Q & A with Traderji

[Traderji]

Thank you Traderji.

You said, you do not use any technical indicator, oscillators. Chart says it all.

But still I would like to know:

1. Do you use MACD, MACD histogram? If yes how do you apply for your anatomy?
2. Do you use ADX?
3. Do you look for divergence?
4. Do you look for any warning signals on charts once you are in the trade? If yes, how?
5. Do you look for overbought/oversold signals in your plan?


6. Also as per your anatomy, you plan the trade and trade the plan. Do you trade in any other ways?

With Regards,

Shantanu.

Here are my answers:

1) No

2) No

3) No

4) No warning signal just use a trailing stoploss which is the previous 3 day low.

5) No

No I do not trade in any other way. My current short trade on the NIFTY is still on with a trailing stoploss at the 3 day high (3045.35).

Since my trailing stoploss is at breakeven I will now initiate another short position on Monday. What this means that the risk on my previous short trade is nil and I will be adding another position in the direction of the profitable trend.

 

[rahulg77]

I swing trade breakouts of chart patterns like pennants and flags.

For exampe after a stock has made a new three month high on the daily chart (this confirms an uptrend) I wait for a consolidation of at least a week (during which time that chart could form a pennant or flag)

I then go long only on a close above the previous 5 day high and ride the trend with a trailing stop below the previous days low.

respected Traderji,

Do you only trade stocks that have made a new three month high on the daily chart. If yes did the trade of the nifty u have put up on this thread also qualify for the three month high at that time.

What do u use to go short. Is it ok to assume that the charts that do not come up in the filter of the three month high are not in an uptrend hence u look for patterns to short it or do u use a formaulae to scan stocks which are potential to short too. If yes could you pls also explain how u scan potential shorting candidates.

I used your formulae and on metastock ( using viratech software) i used it in nse a-z scripts and only three names came up.
-indo gulf corporation
-Usha martin
-Vashishti detergent.

Did i use the filter correctly. Pls if u could verify the same so i know I am using it correctly as I am new to metastock.

Actually I checked these stocks and all are scripts which have data only till april or sometime before that. Maybe my data is corrupted or these stocks are not existent anymore.

Regards

Rahul

 

[Traderji]

respected Traderji,

Do you only trade stocks that have made a new three month high on the daily chart. If yes did the trade of the nifty u have put up on this thread also qualify for the three month high at that time.

What do u use to go short. Is it ok to assume that the charts that do not come up in the filter of the three month high are not in an uptrend hence u look for patterns to short it or do u use a formaulae to scan stocks which are potential to short too. If yes could you pls also explain how u scan potential shorting candidates.

I used your formulae and on metastock ( using viratech software) i used it in nse a-z scripts and only three names came up.
-indo gulf corporation
-Usha martin
-Vashishti detergent.

Did i use the filter correctly. Pls if u could verify the same so i know I am using it correctly as I am new to metastock.

Actually I checked these stocks and all are scripts which have data only till april or sometime before that. Maybe my data is corrupted or these stocks are not existent anymore.

Regards

Rahul

Since we are going short on the Nifty we have to look for a new 3 month low. Yes, the Nifty did make a 3 month closing low on the 01st of June 2006. This confirmed the downtrend in the Nifty on 01st June 2006.

To go short you need to confirm a downtrend first. For this look for a new 3 month low and not 3 month high. So the formula for the scan would be

c<ref(llv(c,63),-1)

Regarding the data please check with your data provider. I cannot help you in that regard.

 

[shantanu10]

Hello Traderji,

You have given example of Nifty trade.

Can you post one more example of trade which turn your way?
Also can you post the example of trade which did not turn your way?

Shantanu

 

[Traderji]

Hello Traderji,

You have given example of Nifty trade.

Can you post one more example of trade which turn your way?
Also can you post the example of trade which did not turn your way?

Shantanu

Hello,

The Nifty trade did turn the way I expectd it to and it is in profit now.

Once I close this Nifty trade I will post another trade which may or maynot go my way!!

 

[rahulg77]

Dear Traderji,

I wanted to know is it different trading cash segement and futures. What I mean is the approach of technical analysis different when trading cash segment and different appraoch if we want to trade derivatives. I am asking as there are not many books available on commodities and hence was wondering should I study any TA book or should I focus on books on future like Technical analysis of futures by John Murphy.

Could you also please suggest a few good books for future/commodity trading if the appraoch is different. Also if you could also suggest a book to understand future, options, put, calendar spread, arbitrage, bull and straddle and other abitrage strategies( if there is a book available for the same.

I ahve tried to research the net a lot for the same but could not come up with any book.

I would very grateful for your suggestion though this should have been in the books section.

Regards

Rahul

 

[ger06]

dear Traderji;

sorry to bother u this silly question.

.

To go short you need to confirm a downtrend first. For this look for a new 3 month low and not 3 month high. So the formula for the scan would be

Sir, I like to know about "Short, Long and Swing" terms.
Does short means short term buy & Long means long term buy?

Thanks.

 

[Traderji]

Dear Traderji,

I wanted to know is it different trading cash segement and futures. What I mean is the approach of technical analysis different when trading cash segment and different appraoch if we want to trade derivatives. I am asking as there are not many books available on commodities and hence was wondering should I study any TA book or should I focus on books on future like Technical analysis of futures by John Murphy.

Could you also please suggest a few good books for future/commodity trading if the appraoch is different. Also if you could also suggest a book to understand future, options, put, calendar spread, arbitrage, bull and straddle and other abitrage strategies( if there is a book available for the same.

I ahve tried to research the net a lot for the same but could not come up with any book.

I would very grateful for your suggestion though this should have been in the books section.

Regards

Rahul

It does not matter if you trade stocks or stock or commodity futures. Your approach should vary depending on the time frame you would like to trade. If you a day trader you will have a strategy which will be different from a swing trader. A swing trading strategy will be different from a position trading strategy. So first you have to decide on the time frame you would like to trade in and then develop a trading strategy to suit that style.

If you are new to trading and technical analysis please read the books mentioned in my post Recommended Books on Technical Analysis

 

[Traderji]

dear Traderji;

sorry to bother u this silly question.



Sir, I like to know about "Short, Long and Swing" terms.
Does short means short term buy & Long means long term buy?

Thanks.

Long (or Long Position)

1. The buying of a security such as a stock, commodity or currency, with the expectation that the asset will rise in value.

2. In the context of options, the buying of an options contract.

Long is the opposite of "short (or short position)".

Short (or Short Position)

1. The sale of a borrowed security, commodity or currency with the expectation that the asset will fall in value.

2. In the context of options, it is the sale (also known as "writing") of an options contract.

Short Selling is the selling of a security that the seller does not own, or any sale that is completed by the delivery of a security borrowed by the seller. Short sellers assume that they will be able to buy the stock at a lower amount than the price at which they sold short. Short sellers make money if the stock goes down in price.

Swing is a term most commonly used when referring to a situation in which the price of an asset experiences a significant change over a short period.

Swing Trading is a short-term trading strategy in which a trader attempts to capture gains by holding a security for only a few days

 

[joy_mitali]

Dearest Traderji,
A really fasciating Qs.ad Ans. Session ----in the most simpliest way---
My Qs. are :
1)While trading Nifty Futures---in this highly volatile month of July---what was ur strategy or with what strategy could one sussessfully carry on a trade with trailing stop loss even for 3--4 days --without the Stop loss getting hit as per the 2% rule of money management?
2) What strategy do u follow in trading Nifty in the 1st three days and the last three days of the near mth cycle?
As usual---Thanks once again,for ur efforts in keeping simple things simple--
Regards,
joy_mitali