create a strategy that suits u......firm grasp on mm.get organised......visualisation is necessary.
fa is anticipated expectation of supply/demand based on some news flow.if demand increase price shall have tendency to move up.interest rate declaration and employment rate r 2value.......past trend,last data vs market reaction and current expectation........3thing u must study.......with probable case scenario.
note....a nominal rate hike may execute to hold inflation.a rate hike is detrimental to index.
......pl study gap to understand when reports come out
know ur opponent if u want to survive in market.use patience and when to fold.a pro knows throw away loser.......search for winner..again.understand risk reward.study market daily.ta helps for timing.develop a particular timeframe playplan where ur guessing and execution is superior.trade evaluation is must,..its is key.if u play breakout.......chance of failure ...very high.......never forget it.std pattern of reversal............a good tool.........to guess how others r seeing market.
build ur confidence in exit as per signal.........simply execute , dont hold......here novice and pro differs
football analogy and mometum..........bull bear character can change any moment,.......a match is exciting as anybody can win,......but as spectator,a pro/gambler...bet on who can win......not whom u like.its ur experience to watch........over many match.....ur cool judgement ,personal idea as player.......develop a sense to bet rightly after seeing fast few min of match,......understand momentum and reserve strength[spring coil action in price]....be a cool calculative head.
understand realistic profit target.pl see how momentum is fed in a stock......if its fading.........get out.
.............
one of the interesting pt..........after reading lot of ta literature....what they have in common?.......study of close price....its bias.......yesterday high low........can they help to predict tommorow.......NO.......BUT THEY SUGGEST IF PRICE X SMOOTHLY LOW......AND WITH MOMENTUM,......-IVE BIAS IS MORE ACTIVE,......SIMILARLY IF HIGH IS BROKEN ,MOMENTUM BUILT UP CAN BE SEEN.......NEW BUY ORDER IS COMING,........DEFINITELY U SHOULD JOIN AS BULL
...
fibonacci is good tool.........both for retracement and price projection.
basically as watcher of price wave............ur duty is judge how easily it break some resistance,.......or how smoothly price falls before bouncing
when price begins to fall from trending high,.........u must get out.......earliest u sure by confirmation.
similarly be ready to enter when downfall stops.......only after confirmation by price......u must have some systematic approach,pref mechanical to do it.
......its the essence of execution
for break out play use strong momentum candidate...in overbought zone........only break out possible ,.......mind high risk,low probability
recent example...........thomas cook
........always have a check list before trade,.........if u feel uncomfortable just reduce trade size
rsi as an indicator...........
learn when to use as contrarian tool
chart pattern recognisation.........
it helps to pull the trigger easily........however no method is infalliable
.......bullish pattern
bearish pattern......
continuation vs reversal pattern
...use pattern recognisation software.........for throwing away subjectivity....and scanner
weekly support resistance .........another good tool.
...........
a developed sense on turning pt........
i someway follow rel strength comparison........though psychologically find dificulty in entering days high.......due to numerous previous loss.
at swing pt reversal i can enter in known stock.
.......an entry of 5lakh value affect me........upto 3lakh good judgement observe.......
around 1lakh.........its easy to handle multi position
with ur permission i shall write here.
stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect price
or otherway...we must study reflection of news on price......example.ongc result bad..price holding 910..its moving up rs5/- on monday...opens rs 7/- up on tuesday..holding..by 1300hr..it crosses days open...hence promise higher up...soon break imp weekly pivot 923..and hold 928-929...hence a promising up play,...for all good trader.
.........next factor...how u close a trade...and what u learnt from a trade.
its those analysis makes u a mature trader
AUCTION CONCEPT IS VERY IMP FOR TRADING, NEGOTION OF BUYER AND SELLER ..A VALUE ZONE,HIGHER UNJUSTIFIED A SELL PT,....LOWER AGAIN UNJUSTIFIED BUY PT.
...FOR A DAYTRADER LAST 0.5HR..TIME TO CLOSE TRADE[IRRESPECTIVE OF PROFIT/LOSS]
PROFESSIONAL MONEY MANAGER WHO BELIEVES IN TA LOOK FROM LONGER TIME WEEK/MONTH.....START BUY THEN AS THEY HAVE MONEYPOWER.
normally we all lower price ....use for buy oppurtunity and use higher price zone for profit booking oppurtunity.
in normal condition market stay at top or bottom a little .and stabilise at price equilibrium pt
IF WE LOOK FROM LONGER TIMEFRAME WE HAVE BETTER ANALYSIS TO TRADE
IMBALANCE OF PRICE IS OPPURTUNITY
HENCE PRICE TRY TO REACH QUICKLY TO BALANCE.
NOW TIME TO REACH THAT...IS OPPURTUNITY
WE must study behavior of market to understand it.
define ;RANGE DEVELOPMENT
NORMAL DAY
TREND DAY.....UP AND DOWN [nothing told consider up to put sp idea]
VOLATILE DAY
................
RANGE HELPS TO DEFINE DAY IN TIME
...............
CONCEPT OF CONTROL ; BUYER $ SELLER
................
PRICE NORMALLY GREED DRIVEN IS UP
PRICE UNDER CONTROL OF FEAR...DOWN TREND
MARKET MOVES FROM IMBALANCE TO BALANCE
THROUGH PRICE EXTREME/RANGE EXPANSION OR VALUE AREA..SLOW MOVE
..............
LONGTERM TRADER WATCH FOR OPPURTUNITY, SEARCH FOR A PRINT[REPEATATIVE TENDENCY OF EDGE 'GIANT FOOTPRINT'
WHEN LARGE BUYERS COME PRICE MOVE UP AND WHEN BIG SELLORDER COMES PRICE FALL DOWN.
IN UPMOVES LIKE RESPONSES COME FROM GREED DRIVEN OBSERVER
..................
HENCE MARKET BEHAVIOR STUDY FURTHER BREAK UP 2SUBTLE ISSUE
1]IMBALANCED DIRECTIONAL MOVE
2]BALANCED ROTATION OF MONEY IN CYCLE /FOR SECTOR ALSO DUE TO CONSTANT CHANGE OF PARTICIPANTS PSYCHOLOGY[GREED AND FEAR]
OPENION...Longterm openion of price reflects true value of stock
current value=todays value[all known and unknown openion hidden in price]
its imbalance we search for.....in weekly chart we see value shifting higher to see oppurtunity of longterm buy
range extension[predictive] shows biasness of close,normally in a range day DAYTRADER do active participation[whether earn or lose] at day top and at day bottom
now continuity of price at extension towards end of session provide biasness of watcher[better skilled trader] to put money for future oppurtunity to earn with trend[continuation]
AT CLOSE TIME HIGHER PRICE BUYING ACTIVITY SUGGEST LONG TIME STRONG HAND BUYER ACTIVE [OPPURTUNITY EXISTS TO EARN]
HENCE STUDY FOR OPPURTUNITY TO CONTINUATION OF IMBALANCE IS IMP WITH THE HELP OF 3 TOOL......PRICE,VALUE AND MARKET ACTIVITY
...........
Analysis shall continue in further post
................
wide expansion is good for daytrade.....from range to wider range ...to be watched for
now narrow range suggests 'side ways market'.....
INITIATION OF TRADE
.............................
1.WATCH[OBSERVATION]
2.RESPONSE i]extreme......STOP
ii] favourable[ continue to hold or add]
other factor....problem of hope
3.now study specific case[with past data ,if ieod very good
4. failed expansion....too much too soon
5.trend termination...........trend of opposite....if proffesional fading coming with volume
..............
always ask current condition , value with mean [open high low close..mean] vs close price
HOW LONG TERM PLAY TRADER R THINKING ? R THEY UNCERTAIN ??
IF YES , DONT PUT MONEY......OBSERVE, LET OPPURTUNITY SLIP BUT DERISK
.....so now u test idea
check imbalance & direction of price move.......to reach a value in time and rupee from imbalance to balance.
IF FAILED EXPANSION CAN GIVE FADE....OPPOSITE DIRECTION TRADE[VICIOUS MOMENTUM
NEXT COMES STRENGTH OF BUYER AND HOLDING POWER....VS MARKETING STRATEGY ADOPTED BY MEDIA.....TO LURE THE WEAK MIND IN FORMING A CROWD RUN/CHASE
.....same way at bottom imbalance occur .........if new directional trend fail ? study....
oppurtunity or risk!!!
study neutral day and volatile day
...........................day 1,day 2, day 3, day 4, day 5.......@TOP ZONE AND BOTTOM ZONE
...........R U GETTING THE SIMILARITY ......HOPE NOW USE IT STOCK SP. CASE
now we actually watch this constantly unfortunately positional holding [blocked openion of direction] CRIPPLE OUR READING[ANALYSIS CAPACITY]
...............
IMP OF LONGTERM TRADER, ACTIVE PARTICIPATION CREATES BULLISH BIAS . ON THE CONTRARY AGGRESSIVE SELL BY THEM CAUSE DOWNFALL
WHEN THEY R UNDECIDED , WATCHING.....market stays in sideways
another imp observation ,....one first move fail[neutralise by counter selling] THEN AGAIN MOVE ...........THIS NORMALLY HELPFUL, ACTUALLY 3RD MOVE HAS MORE STATISTICAL UPBIAS .
MIND IT ALWAYS.......PERCEPTION OF VALUE ITSELF IS VARIABLE
U MUST STUDY RELATIONSHIP WITH PREVIOUS DAY/WEEK......WHAT IS HAPPENING NOW?IN MARKET ,IN THIS SESSION ..TODAY....THIS HR??
