Technical Trading - Practicing the Theory

Thank u Rahulg,
But the s/L is 60 percent away from buying level & Fibonacci talks of 30 & 50 per support also.Which is safe.
ranga

Dear Ranga,

I dont think s/l will be 60% away. entry around 116 and s/l at 109 as per my example. It would be 5-6% away and maybe in this method the s/l is big as according to ajay there is smart money and hence chances of getting out at a loss is very limited.

Ajay please correct me if wrong.


Rgds

Rahul

you are verymuch correct Rahul in your explanation and understanding. And regarding the other doubt you have i'll quote an example here. Say on a rally day the low is 90 and the high is 100 ,then yesterday's range should be Rs.6 or less. Here range means difference between high and low. And yesterday's Low should be above 95 which is median price for the rally day ((90+100)/2)and volume preferably be more than 70%. This pattern helps us in shortlisting the securities to focus for nextday's intraday trading. Today you may check Century Textiles. This can be a good example to understand. Look for day before and yesterday's bars. Look in Cash Market. I didn't observe Futures Charts.

Thanks and Happy Practicing Technicals

AJAYKUMAR

Dear Lohiya,

I'll try answering your question in the chatroom tonight, if my health and WIFE permit . It is a question which requires a lot of explanation which is difficult for me to write at this juncture.

Kindly excuse me. But it is sure I'll address this even in pieces.

AJAYKUMAR

Dear Ajay,

Thank u for your explanation. Yes I understand it now. Can u explain what is a sensible way to approach rallies. Many tims we see a stock rallying 1 day- 2nd day and then we enter and then it starts correcting or moves sideways. Like today in the day I saw Gwalior chemicals and others like HOV Ltd rallying. Is there is a way we can short list them on a certain criteria and enter before the end of the day today if remains in certain norms and exit in a day or two days time.

Regarding century textile...it came up on my list today....i scan on the basis of 3 days closing is higher than previous day. volume is above 10,00,000( i take a high volume like this as I believe not everyone can influence a share of such high vol and it will be some big smart money moving it in such high volumes) and todays close aorund 2wice the volume of yesterday.

Now in century textile all these conditions are met. and since today volume was so high. we can go high above todays high with todays low as s/l. Is this a good strategy. I am still studing this and not implemented it.

By the way in century textile I would only enter above 702 supported by good volumes as this was all time high and today in 60 minutes chart it went down after touching that level and more than half the volume for the day happened at that level in the last hour itself.

Regards

Rahul

Hi Ajay,

I have an issue in mind which i thgt u might be able to sort out. See most data providers provide intra day( 5min chart) for not more than 100 stocks. Now if i see a particular stock on daily basis and decide to take an intra day position i should have the intra day chart to follow its moment. So that means our intra day trading will be restricted to a few stocks. Is there a way out.

Rgds

Rahul

P.S sorry i know u take time out of all your work and i will now try to restrict my queries so as not to burden u.

Dear Rahul,

Sorry I missed your post somehow yesterday.

To address this issue, you should have intraday tracking software. And I remember you telling that you don't track intraday. Then how come you can catch the move before the close of the session?

And in case you have any software, I can post a few mechanism wherein you can track them and enter them immediately.

Otherwise, look for some price volume breakouts in Metastock and shortlist them by looking into charts. Then on the nextday you may try initiating the trades. Even the 1.618 crossover mechanism what i discussed in this thread can also be adopted to run positions. But this has a methodology to adopt. I can discuss that in case you like the approach.

Or even look for higher periodicities inside bars or low range bras with more volume. Here higher periodicity i mean weekly and monthly. Then you can enter the stocks after you like the chart.

And practically what happens in rallies is entry by intraday traders after a rally. In case the stock moves a day or two in a row, generally it attracts the attention of intraday traders. So naturally noise will increase in the move. Then it becomes difficult for the bigfish to run it. So they leave the stock for sometime. They even keep traps and make people hate the security. And once the noise level settles, then again the move will be on.

Hope it is clear now.

Regarding this issue, you have three choices. One is going with the given securities. Second one is subscribing for software like IRIS or Falcon where you get whole market data.

