured near that downtrend, would have indicated me to wait for a bullish signal. That bullish signal could have been a white engulfing bar .
..................

Where are the volumes ??


What does Candlestick or for that matter any formation depict?

They depict the level of Demand and Supply in the market. Can demand and supply be accurate in absence of volumes?? I think you know the answer to this.

As a filter any stock below weekly average of 1,00,00,000 over period of 1-2 years is not worth looking at.

...................So this is upto page 100.........from Raunak
..............

Originally Posted by stumper
Hello Apurv

My personal view is that Candle bars by themselves do not give us any edge. You need to interpret the duration "before" and "after" a candle pattern as well. I feel, a candlestick entry signal needs to consider the price action that occured before that specific candlestick and needs to be confirmed with the bars that occur after.

For example: That Doji, had it occured near that downtrend, would have indicated me to wait for a bullish signal. That bullish signal could have been a white engulfing bar (Have attached my own addition to your chart).

Hope i was able to make sense.

I agree Stumper that next day and prebious move is very imp. However, i think that is true when normal doji occurs after down trend. Here we have long legged doji that too without having any tail or shadow above it. I try and interprete this way, stock opened high then some supply came which was eventually got absorbed and then again it went up closing at high of the day which is opening also.... I may be wrong... just my thoughts...
............................

Sirji, again this is one of my weakest point and i never understood volume theories...

people say volume should be low during consolidation... i say why? Do you not think that somebody is accumulating stock and hence volume is high?

People say, extream high volume in downtrend is trend exhaution, i say why cannot it be possible that somebody has aggressively built fresh short positions? same applicable for uptrend...

say for example - doji with high volume on after down move... people say demand came at downtrend... i say why can it not be possible that I silently added my short position at opening and then i left stock for public... my this added short positions created high volume....

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What you think about volumes is not entirely wrong. Volume interpretation in itself is like a different "Field". This is how vast it is.

What I was saying is that don't apply theories on illiquid stocks. Pick liquid one's. Keep volume rules as simple as possible. Regarding volumes, listen to what father's of TA say. Hope you get my point.

But, Stay Liquid.
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It works as support in most of the cases. At the same time, all big crashes start with the same doji.
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List of Futures Stocks which will be good for day trading

Sobha Developers
Ruchi Soya
Videocon Industries
Apollo Tyres
Uco Bank
Opto Circuits
IndiaBulls Real Estate
HDIL
Moser Baer
India Infoline
APIL
Sesa Goa
Suzlon
IVRCL
IFCI
Aurbindo Pharma
Tata Chemicals
Patni
Syndicate Bank
OBC
BOI
Maruti
Tata Motors

Kindly pick the direction of trade............20.8.10
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Let me put it this way. Never get tied down with candle names/patterns/formations. As a trader, your aim is to detect change in demand/supply. Once you do that, you need *SOME* confirmation --- Something that confirms your signal. So, you have your trade pattern first (In your case a long legged doji) and then wait for a confirmation (say, a Bullish wide range bar or a engulfing bar)... Anything that confirms what the doji is trying to say to you.

This, a pattern+confirmation forms a trade signal for you. Choose either the bars before, or After, or combine both or none... Its your choice as to what constitutes a pattern signal for you. Just ensure you dont loose sight of your end objective ie; Detecting change in Demand & Supply. As per your back study if a Doji at the end of downtrend constitutes a reversal signal --- So be it (As per me , it does not).

...........................
Very true, but for me your DLF call is better...

Reasons -

you anticipated breakout earlier. We can only follow the move... that is where this is applicable - "Never try to predict the move just follow it"...
As per all theories and studies nobody can judge move in advance and that was the case with DLF. I don't think we had any indicator or method saying getting into it right away. All were saying keep close watch...

I think this is where experience plays wider role than studies. Something like education vs work-experience.
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Originally Posted by blackberry
Raunak ji any word about Ranbaxy sept. futures

Wait for consolidation to happen in Ranbaxy. Its undergoing a trend change kind of scenario. Need to see if this move is genuine. Breakout is quite visible.

But do you know in today's markets, only 4 out of 10 breakouts are successful. Why trade such a low winning probability setup. I am aggressive, but I need to see where I get aggressive. For me, this is not yet a buy. It may well rally and I may be wrong. But in my books, there is a lot more than breakout I look for while taking trades.



Tc 21.8.10
..........................Reversing positions - Nifty View

Well, I have been bearish for 2 months now expecting the Nifty to slide to 5100 levels. Last two days, our team has sat down and dismantled what is happening underneath our markets. We have reached a conclusion that we are amidst a market which is extremely strong. Hence, on Monday we will be reversing our stand on Nifty.

The Nifty could go into corrective phase (5300, 5200,5100 or 4900) this month or next month, but we have decided to be long in the markets with active risk management. During past two months, some of the stock futures deals have worked very well for us. This is primarily why, despite of carrying short positions on Index, we have managed to be deep in the green overall.

At present we are going to position ourselves as being conservatively bullish on the market and will structure our investments around this.
My entire shift from being a Bear to a Bull has been due to some long term fundamental and economic factors. There's nothing technical about it. I feel we are on the brink of something Special. Hence even if markets correct (which it will), I am going to be a net - net buyer.


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Trading from 3-10 day perspective - Go through this thread.
For Equities and Investment - Go to "Stock to keep close eye on -II" thread by Savant and Anant
For Day Trading - Go to Columbus thread on Bollinger Bands or Praveen Taneja's thread
For Options related trading - Go to AW10's thread in Futures and options segment.
For general trade queries - Go to AW10's "Come into Trader's Den" thread or Rajputz thread in Introduction segment.


Following this, you will cover everything in your trading domain. Slowly start reading through these threads and in some time to come you will find yourself profitable
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Stock Futures good for Trading

Apollo Tyres
Educomp Solutions
Grasim
HDIL
HPCL
ICSA
IDEA
IndiaBulls Real Est
Indian Bank
Jain Irrigation
Mcleod Russel
Onmobile
Piramal Health Care
Reliance Comm
Reliance Media Works
Sesa Goa
Shre Renuka Sugars
Sterlite Industries
Triveni
TV18
Unitech

Please decide the direction of the trade.

In between I will be posting the direction of the trades. ..........23.8.10
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Just want to understand concept of reversing our stance from bearish to bullish or vice versa.
Normally, is it done by booking loss on perticular trade?
As indicated by you, your Index shorts were hedged with stock long hence net position was in positive. Now when you are reversing your stance, you will be booking loss in your Index position.
Am I understanding it correctly?

Rrmhatre,

Let me explain it to you, the way I think about this.

I have two ways of executing trades.

1. Trade with trend
2. Trade with opinion

When both agree, my profits are huge. When either one of them agree, my profits are still very good. Now, to start with, I never argue with the markets. Hence, if markets are trending up, I keep taking positions in stocks which are showing strength. Similarly, I never argue with my opinions. If I have a bearish opinion, I do not hesitate to open up bearish positions. I know that the current trend positions will take care of my losses. And when trend reverses, I would close my profits on long and would be prepared with my positions on the short side.

When I bet, I bet big. I don't mind to loose. If I see a trade, I go for it. There is no scope of if, but and why in my trading plan.
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It seems you open position in futures only. (no options to hedge)
How do you hedge your position? pls advice more about your hedging methodology.
OR you control your risk with stoploss ONLY?
If your risk management is with stoploss only then how do you handle gap up/down situation?
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You could well be right. Markets are so strong on momentum underneath.

As of now, I would reverse my positions after market closes above 5530. Reverse levels keep changing based on market scenarios.

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#85
25th December 2010, 09:08 AM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
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A very well researched piece of document. Whether this will materialize or not, that only time will tell. My advise to you is to not argue with the markets. Always go with the flow. Our analysis is mere mortal. Markets are the King !!

...........................TimeFrameSet(inWeekly);
Plot(StochK(8,3),"Stochastic %K(8,3) Weekly ",colorRed,styleLine);
Plot(StochD(8,3,3),"Stochastic %D(8,3,3) Weekly",colorBlue,styleLine);
TimeFrameRestore();


Store this code in a separate AFL file and save it as stochastic weekly in indicator folder ... then simply add this indicator as well as the normal indicator ... here u go both daily n weekly stochastic at the same time ...

Dear Raunak,

A few questions :

1. Which is best setting to be used for Stoch for EOD & for intraday? 8,3,3 or 14,3,3 or anyother?

2. How do I to have both the stochastic windows (one for Hourly time frame and other for daily time frame) on the same time. Can you give me the code?

3. Similarly for the intraday trading purpose I would like to see both 15 mins stoch as well as hourly stoch at the same time. Can you give me the code for hourly stoch plz
Abhinay,

1. There is no universal setting for stochastic. Hence, you need to see what suites you. In my opinion for shorter frames 15,3 does well and for daily and weekly 9,3 does well.

2. If you want stochastic on daily frame, then select it from the indicator panel. Furthermore, store the above mentioned code as stochastic_hourly.afl in your indicator folder of amibroker. Then from your indicator list you can select Stochastic_Hourly and put it in another window. This way you will get Daily stochastic and hourly stochastic in same view.

TimeFrameSet(inHourly);
Plot(StochK(15,3),"Stochastic %K(15,3) Hourly ",colorRed,styleLine);
Plot(StochD(15,3,3),"Stochastic %D(15,3,3) Hourly",colorBlue,styleLine);
TimeFrameRestore();

3. For 15 minute, this is the code. Save it as Stochastic_15 under indicators.

TimeFrameSet(in15Minute);
Plot(StochK(15,3),"Stochastic %K(15,3) 15 Minute ",colorRed,styleLine);
Plot(StochD(15,3,3),"Stochastic %D(15,3,3) 15 Minute",colorBlue,styleLine);
TimeFrameRestore();
.................................................. ..
Originally Posted by blackberry
Raunak ji, sometimes spot price is more and future price is less or vice versa,what does it indicates in both cases.

In more complex terms I could write a detailed post about why this happens. But I feel that will only confuse you. In much simpler terms, this happens near expiry and also when roll over's are taking place. If you are trading Futures, just trade that. Don't bother about spot. The movement of futures is what will give you profits.

There have been lot of research papers written on whether futures prices have predictive powers within them. And the findings are that future prices (whether in risk or premium do not have predictive power).

As traders, we don't need to bother ourselves with this. Just trade the price. Go with the flow.
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There are 10000 + analysts with better visibility trying to forecast what is going to happen. As far as I know, 99.9% of them are still scratching their heads. Local investors and traders are better off not even trying to judge what's going to happen. Just follow the price and follow the flow. In long run, that would work well.
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My opinion on Mphasis which purely based on ADX (I usually trade with this single indicator only). Kindly look at attached chart and explaination for better explaination of my style of trading.

1> Take a note of Peak A on price and peak A’ on +DMI
2> Now compare bottom formed at X and peak X’ with the A and A’ – it tells me –DMI did not have power to go beyond last peak formed by +DMI which is A’. So bears are still struggling
3> Now compare peak formed right after X which is peak Y on price chart and peak on + DMI, those also could not go beyond A and A’ as well as Y’ could not go beyond X’ telling me that now bulls making attempt but even they don’t have power to win the battle.
4> Again bears attacking with more power at bottom B on price and –DMI peak at B’. Here they had more power to win battle against bulls of Y and Y’ because B’ –DMI peak is higher than Y’ +DMI peak but still B’ –DMI struggled to go beyond A’ + DMI peak which is the starting of consolidation peak.
5> Now comes bulls again making stroke – I wud declare them as winner only if price breaks out with the +DMI peak higher than the strongest –DMI peak which B’. For more conservative approach I wud also like bulls to have more power than when they had at peak A and A’.

As per my style I wud keep close watch on this rather than directly getting into it.

Bests,
Apurv

Apurv,

No offence to the technique you use (based on ADX).

But whatever you explained, applies directly to price. And hence price can essentially convey the same information in a much more concise manner.

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What KSOILS ?

Firstly, If you are talking about some trade I took, and did not update it, then I think it would have hit profit of 4% or loss of 4%. What's there in telling that? Numerous number of times I have said that I operate on 1:1 risk reward with 3-4% as SL and profit target. Majority of members here know this. As far as i remember, in a discussion with SM I did mention that KSOILS was in neutral zone and not in a buying zone. Beyond that I don't think I remember much.

Secondly, if this is about how I pick stocks, then the one one who follows this thread, knows how I pick stocks. I suggest you go back and read these 107 pages. You will find your answer! I work on subjectivity and screen time. Not on some systems. Hence, putting that subjectivity in words is not possible. Even if that is possible, I would only give limited information. I dont believe in spoon feeding traders. I believe in Educating them. Spoon feeding only leads to losses while education leads to profits. Whenever I write, I give enough clues for the prudent trader to catch. This is how one can grow. Hope you know that !!

Lastly, I am a positional Bull now and Swing bear (I switched my stance from being a positional bear to a positional bull). And that switch was based on some fundamental reasons. These two are different and try and see the words Positional and Swing before you think I have gone from Bull to bear in two days. My style of working is to be positional and to be swing all the time. Ultimately, its what you generate in profits.

Enough Said!
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Why I was positional short earlier

Now, those who have been regular visitors of my posts know that when I swing trade I don't take fundamentals into consideration. But, when I trade on positional basis, I do combine Technicals and Fundamentals together. I was positional short on the markets due to some fundamental reasons. Let me explain those to you first.

When I take a fundamental call, I take into account India's forecast of annual GDP growth, production numbers and inflation. Government of India had given a forecast of India to grow at 10% annual GDP. This was something I was not able to visualize. There were some reasons I thought about this. Let me explain in detail.

Firstly, savings rates, which remain the back bone for any economy to move forward, dropped in 2008/09, and this is likely to continue in 2010/11. Second, India's net fiscal deficit is at 10% of GDP which is also the highest in previous decade. Third, recently we have seen how dovish the Reserve bank of India is behaving regarding Interest rates. Currently, the interest rates have begun to move higher and my personal take is that with rising inflation, we could potentially maintain this trend. Lastly, appreciation of the rupee against the US dollar is beginning to act as substantial risk to Indian economy. There is no doubt that with growing economy, our currency will appreciate. But the real threat in this scenario is the pace of appreciation.Since March 2009, effective exchange rate has increased by 15.7% while that of other countries have seen little or no change.

What I had thought was that before moving forward, we would definitely see a bear phase. Fundamentals needed to catch up and that only happens when we give our Economy enough time to restore the economical balance.


Why I changed my stance from being Positional Bear to Positional Bull

Last week I had posted that if and when Indian markets start correcting, I would be buying heavily into it. I changed my stance from being a positional bear to positional bull. Here are the following reasons.

Now we all know that India is prospering and it grew at about 10% in previous decade. Analyst expect that this growth cannot be repeated and hence India would grow at 7.2-7.7% in fiscal 2010 -2011. Now, in their own right they could be right. But they are not discounting the fact that India grew earlier at higher levels due to exceptional Global economic conditions. Whereas now, India is growing based on faster expansion in private consumption and investment. With some reasonable accuracy, we can say that global economic conditions are not going to enter a confident phase for a long time to come. But will that impede India's growth? Well, the answer is no.

If one reads the 11th five year plan, then one would come to know that in the 11th Five Year Plan, Government of India would like to spend $500 billion in the areas of Power, Road, Irrigation, Railways, Water Supply, Ports, Airports etc. Now this is some serious money which will pumped back into our economy and will be again consumed within our country. With rising doubts about the real growth in "China" where would investors turn to. Which economy is surrounded with problems but yet continues to grow amidst all threats and crisis?

The biggest positive for India is that our problems our known Internationally. Investors (FII's) know we have had a problem of unstable governments, poor governance and problems associated with our neighbors. But yet, they recognize that India gets up at 6 in the morning, to live another day for a better future tomorrow. Our governments don't support their citizens like governments do in other parts of the World. But still, our people find perky solutions to the never ending problems and begin from scratch to build something substantial. These are some facts which cannot be validated statistically but are of immense importance to my Investment decisions.

Personally, when I sat back and weighed all the problems in India, with the number of opportunities in India, then the Opportunities surpassed the problems by a long margin. That for me was the critical point in being overly Bullish on our economy. I have had an amazing run from 2002 -2010 and I feel India's better years are yet to come. In conclusion, change in my thought process was equivalent to resetting my mind to the 2002 year. It was a gradual process and certainly not sudden.

There are obviously many more points to add, but I hope this certainly gives an insight on why I changed my stance. Time only permits me to write few things on the web.

..................................
my opinion, SL depends on the strategy you use. It cannot be applied similarly to every strategy. For eg, for some trade I post live SL. That's because it changes with every tick. Whereas for some trades I place fixed SL.

Hope you get my point. If you want to discuss optimal SL technique for your strategy then feel free to PM me. I understand many users cannot disclose their strategies publicly on forum.
........................................

Nothing to hide. I am still learning trading methodology & psychology.
Traderji has various techniques. I am studding some of them. I am yet to decide which will suit best to me.

But mostly I will planning trading on two fronts
1. Intraday
2. positional trade (Ready to hold upto one month also if potentials are good)

Currently i am not going into stocks & dealing with Nifty only till I gain confidence on one of the technique.

At this moment I am having positional trade of NF short @5490 qty 2lots.
I am already gaining `85points/lot. I feel potential to gain at least ~80 to 100points more. But as you always say "Market is king" hence have money management & risk management plan.

Now I am not sure what stoploss to put in this case.

................................
You probably did not follow what I wanted to convey.

You said you have this position in markets. But you did not mention based on which methodology you have taken this position. Every methodology has a different SL technique. It cannot be same for every strategy.

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Those who are expecting markets to go down, should be prepared to be patient. Same applies for those who are long. Our stand remains the same, we are swing short on the market and positional long. Our positional long time frame stands to 1 year as of now and swing short time frame is variable.

Short time down side seems to be around the corner. However, timing the markets is something which is so difficult. Don't expect markets to go down in a straight line. Retracements till 5500 - 5600 are always possible. If one cannot manage risk via futures, then accumulating put options is not a bad idea. Volatility is still low and options are not that expensive. ..............30.8.10
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Well, whether it reverts or not, we will have to review our position. Always remember that markets are dynamic and hence our opinions cannot be static. They need to be dynamic as well.

Regarding you feeling as a frog in the well .... Sureyes, keep working hard and strive for understanding concepts. Once you do that, money making in the markets will be as simple as you fishing a frog from a well.
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There's a fair bit of chance that we will open on gap up basis and will remain there in terms of market movement. But before calling for the markets to move down further, I would wait for the price to confirm that. It's better to stay with the flow.

"Opinion can be separated from what is currently going on – this will allow you to profit by trading with the market right now, instead of believing your opinion should be right at this time.
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Its amazing how America is rallying on the basis of $4 trillion economy which is again dependent on America itself as exports will dry up Chinese economy will falter too yet the vicious circle is not adhered too by the news channel.

China on the basis of which America is rallying today, though had a positive growth numbers and better than expected economic data it closed negative while US where all the storm is brewing is 225 points up truly senseless animal spirit from the market.

One of the prime reasons few make money in the markets is because of our nature of arguing with the markets and its movements. Humans have a tendency to justify everything. Those who can curb this instinct, do very well in markets. Sadly, less than 1% of traders can do that.

Its not a comment on your post or your analysis. It's a comment on Humanity.

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That is exactly what I meant Raunak bhai market is supreme. Hence this morning in my other post I said go long on the breach of resistance of 5445 and once that was taken out market rallied. I have learnt this the hard way not to be biased one way and also the thanks goes to you. Macro Economics and Fundamentals do matter in the long run. In the short run however, fighting with the market is similar to bull fighting. Still a student of the market and trying to learn from you guys who have weather the market.

Again from Raunakji
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Will it or Won't it?

I think one question pondering every investor and trader on Dalal street is whether Nifty will crack or whether Nifty will rally? Virtually every investor is out there with one theory or other justifying what the markets should (will) do. In my trading and investing career, this is the first time when everyone seems so confused.

Some suggest volatility is at record low levels and hence markets should crack. Others suggest futures and options data is suggesting towards a crash. The never ending theories of Volatility, F & O, Harmonic patterns, Seasonality and Elliot Wave are all going for the toss. It's not only Technicals, but Fundamentals in their own are taking a beating too. Valuations are touch high, forward earnings are not encouraging, inflation is up, interest rates are rising and production if not slowing is not galloping either. So what should an investor/trader do at this point?

The best way to be in this market is to trade it. Some suggest volatility is too low to trade. Well I would request the skeptics to visit volatility data of stocks since 90's. Volatility is cyclical and currently we are in low volatility cycle. That's it !! This market is absolutely ideal for trading. However, there are few things we need to take care of. While trading these markets, it is an absolute necessity to book partial profits. In this thread I have been posting my live index trades and have been showing how and when partial profits are booked. We are in a phase where trends are being established and reversed too quickly. Hence, we need to ensure, we take some profits off the table in order to keep our equity ticking.

As far as Investing in this market is concerned, I sincerely feel markets are fairly valued. Every year or two, we have got corrections of 15-20% and since the last time that happened was in June - October 2008, I guess we are due for one now. I would be more happy to invest when this dip comes. At this moment, we need to be objective. We need to be rational. And going by this, it seems more logical to wait for a dip rather than to invest in markets which are richly valued.

Coming back to what Nifty will do. I feel markets are hinting towards following its price action closely. By following, I mean, going with the flow. If you see some of my previous trades, I have exactly done that. And I feel at this moment this is the right tactic to adopt. Lets follow the market and let our theories rest in peace.

May the markets be kind to all.
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I will certainly back test your system. But you need to know what I judge a system on. I don't want to disappoint you with my comments later on. I dont pay much emphasis on profitability. There is a vast difference between profitable systems and good systems. A good system has to be profitable, but a profitable system is not necessarily good. For me, the main criteria is Draw downs (in trade and end of day), profit factor, number of winning trades, time spent in markets and risk to reward. Apart from all these, I also give importance to equity curve, MAE and MFE.

