some views on applied TA as appeared in traderji forum
- Thread starter oilman5
- Start date
System :
..............
Mechanical trade system- mts
discreationary trade system- dts
hybrid system...hts
different condition of market
..................................................
1. Range bound market play plan
2. Trend market play plan
3. Momentum based break out play plan
4. -momentum / at top quick short plan
..............
Mechanical trade system- mts
discreationary trade system- dts
hybrid system...hts
different condition of market
..................................................
1. Range bound market play plan
2. Trend market play plan
3. Momentum based break out play plan
4. -momentum / at top quick short plan
high probable trade
............................
its the directional bias...where most waiting watchers r ready to join..
market buying r coming...big volume r increasing
concept is use momentum ...act now.
another concept a trend started yesterday 3pm..hence further steam left.
scan at night for candidate.
without any news. on real time..sudden volume surge..price is also moving up.
ACT NOW ..NO TIME TO THINK make money
..........................
shortterm trade/ swing trade
............................................
here u must reqd eod . a software ..preferably some risk reward analysis
some low risk entry tactics and stop-umbrella to save from rain.
u have to define entry characteristic .
1. entry after break out over longterm resistance zone
2. after twice bounce in support ..price just starts moving up.
3. sector starts moving up..stock has good rel strength comparison within sector.
stop
......below 5% of last week low
if not 4% up move occurs within 5 trade days..use time stop
profit target 8-10% from entry..however after 5-6% price is NOT HOLDING
....get out with small profit...than turn profit into loss
position trading
..............................
personally i decide only some shortterm winner to be extended for long.
its basically using chart ..after trend change suggested, entry at predetermined pt
for me some% up with volume increase...in metastock RSC EXPLORER candidate must be in upperside.
yes i use eye ball technique and pattern failure[ in h&s when instead of fall price starts move up and w.pattern price slowly starts moving..acceptance of price]
............................
its the directional bias...where most waiting watchers r ready to join..
market buying r coming...big volume r increasing
concept is use momentum ...act now.
another concept a trend started yesterday 3pm..hence further steam left.
scan at night for candidate.
without any news. on real time..sudden volume surge..price is also moving up.
ACT NOW ..NO TIME TO THINK make money
..........................
shortterm trade/ swing trade
............................................
here u must reqd eod . a software ..preferably some risk reward analysis
some low risk entry tactics and stop-umbrella to save from rain.
u have to define entry characteristic .
1. entry after break out over longterm resistance zone
2. after twice bounce in support ..price just starts moving up.
3. sector starts moving up..stock has good rel strength comparison within sector.
stop
......below 5% of last week low
if not 4% up move occurs within 5 trade days..use time stop
profit target 8-10% from entry..however after 5-6% price is NOT HOLDING
....get out with small profit...than turn profit into loss
position trading
..............................
personally i decide only some shortterm winner to be extended for long.
its basically using chart ..after trend change suggested, entry at predetermined pt
for me some% up with volume increase...in metastock RSC EXPLORER candidate must be in upperside.
yes i use eye ball technique and pattern failure[ in h&s when instead of fall price starts move up and w.pattern price slowly starts moving..acceptance of price]
another criteria...when nifty starts moving up again after retracement-enter good candidate,
third unexpected good result published and buy volume shows high demand.
most imp part of position trade is stock list...here u know from background where move shall continue.
further..as u try for bigger profit ,failure rate is high.
hence u must have inbuild MM system to get out with small loss and addon winner.
as position trade is a judgement game..hit of the moment decision should NEVER be taken..infact temporary fall is a great buy oppurtunity
strength indicator on 2week chart basis [ ie converting data on 10day high-low-close basis available in metastock] is good way to see.
n rangebound market...william%r at oversold zone good indicator
in trend market , i use aroon .
after long fall, weekly chart engulfing bull- i use for entry+ bill williums chaos entry signal
.......for stop simple sar as available in metastock.apart form subjective pattern stop and time stop.
profit booking ...50% quick booking
third unexpected good result published and buy volume shows high demand.
most imp part of position trade is stock list...here u know from background where move shall continue.
further..as u try for bigger profit ,failure rate is high.
