Swing trade for coming days: RELCAP

uasish · #21 6th April 2007, 11:32 PM

EW Gann are also coventional . "Noise" ,"Lagless","Correlation" "Cycle Method of analysis"may be
relatively new,but basics are basics.Price & volume are basics ,at least without Price nothing can be made.

oxusmorouz · #22 7th April 2007, 08:23 AM

Quote:

Originally Posted by karthikmarar

Oxy

It is all the probability factor rather than predictive factor. The MACD falling below zero indicates that there is high probability that the stock will go down further. This probability is derived from the past price action and definitely the future is not guaranteed. So we try to put the money where the probability is high and protect ourselves with proper stop loss is case the probability does not become reality.

Again Karthik, you must not mistake my reply.
More than the probability factor, I should say indicators provide the "trend following" factor...for the best money is made by simply following the price (one can't dream to profit by going against it).
As you well know, macd is the difference between 2 MAs and the macd falling below the zero line is an indication that there has been a moving average crossover ...the faster MA has fallen below the smoother MA...
MA crossovers being purely time series (not an indicator of price action) succeed in their objective when price moves in a particular direction for a significant period of time before it reverses...and I guess macd serves the same purpose. Isn't this the reason for what indicators are designed for? To capture a significant percentage of the market movement irrespective of the direction that the market moves?
Or putting it in other terms, how can we expect a particular time series or indicator to enhance the probability of price action in a particular direction when they are merely derived from price itself? Should it not be the other way round?

RSI · #23 7th April 2007, 03:35 PM

Hello all senior members,
Thanks a lot to all of you for putting down your thoughts. It has been a great learning and experience. It is quite easy to teach things standing in the middle portion of a chart. The practical difficulties are experienced only at the right edge of the chart. The relevant points described by Karthik, Oxy, Ashish are noted.

Oxy, I shall never misunderstand you. But my doubt is, can we disregard all indicators that are derived from price and volume because they show history and not future? I doubt. As someone pointed out here, all these indicators are designed to extract maximum out of the ongoing trend. Catching the exact top or bottom is pure luck. The next best thing is to stay and catch major portion of the trend. I think, these indicators will do just that.

Karthik, as rightly pointed out by you OBV is striking a discordent note here. But please observe the chart of Reliance Capital. The current trend began on 06/03/2007. Compare the volume around those days and the present volume. There is no great increase. On the contrary last three volume bars had an increase on down days.

Ashish, the price target mentioned by you is extremely close to the gap described by me in my earlier post.

Let me thank all of you again. Let me also request you to keep this thread on so that it will be a great learning experience for novice like me.

As I wrote in my earlier post, I am anxiously waiting whether Reliance Capital is going to close the gap. We shall make a detailed study of its movement up to then and especially during that period. The we will take a call.
Thanks and regards
R. S. Iyer

oxusmorouz · #24 7th April 2007, 04:38 PM

Quote:

Originally Posted by RSI

Hello all senior members,
Oxy, I shall never misunderstand you. But my doubt is, can we disregard all indicators that are derived from price and volume because they show history and not future? I doubt. As someone pointed out here, all these indicators are designed to extract maximum out of the ongoing trend. Catching the exact top or bottom is pure luck. The next best thing is to stay and catch major portion of the trend. I think, these indicators will do just that.

I never did say these time series/derivatives (not indicators,what do they indicate?) should not be used in a entry-exit rule for I myself use some of these myself for my entry/exit. It is easy for us to get too involved into the technical complexities of trading that at some point, we strangle these time series to something which is impossible - force the price to move in a particular direction. Trading with unpredictable price (though some may deny the price is unpredictable), any indicator derived from price simply cannot be taken too seriously ...they are more like "the reason to do what we want to" (unless a set up is followed mechanically)

RSI · #25 7th April 2007, 06:13 PM

Quote:

Originally Posted by oxusmorouz

I never did say these time series/derivatives (not indicators,what do they indicate?) should not be used in a entry-exit rule for I myself use some of these myself for my entry/exit. It is easy for us to get too involved into the technical complexities of trading that at some point, we strangle these time series to something which is impossible - force the price to move in a particular direction. Trading with unpredictable price (though some may deny the price is unpredictable), any indicator derived from price simply cannot be taken too seriously ...they are more like "the reason to do what we want to" (unless a set up is followed mechanically)