So, if you need an honest analysis, I will help you with it. If you want, I can also suggest you with some improvements if the need be.

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I am no expert. Raunak Bhai is the king I am very new to trading and very young in this business only seen the bull move from march 2009 until now :p No bear phase seen yet. But there are some stocks with good value for 6 months period try and look for agriculture related stocks even the fertilizer sector. The demand in emerging economies is going up the food consumption in the world is reaching sky high. With the ever increasing population and improving welfare this shortage will keep growing. Next 10 years will be boom period for rural sector. Look at meat products, coffee, wheat etc all hitting life time highs. This is my view also aviation sector around the world is rebounding so Kingfisher spice Jet should do well too.

I also believe KS Oil is a good investment at this level because India is the biggest importer of edible oil and the demand for edible oil is going up and KS Oil should definitely see the profit margins increase.

Punj Lloyd may also be the dark horse. Will try to look for other good stocks too and will put it here right now not in touch with the market that much.
...Don't waste your time on picking multi baggers or whatever they are called. The odds of one hitting bulls eye is way way way less than the odds of you hitting bulls eye with a descent stock. Focus on that.

Everyone hear's stories of how some guy became extremely rich by investing in penny stocks. Believe me, these stories are created and floated by some sources to keep investors engaged.

Stay out and have fun. Invest the right way and believe me markets will reward you in a manner you would never forget.

Tc
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Whether it's small cap or large cap, I would not invest in a market which is trading near high's of its valuation band. I know in 6 months, I will get most of these stocks at a much better price. It's only a matter of time.

With your cash, its not a bad idea to make 1 month fixed deposits. Let the market correct. You will get plenty of opportunities. sept'2010
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Yes, two patterns can form within each other. Trust the one which reflects the broader picture. I would trust the outer channel in this case. And as SM said, this stock looks good to retrace.

Get hold of a good book and go in depth. Once you finish, try and figure out what works for you. Books are just for reference. One needs to figure out what works for him.
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Starting an Investment Portfolio

Since January - February 2010, we have been working constantly towards developing an "Investment" oriented Technical Model. After 7 months of rigorous back testing across several asset classes and several International markets, we have finally finished the development phase. The results were very encouraging and we have decided to replace this model with our current one. Currently, the model is being documented and we wish to take the model live from January 2011. Meanwhile, Since this model will be in use from 2011, I would be posting investment related stocks starting from this Monday based on this model.

Time frame of Investment

This can range from anything from a 3 month period to a 5 year period. In most cases, it is going to be long term bets. Please remember, we are going to Invest in stocks. We are not going to trade them.

What about drawdowns

Since this model is Investment based, we do witness large drawdowns. Sometimes, drawdowns go up to 20%. I know this is too much, but the results we have got are simply worth taking this risk. After all, there is no reward if there is no risk. When markets correct, we could see stocks falling to 20-30%. Even in that scenario, if our investments still remain a buy, we will be holding our positions.

What type of Assets do we invest in

Absolutely everything and anything that moves. Be it stocks, etf's, mutual funds or commodities.

What about Penny stocks

List of stocks posted here could be penny stocks as well. Currently we are not separating penny stocks from rest. This is something we will be doing by December 2010. Whichever stocks are traded in NSE, results for those shortlisted will be posted. Hence please watch out for Penny stocks or operator driven stocks.

Mode of Posting

I would be posting trades on Google documents. Will be leaving a link of the sheet. Whenever the sheet is updated, I will notify all of you by posting a message here. Google sheet will be updated automatically and hence tracking it will be more easy.

What about exits and stop losses

Will be updated in the sheet

Why not a new thread

If results are encouraging, then I will shift these trades to a separate new thread.

Finally .. What about returns

This is something we all will witness over time. If results are good, then I will keep posting it. If results are bad, we will go back to finding improvements. Since this is investment based model, I will give this model enough time to work. Need to be patient.

Tc
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I dont mean to be offensive or rude either. But I am not in agreement of your post.

Technical Trading is not something wherein u get all ur trades correct and as per your plan. My success to failure ratio is 1:1 but still my account is in profit because I usually maintain risk/reward ratio of 1:2 or 1:3...

TA is more of art than science... Success purely depends on individual's skills. And IMHO, faith, system/method/strategy and proper money management is key to the making ur account profitable.

Again, i dont mean to be offensive, just don't want you to lose faith... u can PM me and we can have chat sometime and I wud love to guide you or u can send me ur set of questions and I wud try to reply. You can post here also so that other senior members can also vouch for it...

Humble Request: Don't ask me for my system or setup or anything... probably i will not disclose it. However, if u have observed or read my posts, u wud have made pretty accurate guess of my style of trading...
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As far as your challenge is concerned, I think that is your personal opinion and it may well be right. As far as I am concerned, my balance sheet year on year contradicts what you say. Hence, I own the right to believe what I believe. Finally that is what eventually matters. Our own belief !!

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Originally Posted by Apurv7164
Raunakji.... I m planning to enter into it for 4-5% swing trade... M not looking for investment at this moment... your thoughts on this? ...Usha martin

Apurv,4.9.10

My views were reserved only from investment point of view.

But from swing point of view, it looks kinda ok. Range expansion is being witnessed in all forms. Should do well. You would get a better risk reward from investment trade. Not from swing trade. Investment is a lot easier and more rewarding than trading. If done properly.

Tc
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Investment Portfolio

Guys, in the below mentioned link, there is a spreadsheet linked. That contains list of stocks which are worth investing till they show sign of not moving forward. Since we are just seeing the real time results, it would be strongly advisable not to buy any stock based on this list. Let us see how this goes. The sheet has two pages, one is the fresh buy column and the second one contains list of stocks which had given buy earlier but still look good to move forward.

In this list, A category stocks are highlighted in green and Z category stocks in orange. Personally, I would never ever invest in a Z category stock. Stay with the 'A' list always. Since we have not separated the A category from the Z category in our database, we are posting results for both. Also, some stocks may be low volume, operator driven stocks. At present we are posting results for all stocks. By December 2010 we will be separating stocks based on various criteria.

The current price column contains the last trade price of the stock. Anyone who knows how to link the price to NSE website or google finance page can volunteer to code the current price column. That way, the sheet would be updated real time. Else, every week I will get one of my guys to do it. If anyone is willing to do that, then just post here and I will PM the password to the volunteer.

Please Read this before beginning to follow this document.
Starting an Investment Portfolio

Since January - February 2010, we have been working constantly towards developing an "Investment" oriented Technical Model. After 7 months of rigorous back testing across several asset classes and several International markets, we have finally finished the development phase. The results were very encouraging and we have decided to replace this model with our current one. Currently, the model is being documented and we wish to take the model live from January 2011. Meanwhile, Since this model will be in use from 2011, I would be posting investment related stocks starting from this Monday based on this model.

Time frame of Investment

This can range from anything from a 3 month period to a 5 year period. In most cases, it is going to be long term bets. Please remember, we are going to Invest in stocks. We are not going to trade them.

What about drawdowns

Since this model is Investment based, we do witness large drawdowns. Sometimes, drawdowns go up to 20%. I know this is too much, but the results we have got are simply worth taking this risk. After all, there is no reward if there is no risk. When markets correct, we could see stocks falling to 20-30%. Even in that scenario, if our investments still remain a buy, we will be holding our positions.

What type of Assets do we invest in

Absolutely everything and anything that moves. Be it stocks, etf's, mutual funds or commodities.

What about Penny stocks

List of stocks posted here could be penny stocks as well. Currently we are not separating penny stocks from rest. This is something we will be doing by December 2010. Whichever stocks are traded in NSE, results for those shortlisted will be posted. Hence please watch out for Penny stocks or operator driven stocks.

Mode of Posting

I would be posting trades on Google documents. Will be leaving a link of the sheet. Whenever the sheet is updated, I will notify all of you by posting a message here. Google sheet will be updated automatically and hence tracking it will be more easy.

What about exits and stop losses

Will be updated in the sheet

Why not a new thread

If results are encouraging, then I will shift these trades to a separate new thread.

Finally .. What about returns

This is something we all will witness over time. If results are good, then I will keep posting it. If results are bad, we will go back to finding improvements. Since this is investment based model, I will give this model enough time to work. Need to be patient
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I think the most crucial thing is discipline and money management. One can make money in the mkts consistently without any TA or any kind of analysis but no one will make money without the first two. Even the best of technical analysis will not yield money without moneymangement and discipline in place. Once we put in place a discipline and money management strategy then we should go in for technical analysis.
Also what Raunak has mentioned many times in this thread is that he uses TA to minimise losses when the trade goes wrong and maximise profits when the trade goes right. This I personally believe is the ideal approach.
TA or for that sake anything else only increases the probability of a trade going right, it does not ensure it.
Anyway, thats what I feel. Everyone has their own opinions and beliefs.

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Originally Posted by saivenkat
With what reason can one attribute to, the todays up move in market?

1) Is it due to the US job report?

Neither it ever was, nor it will ever be. What has US jobs got to do with Indian Economy? Yes we do get temporary gyrations. But long term price structure has no relevance with US jobs

2) Is it a bear trap to trap innocent investors built by heavy weights?

Trap is created by innocent investors themselves. No one can trap anyone. Do they make one trade at gun point? The problem is, innocent investor speculates a lot. He does not think of investing. All he wants is short term quick gains.

3) Is it Short covering or creation of fresh longs?

Till the price structure suggests, it is better not to argue with the markets. One can trade with the markets and with opinions. Balance is required though. In some posts earlier, I have replied to Rrmhatre about how to trade with markets and how to trade with opinions.

4) Or nothing in the above, as on expected lines only?

To expect is to commit the biggest mistake.


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Position Sizing in Investments

Assuming account of Rs. 10 Lac
Risk per trade - Variable or based on historical volatility
Maximum positions - 20
No brokerage is assumed for simplicity

Initial Strategy

Now it is widely known that position sizing can vastly increase one's trading performance. In this post, I am going to highlight a simple technique which I use for positioning my trades. Please remember, position sizing is different for the kind of trade one undertakes. Here, I am going to explain position sizing for long term investments. Hence don't follow these techniques when you trade.

Now, lets say I identify Stock ABC as a potential investment candidate. Initially, I put in 1% of the account size, which in this case would be Rs. 10,000. If I have identified something as investment trade, I would definitely expect before hand what sort of levels that stock can attain. Usually, if everything remains normal, it is fine to assume that a good investment will double in 2-3 years. Hence, our motive should be to capture bulk of the move with the correct position size.

The maximum I invest in any one trade is 5% (in current market conditions) or 10% (if market conditions are extremely robust). At the moment, I would commit only 5% of my account size in one trade. So this means we need to start with investment of Rs. 10,000 and scale in positions till our investment reaches limit of Rs. 50,000.

TO start with, lets assume ABC is currently trading at Rs. 100. With an initial investment of Rs. 10,000, I would be in a position to buy 100 shares. I would then, scale in another Rs. 10,000 when ABC appreciates by 10% that is, Rs 110. Going forward, I will keep increasing my position at every 10% gain till my investment reaches value of Rs 50,000. When I do so, I would get an average price of Rs. 119.9 and number of shares equivalent to 417.

What if trades begin to fail

I will just mention two scenarios here and I would leave the rest for you to figure out.

Scenario 1: Stock Moves down from 100

In this case, we would incur a loss on 100 shares. That is, loss on Rs. 10,000. The amount of loss occurred is determined by the kind of exit strategy one uses. I have observed most traders keep stop losses in the wrong manner. They keep a fixed % stop losses for all stocks. Well this should not be done because every stock has different volatility levels and hence each stock must have a different stop level in % terms. Else, one simple way to limit large losses is to not incur loss of more than 20% of investment. Which in this case would be Rs. 2000 on investment of Rs. 10000.

Scenario 2: Stock Moves up to 110 and then collapses to 100 and then probably further.

In this case the average price would be 104.7 and we would get 191 shares. Well, the exit in this case is very simple. If the stock reaches Rs. 110, you would be in profit of Rs. 1000 (100 shares * 10 Rs gain) and it is here where you would add another Rs. 10,000. You would get roughly 91 shares at 110 level on investment of Rs. 10,000. SO, if the stock collapses and reaches Rs 100 again, you would be incurring a loss of Rs 910 (91 shares * Rs 10 loss). Once Rs 100 is reached, I would square off the add on position with a loss of Rs 910 and would have the basic 100 share position open which I took when I bought the first time. With this position, I would exit the same way like I did in scenario 1. Remember, our main motive is to ride a possible trend of 100 - 300 % and hence we should be prepared to take a loss of 20-30% on our investments. Since this percentage seems high, we diversify and position size to take loss at small quantity and gain at higher position size.

Isn't investing Rs. 50000 at one stroke better?

Well, lets work the math here. Typically, before getting on to the real trend, we would get whipsawed a great deal. Hence we need to ensure our losses are small. Now lets assume, I buy Rs. 50,000 worth shares when ABC was at 100. I would get 500 shares. If I take 20% loss on investment as stop loss, then I would roughly loose Rs 10,000 on one trade. Now imagine what if I have 5 such losses in a row. I would incur a total loss of Rs. 50,000, which by the way is 5% of my account size.

Now, going by our original plan of investing just Rs.10,000, we would have a loss of Rs.2000 on each trade. Even if we take 5 losses in a row, we would get a loss of Rs. 10,000 in total. This is only 1% of our account size and is totally acceptable. Remember, our main aim is to preserve capital. And once we learn how to do this, we will be far better money managers than we were earlier.


I hope this post helped many of you who wanted to position size properly. This is not exhaustive. Infact this is something I have worked on my own as it suits my style of investing. At times I scale in quickly if I find a stock moving at great pace. Hence, position sizing is also subjective and discretionary. If one wants advanced strategies, then one can refer to many writings by Van Tharpe.

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My Beliefs:
Any indicator or chart can talk to you if you spend quality time with it to learn and understand it especially construction and structure of it. ADX is not something exceptionally good. It is just I happen to read work of Dr. Charles and Chuck Lebeau and when implemented in my trading found good results so I continued with using ADX.
Like any other indicator, ADX also has got lot of subjectivity involved.
What I still do not know:
How to use it for intermediate time frame or lil more profit than swing of 5-7 %.
When to exit – Currently I use 5% exit strategy. I seriously want to learn this combining any other indicator with ADX. I would appreciate if somebody helps me in this.
How do I use ADX/DMI:
ADX to know trend strength but generally this is just informative nothing else – we all know how does this work. If ADX is above 20-25 and rising tells us trend is strong enough to trade in the direction.
Relative analysis of ADX peaks i.e. comparing ADX peak with the past ADX peaks. This is very important to understand whether current down move is retracement or reversal. I would mark previous couple of ADX as +ADX or –ADX. When –DMI is above +DMI and ADX has formed peak, I wud say that ADX peak is –ADX and vice versa. Whenever, I encounter down move very first thing I would do is will compare current ADX peak which is -ADX peak for down move with the previous ADX peaks if current –ADX peak is significantly lower than previous couple of +ADX peaks then there is a possibility that current down move is complex correction rather than down trend.
Range expansion and contraction on DMIs. Here I wud keep my eyes on DMI behaviors within the consolidation. For example – if range between 2 DMIs is expanding within the consolidation, I wud get early guess of which direction price going to break out. We should get into breakout only.
Traditional use of DMI is to go long or short on crossovers. I do not give importance to cross over on standalone basis. I always want DMI to make new high after cross over. When I say new high, I mean DMI should make high above all the opposite DMI highs as well as same DMI highs within the consolidation period. If price breaks out or breaks down but respective DMI is not going above all DMI peaks within the consolidation period I wud not get into trade (Dr. Charles quote this as cross over high theory). The only exception (my observation) is DMI expansion within the consolidation. If DMIs have clear range expansion within the consolidation and respective DMI does not make new high on break out, I wud still get into trade. As Raunakji mentioned many times, sometimes we can make educated guess. However, I wud not recommend getting into trade without new high if you are not having sound understanding of this indicator.
Cross & Hold and Dominant DMI – many times it happens that DMI does not give us trigger high on breakout. Does this mean we shud not get into trade on this type of breakout? I wud watch DMIs after breakout. If DMIs do not cross back in reverse direction and holds the original cross over, I wud get into trade as soon as DMI makes new trigger high. This is lagging signal but works so I thought of including it.
DMI continuation high – many times we don’t get consolidation and have established trend. Why wud we let go trading opportunity presented by established trend or in other words why wud we not ride on established trend? I would wait for the price retracement and DMI contraction. Once it happened, I wud get into trade as soon as dominant DMI goes above its previous pivot high.
DMI divergence – As we had discussed earlier, I am still not fully convinced with the divergence concept. However, I give lil importance to DMI divergence in getting information. Divergence between price and dominant DMI tells me that correction/retracement/reversal can be on cards. I do not take action based on this. I wud want price to confirm with the breakdown or lower high/low.
Putting all together:
I usually trade where ADX is below 15 and preferably below 10 suggesting me currently price is in congestion or consolidation. I will watch price to give break out with the trigger high/low on respective DMI.
When ADX is extremely low, DMI and price break out generally work for you. Very less chance of getting stopped out.
Well established trend and retracement – First check relative ADX peaks with previous ADX peaks. If it suggests you that it is not trend change. Get into trend as soon as respective DMI makes continuation high. This works best when combined with MAs.
I also combine John Hayden way of looking at Fibonacci and RSI with my ADX analysis. Since this is all together separate topic I am not going into much details here.
I generally use 8 ADX of 13 DMI or 7 ADX of 12 DMI but also seen simple conventional 14 ADX and 14 DMI working equally well. I usually reduce look back period of ADX to make it little more sensitive.
I mostly trade in the direction of higher time frame – I need to have weekly ADX telling me same story about trend when I want to trade on daily chart. Or I need to have daily chart telling me same story when I want to trade on 60 min or 30 min chart.
I have certain strategies defined to trade using these but I am keeping them with me. I am very confident that anybody can improve failure to success ratio understanding above concepts very well and being friends with ADX.

I am very much open for constructive and healthy debate on this if anybody having different opinion. Healthy debate and brainstorming always lead to greater insight and understanding.
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I surely dont mind posting chart but traderji is allowing me to manage attachment to the max limit of only 100 kb. Now it is difficult for me to show all the examples within 100 kbs only.

However, kindly go through below mentioned charts for the points.

Go through USHA Martin daily chart for knowing relative ADX analysis and break out from consolidation and confirmation on DMI by making crossover high.

Also go through ACC daily chart for breakout confirmation on DMI. Weekly chart will show you relative analysis study.

Check 60 min Fed Bank chart for breakout confirmation on DMI. Daily chart of Fed Bank will give you relative analysis study also.

Check sonata software daily chart for probable dominance failure by -DMI. This is still under development.

Check Nifty daily chart for break down but -DMI did not made cross over high, neither cross & hold and maintain dominance.

Check TVS Srichakra chart for DMI range expansion example...07.09.10
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Nifty is climbing up, yesterday's moved look liked a climax. P/E ratios are coming at 25 now for the index. Bubble phase is underway and this is the most riskiest period as everything in the market goes up and everything goes crazy. Everyday market rises.

Bubble of any sort is identified quite easily with the kind of leverage underneath. There has to be something substantial for the bubble to form and for it to burst. Words like crash, bubble are used so frequently by the media these days that even a common investor now understands these terms. In my opinion, any information which is out with the masses has no value at all. Remember, it is information asymmetry which causes markets to move. Not symmetry of information.

As far as PE goes, I think world wide in all economies, PE bands have shifted range. This happens in a growth stock so why can't it happen in a growing economy. When the band shifts, the momentum and prices are bound to expand. I feel currently we are witnessing the same. I don't rule out the possibility of a correction, but I won't anticipate it. If it comes, so be it. I am prepared.

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Hi Raunak,

pls confirm me on my Understanding.
1) You anticipate 100% to 300% growth in these stocks in next 2-3year
2) You will have next investment of 10k, only after you see 10% rise on your current investment. You will keep on doing so till you invest 50k in each stock. (With this logic Vis Finance & Wockhardt should have deployed with next lot of 10k)
3) You will come out if you see 20% loss in any script.

I am not clear on following points.
1) We have invested all 50k. Let us take your example & assume our avg price is Rs119. our target is min of Rs200 for this stock. If stock starts falling down before target is hit then what should be SL? Is it Rs95 (20% lower than avg buying price of Rs 119)? or Rs120 (20% lower than your last purchase @Rs150)?
2) What will be exit strategy after hitting target of 100% growth? Will it be, exiting 20% amount everytime in five steps or exit with all the qty in one shot.

...................Rahul,

For Wockhardt, next lot of Rs. 10,000 has already been deployed today. As far as VLS finance is concerned, I have mentioned earlier that I don't invest in Z category stocks and hence no 'actual' money has been put in the stock. In the given sheet, the scripts given in green color are the one's where actual money has been put in.

Rahul, as we scale in at every 10% jump, we begin to scale out when our positions start coming to the price where we added lots. Only loss we take on add ons is the brokerage loss. For the first lot (Rs. 10,000), I take a loss of X% depending on the volatility of the stock, which typically ranges from 10 - 30%. For every stock this is different.

Regarding exit, if our investment gives 100% return, we start keeping a trailing stop loss. Now this again depends on the volatility the stock is exhibiting. I would never get out of a investment just because it has doubled. On the contrary, once I have 100% returns, I would think about deploying more money in that stock.

We keep going in and out, we keep scaling in and scaling out and this is all done to adjust the alpha and the beta of our portfolio.

Lets see how it goes, we are just testing a new model with real money. We are confident of the performance, lets see what markets have to offer. My aim is to outperform the market. That's it.

Tc
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Just a word on Investing and trading.

If we have a portfolio, in which alpha is generated with given set of stocks. We need to make sure that when the market goes into volatile phase or starts to correct, short selling becomes an instrument to rebalance the alpha lost by market correction on portfolio.