hence u must have inbuild MM system to get out with small loss and addon winner.
as position trade is a judgement game..hit of the moment decision should NEVER be taken..infact temporary fall is a great buy oppurtunity
strength indicator on 2week chart basis [ ie converting data on 10day high-low-close basis available in metastock] is good way to see.
n rangebound market...william%r at oversold zone good indicator
in trend market , i use aroon .
after long fall, weekly chart engulfing bull- i use for entry+ bill williums chaos entry signal
.......for stop simple sar as available in metastock.apart form subjective pattern stop and time stop.
profit booking ...50% quick booking
-momentum short plan
.............................
this condition to be created by media..rumor of market shall go up ..vs pro have already sold..now some -divergence can be seen ...price slowly starts falling..now tv must speak again and again ..threat percept...more sell order coming in nifty future...NOW ONLY THE TIME for short...hence its a short term quick execution ..a bull market top trade ..with propaganda from media.
otherwise harsh bad news....when most participant prefer to sit on cash[bulls r running away]
Note : holding stock of big portfolio -create a conflicting mind..better sell holding first.
its better to see advance-decline curve.
for further study understand extended bullmarket and volatility condition
and see after result out how price is behaving
.............................
this condition to be created by media..rumor of market shall go up ..vs pro have already sold..now some -divergence can be seen ...price slowly starts falling..now tv must speak again and again ..threat percept...more sell order coming in nifty future...NOW ONLY THE TIME for short...hence its a short term quick execution ..a bull market top trade ..with propaganda from media.
otherwise harsh bad news....when most participant prefer to sit on cash[bulls r running away]
Note : holding stock of big portfolio -create a conflicting mind..better sell holding first.
its better to see advance-decline curve.
for further study understand extended bullmarket and volatility condition
and see after result out how price is behaving
system implementation
..............................
1. assumption .....condition of trade....if it does not exist no trade
2. entry..particular signal
3. holding profit one...give time.
4. exit..with profit target
with loss,. use contingency plan..to save skin.
6. write after complete of trade what i learn .....implementation vs. reaction of me based on fact.
OTHER ELEMENT
........................
u factor..how to be neutralised so that i can think right.before taking position i must have an opinion but PRICE must confirm my opinion otherwise i must use stop and book loss ( throw away opinion)
MARKET HAS TRENDINESS AND ALSO UNPREDICTABILITY ELEMENT. NEWS AFFECT MARKET [UNKNOWN EVENT]....MAJORITY TRIES TO GUESS WHAT MAJORITY MAY DO , TAKE RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG.
.....PUT MORE MONEY WHEN RIGHT.
u have to work on prediction model in which chance of RIGHT/BEING WRONG has to evaluated.Other factor..operators game/random price behavior .
ALWAYS TAKE CHANCE OF BEING WRONG 40%...SO THAT IF WRONG ...MUST BE PREPARED
by the chart , i SEE how others r viewing.. so i am ready with my move .
.....tv news guide me how fools shall behave,..many a time i am wrong ..but i stick to it.
as trading is not a game of perfection ,with good MM 50%accuracy sufficient.
..............................
1. assumption .....condition of trade....if it does not exist no trade
2. entry..particular signal
3. holding profit one...give time.
4. exit..with profit target
with loss,. use contingency plan..to save skin.
6. write after complete of trade what i learn .....implementation vs. reaction of me based on fact.
OTHER ELEMENT
........................
u factor..how to be neutralised so that i can think right.before taking position i must have an opinion but PRICE must confirm my opinion otherwise i must use stop and book loss ( throw away opinion)
MARKET HAS TRENDINESS AND ALSO UNPREDICTABILITY ELEMENT. NEWS AFFECT MARKET [UNKNOWN EVENT]....MAJORITY TRIES TO GUESS WHAT MAJORITY MAY DO , TAKE RISK OF PREDICTION BY PUTTING MONEY BUT READY TO RETREAT IF WRONG.
.....PUT MORE MONEY WHEN RIGHT.
u have to work on prediction model in which chance of RIGHT/BEING WRONG has to evaluated.Other factor..operators game/random price behavior .
