I can help you with stock chart reading

Hi Vvonteru,

How is Tata Tea looking? Its run up a lot. Wait for a pull back and enter? Or you think there is an opportunity for shorting while pull back?

- Rags

Ability to give up a chance even though you know you can make money is a trait you need when trading. You want to do that if the winning trade is against your methodology. Even though in short span, you might make money on a trade or two of this sort, but, overall you stand to lose more.

Don't concentrate on the money. Concentrate on doing it right. You should make money as an after thought. Overview of my methodology says,

1. Trade along the market direction.
2. Trade along the sector direction.
3. Trade the stock that follows the sector direction.

Since market direction is down, you have 2 options: Short, Stay aside. That does not mean you short a stock that is going up. In case of Tata Tea, it is setting up for a short. But, wait for the market to do that too. Lets see after Monday. Nifty is going to test 50 day EMA.

For us to go Long on the stocks, there is some more time. If the indexes continue to rise, it may require atleast 1 to 2 weeks.

Hi Vvonteru,

As always your explanation is simply great. What you said is very true, sometimes if you really dont know what can happen, its better to sit out and watch than loosing money.

Century Textile is one stock that I have been watching closely and it follows the market very much.

In the case of Tata Tea what are the things that you would look for and say its setting up for a short? Or even the market? Definitely I dont want to short on a stock that is going up, dont want more pain , seen enough.

- Rags

Tata Tea direction is down, like the market. Last weeks upside doesn't change things. Both are below 50 day EMA. 8 day EMA crossed down 50 day EMA. This tells me that they are setting up for short. But, not yet.

If you don't want to short, just stay aside like me. If the market is so good like every one is saying, we will join them too. Just a little late. Our risk is less than theirs, so are our profits.

Thanks Vvonteru. Your explanation helps as always.

- Rags

Money Management
I always used to follow percentage risk methodology for position size calculator. This was based on Elders suggestion. After reading Van Tharps book, Volatility did make sense for consideration.

No matter what methodology you use or even random entry, you need position size calculator for money management. I am attaching a file to do the same. Feel free to modify.
1. You can change parameters identifying % risk, % volatility, % total risk etc.
2. Add more conditions, like money limit per trade, in addition to % risk and % volatility.

ATR stands for Average True Range, which gives the volatility of the stock.

Market:

I was looking at some leaders. I am seeing positive things about them. I like Reliance Industries. We need to wait for pull back for entry. Hopefully, we will get that next week.

Attached Files

PositionSizeCalculator.xls (42.0 KB, 75 views)

Hi,
Can you let me know which are good indicators for buying and selling on charts?

People talk about moving average or MCAD ossillators, but somehow by the time you are able to time these, you would have lost a lot of you gains.

So what inidicators (individually or in combination) works reasonably well?

I recommend you to read Van Tharp's book, 'Trade Your Way to Financial Freedom'. This book has various systems to choose from. Or you can use Elder's Tripple Screen system. Any system you develop should give you:

1. Setup Criteria
2. Once the setup is there, Entry Criteria
3. Stop Exit
4. Profit Exit
5. Position Size Strategy (You could use the Excel spreadsheet attached in the previous reply)

You could have several other exits (like Time Exit) as outlined in Van Tharp's book. Search in this forum if you can find a link for soft copy.

My current setup criteria are based on Dave Landry's patterns. Entry criteria is always pull back. For example,

N_MonthHigh setup :
1. Market is trending up
2. Sector is trending up. Stock follows sector.
3. 3/6/9/12 month high + 8 day EMA above 50 day EMA above 200 day EMA
4. Volume > 1,00,000 + Price > 100

First Thrust setup
1. Stock makes a 3/6/9/12 month high and loses 10% in the last 10 days
2. Market has turned direction
3. Sector has turned direction. Stock follows sector.
4. Volume > 1,00,000 + Price > 100

For Stops: I used to use Dave's strategy based on value of the stock. After reading Van's book, I am planning to use 3 * ATR (Volatility of the Stock). I am also looking at Chandelier's exit stop loss.

For Profits: I used Dave's reverse position sizing strategy for taking profits. i.e., once risk is reached, take 50% position off. Set the remaining = buy point. I am considering of changing it based on my reading of Van's book. I want to test the strategy of trailing stop with multiple of ATR, reducing the multiple as more profits are reached. I am looking at several things right now and I may test them to see how they work.

So, there is no direct answer to your question. Only direct thing that you can use is the Position Sizing Calculator. No matter what strategy you use, you need this to be successful.

You can start with Tripple Screen system. Google it. And don't look at the history of a stock and think what you missed. Thats the enigma with these stocks. History looks so easy. Once you step in, things are different. So, train yourself not to think about history. If you were not there, thats not yours.

how ll be the marke today... and for this week... seems in us they have hyped the intrest rate.......

Interest Rate increase is due this Thursday. I think this is already adjusted in the market. SP500 is testing 200 day EMA. I don't think anything will happen till Thursday afternoon 2:30 PM. I was sceptical last week. But, now my bias is upwards. But, you never know till 200 day EMA is taken out.

Indian markets so far are doing good. Looking at the charts, there should be a pull back this week. MACD has nice divergence and it worked. Hopefully, the markets will pickup after the pullback and cross above 50 day EMA.