This is where a trading technique or a system comes in handy. During consolidation, our alpha won't be affected much and we must not get into the frenzy of trading. However, when signs emerge of correction, then we must be prepared to short sell in order to restore the alpha lost in correction. This is how one can be a long term investor and at the same time be a short term trader in order to balance alpha. In other words, Trading instrument simply becomes another portfolio vehicle ensuring alpha generation capability.

Rahul,

Let me answer your query in parts.

1. Index stocks - I am a value investor and there are so many small sized companies which are going to do wonders ahead. Yes, I trade and invest a lot based on Technicals. But, I am very sound on fundamentals too. Most of the companies I buy are either good fundamentally or are expecting a turn around. However, some of the companies which I buy are not so good on fundamentals but are still rallying ahead due to momentum. I still prefer to ride those. In short, I am aiming at growth stocks, momentum stocks and value stocks. This in itself is diversification within diversification.

2. Correction - I am very bullish on India. And I assume India's good years are yet to come. We have our own risks, but I think we will sail through all the hurdles. An economy with every individual wanting to be rich can never go off track. Hunger to survive and to do well in life is what India is all about. Dreaming is essence to enhanced performance and my dear India is full of dreams and aspirations. So, when corrections come, I will trade those to balance my portfolio. But till anything catastrophic happens, I will continue buying. We are investing and we should not be scared of a 10-20% correction. Should we? Keep strict money management rules and be disciplined.

3. Trying this concept - I will strongly encourage you to try this concept and you can comfortably try it with any fixed amount you want. But stay in equities and try this entire sizing concept with your own system and own stocks. I have mentioned earlier, we are trying out things with real money. So, just be careful picking out stocks directly based on the sheet given. We are here to stay for long term and I am not expecting returns in a day or two.

4. List of stocks - When you open the sheet, the list of stocks whose rows are in Green are A category stocks. List of stocks highlighted in orange are Z category stocks.
...................According to recent report FII have largely exited investments in small caps and have focussed on the larger caps. Hence many are available still at attractive prices. For a long time now the action has shifted to small and midcap. Any correction will have a small blip but the targeted returns are potentially higher.
Since brokerage is a percentage it will not matter either ways. For starters you can look at returns for 3-6 months. Short term calls are less riskier than trying to do intraday and you can get better returns.

Well, I won't read too much into what FII report says about where they are investing. Trading where the action is something one should focus on. Historically, in every economy, midcaps have always outperformed large caps. Also, Midcaps and small caps also fall a lot more than large caps. Hence, the risks are more in such stocks.

But if you pick the right kind of midcaps, the gains are just staggering. How many large caps are the best performing stocks every year? Some manage to creep up, but the majority of best stocks year on year in terms of risk reward are usually midcaps. Small cap are a bit scary though.

.............................
As traders why should we have a long term perspective of Investment ?

Well, it entirely depends on your mindset. If you are a trader, then you don't need to bother about anything else. As I have posted earlier, I cover up some of my investment draw downs by trading. So, in short I am a medium term trader and long term investor. My time frame in defining what is Long term and what is short term is not fixed,it changes with volatility.


In what way a short term portfolio(1week to 1 month holding) different from a long term Investment portfolio ? How the returns are expected to exceed the returns of a Swing trading Portfolio ?

It is different in terms of alpha and beta both. In short term portfolio, your gains are less and your risk is relatively high. Depending on your skill set you can find suitable risk to reward trades. In long term, you have time on your side and if your investments are sound, then the gains can be spectacular.

For a short term portfolio's returns to be greater than long term portfolio, you need to have the right sort of environment. For eg, when the volatility is high, your short term returns can out run the long term portfolio returns. But, how many traders actually know how to position themselves in high volatility environment? That my friend is key to returns in the shorter term. And don't forget the risk that high volatility environment brings to a trader.



Note:- Lost hope in investment after burning my fingers in Sathyam, Teledata

What are the odds of this happening again to you. Satyam I agree was a shock for many. But how often does this happen? You can't draw inferences based on some trades. Furthermore, one year like 2008 will sway your faith away from trading. So many traders in that year swore never to trade again. Hence, its a double edged sword dear. Ultimately you need to know what works for you.

...................................India is in second place with 39 entities, 19 more than last year, thus making it the biggest gainer. More Indian companies made it to the list this year as the country is less open than many other Asian economies and was therefore less affected by the global downturn," Forbes said in a statement today.

Other Indian firms in the list include Allied Digital Services, Exide Industries, Jubilant Organosys, Spice Mobility, Zydus Wellness, Amara Raja Industries, Compact Disc India, Everonn Education and Micro Technologies.

The 'Best Under A Billion' list is chosen from nearly 13,000 publicly-listed Asia-Pacific companies with actively traded shares and having sales in the range of USD 5 million- USD 1 billion.
The selection of the best 200 companies is based on earnings growth, sales growth, and shareholders' return on equity in the past 12 months and over three years.

According to Forbes, the latest list has 151 new entrants as compared to 136 last year. Information technology, health care and electronics companies accounted for nearly half of the 200 entities.

Indian entities such as Ashiana Housing, Banco Products (India), Bliss GVS Pharma, Deep Industries, Glodyne Technoserve, Kaveri Seed, KNR Constructions, ELGI Equipments and ICSA (India) are also part of the list.

upto page130
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#87
25th December 2010, 11:13 PM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
Learning through your own mistakes is expensive, but it is also one of the most effective ways to learn. I have learned that way. Hence dont feel bad about opening your own thread. That was a bold move and you did well. Keep it up.

Portfolio is not based on pivot method, neither on break out method. But thanks for telling me it coincides with that. Also, from the list of stocks posted and which will be posted further, we dont expect more than 2-4 to go in our favor.

Regarding stocks looking stretched, the continuation buy list is where most of the stocks have moved up significantly. That is why we have not committed any fresh money there. On the contrary we are booking some profits there. For the next few weeks to years, I am more interested in the Fresh buys list. That is where I am expecting some action.
That's good Apurv. You must have different positions in different stocks. But I hope you are not over trading based on your account size. As far as your account size suggests these many positions, its fine. Otherwise, you are taking unnecessary risk. Remember the 2% rule. That's it.

No trade taking more than 2% of your account size as risk.
....................
Posting the list of stocks for fresh investment here. List will be updated as and when new stocks match the criteria. List from continuation list have not been posted here as no fresh money is committed. Excel sheet given earlier has been removed for adding some more real time features and system statistics. Will be made available as and when updates are made.


Code:
Stocks Buy Level Buy Date Quantity Exit
Arvind 42.95 Sep 6th 2010 233
Asahi Safe 92.55 Sep 6th 2010 108
Dish Tv 55.15 Sep 6th 2010 181
EIH 150.8 Sep 6th 2010 66
Guj Fluro Chem 211.35 Sep 6th 2010 47
IBN 18 Broadcast 124.7 Sep 6th 2010 80
IOB 133.95 Sep 6th 2010 75
Jindal Drilling 606.35 Sep 6th 2010 16
MVL 101.5 Sep 6th 2010 99 91.4
Religare Enterpr 480.2 Sep 6th 2010 21
Srei Infra 90.6 Sep 6th 2010 110
Texmaco 160.75 Sep 6th 2010 62
United Brewries 326.25 Sep 6th 2010 31
Venus Remedies 305.3 Sep 6th 2010 33
Videocon Industr 265.5 Sep 6th 2010 38
Wockhardt 237.7 Sep 6th 2010 42Tc
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only say one thing.

Stay with the speculation till the speculation lasts. Don't question it. Let the questionable scenario present itself rather than you trying to find it.

Tc

Adding to what I have written above. I feel, we are at an extremely important juncture as investors. There are some unbelievable investment opportunities present out there for the next 1-5 years and I sincerely feel, India is at the brink of something really really special. Hence, don't limit to explore yourself and your beliefs just because there is 15-20 % correction expected. Feel your spirit, believe in your vision and set yourself free !

......................
ADX Has it's Limitations

(I'm referring to Welles Wilders Average Directional Index in case you are a "newbie".) After many years of extolling the virtues of the ADX in articles and lectures all over the world I have become closely associated with this indicator. That's fine with me and I don't mind being considered the resident expert on ADX. It is an excellent measure of trendiness and a good indicator to be linked with.

However, I think it is a mistake to try and over work or become too dependent on any one indicator. If you were going to build a house you would need more than one tool and you wouldn't try to do it with just a hammer. The same is true of building systems. The ADX can be a very valuable tool if used correctly but it has some major shortcomings that everyone should be aware of: We all know that the ADX is slow. This is because of all the smoothing in the formula. The basic ingredients are smoothed and then the results are smoothed again. For example I think it takes more than 30 bars of data to calculate a 14 bar ADX. This smoothing makes the ADX slow but there is an even greater problem than just the speed of the indicator. The logic of measuring directional movement makes the ADX very reliable at certain times and very unreliable at other times.

A rising ADX is a reliable indication of a trend when there has been an extended sideways period before the trend gets started. Before all the high tech computer mumbo jumbo we used to simply refer to this sideways period as a "basing pattern". The ADX is most effective when it begins to rise from a low level (low = 15 or less). This low level on the ADX indicates that there has been a basing pattern for a while. This interpretation is contradictory to those users of the ADX who want to see the ADX cross above a specified threshold (usually 20 or 25) to indicate that a trend is underway. This technique would make the ADX even slower and means you would be confirming a trend and entering your trade long after the basing pattern was broken. But even if you were late due to your method of interpreting the ADX, following the ADX after a base pattern is still quite reliable. The potential problem I want to bring to your attention in this article is the action of the ADX after major peaks and valleys.

The logic of the ADX is best visualized as measuring directional movement over a moving window of data on a bar chart. If we have sideways data in the window followed by recent trending data (lets think of rising prices but it could be the reverse), the rising prices would show directional movement relative to the sideways data at the beginning of our window. The ADX would promptly rise and call our attention to the fact that there is now a direction in prices that should continue for a while.

However, if the prices rise for an extended period and then begin to fall sharply (a typical scenario) we now have a window of data that shows rising prices followed immediately by falling prices. The ADX formula measures the rising prices in the window and compares them with the declining prices in the window. Because the two trends are about equal they cancel each other and the ADX does not detect any net directional movement. The ADX now begins to decline indicating that it is finding no net directional movement in the period measured by the window.

As the window moves forward, eventually the older rising price data falls outside the back of the window so that the window now contains only the more recent downward price movement. The ADX suddenly begins to rise rapidly because the data window at this point contains only one trend. The problem with this new signal is that the downward trend in prices has been underway for quite some time and only now has the ADX finally begun to rise. This is obviously not a good point to be entering a trade to the short side. We are probably nearer the end of the trend than the beginning.

Remember that the ADX works best after a basing period and is unreliable after a "V" bottom or top.
..................................
I slightly differ on what is mentioned here. I do know a fair bit about most of the indicators out there and hence, although I do agree one should not rely too heavily on one indicator, I also support the view of having absolute mastery over any one of the good indicators.

We don't need to dwell too deep into science to understand why at times trading with one indicator is a good thing. We just need some basic combination theory to understand this. Now, if we have 2 variables, Price and one indicator, we could map out different market specific behavior of these two variables and study them under those conditions. We could then know, how these two variables behaved and what result to expect under those circumstances. Now, as we begin to increase our variables, we find it very tough to monitor and research these variables. Two variables combined with each other, gives a finite combination. But as we begin to introduce more and more variables, the combinations start to increase and hence the result starts to vary. Now, which result to pick in which condition becomes quite a task.

This is precisely why financial markets are something one needs to be at peace with. Some can manage 2-8 indicators, while some can only manage one. The effectiveness however of using 1-2 indicators is no less than using 2-8 indicators. This is just my own experience. Some do believe that the more number of indicators you have, the more accurate the result becomes. I, however, do not voice this view. At the most I prefer to see one indicator. That's it!! Most of the times, price is enough.

Anyhow, the way to master the markets is to approach it step by step. If one picks up one indicator, he should try and research it in and out. It is only then that one can truly master the markets. And once that's done, you'd be in a position to take out money at your own will.
Selecting Time frame to Trade - Data Validation

Majority of the traders in the stock market like to Swing trade using the daily time frame and the 60 minute time frame. Furthermore, about 99% of them use indicators to take a trade in either direction. Now, taking trades based on multiple time frames is very logical as this ensures that the trader always trades in the direction of larger trend. But, which smaller time frame one uses determines whether the trade results in profits or losses. In this post, I want to highlight a very important aspect of data validation which is often the most neglected aspect in Swing trading. In doing so, I will also highlight, why the 60 minute time frame is not suitable for swing trading. Let's begin !

For the sake of simplicity, we will assume that a trader uses Daily time frame to measure the trend direction and 60 Minute time frame for taking the trades. Furthermore, we will also assume that the trader uses stochastic oscillator to enter and exit trades. Now, before getting into data validation aspect, lets briefly review what the stochastic oscillator does. The Stochastic Oscillator measures the level of the close relative to the high-low range over a given period of time. So, when we apply the stochastic oscillator over period of daily time frame, then, the stochastic readings typically depict the level of close relative to the High - low range over the entire day. Now, till here, everything seems fine. It is only when the trader switches to 60 minute does the problem begin to arise.

Our markets are open from 0900 Am IST to 1530 Pm IST. This means we have 6 bars (each of 60 minute) on hourly frame and 1 bar of 30 minute trading. Now, this poses a serious problem if one wants to take trades based on hourly time frame. Each price bar is a representation of the supply and demand prevailing in that hour. When we get one bar which is just of 30 minutes, then we are bound to get an error as that bar does not represent the accurate demand and supply scenario in the market.

Similarly, now, If the trader is using Stochastics oscillator that measures overbought and oversold based on where the close fell relative to the high and low of a bar, then the size of the bar is integral to the result. Because price ranges tend to increase with the length of time, a bar with too little time will give inaccurate signals and give false reading on a market. Once this happens, the profitability of the trader gets seriously affected as now he has deviated from his plan unknowingly.

Typical solution to counter this problem is to create bar sizes with equal length of trading action. Our markets are open for a total 390 minutes. In this case, it would mean, creating a time frame which represents 65 minutes of trading. That is, a 65 minute time frame in which we will have 6 bars of 65 minutes of trading representing the total 390 minutes worth of action. Those who fail to adapt to this concept, will be neglecting a very serious problem of data validation. All we do is trade on data, and if the underlying data is not validated and accurate, then our entire plan is prone to errors.

In conclusion, the next time one uses different time frames to enter trades, please ensure your data is validated and is error free.

.....................

I have given my Nifty view earlier when I became extremely bullish on markets (Technical And Fundamental) and the view remains the same. If you have right money management rules in place, nothing should bother you. Just ride the trend.

I have mentioned this earlier also, having an opinion is good, but sticking to it and expecting it to happen does not have positive expectancy.

Don't focus on what FII's or any other investor is doing. Focus on what your thought process is and what the market is telling you right now. Once you focus on these two aspects, you will get your answer.

Someone recently had asked me about valid interpretation of Open Interests in Options. I just read a very good explanation of the same and thought of sharing it here. I am highlighting the important points in bold.

" Open interest represents the total number of option contracts currently open and is a measure of liquidity in a particular options class. In other words, open interest is a figure that reflects the number of contracts that have been traded but that have not yet been exercised or liquidated by an offsetting trade. When you trade an option, you may in fact be creating a new option contract. Both buying and selling options will increase the open interest figure, providing the action opens a position. Conversely, buying or selling to close a position will cause open interest to fall. If one side is opening a buy position and the counterparty to the trade is selling his existing bought position, then the open interest will not change.

Looking at the open interest, there is no way of knowing whether the options were bought or sold. However, the figure can be compared with the volume of contracts traded on a given day. When the daily volume exceeds the existing open interest, it suggests that trading in that option was unusually high. Open interest also indicates the liquidity of an option. When options have high open interest, it means they have a large number of buyers and sellers, and an active secondary market will increase the odds of getting an order filled at a decent price. Generally speaking, the larger the open interest, the easier it will be to trade that option at a reasonable bid-ask spread. "

Tc
..........................................
OILMAN'S PERSONAL VIEW..........I COPY PASTE RAUNAK.............AS ONLY 2PERSON TRADERJI & VVONTERU..........I FOUND TO COPY PASTE...........definitely many including CV knows more than me,............yes presently Tnsn2345 & Raunak r higher callibre successful trader...........who r of superior individual.Even if they would not in trading,.........because of their superior knowledge & balance of mind ,i shall show my respect to this 5.
Regards

Importance of Getting in and Getting out of a trade

Has it ever happened to you that as a trader you chase a stock and it continues to give you whipsaws. You finally make up your mind to give up on that stock and ironically find it rallying on the very next move. I guess, this has happened to each one of us in our trading career. Therefore, as traders what can we do to counter this? Before we touch upon this topic in detail, I'll assume that everyone reading this has a distinct advantage over the markets in form of systems or methodology. By distinctive advantage, I mean a system which does not depend on specific market conditions to work. So, let's begin !

Well, if you think about this issue in detail, this is more of a psychological issue than a system issue. As soon as we get a couple of loss making trades, we begin to look at our P&L statement. Furthermore, we begin to extrapolate the P&L "if" we were to loose a few more trades. Believe me, if you want to be successful, then don't do this ! We all go through phases where the stocks just don't move and eventually when they do move, we are ultimately out of it. Most of you who follow this thread, must have noted on many occasions that I keep reversing my trades till I find that stock in my favor. Currently, I am doing the same with India Bulls Real estate. I will keep reversing my positions till that stock fits my scaling in and profit booking criteria. It's psychologically tough, but who told that markets rewards one for taking easy decisions? When we are wrong, we want to make sure our losses are small and when we are right, we need to make sure our profits are relatively large.

There are few things in trading which are not documented well enough. Out of those, the topic of getting out and getting in is one. Folks, as far as our system has a positive expectancy, we should not be bothered with the whipsaws and the draw downs. To be successful in this, never ever forget the 2% risk management rule. If you don't let one trade take more than 2% of your portfolio, believe me you'll be soon taking your account in the whole new direction. That is, towards profits.

If you intend to become a good trader, you have to incorporate this in your trading plan. Be relentless, don't think about potential losses, let them show up and then apply the risk management rules. Don't trade what you think, trade what you see.


1. Focus on your thought process - This means focus on your methodology, your system. If your system is good, it will always chase the smart money. If you are able to do this, you will be able to make money. Don't think what they will do, just keep going with the flow.

2. What the market is telling your right now - This means look at the Nifty, Bank Nifty and ask yourself what do you see? Does the Nifty tell you it's going to correct? Don't think it might correct. Let it tell you in person. Once it does, reverse your positions. For eg. As of now if I ask Nifty to short it, I get an answer where Nifty tells me I am a fool. Hope you get my point. It's communication, its logic and its all about being in the present.

...............................
This is completely your call. Let me tell you what I do.

I have three completely different accounts. One for Swing, One for Investments and the last one for scalping. For Swing and Investments I keep 2% (Swing) & 1% (investment) criteria of the account size. For scalping, it is usually 0.3-0.5 %.
Now coming back to your query. Dear, we can never know when FII's will pull out their money. Hence, don't pay attention to these news or rumors. If they will, we will come to know through price structure. Till then, its better not to assume. October is cyclically a corrective month for India and the Global markets. This is just a possibility. This is not certainty. Hence, trade with stop losses and you will be fine.
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To me FII wud pull out money only if they have major redemption pressure else in normal situation they wud not because 1) retail participation is not there and if they start pulling out money they will be in loss 2) they do not have any other (other than GEM - global emerging markets countries) places to park their money. their internal system is not efficient enough to get good returns.

I completely agree with Raunakji that we wud never know when they wud pull out money coz most of the money dumped in indian market is of hedge fund and regulations are not good enough world wide to have any quality standards....
The "What If" Syndrome

As technical traders, we are always dealing with probability and never with certainty. We make systems, we practice them and eventually we trade them in the real markets. In the end, we all know that no matter what analysis we do, markets will eventually do what it wants to do. When we see certain trades going against us, we immediately begin to question our systems, market structure and eventually conceive the worst syndrome a trader can ever have. That is, "The What if Syndrome".

This is a syndrome which is responsible for wiping off 50-60% trading accounts every year. What this does is, it creates doubt about our skills, about our intellect, about our systems and about the potential change the market can go through going forward. We begin to look around and start to feel inferior to other knowledgeable traders around. Believe me, trading has nothing to do with intellect and nothing to do with vast knowledge. Like we cannot change ourselves overnight, similarly markets don't change overnight. It takes time for Bull market to turn Bear, and for Bear market to turn Bull. We begin to assume that just because we start trading certain methodology, the market will start changing its inherent character. This concept is wrong and this never happens.

Once a trader gets affected by this syndrome, he steps out on a path to find the ultimate indicator, oscillator or system. He believes he can find one such system which is going to yield minimum losses and maximum profits. There is absolutely no such system which yields minimum losses. Losses are a part of Technical trading and have to be accepted if one has to stay in the game. Typical symptoms of this syndrome is when one starts switching systems or when one realizes that it is more knowledge which is required to become a good trader. If anyone of you is suffering from this syndrome, then let me tell you that all one needs is a simple methodology, simple rules and discipline.

If systems and methodology were so important, then eventually every technical trader should have been extremely rich. The truth is, systems and methodology form a small part within one's entire trading system. The key ingredient to one's success is the right mind set and immense discipline. If you remain mentally strong, then neither will you nor the markets work against you. Ultimately, strength does not lie in systems, it lies truly in the mind. Keep the "what if" syndrome out of your trading plan and work towards peace and prosperity.

Here's how to identify stock price structure. Look at the graph below.

Now there are two parts to this. One is identifying base and second is what happens after base is formed. In this case, whenever a base is formed, the stock has made a new high with force. This has happened on 3 occasions. Today it was the 4th time when the price has just brushed through the previous high's. The OI and volumes was building with every base and peak.