ALWAYS TAKE CHANCE OF BEING WRONG 40%...SO THAT IF WRONG ...MUST BE PREPARED
by the chart , i SEE how others r viewing.. so i am ready with my move .
.....tv news guide me how fools shall behave,..many a time i am wrong ..but i stick to it.
as trading is not a game of perfection ,with good MM 50%accuracy sufficient.
here i write about a system..5 day momentum method
...................................
background : strong trending market
principle : pullback for fewdays and then again resume move
1-2-3-4 pattern
pullback near 20dma and again moving up.
why? with this pullback ..mf and hni plan to enter.hence new moneyflow..
high momentum,high probability trade
scan.; 1.strong trending candidate
2. use oscillator ...watch pullback(wait mode)
3.trend reverse...now u enter.
indicator: adx..strength of direction
rel. strength ..ok
filter ; adx>30..+di>-di..di=demand index
rel strength..compare to other stock /nifty ..BETTER.
stokastic..%k<40 oversold indicator
..UP DAY.
1.TICK ABOVE YESTERDAYS HIGH.
2. OR NEXT DAY BUY ABOVE 3%UP
CONDITION : %K MUST BE MOVING UP
STOP : 1% BELOW LOW OF LAST DAY
OR 1.5 ATR BELOW FROM LOW OF TODAY
PATTERN LOOKS...1-2-3-4 ...4 IS INITIATING PT ABOVE 2.
PROFIT TARGET : 7% IN 3DAY
MAXM TIME 5DAY..OTHERWISE TIME STOP.
IF PROFIT OCCURS EARLIER THAN EXPECTED..ALLOW 50% HOLD TO RUN FOR TOTAL 10% PROFIT
...................................
background : strong trending market
principle : pullback for fewdays and then again resume move
1-2-3-4 pattern
pullback near 20dma and again moving up.
why? with this pullback ..mf and hni plan to enter.hence new moneyflow..
high momentum,high probability trade
scan.; 1.strong trending candidate
2. use oscillator ...watch pullback(wait mode)
3.trend reverse...now u enter.
indicator: adx..strength of direction
rel. strength ..ok
filter ; adx>30..+di>-di..di=demand index
rel strength..compare to other stock /nifty ..BETTER.
stokastic..%k<40 oversold indicator
..UP DAY.
1.TICK ABOVE YESTERDAYS HIGH.
2. OR NEXT DAY BUY ABOVE 3%UP
CONDITION : %K MUST BE MOVING UP
STOP : 1% BELOW LOW OF LAST DAY
OR 1.5 ATR BELOW FROM LOW OF TODAY
PATTERN LOOKS...1-2-3-4 ...4 IS INITIATING PT ABOVE 2.
PROFIT TARGET : 7% IN 3DAY
MAXM TIME 5DAY..OTHERWISE TIME STOP.
IF PROFIT OCCURS EARLIER THAN EXPECTED..ALLOW 50% HOLD TO RUN FOR TOTAL 10% PROFIT
so u r developing trading philosophy...plan new arsenal...to fight better.
so in trade universe,3terms i introduce...exhausive, exclusive and intersection
EXHAUSIVE..U HAVE TO GO INTO DETAIL,exhausive gives micro view.
EXCLUSIVE..NO RELATION EXISTS..INDEPENDENT ELEMENT
INTERSECTION-;INTERRELATION BETWEEN 2 ELEMENT...INTERRELATIONSHIP BETN MARKET...INTERRELATIONSHIP BETN MANY COMPANY IN A PARTICULAR SECTOR.
so before reaching to become a master...one goes through various way to question and answer this 3 element...[may be in different name].he knows how far he understands.
.....his limit..so now practice on regular basis[system]and follow it diligently[discipline]
TRADERS IMPROVEMENT is nothing but ..... expansion of 3 idea.
any other idea....yes EXECUTION. also some profit booking idea in real sense...so the difference with beginner and pro clearer to me..its IMPLEMENTATION, IMPLEMENTATION BY U.
so in trade universe,3terms i introduce...exhausive, exclusive and intersection
EXHAUSIVE..U HAVE TO GO INTO DETAIL,exhausive gives micro view.