STUDY BALANCED DISTRIBUTION WHICH NORMALLY HAPPENS BUT AWARE OF POTENTIAL LIQUIDATION PT
a bull is ready to liquidate for profit .......but where??
adding of new info [+ive dimention].....no risk....hence hold further for bigger profit.
but opposite direction move starts.....bull must liquidate to book money profit.
hence excess of profit[desire].....act a new dimention to an existing trade
.......VOLUME TO STUDY....BIG MEANS MORE ATTRACTIVE BUYER OR SELLER
HENCE STUDY AFTER OPENING WITH RESPECT TO YESTERDAY CLOSE .......HOW MARKET IS BEHAVING TODAY [1/2 HR]...CRUCIAL .UNDERSTAND WHAT IS A TREND IN CONTINUITY..
WHETHER IT EXISTS AND FURTHER CHANCE OF CONTINUITY , ON THE CONTRARY imbalance and move to extreme or mean reversion balancing move[no trade oppurtunity exist then]
ON THIS CONDITION ON ACTUAL MARKET CORRECT TRADE EXIST.....AND THIS IMBALANCE AND MOVE TO EXTREME FACILITATE A TRADE[ CONTINUATION TYPE BUY SYNDROME TRADE WITH TREND]
HOWEVER ANOTHER DIFFERENT BALL GAME CHOSEN BY A FEW PRO.
LOGIC..change can happen rapidly .observe[perception change of participants]
normally its dificult to understand change of trend due to bias[ so being minority these pro r in right side of trade,unexpected event due taken care of]
study session 1 hr chart bias & gap fill..session 2 ...session 3...session 4 session 5
similarly in day 1 day 2 day 3 day4 ....day5......WHEN OPPSITE FORCE ATTACK ?
HOW IT ATTACK ........INDIVIDUALS PERCEPTION OF VALUE......MOMENTARILY WEEK HAND GO IN UNCERTAINITY MODE AND ACT FOR SELF SABOTAGE.....THROW AWAY IDEA [IF AT ALL] IN PANIC.......AND supply money to this cold blooded pro......as if natural loser[being weak disciplined person]
HOWEVER STRONG HAND ALWAYS PROVEN RIGHT DUE TO CONFIDENCE[JUST LIKE RECENT ENTRY @BSE14200......]STICK TO AND READY TO BUY , ABSORB AT FALLING PRICE CONSIDERING IT AS FURTHER BUYING OPPURTUNITY
hence perception of same event has 2fold outcome/influence.......weak hand seller and strong hand as buyer
.......as a normal person we r fearful of uncertainity , so any event which has financial implication we watch, and try to derive its influence in short term and those who can think for long term,......size and visinity.....a cluster zone can be created considering upper boundary price tag[target]....and lower zone value [entry pt]
all we know condition affects price.......so plan should be ,
1]change of price up...sell oppurtunity
2]low zone...considerably buy idea....provided new percept not so bad
........dynamics of each case stock specific is different
....hence another idea .....surprise event
unlikely event
expected event ......has to be added
.................
in expected event normally mean reversion towards value equilibrium occur
another 2 factor.....fundamental impact of an event and understanding time frame r imp.
normally higher time frame ,say weekly......has more bias...
however in case an unlikely event ,occurs as a shock, price and its value both move together towards a directional bias until stability
hence give priority to surprise event as it act as oppurtunity
on the contrary if u r in wrong side , book loss early if possible reverse position
......remember for expected event after announcement normally price reacts to opposite direction
THIS INSIGHT HELP TO UNDERSTAND RISK BETTER IN TRADING
buyers /sellers confidence and uncertainity r imp factor
actually buyers' dominance /sellers big volume attack....this 2 greatly influence price and so called direction into 'oppurtunity' [threat to a fool]
wild move suggests thrust, when participant transfer from hesitent to aggressive ...wide range occurs.where as openion based participation without rigid parameter and future uncertainiy cause wide fluctuation [volatility]
hence a feel for value is vital
oppurtunity=price away from actual value
normally price fluctuate above and below value
execute=how quick u can act
depends on how much clearly u can visualise with certainity
always study from long term prospective,..what chance is there from present balance to go to quickly imbalance and stabilise higher[new] balance zone
.....now ask ....will sombody buy at higher,if yes....ok..buy now.
for shorting , if u see big seller may come or not.
hence mean reversion is a good theory to apply in market
..........................
hence u check if at present
1] current market is undervalued or not [strategy]
2]study of imbalance in buyer'side
3]continuity factor
..................
hence reaction to news is an imp study to understand internal strength of market
...........................
confident trader[longterm mature buyer] vs. novice day to day [trouble lover]
...........................
remember current perception of value r always reflected in price
............................
be ready for atleast 2 different event 1]unlikely.....2]expected one
play plan for both r entirely different
for unlikely event,if u r in otherside ,damage is very costly,hence prepare for it,..as then price and value both quickly goes against u,shockingly bigger loss
hence be ready in mental level for it[worst case scenario]
experience helps to understand this price/value/event relationship and expectation of people vs. news and its reflection in price
this i call market dynamics of watchers
hence confidence and uncertainity of watchers[potential buyer/seller] gives only directional bias.with uncertainity more rotation occurs ie. distribution phase
.................................
price distribution study
........................... study of ask vs. bid
1]10 -1030..first half hr
2]13-1330 lunch hr
volume or order flow study based on
3]15-1530[presently upto 16oo]close hr tick data[pib]
.................................................. ..............................
this study of tpo...time price oppurtunity concept u have to do for u [own research]
mine shall not validate ur plan....however i suggest to distinguish to understand
up day
down day
volatile day
.................
first half hr ..opening initial balance with yesterday close
lunch hr...observation of biasness development
closing hr...time to take action
................
most imp is long term holder[strong money] r participating or they r sensing danger...hence selling delivery [distributing] to sit on cash andor taking money out
.............
normally all buyers want to buy low and sell at profit[high]
so categorise buyers......short term and long term in trading percept.
long term trader search for unfairlow price with bigger view with higher holding period
shortterm player search and book profit with quick imbalance
hence when break out style is visible ,ranging is moving up with interesting higher pivot break pt, with perception of imbalance to continue.......long term player put big chunk of money near day end with high bias of continuity
so short term day trade type player ,skillful in execution take its advantage ..with their computer generated signal [an edge to take !%profit] continuously take profit with him as per his comfort level ......he is happy , as his scanner suggest oppurtunity every now and then.....based on %up list/volume up signal /a quick pivot break up.
however for long term buyer its not that easy........he has to search continuity of directional bias , ruthlessly buy out volume at top with money power to prove break out.
hence study on eod /weekly chart of impulse[main direction] and distribution [reaction]..
where this phenomena is going to happen now
--------------------------------------------------------------------------------
hence i repeat again ,good 1-2 day mometum players use to play to trade in the side of big money player.
some other skillful player trade ..buy and sell in small targeted zone.
however when other players,new players vs. strong money players maintain equilibrium ....
hence plan of small profit with sector rotation occur as equilibrium tradezone facilitates buy low at support and fade at weekly resistance pt.
so long term fund is out and watching as imbalance creation is aim for strong hand......with watch when they found without news some strong resistance zone is touching again and again ,they test with good money power ..can they break it? ,if yes, put it....and pull price price out of that resistance to new imbalance with a hope of continuity ,luckily greedy buyer or fearful short seller, sometimes media with news help them to fulfil target.
this balance area of around resistance line is test ground .....against new buyer by other pro seller or experiment field for short term players, however ...continuity or holding several days over this new acquired land [from bear]....severity of opponent comes down ...as a true pro they leave to win against bull in other stock where high price on top may attract short seller.
corolliary: market moves directionally unless opposite [reaction against impulse]...strong orderflow comes[attack by big sell].
......................
concept of whole [market] vs. part[individual stock]
..................
nifty component imp one r to be checked .....similarly for summation of total effect ie. play plan of nifty.
similarly for intraday........first playplan
i]range is defined ....high/low in first 10min...[for av trader 1/2 hr]
balancing of flow in it.....when and where it showing range expansion.....show direction defined
ii]so verifying continuity of imbalance in mental level
[i do it,u can use suitable software for it]
enter the trade.....as strong order flow is coming inyour direction ,while breaking predefined pivot ........
yes its the real intraday trade.
[ho.................
top,high
I 1UPPER ZONE
I_
I 2MID ZONE,EQUILIBRIUM VALUE
I_
I
I_3 LOWER ZONE ,BEARISH BIAS
..............LET US STUDY THIS FIGURE, KEEP STRONGLY IN MIND
FOR OUR SIMPLICITY WE SEE AS A DAY BAR, HIGH.MIDDLE,LOW
middle maintain balance,some body called mean value....with a random +/- small value
a zone of equilibrium ,trade will try to facilitate near to it.
now total day bar.....dissect in 3 part, 1part top
2 part middle
3 part bottom
hence a daily range divide in 3 sect.......further study of a day activity.
imp thing is close, by defn end of day close defines....after fight by full day among bull vs. bear....final score.....where they maintain equilibrium
some body use crude 1/3 each, somebody modify total range 0-20 top
20-80 middle
80- 100 low
its in percentage of total day range, for deep study of close
i prefer for indian market , top 15%upbias
15-85%middle equilibrium range where fluctuation normal,mean reversion works
85- 100% bottom value for -bias
somebody prefers to calculate with pivot idea,someone with mean range ...top..bottom,
whatever may be chosen ...structure is same .........a top bias ,an mean equilibrium,a bottom bearish bias
.................we have to think now where is close, that way the biasness.
closing on top........strong upward bias
middle zone....any thing can happen
bottom....suggest bearish bias
now after day close.....all news info,new development...money extra available to put market
reflect quickly with next day opening.
as to facilitate trade day trader search for balance ,longterm player search for imbalance....entry idea and exit plan for both of them r different[in longterm we search for continuity]
now this similar concept can be put in hr bar range and weekly bar
normally higher time frame has more influence
however for simplicity we study hr bar here to understand impact on day trade from microlevel,
now on that particular range closing on top suggest we r interested
next hr bar more wide...moving with higher price zone decides to enter bullside..with big order flow coming in same direction
continuity 5-6bar creates a total day picture......with further strong bias
hints....friday close bar study ,close at bottom .....has given me computer generated short signal in my simple 10hr dema,close cut down]
.............role of observant and vigilant
..................................................
all we know ftse market of opening .....affects around 14hr in trading......and opening bias of nasdaq in tech shares.
now beginning must be observed carefully[in fluctuation as well as orderflow]
price must be treated as supreme ............holding of price over a particular value ...in a particular duration suggest lot of things
yes its the secret of trading
hence study of imbalance and test trade r imp.