Now this is why I feel that stock can fall tomorrow. Because today, the volumes were so high, it could be possible that stock has been passed on to new entrants. However, today there was an OI addition of 70%. Hence we need to see what happens. For traders to execute these type of trades, one has to have a care free attitude. If it works, it works. Else, bring the next trade on.



Tc
Originally Posted by jagankris
Thanks Raunak ji,

Just now saw the script.
Monthly breakout after consolidating in a narrow range on heavy volume.
Also the stock is in news
OI has increased by 77.69 % or 700 lots.
Today is the 52 week high.
A good BTST candidate too.

Best Regards,
-JK

But the stock has closed well below its VWAP of 794.
700 lots or 35,000 stocks addition in OI is defenitely in significant compared to the traded volume of 19,82,031.
Delivery volume is 17%. which comes to 338364.
Not able to guess if it is accumulation or distribution at the higher levels ?

Please advice on how to find accumulation/distribution patterns ?

Thanks.
Entry criteria depends on Exit criteria Prem.

I entered APIL for 2-3% kind of play. Hence my entry yesterday is justified. If you wish to enter for another leg of upmove, then let it consolidate.

..................................
JK,

1. Focus on your thought process - This means focus on your methodology, your system. If your system is good, it will always chase the smart money. If you are able to do this, you will be able to make money. Don't think what they will do, just keep going with the flow.

2. What the market is telling your right now - This means look at the Nifty, Bank Nifty and ask yourself what do you see? Does the Nifty tell you it's going to correct? Don't think it might correct. Let it tell you in person. Once it does, reverse your positions. For eg. As of now if I ask Nifty to short it, I get an answer where Nifty tells me I am a fool. Hope you get my point. It's communication, its logic and its all about being in the present.

Tc

Thanks a ton in advance Raunakji.

The mind always resists to see what is happening in the markets.

The mind remains in anxiety of greed or fear thinking of the past or anticipating the future.

It always tries to find an opinion about the direction and tries to stick on to that.
Or in other words it wants some thing concrete.
It is not flexible enough to change with the change.

(How to develop this ).

For example Yesterday morning before market opening I was of the opinion that Tata steel is weak.

But the same morning it went almost 1.35% up.
From 602 it went to 609.
Came to 597 again went to 607 range.
Finally corrected down to 593.

But in the meanwhile the roller-coster turmoil undergone by the mind was tremendous.

Each time the script reacted against the opinion held by the mind the struggle was more.

To take positions opposite to the opinion of the mind but with the direction of the script is a very difficult challenge.

How the mind got its opinion ?
By analysis.Analysis is the key of the mind to keep itself alive
Because in the "present or now" mind is not alive.Hence it is an survival tactics played by the mind.

How to see the prices and trade with out keeping an opinion ?

Does this mean that don't do your homework ?
Don't do analysis ?
Because by doing analysis mind gets an opinion.
The opinion framed or the belief that the prices would go up or down is the key obstacle for trading.
Which again creates resistance.

So which means throw all your technical analysis/charts/fundamentals/News etc and just follow the price action or flow

At the end of the day I get very tired.

Please enlighten us how to make trading a pleasurable event with least stress possible.

Thanks a ton in advance.
..................................................
Jagan,

What you have analysed is very true and congratulations to have got this right in such an early stage. Now, coming back to answering your query.

Markets neither know Fundamental Analysis, nor does it know Technical Analysis. There have been proponents of both fields and yet somehow they are so wrong. Fundamentals argue about valuations, P/E, Growth and Technicals argue about Patterns, VSA, Market Profile etc. Does the market actually care about these? Well, I have seen stocks dropping like there's no tomorrow even when there P/E/Valuations were indicating 'Buy'. Similarly, patterns, VSA etc fail more often than they work. Hence, both methodologies are prone to fallacies.

What does an investor do then? Well, the answer lies in our mind. It is not that Fundamentals and Technicals don't work. It is just that one has to hone his own skills to judge when these will work. This unfortunately comes only with persistent practice and discipline. Both these fields have immense value, but that value needs to be unlocked by conquering our mind. And that my dear is not an easy task.

Have you ever thought why market analyst try and justify Technicals and Fundamentals? Answer to this lies within our psychology. Our mind has a habit to compartmentalize all the information available to us. It is within this compartment that we seek an answer to all the investment related queries. If the compartment and the information within it is not organized and appropriate, no matter how hard we try, we would never succeed. Hence, the answer to all your queries is the word "Organize". You have to see what you believe in and then have to organize your thoughts in a way where picking stocks becomes just another habit for you.

Don't worry and keep trying. We have all been in this similar situation. The one's who never give up are the one's who always succeed.

Trading with MACD and Stochastics

Tools – Candlestick/Bar Chart , MACD Oscillator with standard settings, Stochastic Oscillator with Standard settings

Trade Setup – The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. My preference is more towards Index. Now, everyone absolutely loves trading with Stochastic and MACD. But in my Opinion, they use these tools in the wrong way. Stochastic and MACD are extremely valuable tools and one needs to use them correctly in order to profit from them.

Buy Setup – Usually, traders begin to buy stocks when they see the stochastic cross below 20/30 or any level. Though this is profitable sometimes, it leads to serious draw downs in the long run. The value of stochastic crossover increases tremendously when it is used with MACD. Next time whenever you see a stochastic cross, wait for the MACD cross to happen. In other words, if one stock exhibits stochastic crossover, begin to watch it. Start looking at the MACD, if the MACD cross happens, then take that trade. Essentially we are using MACD as a trigger to enter trades.

Important Notes – At times, it will happen that Stochastic crosses for a Buy and then by the time MACD crosses for a Buy, Stochastic would cross for a Sell trade. Under these circumstances, always trust the MACD cross. Stochastic will eventually turn up and will move up. To enhance the profitability, one should always trade this setup in the direction of the main trend. Furthermore, this setup will work well in stocks which depict high volatility.

Short Setup - Exactly opposite of the Buy setup.

Targets - Aim for 3-5% Gain.

Example - Look at the example below. I am not going to take you deep down in the History. Hence, I have attached example of Bank Nifty for the Year 2010. With this setup, you would have captured every down move and up move in this year. Whipsaws are common for this strategy as it is for every other, but once you get the hang of it, this is again profitable. I have plotted the recent down move and up move as example. Go back and history and see if this makes sense to you. Try and visually identify this setup. Don't pick up your trading platforms and code it. The more you trade this visually, the more accurately you will identify the false signals. Computer cannot see what the human eye can. Remember, this is no Holy Grail !

Have patience and you will see this pattern occurring regularly.



Tc
__________________
Originally Posted by alroyraj
But the key question is whether you would trade the price action ,if it has a compelling significant move ,opposite to your view before market opening or would stand your ground and enter only once the price action reverts to your view?
I know its a tough question.

Majority of times, one will always know when an explosive move is about to occur. This just comes with experience and significant amount of screen time. So there's no question of trading when the price is not moving in your favor.

Markets opening up or down, against or in your favor, is just another phase in market. Often overstated, but statistically of far less significance.

Tc
Thanks to the golden words "Trade what you see and not what you think".

Instead of holding an opinion on the Script, If I had blindly traded the script with Price Action - I could have eliminated the element of fear and doubt of the trade pricking my mind against my opinion.

That particular day the script moved twice against my opinion and twice in the direction of my opinion.So out of the 4 moves - I was able to remain calm only for 2 moves.

By entering a trade only when the the price action reverts to my view

again
1. The opinion still remains.
2. There is a chance that I could have missed a big move on that against my opinion or hit my stop loss.

So it is highly imperative to trade with out framing an opinion.
or in other words don't have a long or short view at least in day trading.

Very difficult to bring it in practice indeed.

To elaborate more - How opinions framed kills traders I would like to share the following real story.

My friends were seeking professional advice from a well known TA.
He was of the opinion that Nifty would go down from 5100 levels after a pullback from 4800 levels because of RSI divergence in the monthly charts.

They wrote 4900,5000,5100 calls.

In spite of all the technical indicators showing long they didn't square of their positions till the month end saying that we will stick on to his instructions.Again they rolled over their positions to the next month and again went short by writing calls.

Markets never corrected as per their opinion.

Markets are designed to deceive people.
How to deceive people ?
By making them to believe in something by making them to form an opinion.Then react exactly opposite to the opinions of the majority.

TA is not a science it is an art - what does this mean - There is only a high probability but there is no guarantee of the predictions based on TA.

Hence stick on to your trading rules but don't stick on to your opinions even based on Technical analysis.

Market makers,TV channels,News Papers,Analysts,Broking houses want us to have a opinion and stick on to that.So that it will be easy for them to move the markets against most of the crowds opinion.

It took so long to understand the real meaning of the golden words - "Trade what you see and not what you think".
"TA is not a science it is an art .
Jagan, I disagree with you on this.

Markets are designed only to give one success, provided you listen to it. It does not know who you are, what you do or where you come from.

Also, Market makers, brokers, analyst etc don't form an opinion for you. They don't make anyone trade on gun point. It is the trader himself who forms an opinion based on what he hears. Also, the concept of majority and minority is just over stated. There's no visible majority and similarly there's no visible minority which the majority target.

Also, how do you intend forming rules without FA OR TA? Opinions are inevitable. Hence, its easy to say that opinions should not be formed. An year like 1987,1995,2000, 2008 will get all these concepts out of any trader's head. That is why, trading is the most well paid profession, and also the most difficult one.

--------------------------------------------------------------------------------

Stocks to Focus on for next 1-3 weeks are,

Ashok Leyland
Alstom Projects
BGR Energy Systems
Colgate Palmolive
Container Corp
Mundra Port

None of them except Alstom and Mundra has indicated buying pressure. But my guess is that they will sooner or later. Alstom will consolidate more before beginning an up move. Mundra is a high risk trade. 19.9.10
#89
25th December 2010, 11:58 PM
oilman5
Member Join Date: Jun 2006
Posts: 1,329
Thanks: 262
Thanked 1,212 Times in 433 Posts


Re: my last thread
________________________________________
I absolutely agree with you from an individual trader's perspective that
if you are able listen to the markets then one will get success.

My opinion below could be highly debatable but in my several years of observation I held the below opinion.

Markets are designed only to give one success, provided you listen to it.
It does not know who you are, what you do or where you come from.

Most of you would have heard mutual fund advertisements and at the end there will be lightning voice
"Mutual funds investments are subjected to market risks".Have any one thought what those risks are ?

Markets are designed to deceive people.
Some thing like a lier's poker.
In Las Vegas terms - The house always wins.
Like wise in capital markets majority of the people loose their hard earned money for the benefit of a few.

No matter how good a stock - the price is determined by the smart money.

There are several good stocks with less P/E,PEG ratio buts till remaining un touched.

What do you mean by listening to markets ? -- go in the direction of the smart money.
Find out the scripts where accumulation is happening or where distribution is happening.

NEVER SIT IN FRONT THE TRADING TERMINAL.SIT IN FRONT OF A DECISION MAKING SYSTEM.

This is the first basic thumb rule for a trader to take money out of the markets.

How many people can afford to do this ?
Is it possible for every person to spend monthly on Internet/NSE Data charges/SW charges/ and more over their time.

How many people have the capacity in terms Money,Knowledge,Patience,SW background to understand the market dynamics.
That's the reason people come in and go but markets remain.

How many people in our country have advanced get/Amibroker/Metastock or conversant with AFL ?
or atleast aware that there is a sw called Advanced Get/Amibroker.

All the rules are in favour of Big Investors.
Even Automation SW are highly priced to the tune of 1 Lakh/month.
First of all how many people are aware that trading could be automated.

How many of people know that Big investors get news few minutes before news getting published in the TV channels.?
How many people here are aware of Reuters ?

Money lost by a person is not money gained by another person.
Trading is not a Zero Sum Game.

For every click on a computer trading terminal some one is paying the following
Govt + Brokers + Stock Exchange one way or the other.
They are the winners irrespective of people make or loose money or crash or bull run.

Govt being the highest gainer out of Stock markets.
Stocks doesn't have any intrinsic value for themselves like commodities.
There is no real production involved.You have limited stocks.
Supply and demand of the stocks are created artificially.
It is just the opinion or bet on the stocks future prospects.

If you have money Just accumulate/operate a stock at the bottom and dump it on the retailers at the High.
No questions asked.Just make sure that it is not done so visibly like Harshad Metha,Ketan Parekh.

A stock like Satyam can go down to 7 - 8 rs from 650 rs in stock markets but the same cannot happen for a commodity.So who determines this price.It can go to zero as well.

Global Trust Bank.
DSQ.
ASTRAL
.......
.......

The list goes on.

Who brought the price of Satyam to 7 - 8 rs level ? - The market makers.
By precisely knowing the demand and supply of a stock they are able to manipulate well.

One fine morning One reputed TA gives a short call news in CNBC on Tata Steel with a down side target of 480 rs a day or two before expiry.The same day it touched 494 rs.
A smart Fund manager of a reputed Mutual fund purchased certain percentage of TS that day.The script is going up non stop from then.
That evening the news appeared in the same channel.

The day before expiry Maruti crashed like any thing.
On the day of results BOI(11 % earnings up) crashed 11%.

During the previous govt
Most of us should be aware of the play on oil companies like BPCL,IOC,HPCL by the then M.......r.

Why go to that extent.
Most of us would have observed Block deals in NSE.
The companies would buy in lump like 5 lakh shares.
The retail people would buy the shares following jump in volume.
They would dump it pass it on to the retail customers with a minimal margin say a ruppee per share.

So we cannot avoid manipulation by smart money.

Just think of the following situation

1. Remove the so called liquidity providers/Market makers from the exchange.
2. Companies should not be allowed to provide the market makers with crores and crores of shares.
3. Corporates should not be allowed to trade their shares.
4. or Leave market making to a Non profit organisation.
5. Define an intrinsic value for each share.
6. No rumours/News/policies/ during market hours.
7. On upper freeze down freeze days publish the names of the major profit makers.
8. After listing a share with premium if the share price goes down beyond a certain limit.
9. Make sure if the company board of directors/insiders trading.
Or it should be released with a buy back promise from the company.
9. On any single day whether any one has been charged with circular trading ?

How many people have committed suicide in the 2008 market crash ?

Market makers, brokers, analyst on gun point don't force you to trade.
It is the trader himself who forms an opinion based on what he hears.

Why do analysts/Brokers give calls they could themselves buy the shares and get rich ?

It is some thing like this why do you trust a Broker/analyst ?
Bcoz for the lack of infrastructure,knowledge,Money one person seeks advice from an analyst.
Otherwise TV channels and Analysts wont exists.
Again people getting free calls are more vulnerable to cheating.

Why a loosing trader is not able to stop trading ?

It is called gambler's syndrome.He will always be deluded with a false hope that he could recover the loss and make a fortune in short span.
One cannot keep himself out of trading even knowing that he will loose when he goes to broker house.

But your inner urge to recover the loss will create chaos and will make a person ultimately to surrender to some sources.

Broker Houses

1. I know personally broker houses giving calls to generate their daily turnover.
They will make sure that their clients will not make huge profit or loss but survive so as to generate enough brokerage for them.

2.Their HNI calls gets circulated first few days well before in advance than to ordinary clients.

Analysts
1.Some Analysts do have hidden agenda there are many wrong calls given by them purposefully during accumulation/distribution phases.

2.For analysts it is a risk free source of money in the form of consultation or technical calls which is highly being misused now a days by mushrooming TA companies.

TV channels/News Papers

Are being misused by operators/Smart money to distribute/accumulate shares.

Insider trading is happening.This will happen and nothing can be done since Market makers/Brokers/Analysts/Traders - They are all humans with greed.

Leave here.What about recent US Investment banking house crashes ?
The reason behind the fall of banks.

What about the watch dogs and Regulators
Sample Jokes
If you trade with out leverage in forex it is legal.
"Margin trading in derivatives" is allowed for stocks/commodities but the same is not allowed in Forex.

I went to court with my friend for his sub broker fraudulently cheated him by selling a IFCI call@10 paise from his account and sold the same immediately at 8.75 rs when the stock was trading 9 rs.

The Judge asked what do you mean "Options" ?

Finally

Also, how do you intend forming rules without FA OR TA? Opinions are inevitable.Hence, its easy to say that opinions should not be formed.

Fundamentals are required but again are today they are highly and easily manipulated.Not all fundamentally strong companies are trading at their deserving valuations(which is again highly subjective).

Technicals are absolutely required to pick a stock.
Personally I would prefer technicals rather than fundamentals and keep fundamentals as a supporting mechanism for a stock pick.

My point is technicals or fundamentals just don't hold on to your bullish or bearish views.

Just go with the Price action and be with the trend and let the markets decide the view.

Trading rules - Money management rules.
Fibanocci or ATR based targets/Stop loss.

And especially for day trading I think trading with out any bias or opinion would be best.

My point is "It is our hard earned sweet money friends" and it is our responsibility to protect ourselves from the markets.

It is a high risk game and we should play the game accordingly.
My apologies if I hurt ed any one's opinion or sentiments in my above writing.

1. Focus on your thought process - This means focus on your methodology, your system. If your system is good, it will always chase the smart money. If you are able to do this, you will be able to make money. Don't think what they will do, just keep going with the flow.

2. What the market is telling your right now - This means look at the Nifty, Bank Nifty and ask yourself what do you see? Does the Nifty tell you it's going to correct? Don't think it might correct. Let it tell you in person. Once it does, reverse your positions. For eg. As of now if I ask Nifty to short it, I get an answer where Nifty tells me I am a fool. Hope you get my point. It's communication, its logic and its all about being in the present.

Tc

Who Said Life is simple and is not Cruel So is true for the 'Market'. The essence and beauty of Raunak's Teaching is Let life (Market) flow, go with the flow..and the Core message is.."You have a right to perform your prescribed action,but you have no 'control' to the fruits of your action.":-("Karmanye Vadhikaraste Ma Phaleshu Kadachana),...The highest principle to live this complex life (Market) successfully/peacefully Result is the destiny anyway...same is said as "thy (Market's) 'Will' be done..not your 'will' or my 'will'."you just focus on your methodology 'your right of 'action' in the given situation'...rest is INSHA ALLAH... If we focus to much on the results (thniking) there will be stress, we can save our that energy and focus what we simply 'see' our system ..methodology...

"Trade what you see and not what you think".

I'll encourage you guys to discuss things off the forum first. Once you have set rules which work well, then bring it on the forum for other users. Too many views are not good in initial stages of research. Once the research is successful, then put it here for further improvements.

One more thing Apurv, Divergence is among the most over rated technique in Technical trading. I wish markets were so simple. Sadly, most of the traders are not willing to hear this.
 

oilman5

Well-Known Member
Futures or Equities?

This is one question which bothers every novice trader. When one enters the market, the first thing he hears before depositing funds in the market is how margin trading can fulfill all his dreams and desires. For him, the words "Futures and Options" open the doors towards financial freedom and towards prosperity. As many have realized in the past, Futures and Options route is one of the most destructive ways to financial freedom. However, for some, it indeed is the most desirable way to participate in the market. So, why is it that Futures for some is boon and for others is curse?

I strongly believe that Psychology is far more important than Methodology. Methodology in this case includes your system and trading instrument (Futures, Equities). Hence, in most of the cases it is the trader's psychology which prevents him from participating in Futures. I have seen many well funded traders unable to take positions in Futures and at times this is nothing but psychological barrier. Just think, if you know the stock is going to behave in a certain manner, then how would it matter whether you trade in Futures or Equities? The problem of trading in Futures only arises if you have limited funds available. In that case, Equities is the best option.

As far as my trading goes, I never feel the difference if I am holding Equities or Futures. When I hold futures, I can sleep as well as when I hold equities. In my opinion, anyone who is properly funded and does not trade futures is missing out on the calculative advantage of margin trading. In most of the cases, this is mainly due to lack of proper planning. Here, I'll be giving out a systematic approach (series of questions to answer) to solve this problem for those who experience this barrier.

A) Are you Well Funded?
B) Do you have a Trading Plan?
C) Do you have a specific Entry point?
D) Do you have a specific Exit Point?
E) Do you understand 'R' of your system?
E) Are you afraid of Gap down?

In my opinion, if you have answered Questions A to E as Yes, then you must simply start trading futures from tomorrow. As far as "F" is concerned, since you will have a specific exit point, you would know when and where to get out. Having psychological barrier is very common and getting rid of this barrier is what differentiates an expert trader from the rest. If you know how to use calculated leverage, then use it. By not using it, you are limiting equity growth and your growth as a trader.

Originally Posted by Apurv7164
How do we trade pattern on daily chart and pattern on 30 min chart and pattern on 60min chart? Let me be more clear...

Say for I had initiated trade based on daily pattern which gave me tgt of 260... now stock started moving towards my target and within this movement or journey stock started developing pattern on 30 min and 60 min chart and that pattern very similar to daily pattern and based on the same method used on daily pattern... now situation is daily pattern gave me tgt of 260 but 30 min and 60 min pattern which is developed recently giving me tgt of 274 or so...... What should I do???

Bests,
Apurv

The lower you get on time frames, the less reliable the pattern becomes; time wise and target wise. A target on 30 min chart would be valid according to the underlying time frame. That is, 30 min. In the next 30 min whole complexion of markets can change and if it does, this would mean, traders from higher time frame would be dominating the market. This is something you would not want as a trader.

Book half profit according to Daily target, and let rest trail with stop loss of 259 - 260.
...................
R in simple terms is defined as Risk.

Often, the best traders, never take a loss of more than 1R. Whereas, naive traders, often take losses of 2-3R (two to three times of what they should have risked) unknowingly.

....................................
For the next two weeks i may not get time to actively monitor movements in market. But then i would like to use this buy opportunity, as per your valuable advise, to stay invested for a swing trade with Strict SL.

Although you have dealt in detail with about some stocks here, as usual my pestering of you is continuing. Kindly suggest me three to five stocks for this short term, so that i can invest and do my other work.........23.9.10
......................
Patience, patience and patience is the key to everything.