EXCLUSIVE..NO RELATION EXISTS..INDEPENDENT ELEMENT
INTERSECTION-;INTERRELATION BETWEEN 2 ELEMENT...INTERRELATIONSHIP BETN MARKET...INTERRELATIONSHIP BETN MANY COMPANY IN A PARTICULAR SECTOR.
so before reaching to become a master...one goes through various way to question and answer this 3 element...[may be in different name].he knows how far he understands.
.....his limit..so now practice on regular basis[system]and follow it diligently[discipline]
TRADERS IMPROVEMENT is nothing but ..... expansion of 3 idea.
any other idea....yes EXECUTION. also some profit booking idea in real sense...so the difference with beginner and pro clearer to me..its IMPLEMENTATION, IMPLEMENTATION BY U.
TA learning
...............
while this element help me to understand in detail the subject , but following order of learning may help.
1] understanding TREND from weekly chart. Start with simple CLOSE based LINE chart - it clarifies TREND,U can choose ,higher HIGH-higher LOW for UPTREND ,using price action .10 week MA line slope is also well .
2] understand basic of PRICE constructing CANDLE - it helps to follow from color open-close ,shape- bullish/bearish/indecision . A big size candle shows bias of BULL/BEAR. Then comes REVERSAL bar
3] LOCATION- 2 r important - SUPPORT & KNOWN RESISTANCE. lower pivot/ higher pivot where trend may change , so near to pivot -how candle r forming .This location & formation of candle can create - 1st understanding of bias in trade.
4] Pattern- to see typical continuation or REVERSAL , it helps on majority perspective how sidelined player may join . Also known as STRUCURE- flag/pennant r continuation structure. W /M - triple TOP/bottom , r REVERSAL - H & S V or ^ are variations . W/M easily readable, V/^ - takes time to trade with LOCATION.
5] cyclicity- uptrend - distribution -downtrend-accumulation - this 4 stage in higher time frame . Mean reversion - basic GREED force study , IMPULSE bar vs how far its reacting- this is actually more imp .
6] Next comes moneyflow - we always know big money coming - creates MOMENTUM ,so the idea of strong hand/giant footprint. We study typical ORDERFLOW to see it, $/inr relation helps ,Govt sustainability ,policy decision r other indicator.
After some fund coming, it will be distributed from large to MIDCAP - also in Sector rotation keeping NIFTY in a zone . PL switch now in SWING mode trade ,
in upswing - lower pivot break down PROVES moneyflowing out- immediately join in short.
Similarly At short in TOP, stop triggered- proves again money flow started-PLAY LONG.
THIS IS THE SKILL OF A TRADER.
7] when direction bias exists , just hold using any momentum tool to get more juice .
Only at new high/new low as price reaches unknown territory USE DIVERGENCE STUDY - HOW TO SHORT NEW TOP or how to buy at bottom to catch like recent V in nifty.
8] play plan on Trade zone is very simple - create a zone , buy at known low while reversing or forming small doji - take profit with small target - condition u to this way thinking. MA flattens - higher low with lower HIGH - set up to trade this condition.
9] Detail study on chart , say 5min/ then hr chart/daily/weekly clears in ur mind how various group is coming /taking out money - when comes CONFLUENCE , how imp news affect PRICE.
It will help to eliminate random factor vs TREND ,quick sharp move - volatility.
oilman5
...............
while this element help me to understand in detail the subject , but following order of learning may help.
1] understanding TREND from weekly chart. Start with simple CLOSE based LINE chart - it clarifies TREND,U can choose ,higher HIGH-higher LOW for UPTREND ,using price action .10 week MA line slope is also well .
2] understand basic of PRICE constructing CANDLE - it helps to follow from color open-close ,shape- bullish/bearish/indecision . A big size candle shows bias of BULL/BEAR. Then comes REVERSAL bar
3] LOCATION- 2 r important - SUPPORT & KNOWN RESISTANCE. lower pivot/ higher pivot where trend may change , so near to pivot -how candle r forming .This location & formation of candle can create - 1st understanding of bias in trade.