That is right. These MACD, RSI etc. cannot be taken as a future price movers. We must not allow ourselves to think that they will force future price movements. In a strongly trending market RSI may stay overbrought/oversold levels for many days, without infulencing price movements. But then, how do you decide that enough is enough and it is time to get out?
Regards
R. S. Iyer

oxusmorouz · #26 7th April 2007, 07:29 PM

Quote:

Originally Posted by RSI

But then, how do you decide that enough is enough and it is time to get out?
Regards
R. S. Iyer

I guess that is a million $ question

. Experiments/backtest would unfold the truth

uasish · #27 8th April 2007, 09:24 AM

RSI,
A RSI(14) ,have we ever studied it's nature except that what is written in the Books ? If we have traded RSI(14) (why i am mentioning 14 period ,becoz that is universally any new user will recourse to 1st ,before starting to tweak with time period),then what are our personal experiences ? if putten in a trading diary ,we can find observations though giving (+)ve divergence the price falls !(this divergence is 1 example , even OB/OS can be another example) what were the other conditions at that time in the chart,if noted we can find few things ,which is not in the books ! that proves we have not throughly studied RSI,at least that happened with me.Few indicator has a story to tell ,RSI is one of them ,it is our inability to READ it.if at all i decide to trade a RSI set up Will % R is my 2nd confirmatory indicator with RSI . The
maths behind these 2 indicator is somewhat compatible & becoz Close price is the ultimate Day's battle line,hence ignoring that would'nt be prudent,so Will R.The attached chart ,here a simple RSI(14) & Will % R(14) ,has always helped to identify Bottoms ,& even in Dec the top was signalled,it is a simple set up for any new user.

Asish
NB: I would reqest OXY to give us a report using TradeSim (Back-Testing, i am utterly incompetent with back-testing) to enlighten us.
NB: Of late i dont use RSI set up,but it has given me Oxygen to survive.

oxusmorouz · #28 8th April 2007, 02:44 PM

I shall be glad to help you out if you can define the entry-exit rule (and stop losses, if any)

uasish · #29 8th April 2007, 04:34 PM

Oxy,
The Entry Signal
......................8.................
a:= LLV(RSI(14),20)< Ref(LLV(RSI(14),20),-2) AND LLV(RSI(14),20) < 35;
b:= If(Ref(a,-1) =1 AND a =0 ,1,0);
m:= Alert(b,10) AND WillR(14) < -95;
n:= If(Ref(m,-1) =1 AND m =0 ,1,0);
n;
..............................8................... .
2 lot Entry = Next day close.
Stop Loss for both lot = 2 % below entry.
1st lot Exit = 4% above Entry;
2nd Lot Exit = 50 % above Entry;

As tou are coversant about both Metasock & TradeSim rest coding or amendment of this code if necessary can be done by you.Plz do the MonteCarlo test across all type ,set of securities & modify 2nd Exit to get best result ,my intention in 2nd Exit is ,let the profits run.
Asish

oxusmorouz · #30 8th April 2007, 05:16 PM

Quote:

Originally Posted by uasish

Oxy,
The Entry Signal
......................8.................
a:= LLV(RSI(14),20)< Ref(LLV(RSI(14),20),-2) AND LLV(RSI(14),20) < 35;
b:= If(Ref(a,-1) =1 AND a =0 ,1,0);
m:= Alert(b,10) AND WillR(14) < -95;
n:= If(Ref(m,-1) =1 AND m =0 ,1,0);
n;
..............................8................... .
2 lot Entry = Next day close.
Stop Loss for both lot = 2 % below entry.
1st lot Exit = 4% above Entry;
2nd Lot Exit = 50 % above Entry;

As tou are coversant about both Metasock & TradeSim rest coding or amendment of this code if necessary can be done by you.Plz do the MonteCarlo test across all type ,set of securities & modify 2nd Exit to get best result ,my intention in 2nd Exit is ,let the profits run.
Asish

It can be done but rather than having a specific profit level, do you want me to add a trailing stop for the 2nd trade, since you want the profits to run? Rather, since signals are rare, do you want to enter at the next trend following entry and exit the same way?
Do you use ***** messenger? We could chat there if you want... my id is oxusmorouz

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