We captured almost 5%. That's not called missing the bus.

Last week, we had booked around 4-5% on Bhushan steel. From there on it went up another 3%. This is how markets work. You can't pick top's and bottom. Just stick to rules. Any profit booked is always a good job done. Especially if profits range from 3-5%.

..............................
There was machine breakdown in factory & none of the technical person from factory could fix it. One of the external person was called for fixing it. He just had a look at machine for five minutes then took one hammer & tapped it on one of the section of the machine & machine start functioning.
Couple of days later company received bill of Rs10000 as repairing charges. Owner was surprised to see bill of 10k just for 5minutes job. He asked external person to give itemized bill. One day later he got itemized billed as follows.
1. Tapping with hammer : Rs 100
2. knowing where to tap : Rs 9900

So Raunak, We can pat our back for tapping with hammer but we must pat your back for letting us know where to tap. .........values of experience.
...............
have taken long position today in Surya Pharmaceuticals @ 280
Chart presented below for your kind reference.

For the past couple of weeks, I have been able to see some success in my endeavor of having some understanding of stock market. It may also be because the Market is going up; and at this time anyone can think of having understood the markets. But, I am trying my best to be as disciplined and clear as possible.

My question/problem is that though I sometime get good entry levels, but do not know how to decide the target appropriately and also have some problems in exiting the loosing trades.

Therefore, I request you to guide me on this with this chart, if it is possible for you to spare time from your busy schedule. This chart is till 23rd Sept 2010 on which base I made entry. Since, I am still not able to figure out the targets, all I do is to keep the very next resistance as my target, which in this case I observed 290 (the trend line resistance) and then 300, being the round figure near previous resistance. Can you please comment and guide me in this regard, if I have chosen the correct levels of resistance.

Further, the very painful problem is the level of buying the stocks. When I decide to take long trade in a script, I dont know how to handle it during the next day, when market opens. What I do, is to buy the script at whatever price it is available (which many times around 2-4 % more than the closing price on which basis I decide); therefore, it is eating most of the profit, which should have been there if I would have been able to enter the trade at appropriate level. Because, many times the script comes down around 2-4% and then I have to wait with tensed mind.

Therefore, is there any idea of knowing that the script may come down after opening at higher levels and then go up. I don't know if I had been able to express my problems; but I do hope that being a very experienced trader, you may have got the point of problem, which I am facing.

Thanks a Ton in Advance for all your guidance

I have tried calculating the targets with the help of chart patterns like flag, rectangle, triangle, wedges, pennants, cup & handle etc. But my problem is many times (around more than 50% of the time), the target is never met. May be because of myself choosing wrong scripts or some other reason. Like in this chart, if I calculate the target with Flag Pattern, it will be around 380. But that will be only operational if the price violates the resistance and keep moving up. Because, I have taken the trade in advance I don't know how to deal it.
Yes Crown .. it happens ....

b/o s generally have a retest .. and that is where you should enter.

See DLF chart ... 348 was b/o level. Came to 348 y'day and today see .. 365/- again.

I was waiting for entry and it never came to 348 in the next 2/3 days .. so left it.
Y'day it did come BUT my mind was elsewhere .. though I did trade DLF today BUT that was intra based from 349 to 363.

Same with RCap .. see the b/o and then no retest .. BUT y'day it retested b/o levels and today bounced again.

So we have to be patient and this patience HAS TO BE cultivated else our entries and exits both will be wrong.

Again, sometimes we just miss it .. and since the scrip is very strong it may just move on after b/o .. happens .. can't help it .... all part of the game ...

We win some .. we lose some ... just make sure that the ones we win are more than the ones we lose .
.................1. which chart shall I use( Candlestic 30 Min, Daily etc)
2. As there are lot of strategies which are mentioned here which will suit my requirement more appropriately ? So that I will try to learn tht effectively.
3. Do I need to consider only High priced/High volumes Stocks ?
4. Is there a way where I can see which are the stocks eligible to trade or I need to monitor all trades on daily basis to identify if any of these matching the buy criteria.

Let me tell you what you are asking me to do.

You are asking me to be YOU.

Dear this is not how trading works. You must know all the answers to these question. Do some work and work hard. Dont expect easy money.
This is the rule............because of ur superiority of knowledge/experience & skill of execution .........money shall come to u.........against loss of other trader.
...................
Dear Apurv, Just as swing trade, your Thanks to Raunak is valid. Please dont mistake me, as this may look somewhat harsh a bit. He could have made one or two threads, and just give calls blankly, though we may learn blindfolded but not understand. How long will that be?

But in my View, its not for which Raunak is aiming here for that little spoon feed. Rather he wants to learn us the fundamentals, the technicals of the market, i mean the analysis part,and wants us to become self reliant. Thats the reason for him to wear the mantle of the mentor. And its the reason he takes pain to post strategies, techniques etc in between.

Think a while, Do we come and follow his thread, when he keep on posting, theories, techniques, fundamental analysis only? May be one or two, and then naturally our mind, will never compromise to have the WILL for learning, and in the process will give a pass to this thread, saying," Oh, this is no different"

But then, when the calls are given, that which is the outcome of his toil and sweat, and that are happily followed by him, guiding us in every mode, naturally the inclination to learn will increase.

HENCE, THIS bloody mind BEGINS TO THINK, "if we practice 'n follow the guidelines,one day or other why not we can become like RAUNAK"and then starts to work harder and harder towards the goal.

I don't know, what i said above suits to you pals here or not, but for me, i keep on learning and i am proud to say that my learning curve is becoming increasingly higher.
…………………………………………………………………
Futures or Equities?

This is one question which bothers every novice trader. When one enters the market, the first thing he hears before depositing funds in the market is how margin trading can fulfill all his dreams and desires. For him, the words "Futures and Options" open the doors towards financial freedom and towards prosperity. As many have realized in the past, Futures and Options route is one of the most destructive ways to financial freedom. However, for some, it indeed is the most desirable way to participate in the market. So, why is it that Futures for some is boon and for others is curse?

I strongly believe that Psychology is far more important than Methodology. Methodology in this case includes your system and trading instrument (Futures, Equities). Hence, in most of the cases it is the trader's psychology which prevents him from participating in Futures. I have seen many well funded traders unable to take positions in Futures and at times this is nothing but psychological barrier. Just think, if you know the stock is going to behave in a certain manner, then how would it matter whether you trade in Futures or Equities? The problem of trading in Futures only arises if you have limited funds available. In that case, Equities is the best option.

As far as my trading goes, I never feel the difference if I am holding Equities or Futures. When I hold futures, I can sleep as well as when I hold equities. In my opinion, anyone who is properly funded and does not trade futures is missing out on the calculative advantage of margin trading. In most of the cases, this is mainly due to lack of proper planning. Here, I'll be giving out a systematic approach (series of questions to answer) to solve this problem for those who experience this barrier.

A) Are you Well Funded?
B) Do you have a Trading Plan?
C) Do you have a specific Entry point?
D) Do you have a specific Exit Point?
E) Do you understand 'R' of your system?
E) Are you afraid of Gap down?

In my opinion, if you have answered Questions A to E as Yes, then you must simply start trading futures from tomorrow. As far as "F" is concerned, since you will have a specific exit point, you would know when and where to get out. Having psychological barrier is very common and getting rid of this barrier is what differentiates an expert trader from the rest. If you know how to use calculated leverage, then use it. By not using it, you are limiting equity growth and your growth as a trader.

Originally Posted by Apurv7164
How do we trade pattern on daily chart and pattern on 30 min chart and pattern on 60min chart? Let me be more clear...

Say for I had initiated trade based on daily pattern which gave me tgt of 260... now stock started moving towards my target and within this movement or journey stock started developing pattern on 30 min and 60 min chart and that pattern very similar to daily pattern and based on the same method used on daily pattern... now situation is daily pattern gave me tgt of 260 but 30 min and 60 min pattern which is developed recently giving me tgt of 274 or so...... What should I do???

Bests,
Apurv

The lower you get on time frames, the less reliable the pattern becomes; time wise and target wise. A target on 30 min chart would be valid according to the underlying time frame. That is, 30 min. In the next 30 min whole complexion of markets can change and if it does, this would mean, traders from higher time frame would be dominating the market. This is something you would not want as a trader.

Book half profit according to Daily target, and let rest trail with stop loss of 259 - 260.
...................
R in simple terms is defined as Risk.

Often, the best traders, never take a loss of more than 1R. Whereas, naive traders, often take losses of 2-3R (two to three times of what they should have risked) unknowingly.

....................................
For the next two weeks i may not get time to actively monitor movements in market. But then i would like to use this buy opportunity, as per your valuable advise, to stay invested for a swing trade with Strict SL.

Although you have dealt in detail with about some stocks here, as usual my pestering of you is continuing. Kindly suggest me three to five stocks for this short term, so that i can invest and do my other work.........23.9.10
......................
Patience, patience and patience is the key to everything.

We captured almost 5%. That's not called missing the bus.

Last week, we had booked around 4-5% on Bhushan steel. From there on it went up another 3%. This is how markets work. You can't pick top's and bottom. Just stick to rules. Any profit booked is always a good job done. Especially if profits range from 3-5%.

..............................
There was machine breakdown in factory & none of the technical person from factory could fix it. One of the external person was called for fixing it. He just had a look at machine for five minutes then took one hammer & tapped it on one of the section of the machine & machine start functioning.
Couple of days later company received bill of Rs10000 as repairing charges. Owner was surprised to see bill of 10k just for 5minutes job. He asked external person to give itemized bill. One day later he got itemized billed as follows.
1. Tapping with hammer : Rs 100
2. knowing where to tap : Rs 9900

So Raunak, We can pat our back for tapping with hammer but we must pat your back for letting us know where to tap. .........values of experience.
...............
have taken long position today in Surya Pharmaceuticals @ 280
Chart presented below for your kind reference.

For the past couple of weeks, I have been able to see some success in my endeavor of having some understanding of stock market. It may also be because the Market is going up; and at this time anyone can think of having understood the markets. But, I am trying my best to be as disciplined and clear as possible.

My question/problem is that though I sometime get good entry levels, but do not know how to decide the target appropriately and also have some problems in exiting the loosing trades.

Therefore, I request you to guide me on this with this chart, if it is possible for you to spare time from your busy schedule. This chart is till 23rd Sept 2010 on which base I made entry. Since, I am still not able to figure out the targets, all I do is to keep the very next resistance as my target, which in this case I observed 290 (the trend line resistance) and then 300, being the round figure near previous resistance. Can you please comment and guide me in this regard, if I have chosen the correct levels of resistance.

Further, the very painful problem is the level of buying the stocks. When I decide to take long trade in a script, I dont know how to handle it during the next day, when market opens. What I do, is to buy the script at whatever price it is available (which many times around 2-4 % more than the closing price on which basis I decide); therefore, it is eating most of the profit, which should have been there if I would have been able to enter the trade at appropriate level. Because, many times the script comes down around 2-4% and then I have to wait with tensed mind.

Therefore, is there any idea of knowing that the script may come down after opening at higher levels and then go up. I don't know if I had been able to express my problems; but I do hope that being a very experienced trader, you may have got the point of problem, which I am facing.

Thanks a Ton in Advance for all your guidance

I have tried calculating the targets with the help of chart patterns like flag, rectangle, triangle, wedges, pennants, cup & handle etc. But my problem is many times (around more than 50% of the time), the target is never met. May be because of myself choosing wrong scripts or some other reason. Like in this chart, if I calculate the target with Flag Pattern, it will be around 380. But that will be only operational if the price violates the resistance and keep moving up. Because, I have taken the trade in advance I don't know how to deal it.
Yes Crown .. it happens ....

b/o s generally have a retest .. and that is where you should enter.

See DLF chart ... 348 was b/o level. Came to 348 y'day and today see .. 365/- again.

I was waiting for entry and it never came to 348 in the next 2/3 days .. so left it.
Y'day it did come BUT my mind was elsewhere .. though I did trade DLF today BUT that was intra based from 349 to 363.

Same with RCap .. see the b/o and then no retest .. BUT y'day it retested b/o levels and today bounced again.

So we have to be patient and this patience HAS TO BE cultivated else our entries and exits both will be wrong.

Again, sometimes we just miss it .. and since the scrip is very strong it may just move on after b/o .. happens .. can't help it .... all part of the game ...

We win some .. we lose some ... just make sure that the ones we win are more than the ones we lose .
.................1. which chart shall I use( Candlestic 30 Min, Daily etc)
2. As there are lot of strategies which are mentioned here which will suit my requirement more appropriately ? So that I will try to learn tht effectively.
3. Do I need to consider only High priced/High volumes Stocks ?
4. Is there a way where I can see which are the stocks eligible to trade or I need to monitor all trades on daily basis to identify if any of these matching the buy criteria.

Let me tell you what you are asking me to do.

You are asking me to be YOU.

Dear this is not how trading works. You must know all the answers to these question. Do some work and work hard. Dont expect easy money.
This is the rule............because of ur superiority of knowledge/experience & skill of execution .........money shall come to u.........against loss of other trader.
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Dear Apurv, Just as swing trade, your Thanks to Raunak is valid. Please dont mistake me, as this may look somewhat harsh a bit. He could have made one or two threads, and just give calls blankly, though we may learn blindfolded but not understand. How long will that be?

But in my View, its not for which Raunak is aiming here for that little spoon feed. Rather he wants to learn us the fundamentals, the technicals of the market, i mean the analysis part,and wants us to become self reliant. Thats the reason for him to wear the mantle of the mentor. And its the reason he takes pain to post strategies, techniques etc in between.

Think a while, Do we come and follow his thread, when he keep on posting, theories, techniques, fundamental analysis only? May be one or two, and then naturally our mind, will never compromise to have the WILL for learning, and in the process will give a pass to this thread, saying," Oh, this is no different"

But then, when the calls are given, that which is the outcome of his toil and sweat, and that are happily followed by him, guiding us in every mode, naturally the inclination to learn will increase.

HENCE, THIS bloody mind BEGINS TO THINK, "if we practice 'n follow the guidelines,one day or other why not we can become like RAUNAK"and then starts to work harder and harder towards the goal.

I don't know, what i said above suits to you pals here or not, but for me, i keep on learning and i am proud to say that my learning curve is becoming increasingly higher.
The overall concept is fine. But you need to monitor levels from different time frames. Without doing that, your analysis will remain incomplete. Look at colgate again and see what and how I have integrated. Intraday levels are only monitored to detect the change in Demand and Supply situation.

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I do swing trades only in Futures. I used to do it in Equities first. But then I got bored.

Hence as of today there are 198 stocks in Futures, which in my opinion are not that many. Also, I tend to overlook stocks which are not within my volatility criteria. Read my beta related post in the previous page. You will know how I narrow stocks down.

Tc
I have clearly explained Dual time frame strategy in one of the pages. Just refer to the index. It is basically taking trades in the direction of higher time frame while entering from a time frame lower than the higher one. Go through the entire post where I have posted this strategy, you will understand it.

Wipro moved up from 370 to 440 in Jul -Aug. Like colgate, wipro witnessed a nice upmove. But, Colgate consolidated (2-5%) last month, whereas Wipro corrected. This means Wipro despite of moving up had selling pressure prevailing which made it correct for 8-10%. Whereas Colgate simply consolidated representing no selling pressure.

Hence these two are different. We are always looking for 3 things VJAY.

Breakout -Consolidation - Breakout

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Traders who are willing to take significant risk can go long in GSPL @ 113.8

Lot size for this stock is 4000. Hence, a move of 5% in the opposite direction can yield a loss of Rs 20,000. If I am right, I am expecting some good movement in this stock. On the contrary, if I am wrong, I would get out of the stock if (when) it close below 110.

Those who don't deal in Futures, can go long in this stock (equities segment) by keeping the same stop loss.

Risk reward wise, the trade is pretty good..........27.9.10
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never short a rising stock.

Hence, for me, HUL is only a buy candidate. Certainly not a short candidate.

Candlestick pattern should be a small part of the entire decision making system. Not the core of it...........28.9.10
................. HDFC bank is in a wonderful uptrend. Why would you want to short it? Yes, you may have a 2-4% kind of consolidation, but timing the entry and exit will be difficult. Its a very strong stock. You should be looking to buy into it.

Don't fight the trend.........28.9.10
............Calculating Support and resistance does not vary with methods. Calculation is done the traditional way. I can give you some pointers which I use.

1. Look for WRB (wide range bars) in that particular time frame
2. Look at the volumes and the respective price action
3. Look around which levels we witness NRB (narrow range bars), inside bars.
4. Advanced users can also use market profile.
5. Look at the pivot high/low.

Support/Resistance which I draw on charts can be completely different from what someone else might draw. Hence, spotting support and resistance is very subjective and depends on the skill of the user.

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One of the most eminent qualities of a flamingo is that it never loses its vision or focus even while standing on one leg. It knows it's prey will eventually come to it and it maintains perfect poise to strike at the right moment. Surprisingly, it never anticipates the movement of its prey.

As traders, we need to have that right balance in our approach, which in this case would be to wait for the right moment to re - enter (increase positions) in the market. Thoughts about correction should not even cross our minds. As I said before, India is at the brink of something really really special. Lets be prepared to enjoy it.
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Ashok Leyland is actually at very critical levels and is offering excellent risk to reward. One can go long with SL of 72. Not much to loose here.

For the stock to turn bullish again it needs to close above 75. Below 72, it will turn neutral and would demand patience for re - entry. 29.9.10
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fear/greed......
Just not able to hold my fear....hence since c0uple of months am loosing money from positions which 1st in profit....please guide me to rectify my these booking habit which came recently........

There is always a reason to Enter a trade and always a reason to Exit a trade. If you don't have a reason to exit a trade, then you are just randomly speculating. Probably this is why you are losing money.

Your trades couple of months back have nothing to do with your trades today. Stop seeing your P/L statement and just focus on what you are seeing now. As humans we always fear the unknown. Ironically, markets pay only those who conquer their fears. Practice more and trust your instincts.

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can tell you what I do.

I have explained position sizing for investments in one of my posts. Just refer to the index page. I have used a 10% threshold for adding positions in investment related trades. For swing trades, adding positions depends on target %. Let's say I think I would get a 5% rise. In this case I would add positions two times (once when the stock is up a 1% from entry and next when it is up 2% from entry). This works for me.

You need to know what works for you. Position sizing depends a lot on kind of system one uses. Hence, this cannot be same for everyone.

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There are 'n' number of theories regarding something happening to market around expiry. With all due respect, I can show 'n' number of instances when those theories don't work. Regarding your particular observation, I would say that those systems which are related to volatility could be affected near expiry. Markets do tend to be volatile near expiry. Otherwise, on the top of my head, I can't think of anything else.
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This is precisely why you need to let your profits run.

Now, I don't know what will happen to Bajaj Auto or GSPL tomorrow. But as of now, I do know that these are the stocks which were moving in our favor. Hence we need not fiddle with them too much.

On the flip side, since Ashok leyland was not moving in our favor, we immediately got out with a very small loss. Now, we dont have to worry about a stock which was not moving in our favor.

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I have attached two images below. The first one is a chart legend. Understand this before reading the chart. Since I have explained the entire 2010 year for Sterlite, the chart might seem confusing. Hence, its absolutely essential to understand the chart legend first (which is self explanatory).

Now, since the legend is clear, we will come back to Sterlite chart. In my opinion, this stock should never have been bought in the first case. For a stock to remain in an upmove, stock should exhibit significant strength. By strength we mean, a stock should not retrace more than 38.2%. Here are some guidelines.

Extremely Bullish - Retraces less than or equal to 38.2% of previous move.
Weakly Bullish - Retraces more than 38.2% but less than 50%
Neutral - Retraces more than 50% but less than 61.8% but remains sideways
Weakly Bearish - Retraces more than 61.8% but less than 100%
Extremely Bearish - Retraces more than 100% move.

Lets review the sterlite chart now. I have marked points 1-5 depicting the entire upmoves. Not even once has this stock stabilized at some level. The above framework that I have given classifies Sterlite as an Extremely bearish stock since starting of 2010. Hence the line of least resistance has always been on the downside. Any trade taken on the upside is just fighting the trend.

I hope this helps SM bro. I don't emphasize too much on patterns or indicators, hence I have not discussed any indicators here. Price is sufficient if looked at from all angles.
As you explained to SM bro, regarding the retracement percentage being more than 50% makes the stock somewhat weak. The GSPL chart is also showing more than 50% retracement, is that the reason that you said it was a high risk trade? And when you have taken the trade, there had to be some reason, which I am not able to understand. Please guide Raunak bhai

What I had explained earlier was Overall price structure of Sterlite which was bearish since long.

For GSPL, the overall price structure remains ok. It will get weak if it breaches the current base and then the stock will get weak. That is why it was termed as risky bet.

29.9.10
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There is no invisible force operating in the market. What I meant was that everything as of today is looking normal. There is no apparent weakness in Price.

October has cyclically been a corrective month. Hence, I feel this month we will see tussle with long and shorts. Cyclically those who will short will create some gyrations and on the other hand, since fund flows are so strong, those gyrations will be retraced back towards up side.

Hope it's clear now.
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Ash Ley has taken support at your SL 72

Support was changed on a real time basis after witnessing weakness in price structure. Our aim is to cut losses short. Will enter only if bullishness re - appears.30.9.10
Always remember guys, the key to good short term trading is always managing risk properly.

As Ed Seykota says,

"The elements of good trading are cutting losses, cutting losses, and cutting losses."
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Tomorrow, take the trade in Dabur in Equities segment. We will wait for a little longer to get into Sintex as the risk - reward is still not favorable. I want to highlight one more important aspect here. So, just read this carefully.

