An Excellent Collection of ST's Posts.

candle

Well-Known Member
#1
Dear Friends,

I am starting this thread to collect some excellent posts of ST sir at one place. Many of his posts here on TJ are real Gems. I knew that many of us are collecting his posts personally. Some people have acknowledged here to have some of his posts in pdf/doc format. It is very difficult to search many of his valuable posts scattered here on TJ. It will be a good idea to have them all collected here at one place.

I request u all to contribute here to make this collection a real gem.

Regards.
 
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candle

Well-Known Member
#2
P-1 or 2 Bars Entry




Today I will share an entry technique which is my favourite entry technique for getting into a trend move, Many times we either miss an entry in a trend move or we get out in between and we want to enter again with small, predefined and controlled risk.

The chart is attached. Here market was in uptrend, it opened with a gap up and after a bit of correction, the uptrend resumed and we want a low risk entry in this uptrend.

Here we locate a small pivot low. And our entry in long trade is above high of the bar which is one bar earlier to pivot low bar provided it is higher than the pivot low bar high, else we go 2 bars earlier.

I have marked 5 places where market gave us a low risk entry shown by blue lines. The stoploss is at the low of the pivot low bar....and you are hooked into a trend...enjoy the ride.

This is an entry method....it is NOT a stand alone trading system....please use it as an entry method only.

The method is based on the fact that an uptrend is made up of higher pivot highs and higher pivot lows and if we keep stops at a pivot low, it will not be hit in a strong uptrend, and if it is hit, it means that the uptrend is weak and we better get out instead of hanging around in a market which is not trending strongly. It is based on sound trading principle and hence this entry technique has more than 75-80 % success rate and is my favourite.....This entry is a great entry for adds even if we are already in trend. It gives low risk add points.

Mirror image to get into a downtrend.....

Smart_trade
 

candle

Well-Known Member
#3
TO ADD or NOT TO ADD

One of the questions which bother traders whether day traders or swing traders is whether they should add to the winning positions or not.The answer is not simple because adding the positions when the market is going in our favour it a good trading practice but it has its own trade-offs. Let us see what are the advantages and disadvantages :

1) Advantages :*1) The main advantage is when we get a strong trend, and we add to our positions, the positions become large without any increase in risk as we add in such a way that the total position after adds are not jeopardised.So in a strong trend the adds can give profits of 5-10 R from 3-4 R price move.

2) Another advantage is as we are adding in the profitable position along with the trend, there is less tendency/temptations of booking profits and taking positions against the ongoing trend.

2) Disadvantages*: The main disadvantage is the trader looses small profits.Most of the times markets are sideways and choppy and small profits which has accumalated will vanish if we take adds.

So how does a trader resolve the above dilema ? This issue is more bothersome for daytraders. Swing traders generally get good directional trend moves but daytraders will always feel bad if the small profit accumalated goes away due to add and the trade becomes a breakeven or small profit trade. The solution lies in achieving a balance .*I have found that daytraders can take atleast 1 add in sideways/weak trending markets but the moment they sense that the day could be a strong trend day, they must add aggressively and hold till the end as the statistics indicates that the strong trend days close at /near the bottom/top of the day. On strong trend days holding till the end is much profitable than buy/sell during the day*In grinding up/down and choppy markets one should avoid adds.

But for taking adds, one should be prepared to fergo some small profits. Adds in swing trading are very profitable when we get a large trend and we have initial position plus 3-4 adds. Adds could be in 1:1:0.5:0.25:0.25 position so that the add quantity is reduced as we go further in the trend.

Traders can practice by starting with one add on a trend day and holding till the end, then increase add positions to 2 and so on...even one add straight-a-way doubles the profits.

Smart_trade
 

candle

Well-Known Member
#4
Till 11:00 BNF trended and then it went sideways with upwards bias ( this is evident from the fact that it was held above VWAP line all along.

When market goes horrizontal with small up/down range and with breakouts and breakdowns not holding in any direction, these markets are difficult to trade for everyone even seasoned traders.Here pivots wont work as the range in horrizontal movement is small and pivots on both sides keep breaking so here only buying near VWAP and selling near +1SD or +2SD will work.*

This market is not suitable for adds and trailing on pivot lows. This market is suitable only for buy, get a rally and sell and book profits....it is tough to trade all the moves with precision.

This is where traders need to come in lower gears....trade small, no adds, and keep losses small ( take small profits too and try to be in small profits on net basis...)