...now after new price discovery it has a typical tendency to reach new balance , old resistance bounce .....idea of test validity of new price strength
somebody puts in oldway of impulse......and distribution [reaction]....upto a particular retracement value,
however next flow is all imp .......as it gives all important continuity of imbalance.....as seen in pennant and flag pattern
in other words orderflow or new money is vital.
imp oppurtunity occurs if continuiity can be seen,......VISUALISE for higher time frame .
the delivery trade by close........drying the float uplift price normally further up.
some of us in this field of trade experiment put this mean value +/- 2sigma.....a balanced zone with typical past data calculation for 'sigma' value...in this days of statistics,for them monthly once new value based on 20 trade day better.......however i warn too much math make trading less profit worthy....as its the execution and sense of survival that counts after stoping self sabotage,...holding the profitable trade sufficiently take care of u and ur family.dream big should not be motto,learn big and live in reality
.................
normally high value order occuring in the stable zone slowly seen....as all r ready to watch for volume play.market moves as perception of value[fundamental] changes.as all [different time ,different style players participate in market simultaneously view and analysis is not so easy[in fact very difficult time consuming process for me six year to learn and i am putting this hypothesis].......thats why an organized analytical view help.
key component r 1]interest of shortterm buyer[intraday]
2]interest from weekly chart[view from intermediate term]
3]interest of swing style [eod study followed by av
hence organize trade from this 3 element[put 3 different power spec. to see different view
and now give weightage]..........VISUALISATION IS KEY TRADE TOOL, IT ONLY HELPS TO ACT WHEN OPPURTUNITY/THREAT COMES .........otherwise fear/greed put u wrong trade..
put u in info paralysis,courage not to act.......u can be an analyst but not a trader.
larger time player has thats why better judgement,as considering temp fall they can buy in strong bull run.
report publication and its impact change in near term value.......later when bruice die down they enter slowly if long term view is that really good.in all time frame balancing occur through movement of price from quick imbalance[impulsive] to reach next probable balanced zone. volume suggests aggressiveness of participant
study of std 1-2-3 pattern[a-b-c named by others] is always helpful to understand change in value perception
successive session continue ie. biasness of trend.uncertain buyer/seller can not hold trade
linda has suggested first this simple break up of a range bar in 3sect......higher as 1, middle equilibrium and 3 low as down bias......now close gives more mathematical judgement than foolish openion style trade,.....see at close where more activity is ,in tick chart volume by more activity suggest buy by short term moody buyer or deep pocket longterm player .....
study of time and distance move by price clears it......
time when it breaks and move up very imp.
influence of current pice[close of last] also to be seen.close shows final sentiment of that particular time frame ..balance pt of bull/bear.now come influence ........if influence of price towards back[rationality].....price goes back to mean reversion.
if confirmity of irrational by price........up and up or by gap up ......concept of greed or trend fulfils.now most market participant believe [mean of total ie. market majority] it shallmove up....really it will move up.
this is the forward move of price......confirmity.
........................
normally most of time market maintain balance[equilibrium].
short term break of balance shown in long term chart[weekly]...gives oppurtunity when strong money players[biased] participate in trade with a vbiew to hold.
imbalance strength can be studed by volume , price roc also imp.....also study distribution [price relationship]
--------------------------------------------------------------------------------
majority time after new value discovery price move quickly occurs by impulsive move to reach new stable zone. a forward price driveness occurs in market, based on earlier close and feed by media.among all timeframe player higher time frame has max influence [dominance]
.......................recognisation of trend..............
to define a trend ,a ref pt has to taken..it may be yesterday close ...mean pt. or opening stabilise
another factor,.....market needs time to develop trend [continuation]..ie. market must show some move , then opposite direction force has to be neutralised, then only new direction strong trend move possible .
step 1; study in 'balance area'
so which direction imbalance is building up
step 2; now in relation to bigger picture ...how a trend may form
so fairly low..fairly high] ...which one is breaking with thrust ....govern..move in future
....................
but unless u know control of mind /experience.....hit of moment its not possible
.....Identifying the entry point
--------------------------------------------------------------------------------
.Observe the relative performance of various sectorial indices for couple
of trading sessions
2.Stocks that fall the least during correction tend to bounce back fast,
so keep an eye on those stocks and the sectors to which they belong
3.If you watch cnbc for 1/2-1 hour everyday before market opens, they
generally discuss stocks/sectors gaining momentum
4.keep a watch on list of gainers everyday, that gives you a feel
of the winners
5.i have also subscribed to trend trading newsletter, that tells me the
relative strength after I select few sectors
.................................Trading the markets is an extremely simple job. If you can control the emotional devils of FEAR & GREED which generally clouds your mind and prevents you from thinking straight you can easily be a successful trader.
PLAN
Stocks can be bought by using this plan only at early stages of an intermediate upward trend
When markets crash and then bottom out and then again start an intermediate uptrend
Buy stock futures of stocks that belong to the strongest sectors and have a high Relative strength.
some other factors also count like,
Quality of management is important. example - you can always bet on reliance
Need to understand general economic environment. example - IT companies who were earnings 40+ % margin are bound to be hit hard by rupee appreciation so avoid IT
mass consumption theme is playing the round - get into sector like telecom
big plans of govt for power sector - buy power equipment/utility provider
after filtering the stock through numerous such criteria, BUY the Stock future
keep a SL at the lowest point the stock had hit during the preceding downtrend
trail the position with wider SL to catch the maximum trend
Strictly no MID CAP position in this plan. Only Large Cap.
since you buy stock future, with small margin and capturing large trend
profits are very high
limitation of this plan is that you need to have a deep pocket
.........I would prefer to buy on strength (upmove]
.................................................. ....................Every trader has to make a judgemental decision wheather or not to close a trade if a stoploss is breached.
If you plan to close positions intra-day if a stoploss is triggered you have to stick with this plan for all your trades. Alternatively if you plan to close your position if a stoploss is triggered on a closing basis then you should stick to this for all your trades.
In the long run the rewards of sticking to a FIXED set of rules will far outweigh the risks.
I generally prefer to trade using charts with raw prices (bar charts) rather than use oscillators (which I consider as lagging indicators since they are derived from the bar charts or prices).
I like to trade charts which have made new highs which can be one month (for short term trend) or three months (for interrmediate trends).
Yes, I love to trade breakouts of consolidations as I have found them to be very profitable with a favourable risk:reward ratio.
I use a database of 100 stocks which I filter out based on volume or value. I then filter the databse for stocks making NEW one month
.............one of the prerequisites of a swing trade is that the stock should be in a strong uptrend.
Three main criteria to pinpoint potential Stock Picks
A history of consistently strong sales and earnings growth
A reasonable price
Strong price action relative to the market
...........................stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect price
think one of the best indicator for any trader or investor to help him/her select stocks to go long in the market is the External Relative Strength
This indicator can help any investor/trader pick the best performing stocks (or stocks that have corrected the least compared to the other stocks in the market) in any correction.
So the stocks .......I too prefer to wait for pullbacks in the above high ERS stocks. One can use a simple indicator like Stockastics<30 or RSI(5)<30
............
Since this correction is induced(forced) than natural I think it is best to see how the market behaves for a few days before making a call on the direction of the market.
............
recntly i read a book on professional trader.........pitbull.
some pt i think useful as suggested by him
.................................................. ...................
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
his theory on natural /acquired quality
1.gambling feeling
2. good with number
3.how to think and what to think about
4. how to perform under fire
5.money management
....................
trading methodology to suit personality
ur strength............................
.dedication and hard work
hate to lose attitude
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.................
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler not only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR EDGE AND STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
15.exiting a losing trade cleans head and bring back objectivity
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what condition with alternate scenario,go detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule, be ready for all eventuality
......................
a view of market wizard...champ
dear amolhg , as u have asked......on pitbull , .....i am explaining.
its gist of book........as interpreted for development of new trader.
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
he believes in routine,70 stock....watchlist.inflection pt.......probable swing pt.
.........................
next 5pt......must he believes......to be a trader
1.gambling feeling
2. good with number
3.how to think and what to think about
4. how to perform under fire
5.money management
....................
how he gave up his 9yr+ fundamental background........
and way he transforms
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.........................
next his direct suggestion and between line concept .....expressed as pt........
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler not only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR EDGE AND STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
15.exiting a losing trade cleans head and bring back objectivity
15.exiting a losing trade cleans head and bring back objectivity
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what condition with alternate scenario,go detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule, be ready for all eventuality
......................
note....he is known best scalper.
since people loves easy money.......no hard work....not even ready to read good books,forget to buy and learn.i try to gist.............of that 'pitbull'
personally i believe..............all thing u want to become a successful trader........
r expressed in 5 thread........i have writen.
journey....
quality....
maturity...
method.......
system....
adept and adapt.......