Now, those who are regular to this thread, must be noticing that I discourage sometimes to trade in futures for some stocks. Whereas, I encourage sometimes to trade in futures for some other stocks. I want to highlight the reason behind this. We will assume the account size to be of 10 Lac

We recently traded GSPL, where I had mentioned that futures segment poses significant risk for this stock and hence risk averse traders should trade in Equities. Let us walk through some numbers here. GSPL had a contract size of 4000. We entered around 113.5 and got out today around 110. That gives us a loss of 3.5 Rs + commissions. If we assume commissions in futures to be 0.03% each side, then our total loss would be [(113.5 - 110)*4000 + (113.5*0.03*4000)/100 + (110*0.03*4000) /100]. This amounts to loss of 14268. That is, when we deal in futures. This would roughly be 1.42 % of entire equity size of Rs 10 Lac. Under risk management rules, this is acceptable.

Lets look at the Equities scenario. Here, if we did a probe test with 1000 quantities, assuming the same exit and entry price (commissions at 0.3% each side), it would have resulted in a loss of [(113.5 - 110)*1000 + (113.5*0.3*1000)/100 + (110*0.3*1000) /100] Rs 4200. This would roughly be 0.4 % of the entire equity size of Rs 10 Lac. Under the risk management rules, this is something exceptional. Remember guys as traders, we want to avoid our losses being meaningful and want to ensure that our profits our meaningful.

Some of you must be wondering that our position size was small and hence our loss was small. This is true. But what if we add the similar amount of positions (that is, 4000) when the stock begins to move in our direction. Wont that be great? Well, definitely. We can always begin small (but begin meaningfully) and can always increase the position size. Point to remember is that the first position size should be big enough to make an impact at your equity. If GSPL has moved up 10 Rs, then gain of 10,000 Rs (1000*10) is meaningful as it forms 1% of your equity.

Going by the similar notion, trade Dabur tomorrow with Equity size which is meaningful to your portfolio. If the trade goes in our favor, we can add positions when stock begins to move in our favor. If you like to discuss your optimal position size and cannot disclose your portfolio size in the forum, you can always PM me. 30.9.10
..........We don't do day trading here. We are into Swing Trading. Profits can range from 5 -10%. We don't sell till the price shows weakness. Hence, sometimes profits are even more. That's not the point though. The main point is to limit risk. That's why, I promote risk here, not targets.
page 180

ajaj Auto trade was executed at 1465.

Currently it is trading at 1522.

Above mentioned figures are futures figures.

Move your trailing stop to 1505 (futures).

At the most we would like to keep a gain of Rs. 40 as profit.

Reason I am telling you to switch to trailing stop is because Bajaj auto was not a fresh Buy trade like Dabur or GSPL. It was a continuation buy trade. Hence, the trend is a bit mature. Since we are in profits, we would like to book some at least in case it starts to fall.

Stock is extremely bullish as of now. But as traders, we need to ensure that our winning position is not turned into a losing one.

For trades like Dabur we will follow EOD stop losses.

If any queries, please ask..........1.10.10
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If you are taking trades based on my trades, then adhere to what SL and exit positions I mention. Kind of trading which I do, is psychologically difficult. I keep getting in and keep getting out.

GSPL and Ashok leyland were all exited. You exited Bajaj Auto early and now you are still holding on to Relmedia. So, you are entering on my prices, and exiting on your prices. Dear, I hope you know what you are doing.

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Bajaj Auto is going from strength to strength. Now up 4%.

Increase your trailing stop to 1510.

Keep an eye on ashok leyland. Giving an opportunity to enter again. Will wait for a close above 75.
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AM not asking you to follow my calls blindly. Am not going to be there forever, hence you need to learn why these calls are picked. As always, I will post why Bajaj Auto was picked at EOD. Once you begin to get confidence in this method, just start trading on your own. It is good to include "I" in your trading. But do it once you have full confidence
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don't quite think you are doing the right thing. What if Dabur fluctuates till my stop loss and then rallies? See Prem, you cannot take trades based on xyz method and use your own stop loss in that. Do you think this can work ? Well, I'll leave that for you to answer.

Also, Ashok Leyland did not close above 75. It closed at 75. Hence, there was no buy signal initiated. One can be subjective here, but according to my calculations, it has not yet given a buy.
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"Our egos like to pick tops and bottoms because doing it demonstrates our technical analysis skills. But skill in technical analysis is not the same as skill in trading. Trading is finding a low risk entry with a high probability of success and booking profits regularly."

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Remember, stocks turn bullish from bearish and bearish to bullish on a constant basis. So keep reviewing the stocks.
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Trade on Bajaj Auto

Guys, this is why Bajaj Auto was traded.

Look at the chart below, there are two simple moving averages placed; 15 period and 45 period average. The space between those two averages is the value zone. I have highlighted those value zones with red horizontal lines.

Now, whenever in the past 8-9 months the stock price approached the value zone, all we had to do was place the stop and go long. This is simply how it was done. There is no system, no fancy logic and no other complexity involved.

I don't have any other thing to mention here as this is how simple it is. If you guys have any questions,
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In the Bajaj Auto trade, I have highlighted red lines in Value zones. These red lines are drawn based on the below mentioned category (A,B and C). Those who want to test themselves in identifying value zones, can mark on the chart and post here. I'll verify if its right or wrong. Don't be afraid to post what you have marked.

Which of the following value zones are identified based on these categories.

A. Base effect -This is where trader identifies a base being formed
B. Sentiment Shift - This is where a trader identifies a sudden shift in demand supply
C. Retracements - This is where trader identifies a trade after the previous move has retraced.

All the value zones have been marked based on these categories. Just save the chart and Mark A, B and C where you find the categories applicable. Don't be afraid of being wrong.
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Investing - Based on Good Fundamentals and Positive Technicals

Trading - Only based on Technicals

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Bro, I think you are in a quick mood to earn quick money.Learn the market, by studying its behavior, analyze various patterns and technicals discussed here by gurus here, and then select the one strategy which suits your style of trading, then do paper trading with that strategy.. and then test the results of your paper trades, only then if you have a good success ratio, start trading/investing with real money.

Mostly all the newbies to market will ignore all these and straight away make trades blindly, only to make other man rich. The choice is yours, either you can make a straight dive, or make a step by step progress.
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Bro sorry to bother u again and again but last question when there are thousands of companies with good fundamentals how to chose in which to enter and what is best buy price and exit level IF one is not watching mkt regularly????

PT Bro,

To determine the answers of the above I use technicals and fundamentals together. Sadly, there is no right or wrong answer for this. Had you believed in Technicals, you could determine which fundamentally good stocks look good technically. Furthermore, you could also determine at what price to enter and exit the stock.

Bro, its also my belief that there is no such technique or no such way where monitoring markets regularly is not required. Those who don't watch markets regularly, pay a heavy price for that. This is just my observation and can be completely wrong.
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Will the FII's continue to PUMP IN, with SEBI banning nearly 200 of their accounts?


Will the earth stop spinning tomorrow? Yesterday some scientist's were explaining the after effects of global warming.


Sai, get these thoughts out of your head and relax. Whatever will happen, we'll see. Market does not target us, so why should we doubt it or anticipate it?

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On friday you are entred in Dabur...I want to know in which base you are entred in this scrip?is it as B?
Or daily BO and hourly ?

I entered because there is base effect visible. Four days action has formed a base and low at nearly same levels. Hence, we can comfortably take the trade. Need to see if it works in our favor.............3.10.10
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Futures to focus on today

Buy Aban Offshore @ 852 SL 825-832
Buy Bharat Forge @371 SL 360-363
Buy Mcleod Russel @243 SL 240
Buy Ivrcl Infrastructure @ 163.1 SL 160 - 162 [Risky trade]
Buy Reliance MediaWorks @213 SL 209-210

These are again getting in and getting out type of trades. Hence, only take these trades if you are comfortable psychologically to execute this. 4.10.10
..................Dow is in a sustainable uptrend currently. If it's falling, its good. It is going to attract buying soon. Expansion and Contraction is part of market movements. At this stage, even if we have some contraction, it won't be that bad. A healthy contraction would be something where Dow stabilizes around 10200-10300 and Nifty around 5800 - 6000.

There is a disconnect between global markets as of now. I expect markets like US and UK to do reasonably well. Whereas expect markets like Germany, Greece, France to underperform.
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Fresh Investment Buy List


Code:
Script Date Buy SL
Cipla 10/5/2010 328 320-323
Chennai Petroleum 10/5/2010 258.5 252-255
Hexaware Technologies 10/5/2010 78.7 75-77
Hindustan Construction 10/5/2010 62.4 60
Kamat Hotels 10/5/2010 137 120
Tulip Telecom 10/5/2010 190 178
Gateway Distriparks 10/5/2010 117 112* SL given here is for Weekly closing prices
** Position Sizing has to be carried out in the same way as it was explained earlier...4.10.10
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Here's a small quiz for you guys. Now, you guys know that when I swing trade, I exit a stock after 5-7% rise. But today despite a 17% rise in Reliance Media, why am I not exiting the stock? To help you answer this question, I am going to post two charts, one of Intraday and one of Eod. Both are of reliance media. Answer is not that difficult, but one who get's it correct, will open doors to whole new way of looking into trades.





Tc 5.10.10
.........................On an intraday basis the stock has been steadily increasing and has been forming newer bases.It is taking out resistances regularly @234 then @252 now attempting 255 . Also each resistance is being broken and it is becoming a support.Also any attempted retracement or all dips have been bought into and there seems to be no weakness in the stock. The momentum is still very strong so there is no sign of weakness that would would warrant an exit yet.
On an EOD basis it has broken comprehensively taking out the recent high at 240 (resistance since Feb 2010) and looks all set to attempt to cross 280. levels (last in Jan 2010)
But we can afford to keep a trailing stop loss of about 12% and be long. Stocks don't move up 20% for no reason. Anyway if we have our SL in place, then why to worry.
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There are 2 things which are worth noting amidst what is going on in the market.

A) The euphoria which was missing earlier is beginning to come back now. Look at how stocks are just heading up. Everyday there are many stocks which are moving 5-7% with good volumes.
B) Leaders are stalling. Banking stocks and Auto stocks have now started to relatively under perform. On the other hand, High beta counters are now moving ferociously.

Just be alert guys. There is nothing to panic as of now. But keep your eyes open but do not question the markets. 05.10.10
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Intraday Chart

Initial burst was with volumes (lets call it stage 1). Then the stock went into consolidation phase (stage 2) with very very low volumes. Eventually, the stock broke its range with increase in volumes (stage 3) around 12 Pm. Once, this happened, the stock did not look back. It continued to march on with strong volumes (stage 4).

EOD Chart

Now what do we have here? We have initial burst with volumes (stage 1) in June - July. Then stock goes into consolidation phase (stage 2) in August - September with very very low volumes. Eventually, today the stock broke out of a long range (stage 3) with exceptional volumes. Now, it should continue to march on. That is, stage 4 is pending.

The reason I posted both charts together was because, on smaller time frame we were seeing all stages playing out, but on the larger time frame, stage 4 was pending.

Do you now understand why I said that we would be continuing with Reliance Media? In the end, the reason why I squared of the futures position was because the stock rallied by 36%. Hence, I shifted my positions in Equities by taking 1/3rd position of my original futures position. Now, when the stock consolidates, I will begin to buy more. If it does not, we still have locked in profits worth 66% of our position. Hope you get this point.

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A) The euphoria which was missing earlier is beginning to come back now. Look at how stocks are just heading up. Everyday there are many stocks which are moving 5-7% with good volumes.
B) Leaders are stalling. Banking stocks and Auto stocks have now started to relatively under perform. On the other hand, High beta counters are now moving ferociously.

Just be alert guys. There is nothing to panic as of now. But keep your eyes open but do not question the markets.

Tc

What are high Beta counters???

Btw, my 2 cents on similar note...

Generally, I take signal of euphoria from my neighbors, relatives and family members... so far they were utterly scared to pump in fresh money... now they started buying something.. I still say something so they are still lil worried and have fear...

But this is how I take sign... when i heard they started buying, I took first note of euphoria building... now I am waiting for them to give me tips... when they will call me all the way from India to US just to give me tip... I wud be instantly closing my investment positions and will remain on swings with tight stop loss... lolz..
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Lets say a guy is running at a good momentum,knowing very well that he has one good obstacle of considerable height on his way. With all calculations in his mind and confidence that he will cross the barrier, he approaches it with that generated speed. But then when he comes very close to it, he realises with the speed generated so far, is not good to overcome the barrier.

So, he stops a while, RETRACES A FEW STEPS BACKWARD, and AGAIN STARTS HIS RUN, this time with more increased speed, LIKE THAT OF A " LONG JUMPER"

Don't you think, that nifty is doing like this, to overcome the all time high.

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Traded price in some cases will be higher than what was posted during live trades. This is mainly due to the fact that these prices are my actual trade prices. I keep adding positions, hence my average traded price keeps moving up. Let me know if I have missed some script.


Code:
Script Comment Traded Price Exit Price
Aban Buy 872.1 0
RELMEDIA Buy 215.1 279.65
Reliance Capital Buy 827.9 0
Ambuja Cements Buy 141.4 0
BGR Energy Systems Buy 813.7 0
Nifty Buy 6,214.50 6205
Tata Chem Buy 419 0
PFC (EQ) Buy 352 0Tc
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6.10.10
Good you brought this up.

Caution is the name of the game. However, blindly assuming caution, and not trading because of that is not advisable. What I have written above is that there is a need to keep your eyes open and to avoid taking leverage in the markets. Mass hysteria and euphoria can last for many months altogether. But it does not mean we stop trading because of it.

Markets don't fall off the cliff suddenly. There is a psychological pattern to it. Before a 10-15% drop, there is always a fall of 3-4% in Bull markets. This is the best case scenario. If the markets move 3-4% downwards, all the positions will be closed and hence there will be no catastrophic loss. My way of trading is such that incurring heavy loss is just not possible (stops are so tight).

In Worst Case scenario assuming a 10% gap down on markets, our positions will yield a total loss of 1.5 - 2 lakh (assuming one lot). Current margin requirement for all positions is not much and hence trades are well planned and calculated. I trade according to my account size and am prepared to lose the calculated amount of money. I hope those who are following this thread will be doing the same.

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When any trader begins to blame luck for his positions, that means the trader does not have a trading plan, does not know what he is doing, does not have the correct psychological make up and definitely does not have a methodology with positive expectancy. In short, if one works towards the right things, luck automatically falls into place.

Comment is not directed at you. But it is directed in general.

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Nobody is a lousy trader. The good thing is you recognize that you have some problem in trading. This is something many are not able to realize. Hence congratulate yourself on that.

Moving forward, make notes on what comforts you in the market. That is, what are your beliefs about the market, what methodologies are you comfortable with and finally which instruments you will be comfortable trading. Start working on some plan and then stick to it. Trading has a lot to do with minimizing mistakes. Hence keep track of your mistakes and make sure you don't repeat them.

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A Word on Markets

For the next couple of sessions, especially tomorrow, try and keep the media channels out of your trades. There could be gyrations in the European and American markets today and hence tomorrow things will be reported in a way which will definitely sound as the end of the world.

Broader markets including US and FTSE markets are holding up well as of today. Hence, on global front there is nothing serious to worry about. There is a reason why markets have rallied from 4800 to 6100 and that reason cannot be over in a day. Forget about 2008. That was an once in 2-3 decade phenomenon. Be confident about your trades and always have a stop price in your mind.

Todays movement was only a form of consolidation. It should not be associated with "weak session", "Sell off", "Broad based weakness", "Pending Correction" and many more as the channels are reporting.

07.10.10

the moves seemed to be moving up tentatively testing resistances after moving up smartly and there was no indication that the buying support would momentarily disappear. Naturally stop losses would have been hit. Most of the down move was retraced though. Some scripts lost much more that others. Few seemed to have recovered and closed at their supports.
What to sell and what to hold would have been tricky.
As it was people were mindful of the 2 year anniversary of the crash so the effect was exaggerated due to bandwagon effect.
Something has to be said about tightening stop losses as and when necessary.Of course the question is when.

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Last edited by alroyraj; 7th October 2010 at 07:00 PM
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In trading, stop losses have to be always tight. It is not the question of when, but it is the question of how to place it. Investment is a different ball game altogether. But trading requires quick entry and quick exit. Your profits get limited to an extent (most of the times it won't) in keeping tight stops. But throughout your trading career you will never face horrendous losses. That to me is more important than profits.

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Markets don't turn upside down in one day Apurv. So there is no need to panic. If and when that has to happen, we will get plenty of time to exit everything. Why bother till then? Isn't it?

If profits are embraced with zeal, then why should one dislike losses.

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Please give some more info ( ....you are giving us suffecient but yeh dil maange more)...
about your entries....still some thing missing to me...after selecting scrips..next day what are the creteria you are looking to enter....also about stoploss...when we decide at eod..how we handle when scrip going to close too low from our s/l point?eg...today BGR when I closed it arround 790-791...or we took it as one loss trading ...

VJAY,

I will post more charts on weekend so that you can understand better. Unfortunately there is no mechanical system regarding this. Its about seeing how relatively the stock is behaving. Methodology that we are trying to learn here is of trend following. Essentially we will have many losses like BGR energy which range from 5000 - 10000 in Rupee terms. But eventually, we will catch a pretty big trend which will take care of all the losses plus will give us the desired profit. Its about patience, its about controlling your emotions and its definitely about trade management. Our aim is to minimize the losses and not get trapped into a catastrophic loss.

As far as close being low from our SL is concerned, that is not that common. For Eg. If we exit 10 trades based on SL, then 3 out of 10 will be far from our initial SL. This is just a part of trading and nothing can be done about it. But, lets say our SL is 100 and the stock is continuously trading at 97-98, which is about 2% from our SL, then in that case we would exit immediately. So the threshold you are looking for is that of 1 - 2%. If a stock is trading throughout the day between 1-2% of SL, then its fine. Anything more than that is not acceptable.

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I have drawn 2 more probable trend lines. If Nifty breaches the last trend line, it could move sideways or start a down move. Trend lines represent pace of movement. Breaching of trend line does not necessarily represent markets going down. It just represents slowness in pace of trend, which in the present market scenario seems more possible.

P.S - Good work crown. Supports and Resistance have been identified well. Just keep this new concept of trend line in your mind now.........8.10.10
Most of the indicators around are derivatives of price and though they are very valuable, most of the traders (90% +) do not know how to use one. Infact, most of them do not even know how it is calculated. If a trader does not have sound knowledge on indicator construction, then no matter what he does, he cannot use it profitably for a sustained period of time.

Hence, the simplest and the most effective way to determine a trend is to study price action. One indicator which does not lag and which does not require in depth knowledge about its construction is price. Trader who can master this, can master the markets.

Do not be tempted to short the market. If and when the opportunity arises, I will let you know. Currently I would be looking for a close below 6000 - 5980 to get into SAR* kind of trades. As of now, be long.

* - SAR (Stop and reverse) kind of trades are where we short the market and if we get stopped out, we reverse the trade and go long. We keep doing this till we catch the correct direction. 08.10.10
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I have highlighted the word "Probable" when I have drawn the trendline. What this means is that out of my experience of how prices move, I have drawn two highly probable trendlines which could develop in the future. I am looking for the Nifty to take support around those two trend lines. If it does take the support, you would get your second point. Hope you get it.

This is called Futuristic evaluation of the markets where we try to figure out what will happen next when we meditate. With experience, it will come to you too.
Its a valid question hence don't mind asking it.

Anyway now coming to your actual query. I'll answer your questions in parts and hence it will be easier for you and for others to understand. Your questions are highlighted in Bold black.


Q. But for full time trader it is important that his losses are always low than his profit.

Ans. This actually varies from trader to trader. One of my trader friend (who by the way is a full time trader) gets off the market every time he gets a 3% profit, yet year on year his returns are simply outstanding. He risks 3% and waits for gains of 3%, hence his profits are not bigger than his losses. What saves him is his winning %. As far as I can remember, he has a winning % of over 70%. As far as I am concerned, I absolutely love trends. I like to take small losses (3-5%) in high volatility environment and (1-3%) in low volatility environment and I absolutely let my profits run.


Q. Appreciate if you can tell based on your experience(& person with your caliber), what trader can get Returns on annual basis? You are in market since long.. You have seen Ups & Downs of market...What is your experience as trader? How much returns are you able to generate practically?

Ans. Rahul, I would not like to boast about my returns and hence I would not like to disclose my actual figure. But, let me tell you something which will give you a rough idea. I am a double Master's degree holder from 2 of the finest Universities in the World. Hence, unlike most of my friends, I have left a six figure salaried job in abroad to return back to India to do what I actually love.

Not all years are same. Some years you earn more, some years you earn less. But being a relatively small trader, all I can tell you is that if you keep your emotions in check, then out performing mutual funds year on year is not that difficult. As small traders one always has the advantage over mutual funds. Hence outperforming them is relatively easy. Beyond a certain stage, it becomes more difficult to outperform yourself. That's what one should aim for.

Q. But I need to know this as I want to get in this profection full time.... may be five years from now.... & wanted to know if I can fetch returns on my investments which will be sufficienet for my living.

