Q & A with Traderji

[kuldeep49]

This is the dilemma most traders go through. It is generally recommended to use trend following indicators in the daily chart when the weekly ADX is rising and oscillators in the daily chart when the weekly ADX is falling.

Thanks Traderji ... see ... one more thing to learn & remember.
Cheers
Kuldeep

 

[Traderji]

Traderji,
How do you rate Macd and ADX on comparative basis? In my own
view Macd is far better than ADX.

Spiderman

You cannot compare the two. The ADX indicates the strength of the trend whereas the MACD indicates the dierction of the trend.

 

[rahulg77]

Dear Traderji,

I am facing difficulty on deciding an entry level. I see a stock and See its a good stock but cannot decide whether I should enter now or wait for a pull back. Like Amara raja batteries.

I was following Aban Llyod chiles and since 19th june it was moving in a range. So it could be a rectangle pattern and its broken out and the volume is good compared to last few days. So how do u decide if u want to enter this trade. I know its a very vague question and everyone would have a different strategy.

I am getting stuck at the most important part of TA ie Entry and Exit. Could you guide me how I can help myself with this. A book or some other method you could suggest.

Rgds

Rahul

 

[Traderji]

Dear Traderji,

I am facing difficulty on deciding an entry level. I see a stock and See its a good stock but cannot decide whether I should enter now or wait for a pull back. Like Amara raja batteries.

I was following Aban Llyod chiles and since 19th june it was moving in a range. So it could be a rectangle pattern and its broken out and the volume is good compared to last few days. So how do u decide if u want to enter this trade. I know its a very vague question and everyone would have a different strategy.

I am getting stuck at the most important part of TA ie Entry and Exit. Could you guide me how I can help myself with this. A book or some other method you could suggest.

Rgds

Rahul

You can enter the next day immediately after a breakout out of the pattern. Taking a trade is probably the most common heartache faced by market timers and all market traders, and is only compounded when it turns out that it would have been a profitable trade.

"Uncertainty is a powerful emotion that can weaken the resolve of even the best of market timers." You need to get rid of this.

Mark Douglas, an expert in trading psychology, says this about trading fears in his book "Trading in the Zone."

"Most investors believe they know what is going to happen next. This causes traders to put too much weight on the outcome of the current trade, while not assessing their performance as "a probability game" that they are playing over time. This manifests itself in investors getting too high and too low and causes them to react emotionally, with excessive fear or greed after a series of losses or wins.

As the importance of an individual trade increases in the trader's mind, the fear level tends to increase as well. A trader becomes more hesitant and cautious, seeking to avoid a mistake. The risk of choking under pressure increases as the trader feels the pressure build.

All traders have fear, but winning market timers manage their fear while losing timers (as well as all traders) are controlled by it. When faced with a potentially dangerous situation, the instinctive tendency is to revert to the "fight or flight" response. We can either prepare to do battle against the perceived threat, or we can flee from this danger.

When an investor interprets a state of arousal negatively as fear or stress, performance is likely to be impaired. A trader will tend to "freeze."

There are four major trading fears:

Fear Of Losing

The fear of losing when making a trade often has several consequences. Fear of loss tends to make a timer hesitant to execute his or her timing strategy. This can often lead to an inability to pull the trigger on new entries as well as on new exits.

Fear Of Missing Out

Every trend always has its doubters. As the trend progresses, skeptics will slowly become converts due to the fear of missing out on profits or the pain of losses in betting against that trend.

Fear of Missing Out on Profits

This fear is usually felt during runaway rallies. All your friends are talking about the incredible profits they are making every day. If you really look at this in the right perspective, it is a very dangerous kind of fear. It eventually causes you to buy in, and of course, when you and thousands of others who feel the same way react at the same time, the market is finally at its top.

Fear of Being Wrong

The desire to be "right" is in direct opposition to the ability to be successful.

The desire to be "right" is in direct opposition to the ability to make money.

