Technical Trading - Practicing the Theory

Dear Friends,

As I mentioned in my first post, anytime I call it a Trader, please consider investor also and as well trading as investing. So don't get confused if I call it a LT Trader- There are no LT Traders in Practice. Every one is Investor in Long Term. So now comes the question how to sell short in a security which is not in futures? Friends here I'd like to give you two insights. You may choose any one of them as per your convenience. Even these things, what I am going to suggest you, are not 100% fool proof, still work many times well in the market. One of them is selling short in Nifty Futures and thereby being in the markets on bearish moves. And the other one is selling short in any of the weak securities which is in Futures, which belongs to the same sector of your cash stock. Say you got stopped in cash market in a stock belonging to software which is not in futures, then try catching some weaker stock of software in futures to sell short. As I told you earlier, sometimes this also might not work, because the markets might go strong and the whole sector also could be strong,where you got stopped. But in such cases, friends, nithing to worry. If the whole market and the whole sector is strong and your stock fails to move, then definitely there is something wrong with that stock So you may better leave it. No regrets. And start making analysis why you chose that stock for investment, which failed to move, despite a good move in Index and the whole sector- just to avoid future mistakes.

Hope this gives you some clarification over the doubts of reversing your long trades in cash markets.

Will come back to you soon to continue our topics. Meanwhile pl. post your doubts, if any.

Thanks and happy practicing TA

AJAY

I have a simple question:
Are there Single Stock Futures on Indian stocks? If so, where can one find a list of these stocks?
Thanks in advance.
Shamim

Friends,

Might not post till monday or tuesday. Catch you up later.

Thanks and happy Practicing Technicals

AJAY

Dear Friends,
Sorry for not able to catch you for the last 10 days. Hopefully will start my postings from tomorrow. This time onwards we will go in an order to learn practicing the theory.

Thanks to everyone who wished my recovery. Now also really speaking not feeling better, still can't resist but visiting the forum and participating.

Thank you

AJAY

Welcome Back Ajay. Looking forward to the pearls which though found in the Deepest Oceans take the traders to the Himalayan Heights.

Warmest Regards for your health, wealth and our wisdom.

--Ashish

Well said ashish and yes Ajay though not participated much in your thread I am a regular follower here and find it very interesting. All the best for your health. Take care.


Rgds

Rahul

Dear Friends,
Sorry for taking a long break. Let's start discussing the practice part.

The first and foremost thing to have is to practice absorbing the NOISE.

There is lot of subjectivity in defining this NOISE.

Practically speaking the NOISE is nothing but what is happening in the security's price above or below the entry levels before either the stop is hit or the target is hit. So anything between the entry and stop or entry and target is noise.

This noise varies according to the chart periodicity. The noise for a person who trades using Daily charts might not be the noise for the Trader who uses 30 min. charts. Hope it is not confusing.

So, first we have to understand what time frame we are using in charts to initiate the trades. And then the entry, stop and exit. Anything in between is a noise. So while practicing, just go least bothered what ever happens to the security in between. Wait to get stopped out or to reach the target.

If we start paying heed to the movement of the asset price in between, then we will start changing the trade plan and spoil the trade. This changing the trade plan might help us once or twice, but finally it makes us losers in the market.

So, once the trade is initiated with a good trade plan, never change it. To go that rigid, before initiating the trade itself- try visualising the scenarios with "what if" thought in the mind. "What if this doesn't go like I planned", then we will start thinking in the other way and understand one more route
for the security's price movement. Like this if we are ready while designing the trade - with the Road Map of the price move - then the price behaviour won't surprice us and it further helps un in going stable and absorbing the noise.

I remember one incident happenned in the recent past. It was discussed in the chat room. It happened to one of the veterans of our Forum.With due apologies to him I am here mentioning it. He initiated trade in Infosys. And booked a huge profit in it. But this was done out of trade plan. The trade was
initiated keeping Daily charts in the mind and exit took place just for the reason the security was tracked intraday. ofcourse it was a profitable trade. And that member must have taken one more entry into it at a good price and must be running it still- as he is that wise in practicing technicals. Why I mentioned it here is to tell that nobody is foolproofwhen dealing with the
markets. So time and again we should protect ourselves.

It is better to make a record for the trade plan and track it. We should look into it whenever we try to do something with that security in which we are already in, to understand the original trade plan- which should preferably be with the Security's Price Road Map.Then we will get reminded of the trade plan. And this helps us in sticking to it. It will work wonders my friends.

Thanks and happy practicing Technicals

AJAYKUMAR

Welcome Back.

Hey Ajay,

welcome back. Great to hear from you again. Hope all is good with health.

Rahul

Hi ajay,

I had a query regarding your last post.
-So if someone is doing breakout trading using patterns on daily charts he should not see 60 min bars and weekly charts. Is this what u mean?

-What if there is a breakout on daily chart but rsi is overbought and on weekly still MACD maynot be +ve.

-If we are using daily charts, should we also see resistance and support on the weekly charts( though i have seen mostly the resistance levels match but on many they dont)

- if we trade on breakouts and there is a lot of noise above the breakout. Should we trade this stock. I am attaching the stock of berger paints. it has broken out of right angled ascending triangle at the 80 range. Macd is just above signal line above the zero line. RSI is also +ve and a nice uptrend line is drawn on it. Now if u see there is a lot of noise above it. how should one trade such a share.

- One last query. Many times I draw support/resistance lines. It joins some highs and lows. And many times it goes through the shadows and encompasses the main body of the candlestick. Should we consider this valid too or resistance lines should onlu touch high and lows of the candlestick. U will see what i mean on the chart of berger attached. I have marked this with arrows.

Too many questions. Hope u get time to answer them and I hope they are in line with the topic u had covered. If they are a bit out of context excuse me.

Rgds''

Rahul

Attached Images

berger paints.png (50.7 KB, 57 views)