..................................
fitting of jigsaw and u into system ........ur part i left for u [any buddying trader]
however gen caution...........trading is injurious to HEALTH AND MONEY
.importance of rationality
8.visualisation is key
10. see how winners behave
11. elements of trading.........ta fa mm
15. trade element
16. write trade diary
30. news play
32. technical signal
44. day.....swing ......position
45. learn from traderji
49. learn from vvonteru
60. my view on trading
Please use discretion on stops based on confirtability and money management plan.
--------------------------------------------------------------------------------For All:
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.
Here I am writing
.
Trade element.
1] you..swot ..time to learn..your natural patiencetime u have..
BELIVE IN REALITY ,NO WISHFUL THINKING
2] marketyour believe on market
your ta tool mastery
your fa tool mastery
info network
3] fund to learn and experiment..
play less analysis more..use diary..
many help available @traderji.com
4] PSYCHOLOGY
readbook of dr elder..
market wizard series
mark doglous
ari kiev
Livermore
5] personality& trade analysis
dr van tharp
dr bill William
larry William
Linda
Mark boucher
Dave landy
RAKESH JUNJUNWALA
6] trade system design
..
Bernstein
Kaufman
Tusher chande..
Martin pring
Technical trade system
Instant profit
7] individual choice
bird watching in lions country
phantom of pit
personal softwaremetastock & omnitrader
8] trading styleits an individual choice
9] recent experiment.
Dynamic trading..and trend dynamics
10] encyclopedia of chart pattern
candle stick chart study
11] most useful concept
..
money management
risk control
12] yet to learn
volatility
optimum stop.
FUTURE DREAM
..
A PROFESSIONAL TRADER AFTER 3 YR
EXPERIMENTAL TA..
1] TREND AND NON TREND BOTH EXIST IN MARKET
2] RANDOM NESS HAS ITS ROLE
ITS AFTER BREAKING OF RANDOMNESS TREND STARTS
WHEN TREND TERMINATESITS DIFFICULT TO PREDICT
3] PRICE PREDICTION AND STOP GIVES OBJECTIVITY
HOWEVER.. BASED ON WHAT PRICE TELLING U MUST EXECUTE
CONTROL OVER MIND MOST IMP.
4] SCANNING TOOLPORTFOLIO CONCEPT HELPFUL
hope u enjoy this view..
this view r personal and suits me
.............................................
75. a view in depth
80. fa
81. some rule
85. how a trader develop
91. some testing idea
93. copy paste from cv
100. views of oilman
105. views of sh50
110. views of some member
119. my critical view after loss
130. my view on ta
142 my view on investment vs trading
145. a sketch for subjective trading model
147. a trade sheet
157. elements of trading
159. time element
160 163 164..time frame
166. subjective view
177. a conclusive view
a layman term i try to explain...........CYCLE
shm........simple hormonic motion .........repeating cycle.
in human ..........born grow......maturity..........death
in company..........start.........growth .........expotential growth.......other competitor try to expand...........a stable position........decay
in ECONOMY BOOM BUST CYCLE
at low of gnp, recession .........bank interest cut........create idea generator. to do business........easy margin ....confidence..........make business click,now further money creates expansion ........creates boom.........growth rate improve........ultimately expansion r parabollic.........fools try to make without knowing what to make........paper business tiger.......unnecessary expansion,excessive supply of creates demand down....further rate rise by bank.......add the balloon ready to bust......inflation show its ugly head.prudent sells share........take cash.......suddenly based on a rumour , panick reaction .........make bubble busts.........slowly recession moves up,....economic growth rate comes down............this CYCLE occurs again again.in stock market we call it bull-bear cycle,trough -peak analysis.
just see indian market.........guess what state it is now
After identifying the trend, we now come to the interesting part of a trade. Knowing when to enter!
There are certain conditions that need to be fulfilled to identify an entry point for long trades.
The 20 EMA should be above the 50 EMA
The security should be above the 50 EMA
The security should be trading(consolidating) between the 20 EMA and 50 EMA
Once the above conditions have been fulfilled, we need to visually look at the charts to identify the following chart patterns:
Flag, Pennant
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Rectangle
And finally, after identifying any of the chart patterns mentioned above, one needs to look for a bullish (upside) breakout out of these patterns for a BUY(long) trade!
.................................................. ................................
After identifying which stocks to trade in you now should have a basket of50-100 stocks in your watch list.
Your next step as a trader is to now identify the trend of the market and the individual stocks in your wish list. Trend can be different for
different time frames. So as a trader you now have to decide on the time frame you would like to trade in!
After you decide on the time frame you would like to trade in you then work on identifying the trend in that time frame. For example if you would trade short term trends you can watch the hourly intra-day charts and/or daily charts. If you trade medium term trends then you look and daily and/or weekly charts.
Once you decide on the time frame you like to trade, your next step would be to identify the trend.
One quick and easy way to identify trends would be to use moving averages.
Rules for Identifying Trend and Consolidation/Correction
If a security is above both its moving average and the 20EMA is greater than or above its 50EMA then the security is in a strong uptrend.
If the security is between the two moving averages and the 20EMA is above (greater than) the 50 EMA, then the security is in a consolidation/correction in its uptrend.
One of the key concepts in trading is the gap between price and value. I first became aware of this decades ago, during a brief lecture by J. Peter Steidlmayer, a noted Chicago trader. Little did I know how many years I would spend looking for a way to implement it in my trading.
It makes sense to buy below value and sell above value. Everybody knows about price - you read numbers on a price tag or look up a stock quote on the screen. At the same time, very few people know how to define value and track its changes. If you can do that, you no longer need to base your buy or sell decisions on price alone. You can buy when value is rising or sell short when price rises too far above value.
Price can be below value, above it, or equal to it. The distance between price and value may be large or small, increasing or decreasing. Few technical traders ever think about the difference between price and value. Fundamental analysts are much more attuned to the idea, but they do not own it - technicians can use it as well.
A trader needs to answer three questions - how to define value, how to track its changes, and how to measure the distance from price to value.
Fundamental analysts search for value in their spreadsheets and earnings reports. The problem with fundamental analysis is that values change slowly but prices keep fluctuating. As one of my students once said: "Prices are connected to values by a mile-long rubber band."
Technicians can use several simple tools to identify value in any market. My favorite method is to use an -exponential moving average - two moving averages, to be exact.
Moving averages identify those levels at which most market participants agree on value. A rising moving average shows that value is increasing, and a falling moving average tells us that value is decreasing.
A faster moving average represents a short-term consensus (20 EMA in this case). A slower moving average represents a long-term consensus (50 EMA is this case). I call the area between the two lines 'the value zone.'
Traders driven by their emotions tend to buy when prices are high and sell when they are low. Once you learn that the zone between the moving averages identifies value, you can aim to buy at or below value, and sell above value
When securities rise too far away from its moving averages it indicates that the particular sercurity is overvalued and is most likely to pull back to area of value which in this case is the moving average.
.................................................. .. find upside breakouts after a period of consolidation a more relaibe BUY signal as this confirms a continuation of the uptrend.
Buying upside breakouts after a pullback in a strong trend is also fairly reliable. This method of trading is called swing trading.
However in both cases you need a robust and reliable money management strategy to be successful.
One of the first steps a trader has to take is identify which stocks to keep a watch on. This is called his/hers watchlist. This watchlist will be the stocks that a trader will analyze on a daily basis.
So which stocks would you like to keep in your watchlist?
Ideally one should always trade stocks that have a sponsor. A sponsor is actually a large Mutual Fund, FII, etc or in other words Market Movers. No matter how good a stock is fundamentally, the stock will not perform until it does not have a sponsor.
So how do we know which stocks have a sponsor?
One simple way is to keep a watch on the following:
NSE - Equities - Most Active Securities
NSE - Equities - Most Active Securities
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
...............................Go through the links above every single day and add the stocks to your WatchList. Ideally a watchlist should have at least 50-100 stocks for your daily analysis
....................
sector concept is always a great one
........
2week back........it was oil sector........
this week pharma...........
in layman..cycle.......they r in upswing
fa is anticipated expectation of supply/demand based on some news flow.if demand increase price shall have tendency to move up.interest rate declaration and employment rate r 2value.......past trend,last data vs market reaction and current expectation........3thing u must study.......with probable case scenario.
note....a nominal rate hike may execute to hold inflation.a rate hike is detrimental to index.
......pl study gap to understand when reports come out
know ur opponent if u want to survive in market.use patience and when to fold.a pro knows throw away loser.......search for winner..again.understand risk reward.study market daily.ta helps for timing.develop a particular timeframe playplan where ur guessing and execution is superior.trade evaluation is must,..its is key.if u play breakout.......chance of failure ...very high.......never forget it.std pattern of reversal............a good tool.........to guess how others r seeing market.
build ur confidence in exit as per signal.........simply execute , dont hold......here novice and pro differs
football analogy and mometum..........bull bear character can change any moment,.......a match is exciting as anybody can win,......but as spectator,a pro/gambler...bet on who can win......not whom u like.its ur experience to watch........over many match.....ur cool judgement ,personal idea as player.......develop a sense to bet rightly after seeing fast few min of match,......understand momentum and reserve strength[spring coil action in price]....be a cool calculative head.
understand realistic profit target.pl see how momentum is fed in a stock......if its fading.........get out.