A market timer's desire to be right, to be able to tell his friends how successful he or she is, can become so powerful, that a he or she winds up second guessing, the "strategy." Taking winners too quickly, or holding onto losers in the hopes that they will come back, or at least break even.

 

[pasha]

Traderji, how important is market direction when going long?
Many times I have observed that lots of stocks go up when market direction is up and most go down when the market is going down.
As you are buying 100 day highs, how do you take the market condition into account?
In your opinion, what is a reachable profit% yearly?

 

[Traderji]

Traderji, how important is market direction when going long?
Many times I have observed that lots of stocks go up when market direction is up and most go down when the market is going down.
As you are buying 100 day highs, how do you take the market condition into account?
In your opinion, what is a reachable profit% yearly?

IMHO market Direction is most important as majority of stocks move in the same direction of the market. One should always trade in the direction of the market.

I do not BUY 100 Days HIGH. Please read the discussion again.

The reachable % profit yearly depends on your trading style and how the market behaves. One cannot exactly pin point this figure.

 

[bjj9126]

Dear Traderji,

I site is giving daily pick (for one stock's levels) on its front page & these levels are working well,
I am trading with these levels since last 2 months,
I tired but I cannot found with Metastock that which indicators they are using,
for examples:- (1)last day(for date 01/08/2006) there is CIPLA: buy with stoploss 227 target 236 & 240, (2)for today(for date 02/08/2006) there is RELIANCE : sell with stoploss 993 target 974/67/45 break of stoploss will go 1005 there sell again,(3) for date 24/07/2006 there SBIN : crucial 704,

Can you please guide me how can they found these levels ? Which Indicators they are using ?

By which Indicators I can also found these levels ? (i.e crucial for SBIN:704 on 24/07/006)

I am using Metastockpro 9.0,

Thanks.

Prakash(bjj9126)

 

[Traderji]

Dear Traderji,

I site is giving daily pick (for one stock's levels) on its front page & these levels are working well,
I am trading with these levels since last 2 months,
I tired but I cannot found with Metastock that which indicators they are using,
for examples:- (1)last day(for date 01/08/2006) there is CIPLA: buy with stoploss 227 target 236 & 240, (2)for today(for date 02/08/2006) there is RELIANCE : sell with stoploss 993 target 974/67/45 break of stoploss will go 1005 there sell again,(3) for date 24/07/2006 there SBIN : crucial 704,

Can you please guide me how can they found these levels ? Which Indicators they are using ?

By which Indicators I can also found these levels ? (i.e crucial for SBIN:704 on 24/07/006)

I am using Metastockpro 9.0,

Thanks.

Prakash(bjj9126)

These are called pivot points. If you do a search around this forum you should find the formula.

 

[Disciple]

Respected Traderji!
Thanks for this wonderful thread.Thanks for sharing your vast knowledge with us.This shows your openmindedness.I also thank NEAL for starting this thread.
Traderji,I would request you to notice the post of "bjj9126".This person is posting the same queries again nad again in various thread.Though you have answered his query,he keeps posting the same query in many posts and many times.It seems that he's promoting a particular website with selfinterest.Please do what you think right reagrding this matter.
THANKs again for this wonderful learning journey!Please keep it up Sir.
God Bless You.
Disciple.

 

[rahulg77]

Dear Traderji,

I had a query on your trading system. You say u look for stocks that have made there three month high. Now when u find this stock you follow it, let it consolidate and trade on a breakout. Now once we find a stock and it declines quite a bit and then consolidates/forms a penant or flag and there is a breakout. Is it still ok to trade that stock or after forming a three month high it should stay at the same level or move up and then consolidate.

Also when u trade pattern breakout you only trade patterns that have formed a three month high/low or is the 3 month high/low strategy only for swing trade.

When u say u keep a stop at previous 3 bar high. Now suppose after rising the stock falls today. So tommorow ( i.e the next trading day)will my stop be the previous three day high or it will remain the same as yesterdays stop( i.e previous four days high) as the stock is now declining.

Rgds

rahul