No one can trade all the moves and turns in any market. If you trade clear and clean trends, that is enough for making the month positive...in sideways try to put small amounts of profits in the kitty.

Smart_trade
 

candle

Well-Known Member
#5
I have been fortunate to have worked with some brilliant and successful trades and also with many failure traders. Failure traders fail not because of lack of intelligence, hard work, discipline.....etc even they have all these...they also have strong will to succeed . Then why do they fail ??

I find that if I have to list down 2-3 important points which separate successful traders from the traders who could not succeed, I will list them as :

1) Successful traders have inherent sense of Reward/risk so they wait patiently for a trading set up which gives them a good R/R trade. There is no point taking a trade with 10 points risk unless the set up is such that you are reasonably sure of making 15,20 or 30 points profits...if you feel that the trade does not have that potential, they pass the trade...

2) All successful traders have what is called " controlled aggression" Some traders are aggressive everyday in all situations and some are controlled ( meaning scared) in all situations. But successful ones become very aggressive when they see opportunity...else they are controlled.

3) All successful traders can sense when the trade is not going as per the plan and they get out not waiting for stops to hit. They are always in control of the trade and not the other way round.

Smart_trade
 

candle

Well-Known Member
#6
n range bound markets use VWAP,Oscillators ( if one does not have allergy to oscillators) , range boundries. Using pivots in a range market is invitation to whipsaws and false trades.

I have always maintained that in trends and sideways range markets traders need to trade differently. The mechanical systems give mediocre results because most of then dont differentiate between trending and range markets and use same tools for both markets. So in trends they make money and loose large part of it in range markets.

Similarly in strong trends if one uses sideways range tools, one is sure to get losses as OB/OS will not work in strong trends.

Very very few mechanical methods have some way of knowing which type of market we are in and decide the tool to be used for trading it as such inputs to get mechanically is difficult.They normally will have a filter which will trade only when the market is in trending mode ( Like DeMark Mov Average 1 method ) and stay away in sideways. They normally dont have way of recognising and trading both types of markets.Even in trends, some trends are strong and broad, some are weak and limping or struggling types, some trends are tight...some are loose and volatile....and that is where discretionary trader scores over 100 % mechanical trading systems.

Take for example yesterdays Nifty futures. It was a volatile and weak trend...so we need to trade both ways as the dips after rallies are also deep and tradeable. But if it was tight strong trend, then trading counter-trend is hazardous.

Smart_trade
 

candle

Well-Known Member
#7
MULTIPLE TIMEFRAMES

Multiple timeframes is a great concept even for day trading and short term trading . This concept was developed by many and Dr Alexander Elders and Robert Krauz are the two names I associate with concept of Multiple timeframes.

There are many ways multiple timeframe concept can be used in our trading.Some of the applications are as under :

1) Trade in the direction of trend on higher timeframe.....suppose you are trading 5 min bar, take all trades in the direction of higher timeframe...say 30 min timeframe. So if 30 min timeframe is in uptrend, take all long trades and no short trades.....our sequence of trades should be long...add....book profits.....stay out....again long...add....book profits. But what if the 30 min is not trending and is in sideways phase ? Either dont trade in this period or even if you take trades, be very fast to get out on first sign of trouble....We daytraders want our trades to move in our favour quickly after we enter....and we dont like hanging around in a trade which is going nowhere.

2) When longer timeframe is trending, we trade more aggressively in direction of that trend....we give bit more room for our trades to work.....but when the longer term trend is sideways.....these trades are small , choppy and frustrating ,we enter and exit fast....grab whatever profits we can.....but in trending period we play for big win.

Smart_trade
 

candle

Well-Known Member
#8


TRADING THE HOLY GRAIL – Trade in the direction of 21 MA using the pivots
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Posted Nifty Fut 5 min chart of today 06-01-2012. The entry is on pivots, and trade direction determined by 21 SMA red line. Plain vanilla entries...no indicators, no oscillators,no higher timeframes ....not to complicate life with all those.

Below the red line we are looking to go short.....above the red line we are looking to go long......stops trailed as per shown in black lines.

For profit taking we have taken help of stochastics positive divergence....also the green arrow between 10:00 and 11:00 is a Sequential Buy point.....additional reason for booking profits there.

In the long trade, the move gets steep and we trail the profit taking levels to the lows of each of successively higher bars.....

Trading is simple...we traders make it too complicated......

Smart_trade
 

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