.............
one of the interesting pt..........after reading lot of ta literature....what they have in common?.......study of close price....its bias.......yesterday high low........can they help to predict tommorow.......NO.......BUT THEY SUGGEST IF PRICE X SMOOTHLY LOW......AND WITH MOMENTUM,......-IVE BIAS IS MORE ACTIVE,......SIMILARLY IF HIGH IS BROKEN ,MOMENTUM BUILT UP CAN BE SEEN.......NEW BUY ORDER IS COMING,........DEFINITELY U SHOULD JOIN AS BULL
...
fibonacci is good tool.........both for retracement and price projection.
basically as watcher of price wave............ur duty is judge how easily it break some resistance,.......or how smoothly price falls before bouncing
when price begins to fall from trending high,.........u must get out.......earliest u sure by confirmation.
similarly be ready to enter when downfall stops.......only after confirmation by price......u must have some systematic approach,pref mechanical to do it.
......its the essence of execution
for break out play use strong momentum candidate...in overbought zone........only break out possible ,.......mind high risk,low probability
recent example...........thomas cook
........always have a check list before trade,.........if u feel uncomfortable just reduce trade size
rsi as an indicator...........
learn when to use as contrarian tool
chart pattern recognisation.........
it helps to pull the trigger easily........however no method is infalliable
.......bullish pattern
bearish pattern......
continuation vs reversal pattern
...use pattern recognisation software.........for throwing away subjectivity....and scanner
weekly support resistance .........another good tool.
...........
a developed sense on turning pt........
i someway follow rel strength comparison........though psychologically find dificulty in entering days high.......due to numerous previous loss.
at swing pt reversal i can enter in known stock.
.......an entry of 5lakh value affect me........upto 3lakh good judgement observe.......
around 1lakh.........its easy to handle multi position
with ur permission i shall write here.
stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect price
or otherway...we must study reflection of news on price......example.ongc result bad..price holding 910..its moving up rs5/- on monday...opens rs 7/- up on tuesday..holding..by 1300hr..it crosses days open...hence promise higher up...soon break imp weekly pivot 923..and hold 928-929...hence a promising up play,...for all good trader.
.........next factor...how u close a trade...and what u learnt from a trade.
its those analysis makes u a mature trader
AUCTION CONCEPT IS VERY IMP FOR TRADING, NEGOTION OF BUYER AND SELLER ..A VALUE ZONE,HIGHER UNJUSTIFIED A SELL PT,....LOWER AGAIN UNJUSTIFIED BUY PT.
...FOR A DAYTRADER LAST 0.5HR..TIME TO CLOSE TRADE[IRRESPECTIVE OF PROFIT/LOSS]
PROFESSIONAL MONEY MANAGER WHO BELIEVES IN TA LOOK FROM LONGER TIME WEEK/MONTH.....START BUY THEN AS THEY HAVE MONEYPOWER.
normally we all lower price ....use for buy oppurtunity and use higher price zone for profit booking oppurtunity.
in normal condition market stay at top or bottom a little .and stabilise at price equilibrium pt
IF WE LOOK FROM LONGER TIMEFRAME WE HAVE BETTER ANALYSIS TO TRADE
IMBALANCE OF PRICE IS OPPURTUNITY
HENCE PRICE TRY TO REACH QUICKLY TO BALANCE.
NOW TIME TO REACH THAT...IS OPPURTUNITY
WE must study behavior of market to understand it.
define ;RANGE DEVELOPMENT
NORMAL DAY
TREND DAY.....UP AND DOWN [nothing told consider up to put sp idea]
VOLATILE DAY
................
RANGE HELPS TO DEFINE DAY IN TIME
...............
CONCEPT OF CONTROL ; BUYER $ SELLER
................
PRICE NORMALLY GREED DRIVEN IS UP
PRICE UNDER CONTROL OF FEAR...DOWN TREND
MARKET MOVES FROM IMBALANCE TO BALANCE
THROUGH PRICE EXTREME/RANGE EXPANSION OR VALUE AREA..SLOW MOVE
..............
LONGTERM TRADER WATCH FOR OPPURTUNITY, SEARCH FOR A PRINT[REPEATATIVE TENDENCY OF EDGE 'GIANT FOOTPRINT'
WHEN LARGE BUYERS COME PRICE MOVE UP AND WHEN BIG SELLORDER COMES PRICE FALL DOWN.
IN UPMOVES LIKE RESPONSES COME FROM GREED DRIVEN OBSERVER
..................
HENCE MARKET BEHAVIOR STUDY FURTHER BREAK UP 2SUBTLE ISSUE
1]IMBALANCED DIRECTIONAL MOVE
2]BALANCED ROTATION OF MONEY IN CYCLE /FOR SECTOR ALSO DUE TO CONSTANT CHANGE OF PARTICIPANTS PSYCHOLOGY[GREED AND FEAR]
OPENION...Longterm openion of price reflects true value of stock
current value=todays value[all known and unknown openion hidden in price]
its imbalance we search for.....in weekly chart we see value shifting higher to see oppurtunity of longterm buy
range extension[predictive] shows biasness of close,normally in a range day DAYTRADER do active participation[whether earn or lose] at day top and at day bottom
now continuity of price at extension towards end of session provide biasness of watcher[better skilled trader] to put money for future oppurtunity to earn with trend[continuation]
AT CLOSE TIME HIGHER PRICE BUYING ACTIVITY SUGGEST LONG TIME STRONG HAND BUYER ACTIVE [OPPURTUNITY EXISTS TO EARN]
HENCE STUDY FOR OPPURTUNITY TO CONTINUATION OF IMBALANCE IS IMP WITH THE HELP OF 3 TOOL......PRICE,VALUE AND MARKET ACTIVITY
...........
Analysis shall continue in further post
................
wide expansion is good for daytrade.....from range to wider range ...to be watched for
now narrow range suggests 'side ways market'.....
INITIATION OF TRADE
.............................
1.WATCH[OBSERVATION]
2.RESPONSE i]extreme......STOP
ii] favourable[ continue to hold or add]
other factor....problem of hope
3.now study specific case[with past data ,if ieod very good
4. failed expansion....too much too soon
5.trend termination...........trend of opposite....if proffesional fading coming with volume
..............
always ask current condition , value with mean [open high low close..mean] vs close price
HOW LONG TERM PLAY TRADER R THINKING ? R THEY UNCERTAIN ??
IF YES , DONT PUT MONEY......OBSERVE, LET OPPURTUNITY SLIP BUT DERISK
.....so now u test idea
check imbalance & direction of price move.......to reach a value in time and rupee from imbalance to balance.
IF FAILED EXPANSION CAN GIVE FADE....OPPOSITE DIRECTION TRADE[VICIOUS MOMENTUM
NEXT COMES STRENGTH OF BUYER AND HOLDING POWER....VS MARKETING STRATEGY ADOPTED BY MEDIA.....TO LURE THE WEAK MIND IN FORMING A CROWD RUN/CHASE
.....same way at bottom imbalance occur .........if new directional trend fail ? study....
oppurtunity or risk!!!
study neutral day and volatile day
...........................day 1,day 2, day 3, day 4, day 5.......@TOP ZONE AND BOTTOM ZONE
...........R U GETTING THE SIMILARITY ......HOPE NOW USE IT STOCK SP. CASE
now we actually watch this constantly unfortunately positional holding [blocked openion of direction] CRIPPLE OUR READING[ANALYSIS CAPACITY]
...............
IMP OF LONGTERM TRADER, ACTIVE PARTICIPATION CREATES BULLISH BIAS . ON THE CONTRARY AGGRESSIVE SELL BY THEM CAUSE DOWNFALL
WHEN THEY R UNDECIDED , WATCHING.....market stays in sideways
another imp observation ,....one first move fail[neutralise by counter selling] THEN AGAIN MOVE ...........THIS NORMALLY HELPFUL, ACTUALLY 3RD MOVE HAS MORE STATISTICAL UPBIAS .
MIND IT ALWAYS.......PERCEPTION OF VALUE ITSELF IS VARIABLE
U MUST STUDY RELATIONSHIP WITH PREVIOUS DAY/WEEK......WHAT IS HAPPENING NOW?IN MARKET ,IN THIS SESSION ..TODAY....THIS HR??
STUDY BALANCED DISTRIBUTION WHICH NORMALLY HAPPENS BUT AWARE OF POTENTIAL LIQUIDATION PT
a bull is ready to liquidate for profit .......but where??
adding of new info [+ive dimention].....no risk....hence hold further for bigger profit.
but opposite direction move starts.....bull must liquidate to book money profit.
hence excess of profit[desire].....act a new dimention to an existing trade
.......VOLUME TO STUDY....BIG MEANS MORE ATTRACTIVE BUYER OR SELLER
HENCE STUDY AFTER OPENING WITH RESPECT TO YESTERDAY CLOSE .......HOW MARKET IS BEHAVING TODAY [1/2 HR]...CRUCIAL .UNDERSTAND WHAT IS A TREND IN CONTINUITY..
WHETHER IT EXISTS AND FURTHER CHANCE OF CONTINUITY , ON THE CONTRARY imbalance and move to extreme or mean reversion balancing move[no trade oppurtunity exist then]
ON THIS CONDITION ON ACTUAL MARKET CORRECT TRADE EXIST.....AND THIS IMBALANCE AND MOVE TO EXTREME FACILITATE A TRADE[ CONTINUATION TYPE BUY SYNDROME TRADE WITH TREND]
HOWEVER ANOTHER DIFFERENT BALL GAME CHOSEN BY A FEW PRO.