4] Pattern- to see typical continuation or REVERSAL , it helps on majority perspective how sidelined player may join . Also known as STRUCURE- flag/pennant r continuation structure. W /M - triple TOP/bottom , r REVERSAL - H & S V or ^ are variations . W/M easily readable, V/^ - takes time to trade with LOCATION.
5] cyclicity- uptrend - distribution -downtrend-accumulation - this 4 stage in higher time frame . Mean reversion - basic GREED force study , IMPULSE bar vs how far its reacting- this is actually more imp .
6] Next comes moneyflow - we always know big money coming - creates MOMENTUM ,so the idea of strong hand/giant footprint. We study typical ORDERFLOW to see it, $/inr relation helps ,Govt sustainability ,policy decision r other indicator.
After some fund coming, it will be distributed from large to MIDCAP - also in Sector rotation keeping NIFTY in a zone . PL switch now in SWING mode trade ,
in upswing - lower pivot break down PROVES moneyflowing out- immediately join in short.
Similarly At short in TOP, stop triggered- proves again money flow started-PLAY LONG.
THIS IS THE SKILL OF A TRADER.
7] when direction bias exists , just hold using any momentum tool to get more juice .
Only at new high/new low as price reaches unknown territory USE DIVERGENCE STUDY - HOW TO SHORT NEW TOP or how to buy at bottom to catch like recent V in nifty.
8] play plan on Trade zone is very simple - create a zone , buy at known low while reversing or forming small doji - take profit with small target - condition u to this way thinking. MA flattens - higher low with lower HIGH - set up to trade this condition.
9] Detail study on chart , say 5min/ then hr chart/daily/weekly clears in ur mind how various group is coming /taking out money - when comes CONFLUENCE , how imp news affect PRICE.
It will help to eliminate random factor vs TREND ,quick sharp move - volatility.
oilman5
Introduction to TA - once i guided through corporatebridge in 2011
.................................................................................
1] Basic- its on support/resistance -pivot/trend on chart
2] Patterns & utility of particular chart
3] MA & 2MA -MACD- in detail ,it helps to understand /continuation , momentum ,reversal chance
4] volatility & how to use it intraday trade
5] Darvas box for break out
6] advance tool, KO-Aroon-William%r,volume accln,BB
7] Elliott - using it trading,cycle
8] Market breadth study to understand sentiment
9] How to use all these to prepare a trading system ,as per market condition
10] How past study of price helps to predict PRESENT ,so we can use elongation to predict future, case study from actual Trade-TRADING ARENA,MARKET PSYCHE & FUNDAMENTAL FORCE WHICH DRIVES THE MARKET
.......................................................................
ONCE this basic is cleared one can go through Advance TA ,where thorough conversion ,after avoiding mistake - utilizing particular tool for sp MARKET Condition- with trade sp case are discussed ,alongwith Result ,sector rotation + software guidance.
GAP , pull back buy, Style of trade - fitting with MARKET CONDITION,USE OF HIGHER TIMEFRAME , counter trend attack + psychology of trading are shown.
.................................................................................
1] Basic- its on support/resistance -pivot/trend on chart
2] Patterns & utility of particular chart
3] MA & 2MA -MACD- in detail ,it helps to understand /continuation , momentum ,reversal chance
4] volatility & how to use it intraday trade
5] Darvas box for break out
6] advance tool, KO-Aroon-William%r,volume accln,BB
7] Elliott - using it trading,cycle
8] Market breadth study to understand sentiment
9] How to use all these to prepare a trading system ,as per market condition
10] How past study of price helps to predict PRESENT ,so we can use elongation to predict future, case study from actual Trade-TRADING ARENA,MARKET PSYCHE & FUNDAMENTAL FORCE WHICH DRIVES THE MARKET
.......................................................................
ONCE this basic is cleared one can go through Advance TA ,where thorough conversion ,after avoiding mistake - utilizing particular tool for sp MARKET Condition- with trade sp case are discussed ,alongwith Result ,sector rotation + software guidance.
GAP , pull back buy, Style of trade - fitting with MARKET CONDITION,USE OF HIGHER TIMEFRAME , counter trend attack + psychology of trading are shown.
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