Thirdly ignore everything, do your homework, keep your orders in the system with stops and take positions home. Sorry. Really there is no other alternative solution for your problem. And honestly, for the size of our investments, even the 100 or so what ever they give is also enough to make money. Only required thing is patience. Wait patiently to get moves i the securities. And I think anyhow they are all frontrunners only. So you will get your move oneday or other.

And Finally Rahul, you may keep posting your questions. But should excuse me in case I take more time to answer them.

Thanks and Happy Practicing Technicals.

AJAYKUMAR

HI Ajay,

I can quite understand....your health, then work and like u said wife . I got married recently and I can quite understand the last one


I do have a metastock now and can track data intraday but of stocks traded on nifty and some other from nse. WHat i did prior to this was see the top movers on NSEINDIA and then go to the daily chart on MS and see what was the volume and if there are an Breakout or did it stop at any major resistance level and if i dont see any hurdle and daily is pointing upwards i decide to buy before the close....but many times it reacts the other way that way. Have to add another filter to reduce the fail rate. Any suggestions?


Yes please. I would like to know more about this.

Because in intraday i dont think this strategy can be used on top runners for intraday basis as for that security needs to be up 5% and very rarely security moves at that rate in top runners. Otherwise on NSE we find atleast 3-4 stocks above the 1.618 level daily but i only get to see it on nseindia and its too late to enter as they are already 12-15% up as I dont have a live scanner plus those securities are not covered by the data provider even if i have a scanner

Please if u could send me explorers for MS for inside day and other methods described by u and also discuss the method to use 1.618 for positions.


Thanks a ton

Rahul

Hi Ajay,

There is an issue which came to my mind--

- When we decide to enter a stock the next day on reasons of high volume, inside day or other reasons and the next day the stock opens with a gap. How do we treat that. do we wait for a pull back or enter with a smaller lot size and buy again if it then pulls back to our purchase price.

-Also they say we should not enter in the first 5-10 minutes as lot of euphoria is created in the beginning. What happens if the price moves beyond our purchase price within that period...or would that rule apply only if we do not have a pre determined mind set and are looking for trades on that day itself....

-if we see high volume( exceptionally high) on one day. Can we use the high of that day as a level to enter and low of the day as a S/L level. I am attaching chart of what I had in mind. Would these charts have been better of the 50 Day MA was pointing upwards in liberty or for short term it does not make a difference.

Rgds

Rahul

Attached Images

	Liberty.png (21.3 KB, 36 views)
	Crew Bos Products.png (21.7 KB, 32 views)

Hi Rahul,

Very sorry for my delayed reply. The mindset was not that proper to sit and give you reply. Yet for any clarification over your doubts, if it is possible, you may visit the chat room. I am almost present there every day in the night -along with our great grand masterji karthik-, if you want to have a quick clarification, but preferably not beyond 11 p.m.

Rahul! generally in these cases you may design your entry by breaking the quantity what you planned to take in that particular stock.

Say, you want to buy 100 shares of X company. Buy 50 there at any price available and the rest at the price you initially planned. This helps you to be with the stock, in case if it breaks out heavily without retracing to your originally planned entry price. In such cases you will be with atleast 50 stock.

But keep in mind always the risk ratio. And design the quantity as per your risk taking capacity depending on the difference in price between your trade plan and available price.

But in majority of the circumstances, the prices generally retrace to the technical level where you planned your entry, once the euphoria gets settled.

But just to avoid the non participation in the rally in the stock what you identified, you may as you said, can take a part.

Rahul! all these questions are very subjective. The major issue is the risk ratio. If it is met, then trade can be initiated anywhere.

Generally, the first five minutes move is important. In case the price crosses the first five min high, you may initiate the trade.

Rahul, as per my experience with charts so far and in practice, the better stop will be the bottom of the day before the day of Rally or in case even a minor pivot is seen before the rally, that pivot is a better stop. But here the high volume bar should generally be with genuine buying and should not be with circular trades . This is more important. And regarding the MA, i have no answer as it is highly subjective.

Thanks and Happy Practicing Technicals

AJAYKUMAR