Technical Trading - Practicing the Theory

[karthikmarar]

Dear Ajay

it is so nice to see you in action. Excellant post. Iam a bit selfish . I am praying for your good health so that we can see many more excellant posts.

By the way .. wondering who that stupid veteran is...

warm regards

karthik

 

[cooltetra]

Hi Ajay
Good to see u in action. Welcome back.

And this encorages me to make more mistakes, I am still to be a veteran

Best Regards
Coool.

 

[jdm]

hi ajay,
good to see you back.

i found a software which can help the user record their trade log. the same can be downloaded from the below link:
http://0201.netclime.net/1_5/P/E/A/FTLog100.zip

the zip file is password protected and password for the same is klse2u.com

the software is a freeware, although now discontinued (atlest the freeware version)

cheers,
jdm.

 

[aca_trader]

By the way .. wondering who that stupid veteran is...

warm regards

karthik

Wish I were him! Atleast I would have been a Case Study.

 

[AJAY]

Dear Ashish- Rahul- Krathik- Cool- JD,

Thank you very much for the warm welcome. Hopefully, if God permits, I'll keep this thread active as long as possible and at the same time wish -deep in my heart-I should close this at the earliest, once the purpose is fulfilled.

Rahul,

Regarding your first question

-So if someone is doing breakout trading using patterns on daily charts he should not see 60 min bars and weekly charts. Is this what u mean?

I didn't mean that Rahul. You are at liberty to look into any periodicity. but not at liberty to act upon looking into them, if they are not a part of your trade plan when you designed the entry.

Second One and Third One

-What if there is a breakout on daily chart but rsi is overbought and on weekly still MACD maynot be +ve.

-If we are using daily charts, should we also see resistance and
support on the weekly charts( though i have seen mostly the resistance levels match but on many they dont)

Please check whether you initiated the trade on what reasons. In which MACD and RSI are also to be involved, then when all fall in place only you should initiate the trade.

By the way- regarding RSI()- it keeps itself in over bought zones for a long time during upward trending markets. So, please try ignore RSi as much as possible, when you are in momentous trending markets.

And regarding MACD turning positive- The trends first start in lower periodicities and then go to higher ones. So, the daily MACD might be positive but not the weekly. See Rahul! in case of following the weekly charts to initiate the trades, your entry will be delayed- and in practice it is that delayed - that you don't feel like initiating the trades at all. Sorry to say this and with due appologies to the people who use weekly charts to initiate the trades. I am not denying the trading mechanism depending on weekly charts. but in such cases the stops will be distant as well the targets (which are generally very high). We should be able to sustain the stop hits and be able to be enough patient to wait for the targets.

So,at one point, there should be an end for fixing the periodicity to look into . Incase we look into monthly charts, then it will be further bigger- the stop and target as well.

Only thing to be kept in mind is whether the risk return matches and whether we can sustain the stops.

Once it is decided and pinned, then we can trade in any time frame.

But Rahul! personally I suggest to confine maximum at daily chart levels itself for initiating trades. Have a look at weekly charts for getting better clues. And if your trade plan is right generally these clues match with your exits.

Regarding the fourth one, trades on the breakouts

- if we trade on breakouts and there is a lot of noise above the
breakout. Should we trade this stock

Any breakout trade should make you comfortable in your trade. Let the noise be anything, if the stop is not hit, go least botherred. But generally in these trades, and for that matter in any trades, it is always better to keep the time stop also for the exits. So if in the designed time frame the target is not hit, you should get out though your price doesn't hit stop. But this should be practiced with a lot of care.

And the final one

- One last query. Many times I draw support/resistance lines. It joins some highs and lows. And many times it goes through the shadows and encompasses the main body of the candlestick. Should we consider this valid too or resistance lines should onlu touch high and lows of the candlestick.

The support and resistance lines can sometimes be on Close to Close basis also. And in such cases, the trend lines go through the Bars. And we cannot say which is right practice in this regard. Generally people follow lines drawn for tops or bottoms of the bars/candles.

Hope it is clear.

And Karthik Maharaj! That veteran is wise enough to have reentered the position at a lesser price than his exit- but thanks to god- encashing on the advantageous position, having realised the mistake, thanking God for the opportunity. So he is very wise as I know him well and no stupid.

Thanks and happy practicing Technicals

AJAYKUMAR

 

[rahulg77]

Hi Ajay,

Thank you so much. Very clear to the point answer.

Rgds
Rahul

 

[AJAY]

Dear Rahul,

You are most welcome. And finally keep at the back of your mind what time frames you should look into while designing trades. And what are the conditions required to meet in those time frames to initiate the trade. There is no room for confusion. Or personally suggest to look into only single time frame and plan the trades. And then trade the plan. Then the confusion part will go off.
Here TA is highly subjective. You will find some reason or other for entry and exit at any point of time on the chart. e.g., if we initiate the trades using daily charts and get stopped, then if we look into weekly periodicity charts we might find a resistance there. Just for that reason we don't require to confuse ourselves. We neednot feel that we should have looked into weekly charts. No need at all. In some cases, though we find a resistance in weekly, the stock might shoot up. So, finally what i 'd like to say here is- keep a firm trading strategy and start adopting it. Initially it might not work out sometimes. but finally it will give us the returns.

And please keep at the back of your mind that you are reading a subjective science - which infact has not yet given a science status as the argument goes on whether it is an art or a science- which has got a lot of choice. Any choice gives you money in the market, provided we follow it. The choice should be for our good and not to confuse us.


Thanks and happy practicing Technicals

AJAYKUMAR

 

[rahulg77]

Hi Ajay,

thanks again. by what u have written might seem like just 1-2 paras but it contains a lot to think about. Thank you. U have a very valid point and has cleared a lot of confusions that were actually lingering in my mind.

Rgds

Rahul

 

[AJAY]

Hi Friends,

Sorry for going highly irregular.

This time I'd like to discuss the importance of a portion od data which is generally ignored by the position traders.

The common notion for a position trader is- generally- to look into daily, weekly and other higher periodicity charts. I am thinking to discuss the lower periodicity charts also here and give a reason how important they are.

Here, pl. remember, I am not going to ask you to track intraday- but to read intraday charts at the end of the day.

The very reason for this suggestion is to understand how the volumes have flown into and out of security. This helps in taking a decision while initiating the trades - when you decide to - using your Daily and other higher periodicity charts.

This particular issues of reading intraday charts helps us in keeping the stops right and tight and at the same time protects us from initiating some wrong trades which give us signals for trade initiation when we look into Daily charts.

So, pl try collecting the Intraday data even at the End of the Day and keep maintaining. Hope I am making sense in discussing this. In case if this doesn't make any sense for you, kindly excuse me and ignore this post.

Thanks and happy Practicing Technicals.

AJAYKUMAR

 

[sharantaka]

Dear Ajay,
Firstly I wish ti thank you for this great thres started by you. I have registered only 2-3 days ago and still not very conversant with the procedure for replying to the threads through "quick Reply" icon. So can I request you to acknowledge this when you receive this reply so that I can atleast know that I am following the right procedure.
Have you already started posting information on this thread, if yes since when