I can help you with stock chart reading

Discussion in 'Position Trading' started by vvonteru, Mar 21, 2006.

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  1. Saint

    Saint Banned

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    Great going ,Vvonteru........a warm welcome to this forum.Your experience and your desire to share will be of great benefit to many here.All great posts,very nice!

    Wishing you the very best,and looking forward to many more posts.....:)

    Saint
     
  2. vvonteru

    vvonteru Member

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    JJ Exporters
    There is nothing to say from TA point of you. Stock selection is most important. In the previous email, 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.

    Day Trading

    In end of day trading, you have a chance of looking what is the price at the end of the day and responding. You are oblivious to what happened in the day. In day trading, you don't have that luxury. Beware of crowd pull. So, I warn you that it will be a nightmare (stressful) initially. If you last long enough, you might develop an edge.

    1. 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.

    I will recommend this book which talks a lot about day trading in examples. The author is a day trader.

    High Probability trading - Marcel Link
     
    Last edited: Mar 22, 2006
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  3. cooltetra

    cooltetra Active Member

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    hi vvonteru
    could u please put some light on prajind. i entered it @103 today.
    Regards
    Tetra
     
  4. subratabera

    subratabera Member

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    Thankyou very much for your nice advice "vvonteru". I will keep your advice in my mind while investing my money. By the way I got the news from one of my friend who is an experienced investor and almost never failed to pick the right stock. He told me that MOSERBAER will soon (2-3 months) make a move. That's why I am keeping my eyes on this stock.

    Thankyou once again...

    Subrata Bera.
     
  5. vvonteru

    vvonteru Member

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    prajind
    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.

    MOSERBAER
    There are easy ways to make money and hard ways. Choice is yours.

    Tata motors
    Good chart. But, MACD bullishness has been reducing. Looks like a double top (don't short though). That tells me there are chances for correction. Avoid the stock for right now.

    maruti
    MACD is bearish for the current trend. I would wait to buy at 50 day EMA.
     
  6. manugoyal

    manugoyal Member

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    Thanks for such great posts.
    Would you be kind to explain what essentially MACD is.

    thanks
    m
     
  7. engel

    engel Well-Known Member

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    Hi,:)
    What do you think about sail@67,gujarat ambuja@97,kotak mahindra bank @247.
    Upto when I can hold them?
     
  8. vvonteru

    vvonteru Member

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    MACD

    Before you start putting your money, please read books I mentioned in this thread. Investing/Trading in stocks is like any other job/business. We do bachelors and masters to get the job. We spend all our life for that job. What do we get? Fixed income, which neither lets you live or die. Thats where stock market comes in. There is no end to making money :p . No end to your dreams. So, we need to ask ourselves, 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. Please read the books I mentioned before you put your money. 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.

    Now, look at the Tata Motors example. Compare bullishness between March 6th versus March 20 for the same price of 975 or so. You can clearly see that bulls are losing. This is just an indicator. It may not happen. But, we are looking for probability. Did I say that:rolleyes: . Trading in stock market is all about probability. You need to pick stocks which have high probability of making you money. Any doubt, move on to the next stock (Do not get attached to a particular stock). And we know there are several of them that need your money in BSE/NSE.


    sail@67,
    It already tried 2 times the current level before in March'05 and Oct'05. Bullishness has decreased between March06'06 (70) and March22'06 (70). Put a stop at 63 (2 times tried before). Let the market show it.

    gujarat ambuja@97 - Good chart
    Looking at the pattern of the stock, it touches 50 day EMA and then goes up. It did that at 70, 77 and 85. So, you should have waited for that to happen again before getting in. Now, you have 2 options. Get out for break even (right now it 96) or wait with a stop at 85 below previous base.

    kotak mahindra bank @247
    From Dec'05 till now, stuck in a trading range between 220 and 260. Lucky for you that it is just coming out of that. So, hopefully it doesn't come back to the trading range. Depending on you stop loss, take partial profits and move the stop to break even. Ideally, never enter when the stock is in trading range. They can be for months/years. Let them come out of the trading range. Then they test previous top of range by pull back. Thats when you enter above the pull back.
     
    Last edited: Mar 23, 2006
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  9. rajesh.sadhanala

    rajesh.sadhanala Well-Known Member

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    Hi Vonteru,

    Its nice to see the way this thread is going. Great explanations with lot of hardwork around. Nice going friend. Its nice to see one more guy taking up questions with spirts high.

    Regards
    Raj
     
  10. anandberia

    anandberia New Member

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    Hey vvonteru
    are there any help files to learn how to read and understand tech charts?
     
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