LOGIC..change can happen rapidly .observe[perception change of participants]
normally its dificult to understand change of trend due to bias[ so being minority these pro r in right side of trade,unexpected event due taken care of]
study session 1 hr chart bias & gap fill..session 2 ...session 3...session 4 session 5
similarly in day 1 day 2 day 3 day4 ....day5......WHEN OPPSITE FORCE ATTACK ?
HOW IT ATTACK ........INDIVIDUALS PERCEPTION OF VALUE......MOMENTARILY WEEK HAND GO IN UNCERTAINITY MODE AND ACT FOR SELF SABOTAGE.....THROW AWAY IDEA [IF AT ALL] IN PANIC.......AND supply money to this cold blooded pro......as if natural loser[being weak disciplined person]
HOWEVER STRONG HAND ALWAYS PROVEN RIGHT DUE TO CONFIDENCE[JUST LIKE RECENT ENTRY @BSE14200......]STICK TO AND READY TO BUY , ABSORB AT FALLING PRICE CONSIDERING IT AS FURTHER BUYING OPPURTUNITY
hence perception of same event has 2fold outcome/influence.......weak hand seller and strong hand as buyer
.......as a normal person we r fearful of uncertainity , so any event which has financial implication we watch, and try to derive its influence in short term and those who can think for long term,......size and visinity.....a cluster zone can be created considering upper boundary price tag[target]....and lower zone value [entry pt]
all we know condition affects price.......so plan should be ,
1]change of price up...sell oppurtunity
2]low zone...considerably buy idea....provided new percept not so bad
........dynamics of each case stock specific is different
....hence another idea .....surprise event
unlikely event
expected event ......has to be added
.................
in expected event normally mean reversion towards value equilibrium occur
another 2 factor.....fundamental impact of an event and understanding time frame r imp.
normally higher time frame ,say weekly......has more bias...
however in case an unlikely event ,occurs as a shock, price and its value both move together towards a directional bias until stability
hence give priority to surprise event as it act as oppurtunity
on the contrary if u r in wrong side , book loss early if possible reverse position
......remember for expected event after announcement normally price reacts to opposite direction
THIS INSIGHT HELP TO UNDERSTAND RISK BETTER IN TRADING
buyers /sellers confidence and uncertainity r imp factor
actually buyers' dominance /sellers big volume attack....this 2 greatly influence price and so called direction into 'oppurtunity' [threat to a fool]
wild move suggests thrust, when participant transfer from hesitent to aggressive ...wide range occurs.where as openion based participation without rigid parameter and future uncertainiy cause wide fluctuation [volatility]
hence a feel for value is vital
oppurtunity=price away from actual value
normally price fluctuate above and below value
execute=how quick u can act
depends on how much clearly u can visualise with certainity
always study from long term prospective,..what chance is there from present balance to go to quickly imbalance and stabilise higher[new] balance zone
.....now ask ....will sombody buy at higher,if yes....ok..buy now.
for shorting , if u see big seller may come or not.
hence mean reversion is a good theory to apply in market
..........................
hence u check if at present
1] current market is undervalued or not [strategy]
2]study of imbalance in buyer'side
3]continuity factor
..................
hence reaction to news is an imp study to understand internal strength of market
...........................
confident trader[longterm mature buyer] vs. novice day to day [trouble lover]
...........................
remember current perception of value r always reflected in price
............................
be ready for atleast 2 different event 1]unlikely.....2]expected one
play plan for both r entirely different
for unlikely event,if u r in otherside ,damage is very costly,hence prepare for it,..as then price and value both quickly goes against u,shockingly bigger loss
hence be ready in mental level for it[worst case scenario]
experience helps to understand this price/value/event relationship and expectation of people vs. news and its reflection in price
this i call market dynamics of watchers
hence confidence and uncertainity of watchers[potential buyer/seller] gives only directional bias.with uncertainity more rotation occurs ie. distribution phase
.................................
price distribution study
........................... study of ask vs. bid
1]10 -1030..first half hr
2]13-1330 lunch hr
volume or order flow study based on
3]15-1530[presently upto 16oo]close hr tick data[pib]
.................................................. ..............................
this study of tpo...time price oppurtunity concept u have to do for u [own research]
mine shall not validate ur plan....however i suggest to distinguish to understand
up day
down day
volatile day
.................
first half hr ..opening initial balance with yesterday close
lunch hr...observation of biasness development
closing hr...time to take action
................
most imp is long term holder[strong money] r participating or they r sensing danger...hence selling delivery [distributing] to sit on cash andor taking money out
.............
normally all buyers want to buy low and sell at profit[high]
so categorise buyers......short term and long term in trading percept.
long term trader search for unfairlow price with bigger view with higher holding period
shortterm player search and book profit with quick imbalance
hence when break out style is visible ,ranging is moving up with interesting higher pivot break pt, with perception of imbalance to continue.......long term player put big chunk of money near day end with high bias of continuity
so short term day trade type player ,skillful in execution take its advantage ..with their computer generated signal [an edge to take !%profit] continuously take profit with him as per his comfort level ......he is happy , as his scanner suggest oppurtunity every now and then.....based on %up list/volume up signal /a quick pivot break up.
however for long term buyer its not that easy........he has to search continuity of directional bias , ruthlessly buy out volume at top with money power to prove break out.
hence study on eod /weekly chart of impulse[main direction] and distribution [reaction]..
where this phenomena is going to happen now
--------------------------------------------------------------------------------
hence i repeat again ,good 1-2 day mometum players use to play to trade in the side of big money player.
some other skillful player trade ..buy and sell in small targeted zone.
however when other players,new players vs. strong money players maintain equilibrium ....
hence plan of small profit with sector rotation occur as equilibrium tradezone facilitates buy low at support and fade at weekly resistance pt.
so long term fund is out and watching as imbalance creation is aim for strong hand......with watch when they found without news some strong resistance zone is touching again and again ,they test with good money power ..can they break it? ,if yes, put it....and pull price price out of that resistance to new imbalance with a hope of continuity ,luckily greedy buyer or fearful short seller, sometimes media with news help them to fulfil target.
this balance area of around resistance line is test ground .....against new buyer by other pro seller or experiment field for short term players, however ...continuity or holding several days over this new acquired land [from bear]....severity of opponent comes down ...as a true pro they leave to win against bull in other stock where high price on top may attract short seller.
corolliary: market moves directionally unless opposite [reaction against impulse]...strong orderflow comes[attack by big sell].
......................
concept of whole [market] vs. part[individual stock]
..................
nifty component imp one r to be checked .....similarly for summation of total effect ie. play plan of nifty.
similarly for intraday........first playplan
i]range is defined ....high/low in first 10min...[for av trader 1/2 hr]
balancing of flow in it.....when and where it showing range expansion.....show direction defined
ii]so verifying continuity of imbalance in mental level
[i do it,u can use suitable software for it]
enter the trade.....as strong order flow is coming inyour direction ,while breaking predefined pivot ........
yes its the real intraday trade.
[ho.................
top,high
I 1UPPER ZONE
I_
I 2MID ZONE,EQUILIBRIUM VALUE
I_
I
I_3 LOWER ZONE ,BEARISH BIAS
..............LET US STUDY THIS FIGURE, KEEP STRONGLY IN MIND
FOR OUR SIMPLICITY WE SEE AS A DAY BAR, HIGH.MIDDLE,LOW
middle maintain balance,some body called mean value....with a random +/- small value
a zone of equilibrium ,trade will try to facilitate near to it.
now total day bar.....dissect in 3 part, 1part top
2 part middle
3 part bottom
hence a daily range divide in 3 sect.......further study of a day activity.
imp thing is close, by defn end of day close defines....after fight by full day among bull vs. bear....final score.....where they maintain equilibrium
some body use crude 1/3 each, somebody modify total range 0-20 top
20-80 middle
80- 100 low
its in percentage of total day range, for deep study of close
i prefer for indian market , top 15%upbias
15-85%middle equilibrium range where fluctuation normal,mean reversion works
85- 100% bottom value for -bias
somebody prefers to calculate with pivot idea,someone with mean range ...top..bottom,
whatever may be chosen ...structure is same .........a top bias ,an mean equilibrium,a bottom bearish bias
.................we have to think now where is close, that way the biasness.
closing on top........strong upward bias
middle zone....any thing can happen
bottom....suggest bearish bias
now after day close.....all news info,new development...money extra available to put market
reflect quickly with next day opening.
as to facilitate trade day trader search for balance ,longterm player search for imbalance....entry idea and exit plan for both of them r different[in longterm we search for continuity]
now this similar concept can be put in hr bar range and weekly bar
normally higher time frame has more influence
however for simplicity we study hr bar here to understand impact on day trade from microlevel,
now on that particular range closing on top suggest we r interested
next hr bar more wide...moving with higher price zone decides to enter bullside..with big order flow coming in same direction
continuity 5-6bar creates a total day picture......with further strong bias
hints....friday close bar study ,close at bottom .....has given me computer generated short signal in my simple 10hr dema,close cut down]
.............role of observant and vigilant
..................................................
all we know ftse market of opening .....affects around 14hr in trading......and opening bias of nasdaq in tech shares.
now beginning must be observed carefully[in fluctuation as well as orderflow]
price must be treated as supreme ............holding of price over a particular value ...in a particular duration suggest lot of things
yes its the secret of trading
hence study of imbalance and test trade r imp.