Ans. Rahul, to make a living out of trading, one has to be realistic. Let me explain this to you. Let's assume one set's a target of earning 10 lacs per year. Now whether that trader will achieve this objective or not will depend on many factors. Let's assume he has a good system, perfect psychological make up and good money management. Now to get this objective realized, the most important aspect after all those factors mentioned above is trading capital. Making a 10% return on a Capital of 1 Crore is relatively easy. 10% of 1 Crore is 10 Lakhs and hence the objective is realized. But making 10 lakhs on a capital of 10 lakhs is very difficult. This is because now the trader needs to make a 100% return. Now, this becomes difficult. This is precisely why trading has a lot to do with other aspects than a trading system
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The above expectation is based upon psychological reaction of the herd. I don't know whether I have been able to understand the reasons behind movement in market, but I think it is all between the struggle of bears and bulls to have control. The very main concept of TA that believe what you see not what you expect, is somewhat compromised by me for certain specific issues; like I always avoid reacting towards sudden movements, even if I have to take loss. And around 7 out of 10 times, this has saved me from entering or exiting at wrong levels. The latest experience which I had was with Radico Khaitan which I purchased around 177 (i think) on 21 Sept 2010. On the very next day, it was showing some doubt but closed in green. My s/l was between 172-170 depending upon the momentum at that time. on the next day, it went down and closed below 175. I just kept that holding, in the expectation that because the momentum was still positive, it may go up in future. For next few days, the script remained rangebound and was giving red candles continuously. It was really difficult to manage and control my mind because of regular urge of selling the stock and booking the loss. But somehow, I managed not to go by emotions. On 30 Sept, the hell broke loose and the stock made a low of 160 during the very initial hour. I was sweating heavily and the mind stopped working. There was just one thing which kept my confidence that if I had some inside information of that script and that if I had to sell that stock, I wouldn't be doing like that. Anyway, within couple of hours, the script was again trading above 170 and from thereon, it again touched its resistance level of 184; and seeing that it may again fail to breach that resistance, specially in the light of ongoing Nifty movement, yesterday i sold that script @ 182.15.
Therefore, if I have some inside information of future weakness in the market, I wouldn't be diluting my position in a way that it can be noticed so easily. I would be trying to sell at upper levels. Currently, Nifty is trading around 100 points below its recent high, if I start selling now; I would not be getting the appropriate price.
On the other hand, if I have some inside information of future strength in the market, I wouldn't be buying either at these levels. Reason is the same, if I buy right now, I will be getting it at a very high price because any buying at current levels would increase the price to the significant level which will not be suitable for me. Therefore, what I will do is to discard the market in a way that the herd should start diluting their holdings. And, in that moment, I will just do something or will expect something like to happen, which will create panic. And, at some level, which I find suitable, I will make a quick entry and bang.
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thanks for your kind words. There is one person, whom I consider my Guru in my personal life and besides him, there was one another grate trader (name I can not remember right now); both of them are having one common funda for success and that is FEAR. Everytime, when I am on loosing side, I start feeling the fear so much so that sometimes the shivering of the body can be easily seen by the person sitting beside me. Whenever, i discuss about this problem with my Guru, he says always respect fear, because it will keep you alert. The moment you become confident, the chances of loosing become more prone. And perhaps, my doing fast [if it actually is fast ] is simply because of this high level of fear which makes the mind work fast enough which wouldn't be possible if I have learned relaxing. My personal experience, may not be correct though, is that in stead of hating yourself for being fearful, just start loving your fear. Express it to your own.. Talk to your ownself and things will start becoming more and more clear.
.........With all due respect to Crown and his mentor's, I would like to say that trading in my own experience does not work this way. Fear, in my own experience is a parasite in trading. Fear in my opinion is not a bad thing. It is a form of emotion that will either fuel the desired change in your life or will paralyze you. While the former might be more witnessed in other walks of life, in trading especially fear more often tends to paralyze a trader. If the markets begin to drop 1% every 10 minutes (which has happened in the past), then no matter what you do or preach, fear is going to get you out of your positions. It will force you to act against your plan and will definitely make you release your emotional charge by getting you out of what you are into.

Trading is the only profession where you can see your capital being eroded every second. Hence, it is also the most difficult profession to be in psychologically. It is never ever easy to lose money. Our mind is trained to release pressure. Hence no matter what you do, never ever be afraid of 'fear'. If you are afraid of being in fear, your mind will sub consciously make you do the thing which will put you out of fear. Statistically there are very few traders who can stick to their plan even when they are deep inside grabbed by fear. The best way to trade in my opinion is to be in a different psychological zone. It is achieved by constantly practicing the state of being emotionless. For eg, I never get excited when I see profits. Going by the same token, I never get bored (sad,depressed) seeing my losses. It is only at the end of the year, after I take a break from trading, do I celebrate my profits or celebrate my losses. Hence, when one trades, he should neither be confident, nor should he be afraid.

Please remember, my experience is not a rule. It is just my experience.
..............................Crown... I love you for bringing this point as well as very nicely jotting ur thoughts in words and posting here....

Raunakji.... you r one utterly disciplined (don't take it otherwise) person in ur personal life and probably that is making u utterly organized and disciplined in ur trading profession... I have seen u going off early every evening and getting up at one particular time.... we usually get ur reply on forum at unsaid but stipulated time every morning.... being utterly disciplined or organized is sign of mental strength... Hats off to you....

However, general public is not so organized... bitter but it is fact... if we all introspect, we know that we r not like you... now somebody who is not utterly organized and disciplined in personal life, u cannot expect them to cultivate emotional balance for trading as u r having.... we got to accept the fact that general can only procrastinate.... This is the best trading system available in global trading business if one wants to learn… otherwise I can bet there is nothing like “SYSTEM” in trading….

now coming to the discussion u were having with Rahul on being full time trader... it is also again related to ur disciplined and organized life style... people like u can be successful anywhere.. it is not just trading... u go anywhere and work with ur soul, u will be successful... I envy ur disciplined life style …. Make me disciplined, organized and structured like u and I can bet I can make 10 lacs out of 10 lacs in one year.... to me the only lacking part i m having is i procrastinate and that is again because of lack of discipline in life...

So as a bottomline, I agree with Crown that observing one own self and emotions is very early starting point to develop right mindset. Once we continuously do that, we go one step ahead in being successful trader.. i m sure 90% people cannot do this more than 21 days.. i can bet... (btw, i m one of those 90% but trying hard to improve myself)... profit and loss are part of business... we just need to make sure our losses shud not be bigger that our loss tolerance... today loss.. tomorrow cud be profit...

now if u correlate this with what I wrote a month or two back about emotional imbalance or balance in left and right hemispheres of brain, one will realize how these two points are related to each other… balanced hemispheres are required to be detached/disciplined/stop procrastination and all these are signs of mental strength…
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Thanks bhai.....

Raunakji.... you r one utterly disciplined (don't take it otherwise) person in ur personal life and probably that is making u utterly organized and disciplined in ur trading profession... I have seen u going off early every evening and getting up at one particular time.... we usually get ur reply on forum at unsaid but stipulated time every morning.... being utterly disciplined or organized is sign of mental strength... Hats off to you....

However, general public is not so organized... bitter but it is fact... if we all introspect, we know that we r not like you... now somebody who is not utterly organized and disciplined in personal life, u cannot expect them to cultivate emotional balance for trading as u r having.... we got to accept the fact that general can only procrastinate.... This is the best trading system available in global trading business if one wants to learn…
Quote:
otherwise I can bet there is nothing like “SYSTEM” in trading….



now coming to the discussion u were having with Rahul on being full time trader... it is also again related to ur disciplined and organized life style... people like u can be successful anywhere.. it is not just trading... u go anywhere and work with ur soul, u will be successful... I envy ur disciplined life style ….


Quote:
So as a bottomline, I agree with Crown that observing one own self and emotions is very early starting point to develop right mindset. Once we continuously do that, we go one step ahead in being successful trader.. i m sure 90% people cannot do this more than 21 days.. i can bet... (btw, i m one of those 90% but trying hard to improve myself)... profit and loss are part of business... we just need to make sure our losses shud not be bigger that our loss tolerance... today loss.. tomorrow cud be profit...

Apurv Bhai...

Raunak Bhai is hundred percent correct in his observation and comment....
And.. I am also hundred percent correct in my observation.... He has already attained the mastery.... while I have yet to attain that level of mind and efficiency. My point is simple.... accept what you are.... even if you are stupid... like me.... accept it.... because that will be the first step towards wisdom...


Quote:
now if u correlate this with what I wrote a month or two back about emotional imbalance or balance in left and right hemispheres of brain, one will realize how these two points are related to each other… balanced hemispheres are required to be detached/disciplined/stop procrastination and all these are signs of mental strength…

Apurv Bro... I would love to read that.... if possible can you please give the link ......I have been a strict follower of this concept or theory i.e. left and right hemispheres of brain....and I know that both of my hemispheres are below average.....But there is one third hemisphere in which both these hemispheres exist....and that is quite strong..and that is the only thing which gives me some hope in my life...As far as trading is concerned... IMHO....the operation of right hemisphere (which is purely imaginative) is more important.... and IMHO....most of the successful persons on the earth were/are highly disorganized in a very organized way.....
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And discipline is an outcome of many things that individually contribute to trading success. Like keeping up to date with various traders perspective and systems i.e a good reading habit. Also being alert in recognizing a trading opportunity and a safe entry point. Alertness is contributed in no small measure by a healthy lifestyle including a fitness via an active gym attendance and off time where you tune off say after 9 pm IST. Early to rise and meditate and pray.
Various points that can be learned from him that can be considered as part of good trading practice . Take for instance a small list to trade from which is vetted in advance. This helps to avoid spreading one's energies thin.
Raunak's emphasis on high probability trades is key here. He enters early when the volumes is low to avoid the mad scramble when the volumes pick up thus creating a margin of safety.
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Setting Stop Losses

This is one of my favorite concepts in Trading because of its usability and its necessity. Many traders don't even know how to keep appropriate stop loss for a stock and yet they keep trading randomly. Either their stop loss is too low, or it is too near. In either case, achieving results is not possible. The key to setting a stop loss is to link it with the concerned entities volatility. Every stock has its inherent character (range of movement, pace of movement) and hence stop losses for every stock has to be different. The inherent concept could remain the same, but incorporation of volatility within its core methodology would be ideally the right way to go about it.

Again there are many ways to do this. But, here I will focus on how it is done through ATR (Average True Range). Now, before getting into the depth, lets first recollect what ATR is. It is is the difference between the high and low price on any given day. It reveals information about how volatile a stock is. Large ranges indicate high volatility and small ranges indicate low volatility. Essentially this means, if a stock A of Rs 100 has ATR (14) of 10 Rs and another stock B has ATR(14) of 5 Rs, then there is high probability that stock A can fluctuate 100 + 10 or 100 - 10 and stock B can fluctuate 100 + 5 or 100 - 5. Hence, stop losses for both cannot be the same as their fluctuation range is different statistically. I hope this is clear up till now.

Moving forward, let's actually see how it is done. There are many ways to implement ATR in stops. However, here I will explain it in the most simplest form. Let us assume we are using a Technical System where we Buy when prices crosses 20 day MA and Sell when the price crosses below 20 DMA. Now the initial stop loss considered by most traders in these systems is the 20 DMA itself. For Eg. If Nifty is at 5000 and it has crossed its 20 DMA (4950) today and given a buy, then many traders will keep 20 DMA (4950) as the stop loss. Now, keeping this stop loss is wrong as it does not take into account the inherent volatility which is being reflected currently. To make the stop loss more meaningful, we can subtract the 20 DMA with the 10 day ATR to get a more appropriate stop loss. This way, we would give ourselves, reasonable margin of not getting whipsawed again and again. Below I have attached a figure to understand this better.



Please see, the original stop above based on the 20 DMA and the modified stop above based on 20 DMA minus the ATR. The extreme right column will indicate the difference (%) between the two. As you can notice, year like 2008 where volatility was extremely high, the difference between the two prices is over 5%. Whereas today the difference is only 1%. This is reflecting the fact that 2008 was a highly volatile year and stops should have been lower as on up days markets were rallying close to 6-8% every session. This was done to avoid whipsaws. Whereas in 2010, markets are very low on volatility and traders should keep tight stop losses in order to lock their profits. Since 2008, we have entered into a low volatility phase. Volatility has been reducing drastically since 2008 and now we will at sometime start moving up in terms of volatility. This can be very valuable information for traders. Since volatility is more cyclical than price, the high volatile phase is bound to come.

P.S. - The above illustration is based on a very basic system. I am not encouraging you to use this system, but have just given you an example of how to use this system and avoid whipsaws by incorporating volatility in your trading. There are 'n' number of ways this can be done for your system, and now since you have a good understanding of the underlying concept, start experimenting till you find something that suites you.

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I will here just post what was written 1912 :

In 1912, an interviewer asked Harriman about his stock market skills and secrets. The trader replied : If you want to know the secret of making money in the stock market, it is this : Kill your losses. Never let a stock run against you than three-quarters of a point, but if it goes your way, let it run.

Move your stops up behind it so that it will have room to fluctuate and move higher.

Like I say, it was written 1912.
................................................An yway now coming to what you have written. As a futures trader, I absolutely agree with the fact that stops should be very tight. If you would have noticed, whenever I trade in futures I keep getting in and out numerous number of times till I finally catch a good move. That is primarily my style of trading in Futures. However, in stocks, I keep stops at a reasonably lower level. I absolutely never move my stops down. I am always looking to move up my stops.

Regarding the note written in 1912, I feel in the current age, where technology has made trading easily accessible and hence added range volatility in prices, keeping three quarters of a SL is not advisable. Markets have changed, volatility behavior has changed and hence nature of stop losses has also changed. In the end we are so many traders, so many different inherent personalities and certainly traders with different risk profiles and hence SL like entry and exit should be determined with what one is comfortable with.

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Coming back to the subject you mentioned.

Stop loss with shares is as essential as in any other trading papers.

That was the message I wanted to make clear here. If it now was 1912 or today, the idea is the same : Small losses and if possible, big profit.
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Every thing I found interesting or was teached in the past, I collected.

You may not guess how big my most important folders have become. It ist already more than two GB.

What you speak about, I was told that way to do so even I have in my collection around 15 ways to do it in other ways.

As I see the reaction to some of my post, I realize how individual my knowledge is about trading. First time I see the real value of it when comparing it to other trading styles. The one which teached me, was a millionaire. Now I know why.

Individuality is a key to extreme success. Learned this today.

So what could I say to your post ?

Keep your trading in an individual style and you will be the winner
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List of stocks to focus on for Swing Trades. List will be revised and posted every week. You can narrow it down further according to suitable lot size, sectors or other structural approach. This list is not exhaustive. This just contains those stocks which according to me will move in either direction. You can use your desired systems for catching the move in either direction.




ABAN OFFSHORE
BGR ENERGY SYSTEMS
BHARAT PETROLEUM
BHARTI AIRTEL
BHUSHAN STEEL
CORE PROJECTS & TECHNOLOGIES
DLF
EDUCOMP SOLUTIONS
FINANCIAL TECHNOLOGIES (I)
GODREJ INDS
HIND OIL EXPLORA
HIND PETROLEUM
HIND ZINC
HINDALCO INDS
HOUSING DEV & INFRA
INDIAN BANK
INDIAN OIL CORP
JINDAL SOUTH WEST HOLDINGS
JSW STEEL
LIC HOUSING FIN
MCLEOD RUSSEL
ONMOBILE GLOBAL
ORCHID CHEM
ORIENTAL BANK
PANTALOON RETAIL
PATNI COMPUTER SYSTEMS
PIRAMAL HEALTHCARE
SESA GOA
SINTEX INDS
SOBHA DEVELOPERS
TATA CHEM
TATA COMMUNICATI
TATA MOTORS
TATA STEEL
TECH MAHINDRA
UNITED SPIRITS
VIDEOCON INDS

10.10.10
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This is the list of stocks I am looking for as Investments. Now this list is not exhaustive, but again these stocks won't sit without movements. The movement can happen in either direction and hence one has to apply proper methodology to pick out stocks which will move up. See if your stocks are in this list, if they are then provided your methodology is correct, your stocks will move. If your stocks are not in this list, then if they begin to move, they will show up in this list whenever it is revised.

Every month 3 months this list is reviewed and as far as I am concerned, I only look to buy within this list.

This list is not of dividend yielding companies. This list is for investments which are due for move. I don't specialize in dividend based investments and hence cannot help much on the same.
Full name
3I INFOTECH
AARTI INDS
ABAN OFFSHORE
ABB
ABG SHIPYARD
ACTION CONSTRUCTION EQUIPMENT
ADANI ENTERPRISE
ADHUNIK METALIKS
ADITYA BIRLA NUVO
AJANTA PHARMA
ALCHEMIST
ALEMBIC LTD
ALKALI METALS
ALLAHABAD BANK
ALLIED DIGITAL SERVICES
AMAR REMEDIES
AMARA RAJA BATTE
AMBUJA CEMENTS
AMTEK AUTO
AMTEK INDIA
ANANT RAJ INDS
ANDHRA BANK
ANKUR DRUGS & PHARMA
ANSAL PROPERTIES
APOLLO HOSPITALS
APOLLO TYRES
APTECH LTD
ARCHIES
AREVA T&D (I)
ASAHI (I) SAFE
ASHAPURA MINCHEM
ASHOK LEYLAND
ASTRA MICROWAVE PRODUCTS
ATLANTA LTD
ATLAS CYCLES
ATUL LTD
AUROBINDO PHARMA
BAJAJ ELECTRICALS
BAJAJ FINSERV
BAJAJ HINDUSTAN
BAJAJ HOLDINGS & INVESTMENT
BALAJI TELEFILMS
BALRAMPUR CHINI
BANK OF INDIA
BANK OF MAHARASHTRA
BARTRONICS (I)
BATA (I)
BERGER PAINTS
BGR ENERGY SYSTEMS
BHARAT FORGE
BHARAT PETROLEUM
BHARTI AIRTEL
BHARTI SHIPYARD
BHUSHAN STEEL
BINANI CEMENT
BOMBAY DYEING
BOMBAY RAYON FASHIONS
BRIGADE ENTERPRISES
CANARA BANK
CEAT LTD
CENTRAL BANK OF INDIA
CENTURY PLYBOARDS (I)
CENTURY TEXTILES
CHAMBAL FERT
CONSOLIDATED CONSTRUCTION CONSORTIUM
CORE PROJECTS & TECHNOLOGIES
COSMO FILMS
CROMPTON GREAVES
DALMIA BHARAT SUGAR AND INDS LTD
DECCAN CHRONICLE HOLDING
DEEPAK FERT
DENA BANK
DEVELOPMENT CREDIT BANK
DEWAN HOUSING
DHAMPUR SUGAR MI
DHANLAXMI BANK
DISH TV (I)
DISHMAN PHARMA
DLF
DREDGING CORPN
DS KULKARNI
EDELWEISS CAPITAL
EDUCOMP SOLUTIONS
EIH ASSOCIATED HOTELS
EIH LTD
ELECON ENGG
EMAMI LTD
EMCO LTD
ENGINEERS (I)
ENTERTAINMENT NETWORK (I)
ESCORTS LTD
ESSAR OIL
EVEREADY INDS
EVEREST KANTO CYLINDER
EVERONN SYSTEMS (I)
EXIDE INDS
FDC LTD
FEDERAL BANK
FINANCIAL TECHNOLOGIES (I)
FINOLEX CABLES
FINOLEX INDS
FORTIS HEALTHCARE
FUTURE CAPITAL HOLDINGS
GAMMON (I)
GATEWAY DISTRIPARKS
GATI
GEODESIC
GEOMETRIC SOFTWA
GIC HOUSING FINA
GITANJALI GEMS
GMR INFRASTRUCTURE
GODAWARI POWER & ISPAT
GODREJ CONSUMER PRODUCTS
GODREJ INDS
GOKUL REFOILS & SOLVENT
GRAPHITE (I)
GREAT EASTERN SHIPPING
GREAT OFFSHORE
GUJ ALKALIES
GUJ FLOUROCHEM
GUJ INDSTL POWER
GUJ MINERAL
GUJ NRE COKE
GUJ ST FERTILIZE
GUJ STATE PETRONET
GULF OIL CORP
HANUNG TOYS & TEXTILES
HAVELLS INDIA
HCL INFOSYSTEMS
HCL TECHNOLOGIES
HEG LTD
HIND CONSTRUCTION CO
HIND DORR-OLIVER
HIND OIL EXPLORA
HIND PETROLEUM
HIND ZINC
HINDALCO INDS
HOTEL LEELA VENT
HOUSING DEV & INFRA
HT MEDIA
IBN18 BROADCAST
ICICI BANK
ICSA (I)
IDBI
IDEA CELLULAR
IDFC
IFCI LTD
IL&FS INVESTMENT MANAGERS
IND SWIFT LABS
INDIA CEMENTS
INDIA GLYCOLS
INDIA INFOLINE
INDIABULLS REAL ESTATE
INDIAN BANK
INDIAN HOTELS
INDIAN OVERSEAS BANK
INDRAPRASTHA GAS
INDUSIND BANK
INFOTECH ENTERPR
ING VYSYA BANK
IRB INFRASTRUCTURE DEVELOPERS
ISMT
IVRCL ASSETS & HOLDINGS
IVRCL INFRASTR & PROJECTS
J KUMAR INFRAPROJECTS
JAGRAN PRAKASHAN
JAIN IRRIGATION
JAIPRAKASH ASSOC
JAIPRAKASH POWER VENTURES
JAYSHREE TEA
JB CHEM & PHARMA
JBF INDS
JET AIRWAYS
JINDAL COTEX
JINDAL POLY FILM
JINDAL SAW
JINDAL SOUTH WEST HOLDINGS
JINDAL STEEL POW
JK LAKSHMI CEMEN
JK PAPER
JK TYRE & INDS
JMC PROJECTS
JSL STAINLESS
JSW STEEL
JUBILANT ORGANOS
JYOTHY LABORATORIES
JYOTI STRUCTURE
KABRA EXTRUSION
KAJARIA CERAMICS
KALE CONSULTANTS
KALINDEE RAIL NIRMAN (ENGINEERS)
KALPATARU POWER
KARNATAKA BANK
KINGFISHER AIRLINES
KLG SYSTEL
KOHINOOR FOODS
KOLTE PATIL DEVELOPERS
KOTAK MAHINDRA BANK
KOUTONS RETAIL (I)
KSK ENERGY VENTURES
LAKSHMI ENERGY & FOODS
LAKSHMI VILAS BK
LANCO INDS
LANCO INFRATECH
LIBERTY SHOES
LIC HOUSING FIN
LLOYDS ELEC
MADHUCON PROJECTS
MADRAS CEMENT
MAGMA FINCORP
MAHANAGAR TELEPH
MAHINDRA & MAHIN
MAHINDRA & MAHINDRA FINANCIAL SERVICES
MAN INDS (I)
MAX INDIA
MCLEOD RUSSEL
MERCATOR LINES
MINDTREE
MONET ISPAT
MOSER BAER (I)
MOTHERSON SUMI
MPHASIS
MRPL
MSK PROJECTS (I)
MUDRA LIFESTYLE
MUKAND LTD
MUNDRA PORT & SEZ
MUSCO
NAGAR CONSTRUCTI
NATCO PHARMA
NATL ALUM - NEW
NAVNEET PUBLICAT
NDTV LTD
NELCO
NETWORK 18 MEDIA & INVESTMENTS
NEYVELI LIGNITE
NIIT
NIIT TECHNOLOGIES
NILKAMAL
NIRMA LTD
NITCO
NITIN FIRE PROTECTION INDS
NMDC
NRB BEARING
NUCLEUS SOFTWARE
OIL COUNTRY TUBU
OMAXE
OMNITECH INFOSOLUTIONS
ONMOBILE GLOBAL
OPTO CIRCUITS (I)
ORBIT CORPORATION
ORCHID CHEM
ORIENT PAPER
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PARSVNATH DEVELOPERS
PATNI COMPUTER SYSTEMS
PBA INFRASTRUCTURE
PENINSULA LAND
PETRONET LNG
PHOENIX MILLS
PIDILITE INDS
PIRAMAL HEALTHCARE
PIRAMAL LIFE SCIENCES
POLARIS SOFTWARE
PRAJ INDS
PRAKASH INDS
PRATIBHA INDS
PRISM CEMENT
PROVOGUE (I)
PSL LTD
PTC (I)
PUNJ LLOYD
PURAVANKARA PROJECTS
RADICO KHAITAN
RAJ OIL MILLS
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RASHTRIYA CHEM
RAYMOND LTD
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SESA GOA
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SUNDARAM FASTENE
SUPREME PETROCHE
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SUZLON ENERGY
SYNDICATE BANK
TAJ GVK HOTELS
TATA CHEM
TATA COFFEE
TATA COMMUNICATI
TATA ELXSI (I)
TATA METALIK
TATA MOTORS
TATA MOTORS DVR 'A' ORD
TATA STEEL
TECH MAHINDRA
TEXMACO LTD
THOMAS COOK (I)
TIME TECHNOPLAST
TIMKEN INDIA
TINPLATE CO
TITAGARH WAGONS
TORRENT POWER
TRIVENI ENGG
TUBE INVESTMENTS
TULIP TELECOM
TV 18
TV TODAY
TVS MOTOR
UCO BANK
UFLEX
UNITECH
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UNITED PHOSPHOROUS
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USHA MARTIN
UTTAM STEEL
V GUARD INDS
VIDEOCON INDS
VIJAYA BANK
VOLTAS LTD
WALCHANDNAGAR IN
WELSPUN (I)
WELSPUN CORP
WEST COAST PAPER
WOCKHARDT LTD
YES BANK
ZEE ENTERTAINMENT ENTERPRISES
ZENSAR TECHNOLOG
ZICOM ELECTRONIC SECURITY SYSTEMS
ZYLOG SYSTEMS__________________he list mentioned is not a Buy list.

