now i shall put view from traderji.......his time tested concept
.....Identifying the entry point
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
....................
so u get the touch of traderji!!
with regards this great trader from mumbai
.....Identifying the entry point
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
....................
so u get the touch of traderji!!
with regards this great trader from mumbai
...