...now after new price discovery it has a typical tendency to reach new balance , old resistance bounce .....idea of test validity of new price strength
somebody puts in oldway of impulse......and distribution [reaction]....upto a particular retracement value,
however next flow is all imp .......as it gives all important continuity of imbalance.....as seen in pennant and flag pattern
in other words orderflow or new money is vital.
imp oppurtunity occurs if continuiity can be seen,......VISUALISE for higher time frame .
the delivery trade by close........drying the float uplift price normally further up.
some of us in this field of trade experiment put this mean value +/- 2sigma.....a balanced zone with typical past data calculation for 'sigma' value...in this days of statistics,for them monthly once new value based on 20 trade day better.......however i warn too much math make trading less profit worthy....as its the execution and sense of survival that counts after stoping self sabotage,...holding the profitable trade sufficiently take care of u and ur family.dream big should not be motto,learn big and live in reality
.................
normally high value order occuring in the stable zone slowly seen....as all r ready to watch for volume play.market moves as perception of value[fundamental] changes.as all [different time ,different style players participate in market simultaneously view and analysis is not so easy[in fact very difficult time consuming process for me six year to learn and i am putting this hypothesis].......thats why an organized analytical view help.
key component r 1]interest of shortterm buyer[intraday]
2]interest from weekly chart[view from intermediate term]
3]interest of swing style [eod study followed by av
hence organize trade from this 3 element[put 3 different power spec. to see different view
and now give weightage]..........VISUALISATION IS KEY TRADE TOOL, IT ONLY HELPS TO ACT WHEN OPPURTUNITY/THREAT COMES .........otherwise fear/greed put u wrong trade..
put u in info paralysis,courage not to act.......u can be an analyst but not a trader.
larger time player has thats why better judgement,as considering temp fall they can buy in strong bull run.
report publication and its impact change in near term value.......later when bruice die down they enter slowly if long term view is that really good.in all time frame balancing occur through movement of price from quick imbalance[impulsive] to reach next probable balanced zone. volume suggests aggressiveness of participant
study of std 1-2-3 pattern[a-b-c named by others] is always helpful to understand change in value perception
successive session continue ie. biasness of trend.uncertain buyer/seller can not hold trade
linda has suggested first this simple break up of a range bar in 3sect......higher as 1, middle equilibrium and 3 low as down bias......now close gives more mathematical judgement than foolish openion style trade,.....see at close where more activity is ,in tick chart volume by more activity suggest buy by short term moody buyer or deep pocket longterm player .....
study of time and distance move by price clears it......
time when it breaks and move up very imp.
influence of current pice[close of last] also to be seen.close shows final sentiment of that particular time frame ..balance pt of bull/bear.now come influence ........if influence of price towards back[rationality].....price goes back to mean reversion.
if confirmity of irrational by price........up and up or by gap up ......concept of greed or trend fulfils.now most market participant believe [mean of total ie. market majority] it shallmove up....really it will move up.
this is the forward move of price......confirmity.
........................
normally most of time market maintain balance[equilibrium].
short term break of balance shown in long term chart[weekly]...gives oppurtunity when strong money players[biased] participate in trade with a vbiew to hold.
imbalance strength can be studed by volume , price roc also imp.....also study distribution [price relationship]
--------------------------------------------------------------------------------
majority time after new value discovery price move quickly occurs by impulsive move to reach new stable zone. a forward price driveness occurs in market, based on earlier close and feed by media.among all timeframe player higher time frame has max influence [dominance]
.......................recognisation of trend..............
to define a trend ,a ref pt has to taken..it may be yesterday close ...mean pt. or opening stabilise
another factor,.....market needs time to develop trend [continuation]..ie. market must show some move , then opposite direction force has to be neutralised, then only new direction strong trend move possible .
step 1; study in 'balance area'
so which direction imbalance is building up
step 2; now in relation to bigger picture ...how a trend may form
so fairly low..fairly high] ...which one is breaking with thrust ....govern..move in future
....................
but unless u know control of mind /experience.....hit of moment its not possible
.....Identifying the entry point
--------------------------------------------------------------------------------
.Observe the relative performance of various sectorial indices for couple
of trading sessions
2.Stocks that fall the least during correction tend to bounce back fast,
so keep an eye on those stocks and the sectors to which they belong
3.If you watch cnbc for 1/2-1 hour everyday before market opens, they
generally discuss stocks/sectors gaining momentum
4.keep a watch on list of gainers everyday, that gives you a feel
of the winners
5.i have also subscribed to trend trading newsletter, that tells me the
relative strength after I select few sectors
.................................Trading the markets is an extremely simple job. If you can control the emotional devils of FEAR & GREED which generally clouds your mind and prevents you from thinking straight you can easily be a successful trader.
PLAN
Stocks can be bought by using this plan only at early stages of an intermediate upward trend
When markets crash and then bottom out and then again start an intermediate uptrend
Buy stock futures of stocks that belong to the strongest sectors and have a high Relative strength.
some other factors also count like,
Quality of management is important. example - you can always bet on reliance
Need to understand general economic environment. example - IT companies who were earnings 40+ % margin are bound to be hit hard by rupee appreciation so avoid IT
mass consumption theme is playing the round - get into sector like telecom
big plans of govt for power sector - buy power equipment/utility provider
after filtering the stock through numerous such criteria, BUY the Stock future
keep a SL at the lowest point the stock had hit during the preceding downtrend
trail the position with wider SL to catch the maximum trend
Strictly no MID CAP position in this plan. Only Large Cap.
since you buy stock future, with small margin and capturing large trend
profits are very high
limitation of this plan is that you need to have a deep pocket
.........I would prefer to buy on strength (upmove]
.................................................. ....................Every trader has to make a judgemental decision wheather or not to close a trade if a stoploss is breached.
If you plan to close positions intra-day if a stoploss is triggered you have to stick with this plan for all your trades. Alternatively if you plan to close your position if a stoploss is triggered on a closing basis then you should stick to this for all your trades.
In the long run the rewards of sticking to a FIXED set of rules will far outweigh the risks.
I generally prefer to trade using charts with raw prices (bar charts) rather than use oscillators (which I consider as lagging indicators since they are derived from the bar charts or prices).
I like to trade charts which have made new highs which can be one month (for short term trend) or three months (for interrmediate trends).
Yes, I love to trade breakouts of consolidations as I have found them to be very profitable with a favourable risk:reward ratio.
I use a database of 100 stocks which I filter out based on volume or value. I then filter the databse for stocks making NEW one month
.............one of the prerequisites of a swing trade is that the stock should be in a strong uptrend.
Three main criteria to pinpoint potential Stock Picks
A history of consistently strong sales and earnings growth
A reasonable price
Strong price action relative to the market
...........................stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect price
think one of the best indicator for any trader or investor to help him/her select stocks to go long in the market is the External Relative Strength
This indicator can help any investor/trader pick the best performing stocks (or stocks that have corrected the least compared to the other stocks in the market) in any correction.
So the stocks .......I too prefer to wait for pullbacks in the above high ERS stocks. One can use a simple indicator like Stockastics<30 or RSI(5)<30
............
Since this correction is induced(forced) than natural I think it is best to see how the market behaves for a few days before making a call on the direction of the market.
............
recntly i read a book on professional trader.........pitbull.
some pt i think useful as suggested by him
.................................................. ...................
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
his theory on natural /acquired quality
1.gambling feeling
2. good with number
3.how to think and what to think about
4. how to perform under fire
5.money management
....................
trading methodology to suit personality
ur strength............................
.dedication and hard work
hate to lose attitude
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.................
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler not only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR EDGE AND STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
15.exiting a losing trade cleans head and bring back objectivity
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what condition with alternate scenario,go detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule, be ready for all eventuality
......................
a view of market wizard...champ
dear amolhg , as u have asked......on pitbull , .....i am explaining.
its gist of book........as interpreted for development of new trader.
1.routine
2.checklist........70stock
3.prepare for tomorrow.........big picture,inflection pt.channel zone and spotting trend
............
he believes in routine,70 stock....watchlist.inflection pt.......probable swing pt.
.........................
next 5pt......must he believes......to be a trader
1.gambling feeling
2. good with number
3.how to think and what to think about
4. how to perform under fire
5.money management
....................
how he gave up his 9yr+ fundamental background........
and way he transforms
.........................ur weak pt
fear of loss
constant praise is reqd
mentally someone must give comfort
..................................................
accuracy factor in guessing
understand to make money learn to cut loss quickly
exactly know u shall fight in own terms
market analysis........how price try to move
10ema as a trend
feel on support /resistance and oscillator base signal
gap play
imp of cash in hand
money flow of fii,mf
3day rule........1..2..3 day up then reverse play
how market react to news.............-news,shrugged off by market..........bullish ...............take position
new high
probability calculation ........trading signal on half hr basis
nontrade day..............watch top for reverse
..................................
ego is worst enemy,divorce from trade decision..........trade only to make money
CONCEPT
.........................
next his direct suggestion and between line concept .....expressed as pt........
1.TRADE OR FADE
2. PLAN IN DETAIL
3. HONOUR STOP
4. WHEN TO PLAY BIG
5.HAVE A MENTOR........HAVE SOMEONE..TO SOOTHE NERVE
6.DEVELOP A METHODOLOGY THAT FIT U.......TRADE FIRST TO PROVE UR ABILITY.
TO BE WINNER............FIRST BE IN LINE OF FIRE AND PULL THE TRIGGER RIGHT
PREPARATION PAYS......ITS ESSENTIAL TO KNOW MORE THAN OTHERS
7.WHERE U R GOING THAT COUNTS..........ie. what u shall be
8.never gamble for large amount........never gamble if u have other priority.....never lack selfdiscipline.......stick to ur money earning plan,good gambler not only keep bet low,but led a rational life also[stressfree within limit]
9.ASSUMPTION OF PRICE RISE IMP.NOTHING CAN BEAT KNOWING WHAT MAY HAPPEN,BEFORE IT HAPPEN .........EXCEPT WHEN IT IS WRONG.
