Unconventional ways of identifying market moves

Discussion in 'Advanced Trading Strategies' started by Square, Oct 12, 2016.

  1. Square

    Square Active Member

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    What are unconventional ways of identifying market moves, something between fundamental analysis and technical analysis. This is not event or news based identification but something like after a big move on a Thursday, the market may take a breather on Friday and just stay put. Or just because the markets were flat on Friday and people expect Monday to gap and then close the day considerably, the market do contrary and do nothing on Monday.
    Just recent example, since this week, yesterday and today are closed, the market didn't do much on Friday or Monday. And maybe just because people expect big move tomorrow, it will do not nothing and close flat tomorrow.

    So for people who are swing trading or trading daily time frames, how does one avoid such non action /move days, without following news or events. Again as the theory goes that most of the days market may just not do anything they only move in tranches a few days and then most days they oscillate and remain there.
     
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  2. Square

    Square Active Member

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    See what I trying to explore is not some price or volume or momentum indicator or any fundamental news or event tracking, but just something like common sense thing which may be quite obvious but is not touched upon or experienced, given that we get so much buried in our analysis all the time.

    Kindly share feedback on such common sense approach that you all might be using very often than naught.
     
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  3. psvaja

    psvaja Active Member

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    One way to identify trend in advance is to look for difference between Pre-open market and actual open.

    Take a case of today. In pre-open market, Nifty was down about 35 to 37 points. While actual open was way below about 60-70 points.

    What it is telling ? It is telling that somebody is in hurry to sell & who is going to be in control rest of the day. It helps to take short trade more confidently. The only thing is difference has to be sizable. Sizable i mean approx more than 25 points

    Pravin
     
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  4. Square

    Square Active Member

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    I have started implementing 'selection through rejection' theory. This essentially means that you do not predict, guess, estimate etc, what will happen, but rather we focus on what will not happen, or rather 'likely' not happen. So once we think from this perspective the chances of arriving at the right decision become more probable. At least incase we are wrong then still losses maybe small and profits big in case we are right.

    One common sense approach I am using is seeing daily charts by compressing the bars and viewing it from physicist view, or like a spring action, something like action - reaction, momentum building, winding or winding of a spring for break outs or false break outs etc. And more charts I see, more convincing it appears to swing trade on daily bars. I have just started trading it with real money and using less leverage and it is seeing me in green. It is slow but still in green.
     
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  5. Square

    Square Active Member

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    Good point.

    Any place where we can get historic data to check this in past. Or else will have to track now onwards. Thanks.
     
  6. badarivt

    badarivt Active Member

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    A very conventional but mostly overlooked method is to view trading based on volumes alone. We retailers are small fish who have to swim alongside of the bigger sharks and whales, not against them. So a big volume tells us that a big fish is making some move. We have to align with that
     
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  7. mastermind007

    mastermind007 Well-Known Member

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    How do you pre-open open value? In Sharekhan, I get a tick a 9:07 AM if I am connected. Is that pre-open value?
     
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  8. psvaja

    psvaja Active Member

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    Pre-open open value is not important. Once Pre-open phase is over at 9.08, we have an idea where regular market is going to open. i.e. If Pre-open market suggests that, we should open 35 points down while actual market opens say around 65 to 70 points down than there will be higher probability of having strong down day as it indicates that sellers are in hurry to sell and market may be in control of sellers that day.
     
  9. psvaja

    psvaja Active Member

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    I don't think we can get historical data of pre-market opening.
     
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  10. Square

    Square Active Member

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    My other observations are as follows:

    The charts we see (daily charts) comprise of fundamental or event based movement and non event based i.e. technical movements. Hence when we see a chart as a whole it comprises both, so only trading on technicals or only on fundamental cannot be sustained in the long run even with robust money management.

    Market is a market, just like any other market, sabzi market or fish market. It is seasonal in nature, like any other market. But we try to make stock market standardise by using only charts to arrive at future prediction. The stock market is also seasonal, so apart from periodic economic data release, there is earning season at every quarter end, so April, July, Oct and Jan the market will behave differently as quarterly results are announced. So we just cannot trade the market by looking at the chart as is and we need to use some common sense too and keep all such basic things in mind always.

    Even for intraday trading, the trading on Friday maybe different than on Monday. Also on Monday people come fresh with ideas and plan to stick to their trading rules etc and hence will behave differently till they forget it by Friday and the cycle continues. Just think how different is our mood when we go to office on Monday morning and when we go to office on Friday morning. Its quite different. So we maybe trading differently when it come to trade on these two extreme days of a week.

    For salaried traders like us, we get our salary on last day of the month, the expiry has happened so we have full one month to use our salary till next expiry. So when we start the month, with full account, the volatility in our trading maybe less as we have to take care of the money to trade for full month so we will exit losses early and take proper care of our money. And as the month comes to close we start taking more risk and gamble like jackpot or nothing because we know that on the last day of the month our account will be replenished by our salary. So this cycle also continues. So basically there is also a pattern in our own trading from beginning till end of the month. So if we use some common sense and put some speed breakers in our pattern we can remain green in the end. Else we will continue to run on the tread mill.

    All this and more such thoughts led to believe that in trading we must predominately use some common sense first and then our trading tools or system to trade.
     
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