It is just a list of stocks which will move either up or down. They won't be flat. Hence direction cannot be associated with this list. Only movement can.

I would be looking for a positive price structure along with some good volumes. I don't use some complex methodologies. I just keep it simple. If price structure is in place and volumes are favorable, then that's my trade for the taking. Once one gets in a trade, then it is more about trading intelligence and trade management.

................
ok you mean u watch on chart price rise and vollume increase as remembering avg vollume of every stock is not easy here my problem start as I dont watch chart and dont have any charting software or anyother type of software trade simply with guts and whatever stock i chose take 10-20-50-100 days avg vollume note it down from google and keep an eye whenever go up with vollume I enter can U suggest any other way?? Hope I am not wasting ur weekend thnx for spending time for me bro GBU tc
__________________
Word on Markets

This is perhaps a very ideal time to be trading. However, bear in mind that at every stage, there is different inherent character of a market operating. Currently we are in a low volatility phase where our stops need to be reasonably tight. As volatility picks up, we would not like our positions to amplify our losses as a result of volatility expansion.

In my own opinion, we still have upside left in the market and whenever short term reversal signs emerge, we need to reverse our trades and go short. Current market environment which we are into is ideal for SAR trades. Either side we will profit, provided we don't argue with the market. Those of you who have systems with reasonable positive expectancy (long and short side) should be ready to take SAR trades based on your own system.

Tc
What if the Nifty gaps down 1% tomorrow? Will you square off immediately? What if you square off immediately and the market rebounds to rise up again?

What if Nifty gaps down 2% tomorrow?

Dear, hope you are planning your trades. If you are taking 6110 as your stop loss, you need to also take the average gap down over low volatility periods and subtract it with your SL. That way you would get a better measure of risk reward. You could then see if it's worth taking the trades.

Tc
We are in a low volatility environment, hence gap up and down should not effect you much. But for future, have a plan ready. In my opinion, if you are trading without a plan, you are already losing out in this game.

As far as your trade is concerned, keep your SL intact and prefer to sell out only after 2 in case things get bad............11.10.10
It is a market with full of risk.. But if you know your risk taking capacity and ready to take a risk for better earnig, then it is the place where you should be.

But for that you should know about the market/how this market work etc.etc.

Try to learn first.

Then open your vallet to invest.

Stops on intraday basis are a bit different from that on daily, weekly or monthly basis. Hence see what Columbus has written and try to understand that.

Also, I would encourage you to visit Columbus's own thread where you will get much further insights into how things are done. Markets have to be seen in a framework at all the time and I think you will get an idea of how to do it by visiting that thread more often.

I don't specialize in intra day trading and hence my knowledge in that domain is limited.

........................
Here This is with single ema and the logic is trade when price crose over /crose below of the ema.

First of all you have to make some guarantied rules for your trade and be stick on that even if you lose.
In my rules i kept 8 points SL because I am using 5 ema and 13 ema.13-5=8. And my expected(NOT FIXED) target is 24=8*3. I book profit when I am with 16 points i.e. 8*2 and even a single indicator out of 3 indicate a weekness. I book profit with 12 points if 2 indicators show weekness.
I enter trade when 3 indicators suport it.

Now Each of the indicators are used for certain purposes to sort out the risks and trade becomes somewhat fool proof. But remember that there is nothing known as perfect in this market.

These ae some simple trading rules.


NIFTY TRADING RULES
A COMMON RULES
1 DON’T FIX A TARGET FOR PROFIT BOOKING (MARKET KISI KA BAAP KA NAHI….)
2 DON’T SQUREOFF WITH OUT A MINIMUM GAIN OF 10 POINTS
3 TRADE WITH MINIMUM 4 TOOLS EXAMPLE (2EMAs/BB/STOCHIATICS/RSI)
4 KEEP A STOP LOSSE OF 8 POINTS…… NO MATTER EVEN IF IT HITS.
5 ENTER A TRADE STRICTLY ONLY WHEN THE 3 INDICATORS SUPORT IT.
6 BEHAVE LIKE AN INSTRUMENT WHICH OBEY ALL TRADING RULE AND FORGET THAT YOU ARE MAN WITH IMOTIONS
B RULES OF BOLINGER BANS
1 MAKE SURE THAT THE PRICE IS NEAR THE SUPORT LEVEL WHEN YOU ENTER LONGS
2 MAKE SURE THAT THE PRICE IS NEAR THE RESISTENCE LEVEL WHEN YOU ENTER SHORTS
3 GO JUST AGAINST THE ABOVE TWO RULES WHEN BANDS SHOW AN ABNORMAL CONDITIONS (TREND CHANGING WITH SUDDEN BREAK OUT
IN THIS CONDITIONS PRICE STICK TO ANY OF THE LEVELS AND THAT LEVEL START INCREASING)
C RULES OF STOCHIASTICS
1 BUY IN OVERSOLD CONDITIONS IF THE GREAN LINE TURNED UP
2 SELL IN OVERBOUGHT CONDITIONS IF THE GREAN LINE TURNED DOWN
3 IF OTHER TWO TOOLS SHOW A CHANCE OF ENTRY JUST LOOK ONLY FOR GREEN LINES POSITON (IGNORE OVERSOLD OR OVERBOUGHT SIGNALS)
D RULES OF MOVING AVERAGE
1 BUY WHEN PRICE CROSSOVER EMA (NEAR EMA CROSSOVER FAR EMA)
2 SELL WHEN PRICE CROSSDOWN EMA (NEAR EMA CROSSDOWN FAR EMA)

I believe that one should not trade to make money. one should trade for his satisfaction and should be smart enough to not loose money. If you understand that then the trade will make money for you.


Now in my system I will not loose money even if my SL hit for 50% of my trade. Now you may understand the reason for my win. my system performs easly 70% times.

See, Keep learning till death. Yesterday learned from Mr. Columbus that in the closing sesssion the SL. should be little increased. That I have started aplying from today.
...........................

1. There is no Buy and Forget investment. Every single deal has to be monitored atleast once a week.

2. Your understanding of PE is not right. General motors which was the darling of America, traded for low PE's for years. Just look at its chart. You will know what I am saying. If PE's worked this way, every fundamental analyst would be a billionaire. Its like saying buy this stock as its RSI is oversold. Hope you get it.

3. Our fundamental analysis is carried out through a in - house financial model. I cannot release the details here as its development has costed significant amount of resources. However, I will soon be posting list of stocks fundamentally attractive.

Tc
__________________Godrej Industries is offering some good opportunity to swing trade. An uptrend channel is highlighted in Red and Support lines are mentioned in blue. Please don't get into the technicalities of drawing channels and trendlines. We can be subjective at times and this trade seems to be more of subjective kind.

Trade it in delivery only. Buy X quantities and keep SL of 219 and 212

Square off X/2 quantities if 219 gets violated and then remaining if 212 gets violated. Let's see if this works out. Any queries let me know.

Tc.......12.10.10
.........................
Hi Raunak,appreciate your contributions.
Generally I have seem that your portfolio consist of three parts,one with the fundamental long term style (where you scale up 10%), the second with the derivative swing i.e futures and the third with equity swing . Are all these based on this proprietary model you developed in the sense that are these stocks thrown up by the model.
Your knack for zeroing on the scripts before they start buzzing is amazing. Any guidance on how to go about this.
How to interpret/read the behaviour of stock after the approach or cross their year's high ?
Since you stress that price is a sufficient criteria wouldnt we need to check the price action in these fundamentally attractive scripts?
...........Firstly, let me guess, are you doing some management related course? Or pursuing MBA or something. Let me know if this is true. I'll tell you the reason then.

Q. Generally I have seem that your portfolio consist of three parts,one with the fundamental long term style (where you scale up 10%), the second with the derivative swing i.e futures and the third with equity swing . Are all these based on this proprietary model you developed in the sense that are these stocks thrown up by the model.
Since you stress that price is a sufficient criteria wouldnt we need to check the price action in these fundamentally attractive scripts?

To be very precise about my portfolio, I have a very different approach to my trading. I don't have any fixed % of money attributed to some style of trading. It keeps changing with market scenario. For E.g., currently, we are planning to invest heavily and hence all our focus is towards finding good investment related stocks. Precisely we are going to invest 50% of the money we have. Out of the remaining 50%, nearly 30% will go towards swing trading (that is, for margins and stuff) and rest will be for Scalping. Sometimes I get adventurous and i go on a scalping spree.

Fundamentally good stocks are chosen (short listed) through our financial model. Once I get the shortlisted stocks, I hide the name of the stock on our custom made software and let it play one by one on a large LCD. All the stocks are numbered 1 to 'n'. The stocks I like in one glance are noted and finally I invest in those. Essentially, I am selecting only those fundamentally good stocks whose price structure is positive. I have explained many times how i identify price structure and I am sure you are now aware of it.

Q. Your knack for zeroing on the scripts before they start buzzing is amazing. Any guidance on how to go about this.
How to interpret/read the behaviour of stock after the approach or cross their year's high ?

I don't have some mechanical system for swing trades. I feel any system one makes, has to lag behind the market action. Hence, I keep rolling on the charts one by one spending no more than 1 second on them. The moment I see something I like, I post it here. Again this is simply based on short term price structure. I agree to what Ed Seykota says and that is, Advanced technology for analyzing the markets is interesting, entertaining, distracting, and even counter-productive to coming to terms with emotional reactions to uncertainty and volatility. Hence, I always tend to keep it extremely simple. In one line if I have to tell you why I succeed it is because I don't fear failure. Today I picked up Godrej because it appealed to me instantaneously. See, I lay a lot of emphasis on Risk Reward and hence even if my trades fail, I usually don't loose that much.

Let me know if you need to know something else.

........................There is a reason that the particular stock is trading at its year's high. I try and see if I could see some potential problems that would affect the price. If i can't find one, I enter it whole heartedly. A body in motion will remain in motion, unless acted upon by an outside force.

As simple as that. Keep it simple. That's the key.

I'm basically a day trader, none the less, i guess my point should be valid for swing traders as well.

Selecting Targets and Stop Loss, surprisingly, is not given the same attention as a one does to his indicators or trade signals. I mean, people usually apply the percentage model to both "Target" and "Stop Loss". Some apply the brakes near S/R zones. Others follow the order books, and so on. Each has its merits.

So there is no Right or Wrong answer to this. To each his own. Personally i find the above fixed % and pivots as flawed. Each trade is unique. You have different reason for entries. So why keep same model for StopLoss and Target across trades? . I believe a trader should not have a fixed StopLoss and Target model. Rather let price action dictate this.

For me, i don't apply the percentage or S/R model for Target and StopLoss.
My Stop Loss is way above/below the "OBVIOUS" S/R zone. Yes, sometimes, my risk level does not permit to take such a risk, other times i time my entry early to minimize the risk.

My Target is based on price action (And not S/R or Pivots). Till the time the price action suggest momentum i stick with my trade.

I write very less on indicators, hence i hope you know by now I don't emphasize much on them. S/R lines and trend lines are nearly zero lag indicators. If you get a good grasp on these, I think you should do well.

Also, it is not necessary that you profited because of Bull market. Many were not even able to do that. Hence congratulate yourself. You have the correct psychological make up it seems.

Regarding books - Yamin I have largely been a self taught trader. I had a thing to not trust what other authors have written. Hence, I have found my own style for trading. I have read a lot of books on market psychology, but have read very few books on indicators or anything else. My only piece of advice in this regard is to pick up 2 indicators, absolutely master their construction and behavior and finally writing some rules based on your observation. If you can do this, then that is all you will require. For book reference you can also contact Linkon7 as he is one user who uses a lot of indicators. I am sure he will be able to guide you on this.
....................
This entirely depends upon what and where are you investing in. If you are a swing trader, your first lot of profit should be booked around 6-8% of gain and then you can manage your trades on other lots. But again this is so very subjective and hence very difficult to put in words. Unfortunately i have also not come across books which deal into these subjects.

As traders you have to set target for yourself. For eg. If you want your equity curve to grow by 10% in next two months, then you have a target of 5% per month. This small target will make you take trades where you can achieve your results and will keep you aware on where to book profits. Hence, I feel if a trader keeps such small targets in mind, then booking profit and loss becomes a lot easier.

.....................
Regarding this I had mentioned in my previous post. What you are lacking is a consistent way to pick stocks. That can only come if you have a trading plan. A Trading plan is a structural approach to market where in you refer to it for every trade. Now, even if your methodology suggests trading on momentum, then try and formulate more rules for different market phases. The more market phases you see, the more rules will you come up with. Keep modifying your rules with the market and within a period of 6-12 months you will have a complete trading plan ready.

Always remember that we are in the market for long term. We are not here to get rich quickly. That can rarely happen. Long time survival is only possible with a sound trading plan. Start developing it right away and you will become consistently profitable. Develop your plan only according to your methodology. It is only then that you will be successful.
.............It is useful to accept and understand and see any support and resistance in any up or down trend for those, which have a problem with that part of trading.

Draw exact lines from any tops to any tops in the trend and draw lines from any down to any down in the trend.

Cut out the whole trend with any top and down in the chart with a scissors and hold this pace of paper horizontal in front of you. It then looks like a sideway market and so it is easier for some trader, to really see and accept, that this is the real range in any trending market. Many trader get confused about this by looking at a chart which is in a trend. We still can make positioning trading in such market, but we have to accept and see this supports and resistances on a permanent moving strike level. Not easy and still makable.

..................Fundamentally this stock is not as strong as Renuka or Balrampur. But, price structure wise it is in much better shape. I could not find any significant overhead supply in this, whereas in Balrampur and Renuka I could clearly see overhead supply. Sometimes my intuition contributes a great deal in my decision making. .ponnie sugar
..............

"The trend is your friend except at the end when it bends" What I'd like to add to this is,

Those who worry about the bend, can never profit till the end.
.........................................
Tata Chem has entered that zone of 430 - 434.

Needs to be monitored very closely...........14.10.10
................
don't know what to tell you. Look at the chart which is posted by Alroyraj. What can you see? Can you see the uptrend? If yes, then why did you short this stock? When a market is down and a stock is up, what does it tell you? Does it tell you to short? Don't trade randomly.

Don't blame it on luck. This stock was never a short candidate in the first place. Take responsibility and remember your mistake. You'll get better.

If you want to improve,

Form rules, Form rules and Form rules.

If you want to succeed,

Don't break the Rules, Don't break the Rules and Don't break the Rules.

.........................
--------------------------------------------------------------------------------

Something Interesting

Look at the chart below of Tata Chem. Notice anything similar?

See the formation where 'A' is mentioned. I have pointed an arrow there where there is a WRB following 'A'.

Now see the formation 'B'. It is almost similar to 'A' and even it gets a WRB (today) similar to what we got when 'A' was formed.

How cool is that ? ...........14.10.10
Nifty has come a long way in its current movement. As of now there seems to be nothing which suggests that this rally is going to end. In fact, the WRB I have highlighted on the chart are testimony to the fact the underlying Bullish pressure is pretty much intact. I have also marked a trend line on the chart to show the pace of movement. Usually when we see such an angle being formed, we must be prepared to witness some volatility. Volatility in this means, for the next few - many sessions markets are going to be extremely good for day trading. The bias will remain positive, but we will also see negative days more often. The main reason why will see this is because this is a market which has split open Bulls and Bears into two equal halves. On one side, trend followers are arguing that the markets will continue to rise and on the other hand, Bears will argue that markets are seasonally due for correction and are very rich on valuation. The end result could be lack of weekly trend in the market but significant amount of intraday trend going forward. Overall though the markets will continue to inch upwards. Momentum traders should be prepared to adjust their stop losses as and when volatility expands.

At the end of the day, use your own analysis and don't buy what is being reported in the media. They never got this upmove right and hence don't expect them to get any down move right either.
Nifty Price Analysis

The word of some serious corrections is again doing the rounds; especially by the coveted guests in some of the prominent channels. Not all are notorious and misleading, some of them are indeed stalwarts of the markets who have seen many cycles in the market and know the structure of the market well enough to draw attention towards what they are saying. Though their views and (our's) cannot be negated, we need to be as objective as the ticker requires us to be. In other words, we need to listen to what the screen is telling us.

There are many arguments about momentum slowing and divergences forming. But, as Haile Gebrselassie will tell you, in order to win a long marathon , one needs to slow down at intervals and needs to breathe slowly before the next acceleration is enforced. This is the essence of winning a Marathon. Similarly, Markets slowing down in momentum and forming divergences is actually a sign of Bullishness (on longer term) and Bearishness (on smaller term). The concerned Bearishness need not have to be larger in magnitude as it is engulfed by the longer term Bullishness.

The question that we need to answer is where do we feel the markets are heading? But even before this fundamental question can be answered, there is another basic question of a more technical character, which must be addressed and—if not answered—at least contemplated. Where is the next underlying base for the market? There really are no generic, ready-made answers to this question, because base for me might be different for you and something completely different for someone else. Whatever your answer is, it is correct for you and not for anyone else to question. Markets tend to reverse at bases and hence we need to keep our 'feeling' out and need to focus on near term bases. An upper base that we have identified is currently at 6250-6300 and the lower base identified (highlighted in chart) is between 5800-6000. As far as we are above this base, things are merrier. This is not something I am telling you. This is something which is very evident on the price structure.

In my last post, I had mentioned that markets are going to be extremely good for intraday trading and I continue to hold that view even now. Last few sessions have been wonderful for day traders and this trend is likely to continue for sometime
Quantitative Easing Part 2 seems more like a movie than a broad based measure taken by Government. I am sure, the Promoters of this move are prepared to give the Wachowski Brothers (Promoters of Matrix Trilogy) a run for their money. Look at how much coverage its getting. Nearly everyone seems to have an opinion on what is going to happen and everyone is literally spelling out next week as doom's day for the markets.

Anyway, the market structure is completely healthy and as of now there are absolutely no signs of any crack down coming in the markets. Look at the chart posted below. I have circled the October Months action. There are just 3 Bullish price days in the entire month and nearly 11 bearish days followed by 3-4 days of indecision. Despite of this negative price bias, we are literally at the same level as we were when October started. To me, this does not look like a market which is about to correct heavily. Balance of power still remains with the Bulls as they have taken just 3 session in the entire month to stamp their authority.

Going forward, we could well have consolidation which could take is around 300 points lower but that for me will be the limit of the down move. I expect November to be similar to October with prices moving below October lows and probably heading 3-5 % lower. In December, I expect the markets to bounce back from November lows and retest highs made in September and finally from December end to January 2011, I expect the markets to take out the September highs and move forward. This is just how I am visualizing the movement of the markets. In the end, my aim is always to move with the markets and I sincerely hope, you'll do the same. As traders we need to honor the market's opinion and should not expect otherwise.

Going forward, my views regarding Intraday trading remains the same as posted above. This market is going to be very good for day traders and it will remains so for at least a month or two.
 
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