10.KEEP UR PRIORITY STRAIGHT,MANAGE UR MONEY........CHANGE U.
11. TRADER MUST UNDERSTAND GAMEPLAN VS. GAMBLING........WITHOUT IT NOTHING POSSIBLE,DIVORCE EGO FROM TRADING.......FIND UR EDGE AND STICK TO IT
12. value of info..............[inside one]
13.u must change direction of bad trading by first.....neutral.......must stop.......then reevaluate.....where and why wrong
14.dont go for killing trade,........u shall be killed first then,instead learn to take small profit
15.exiting a losing trade cleans head and bring back objectivity
15.exiting a losing trade cleans head and bring back objectivity
16.trading is a full time commitment,personality fitment........plan first with worst case scenario...then improve at what condition with alternate scenario,go detail....in problem get out.........fight another day attitude.auction game .....helps
17. fibonacci,wave theory helpful. read uncertainity well.......it may be oppurtunity
18.never let.......friendship,family relationship get into way of sound decision making about money.......follow written rule, be ready for all eventuality
......................
note....he is known best scalper.
since people loves easy money.......no hard work....not even ready to read good books,forget to buy and learn.i try to gist.............of that 'pitbull'
personally i believe..............all thing u want to become a successful trader........
r expressed in 5 thread........i have writen.
journey....
quality....
maturity...
method.......
system....
adept and adapt.......
..................................
fitting of jigsaw and u into system ........ur part i left for u [any buddying trader]
however gen caution...........trading is injurious to HEALTH AND MONEY
.importance of rationality
8.visualisation is key
10. see how winners behave
11. elements of trading.........ta fa mm
15. trade element
16. write trade diary
30. news play
32. technical signal
44. day.....swing ......position
45. learn from traderji
49. learn from vvonteru
60. my view on trading
Please use discretion on stops based on confirtability and money management plan.
--------------------------------------------------------------------------------For All:
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.
Here I am writing
.
Trade element.
1] you..swot ..time to learn..your natural patiencetime u have..
BELIVE IN REALITY ,NO WISHFUL THINKING
2] marketyour believe on market
your ta tool mastery
your fa tool mastery
info network
3] fund to learn and experiment..
play less analysis more..use diary..
many help available @traderji.com
4] PSYCHOLOGY
readbook of dr elder..
market wizard series
mark doglous
ari kiev
Livermore
5] personality& trade analysis
dr van tharp
dr bill William
larry William
Linda
Mark boucher
Dave landy
RAKESH JUNJUNWALA
6] trade system design
..
Bernstein
Kaufman
Tusher chande..
Martin pring
Technical trade system
Instant profit
7] individual choice
bird watching in lions country
phantom of pit
personal softwaremetastock & omnitrader
8] trading styleits an individual choice
9] recent experiment.
Dynamic trading..and trend dynamics
10] encyclopedia of chart pattern
candle stick chart study
11] most useful concept
..
money management
risk control
12] yet to learn
volatility
optimum stop.
FUTURE DREAM
..
A PROFESSIONAL TRADER AFTER 3 YR
EXPERIMENTAL TA..
1] TREND AND NON TREND BOTH EXIST IN MARKET
2] RANDOM NESS HAS ITS ROLE
ITS AFTER BREAKING OF RANDOMNESS TREND STARTS
WHEN TREND TERMINATESITS DIFFICULT TO PREDICT
3] PRICE PREDICTION AND STOP GIVES OBJECTIVITY
HOWEVER.. BASED ON WHAT PRICE TELLING U MUST EXECUTE
CONTROL OVER MIND MOST IMP.
4] SCANNING TOOLPORTFOLIO CONCEPT HELPFUL
hope u enjoy this view..
this view r personal and suits me
.............................................
75. a view in depth
80. fa
81. some rule
85. how a trader develop
91. some testing idea
93. copy paste from cv
100. views of oilman
105. views of sh50
110. views of some member
119. my critical view after loss
130. my view on ta
142 my view on investment vs trading
145. a sketch for subjective trading model
147. a trade sheet
157. elements of trading
159. time element
160 163 164..time frame
166. subjective view
177. a conclusive view
a layman term i try to explain...........CYCLE
shm........simple hormonic motion .........repeating cycle.
in human ..........born grow......maturity..........death
in company..........start.........growth .........expotential growth.......other competitor try to expand...........a stable position........decay
in ECONOMY BOOM BUST CYCLE
at low of gnp, recession .........bank interest cut........create idea generator. to do business........easy margin ....confidence..........make business click,now further money creates expansion ........creates boom.........growth rate improve........ultimately expansion r parabollic.........fools try to make without knowing what to make........paper business tiger.......unnecessary expansion,excessive supply of creates demand down....further rate rise by bank.......add the balloon ready to bust......inflation show its ugly head.prudent sells share........take cash.......suddenly based on a rumour , panick reaction .........make bubble busts.........slowly recession moves up,....economic growth rate comes down............this CYCLE occurs again again.in stock market we call it bull-bear cycle,trough -peak analysis.
just see indian market.........guess what state it is now
After identifying the trend, we now come to the interesting part of a trade. Knowing when to enter!
There are certain conditions that need to be fulfilled to identify an entry point for long trades.
The 20 EMA should be above the 50 EMA
The security should be above the 50 EMA
The security should be trading(consolidating) between the 20 EMA and 50 EMA
Once the above conditions have been fulfilled, we need to visually look at the charts to identify the following chart patterns:
Flag, Pennant
Symmetrical Triangle
Ascending Triangle
Descending Triangle
Rectangle
And finally, after identifying any of the chart patterns mentioned above, one needs to look for a bullish (upside) breakout out of these patterns for a BUY(long) trade!
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After identifying which stocks to trade in you now should have a basket of50-100 stocks in your watch list.
Your next step as a trader is to now identify the trend of the market and the individual stocks in your wish list. Trend can be different for
different time frames. So as a trader you now have to decide on the time frame you would like to trade in!
After you decide on the time frame you would like to trade in you then work on identifying the trend in that time frame. For example if you would trade short term trends you can watch the hourly intra-day charts and/or daily charts. If you trade medium term trends then you look and daily and/or weekly charts.
Once you decide on the time frame you like to trade, your next step would be to identify the trend.
One quick and easy way to identify trends would be to use moving averages.
Rules for Identifying Trend and Consolidation/Correction
If a security is above both its moving average and the 20EMA is greater than or above its 50EMA then the security is in a strong uptrend.
If the security is between the two moving averages and the 20EMA is above (greater than) the 50 EMA, then the security is in a consolidation/correction in its uptrend.
One of the key concepts in trading is the gap between price and value. I first became aware of this decades ago, during a brief lecture by J. Peter Steidlmayer, a noted Chicago trader. Little did I know how many years I would spend looking for a way to implement it in my trading.
It makes sense to buy below value and sell above value. Everybody knows about price - you read numbers on a price tag or look up a stock quote on the screen. At the same time, very few people know how to define value and track its changes. If you can do that, you no longer need to base your buy or sell decisions on price alone. You can buy when value is rising or sell short when price rises too far above value.
Price can be below value, above it, or equal to it. The distance between price and value may be large or small, increasing or decreasing. Few technical traders ever think about the difference between price and value. Fundamental analysts are much more attuned to the idea, but they do not own it - technicians can use it as well.
A trader needs to answer three questions - how to define value, how to track its changes, and how to measure the distance from price to value.
Fundamental analysts search for value in their spreadsheets and earnings reports. The problem with fundamental analysis is that values change slowly but prices keep fluctuating. As one of my students once said: "Prices are connected to values by a mile-long rubber band."
Technicians can use several simple tools to identify value in any market. My favorite method is to use an -exponential moving average - two moving averages, to be exact.
Moving averages identify those levels at which most market participants agree on value. A rising moving average shows that value is increasing, and a falling moving average tells us that value is decreasing.
A faster moving average represents a short-term consensus (20 EMA in this case). A slower moving average represents a long-term consensus (50 EMA is this case). I call the area between the two lines 'the value zone.'
Traders driven by their emotions tend to buy when prices are high and sell when they are low. Once you learn that the zone between the moving averages identifies value, you can aim to buy at or below value, and sell above value
When securities rise too far away from its moving averages it indicates that the particular sercurity is overvalued and is most likely to pull back to area of value which in this case is the moving average.
.................................................. .. find upside breakouts after a period of consolidation a more relaibe BUY signal as this confirms a continuation of the uptrend.
Buying upside breakouts after a pullback in a strong trend is also fairly reliable. This method of trading is called swing trading.
However in both cases you need a robust and reliable money management strategy to be successful.
One of the first steps a trader has to take is identify which stocks to keep a watch on. This is called his/hers watchlist. This watchlist will be the stocks that a trader will analyze on a daily basis.
So which stocks would you like to keep in your watchlist?
Ideally one should always trade stocks that have a sponsor. A sponsor is actually a large Mutual Fund, FII, etc or in other words Market Movers. No matter how good a stock is fundamentally, the stock will not perform until it does not have a sponsor.
So how do we know which stocks have a sponsor?
One simple way is to keep a watch on the following:
NSE - Equities - Most Active Securities
NSE - Equities - Most Active Securities
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
NSE - Equities - Top Gainers & Losers
...............................Go through the links above every single day and add the stocks to your WatchList. Ideally a watchlist should have at least 50-100 stocks for your daily analysis
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sector concept is always a great one
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2week back........it was oil sector........
this week pharma...........
in layman..cycle.......they r in upswing
