Technical Trading - Practicing the Theory

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

I will trouble u sometime there



Ajay when u say the better stop will be the bottom of the day before the day of rally or even a minor pivot that would be more appropiate for short term trading. If we think of day trading maybe the stop will be too far for comfort. Or can we use it for day trading.

If u dont mind can we discuss strategies for trading using EOD data and use intraday data only for analysis after market hours. I think what u were talking about before using 1.618 method for taking positions did u mean for a longer period or use it for short term trading. I would be more comfortable in using strategies with lower risk(less aggressive) as sometime I cannot monitor regularly due to business commitments that keep coming up. And ofcourse this when u are finished with your day trading strategies. Its nice for me to be aware of them too.

Also if u can send explorer formula for inside day and also for the accumulation pattern u were talking abt......which moves 60% of the previous rally and above its median price. Can these strategies be used for taking short term trading too and if yes would we have to change the tuning a bit for that type of trading or use them as u had explained them for day trading.

I was wondering what kind of trading do u do. Are u a day trader, swing trader, positional trader or use a combination of all depending on the market conditions.


Rgds

Rahul

Sorry Rahul, I was thinking your question was on position entry basing on price volume break. So only i recommended the bottom of the previous day of the rally as stop, provided the volume is genuine- i mean a clear inflow of money.

And the exploration for the inside day is very simple in metastock.

Just keep the following in the filter in your exploration.
Inside()

And in case you want to keep volume filter as well, them keep this
Inside() AND V>Ref(V,-1)

And for the other accumulation or distribution pattern after a big move, pl take the following
(H-L)<(Ref(H,-1)-Ref(L,-1))*.60 AND L>Ref(MP(),-1)

Here you may keep volume filter as per your volume preference by adding
(H-L)<(Ref(H,-1)-Ref(L,-1))*.60 AND L>Ref(MP(),-1) AND V>Ref(V,-1)*.6

Here 0.6 is my figure. you may keep any much as you wish. Here I mean Volume should be greater than previous volumes 60% which means- if previous volume is 1 lakh, today volume should be morethan 60000.

Have a little disturbance Rahul. I will stop here for now. Catch you later.

Thanks and Happy Practicing Technicals
AJAYKUMAR

Hi Ajay and others like rahul, who are giving a very healthy discussion here.

I happen to log on after a very long lime and believe me; I read the whole thread in just two sittings before PC.

It is a very interesting and healthy discussion indeed, and a lot to learn for me.

Thanks to Ajay again for this wonderful initiative and great but simple insights.

Unfortunately I can’t do day trading and can by stocks in delivery only.
I am waiting eagerly when you move to next section of the trading in detail.

Thanks to all you guys again.
I will try to keep logging in here daily

Hi Ajay,

I have changed inside day formulae a little. In col a i have put Vol>=250000. in colb I have put ROC(VOLUME,1,PERCENT). In filter col I have put Inside() AND When(colA=1) AND When(colB>50). I have tried to keep a filter of securities in which vol is above 250000 shares. and also for rate of change of volume in inside day the vol should atleast be 50% higher than previous day. Is this formula correct since i dont know how to write and I have just made it seeing other formulaes.

Now to make things clear for inside day. Is it necessary that for inside day the previous day shold be a rally or it can be kind kind of bar. next question is the increase of volume for inside day. SHould we see it in relation to just the previous day. What i mean is that on inside day the volume is higher than the previous day but it is still lower than what the normal volume is for the stock on any given day. My own thinking is that on inside day the volume should if not be more should atleast be equal to the volume at which normally the security trades and we can use a 50 day MA on vol for that.

Then I am attaching a chart in which i am observing inside day. Its of ranbaxy. Its made an inside day for last 3 days. All three days have higher volume. and in addition to this fridays close has again made an inside day to thursday with higher volume. So in case of a up move we can go long on break above thursdays high and add more positions above the high of tuesday and if breaks down the level to go short is nearly the same on thursday and tuesday.

Regards

Rahul

P.S I am enjoying these sessions and hope your health permits you to continue. I will also try and post and attach charts on these findings. Though I dont do day trade, learning is always good. Infact it will also help if we take positions as we will understand small formations and how we can expect price to react.

Attached Images

Ranbaxy.png (19.8 KB, 53 views)

Hi Ajay,

How are u? I was reading some price action and had a query regarding the same. When we trade patterns we basically try to assess accumulation and distribution and take our trades accordingly and we exit when the price reaches a point where the trend no longer holds valid.

Is it possible that a pattern is formed over 2-3 years. If yes would that mean that someone was controllling the stock for so long. I was going through the chart of Dr Reddy. In the weekly there seems to be a cup with handle. Pls see the attahced chart, Though the rim on the right ishigher so that may not make the right pattern. let me knwo about your view. Also see the movement of this stock in the daily. there is definatley something brewing. Its already shaken ppl out by moving out of trading range and entering it again and is not again moving up. In last fall it did not fall much and last 3-4 days volumes are high.

Also how do we treat high volume days as there was on 2nd may 2006. I have marked these high volume bars in the daily charts attached here. Do these high vol bar of the past hold any imp 2-3 months when price approaches these high/low of that bar.

Sorry have loaded u with a lot of query. Now will just wait till u et time to answer them

Thanks and regards

Rahul

Attached Images

	DrReddy.png (26.8 KB, 40 views)
	DrReddy-Daily.png (29.0 KB, 32 views)

Hi Ajay!

Hope you are doing good. Can we have any exploration for a big move day as well or we can go ahead with something like a fixed %age change?

Best Regards,
--Ashish

Hi Ajay,

How are u doing? Hope health is fine. Happy new year to u and all members of traderji forum.

Rgds

Rahul

A Gr8 thread,i was refered about this thread to-day,have gone thru all of the posts in this thread, in last 1.50 hr ,really impressed about the sincere efforts taken ,to explain / share .
Some one plz continue this.

Dear Ajay,

I have been wanting to learn trading for quite some time now. Am not even decided if it's really something that can turn into a passion or not. A lot of people around talk about it considering the current scenario. But I want to learn more and do atleast some position trading,
1. To allow me to invest my funds intelligently
2. To be exposed enough to a kind of business to be in a position to say whether I love or hate it.

Needless to say, your reflections are insightful and interesting. This question comes from a rank amateur but please do tell me what does getting stopped in a trade mean as your earlier post suggests?

Keep up the great work. It's a source of inspiration for a lot of newcomers