Re: For My Moneycontol friends
now startng wth Price action what does it means and how to read it wth the help of candles, price action has lot of strategies and first i am gonna teach the most simple and basic strategy and rest of the strategies we will cover at the end of this thread, when u all will be aware of most of the important things,
first of all whoever use price action in there tradng they shld stop using magical indicators becz by doing that u r only fooling yourself, indicators wont help u anywhere, just use movng averages and simple candles on your charts, as we already discussed if we focus on longer tme frames then it will mke our price action signals work mre effectively,. so dnt look at short tme frame candles lke 1hr or lesser then that, always see 4hr or 1day or 1week candle for a better picture, as we all knw about trends also now, so i just wnt u to know again that counter trend is only for masters, rest its always good to follow the dominant direction of trend and trade wthin that direction to mke more successful trades,
now first strategy is called as long pin candles,
in long pin candles usually price gets rejected from supports or resistance areas, lke if long pin of a candle is down which means that stock went down and made a low in day tme but closed at the highs of day or quite above the lows , then it creates a long pin to the downside, which means that there is lot of supply of buyng, same goes for the pins which gets create on the upside, that shows that there is huge rejections comng and sellers dnt wnt stock to go up frm that level for few more days, so when the long pin of a candle is on downside that means that area is v crucial and lot of buyers are standing there and they dnt wnt the stock to go more down frm that level, which is a v bullish price action signal, usually whenever a long pin candle gets created it will only be at hot levels lke horizontal or vertical lines or movng averages or trend lines,
i will show some diagrams of it now
now the above diagram is of vip industries 1 yearly daily candles chart, i marked the blue box where it made a long pin candle and if u notice that point is of 200sma also which acts as a v strong support for the stock, so the long pin here saying that buyers dnt wnt the stock to go below that level, first it made a day low and then on closng of day it closed near the highs of day, so the long pin was a v good price action signal which tells us to buy this stock,
now when to buy it and how, i will tell u all now 2 major tactics to buy after u see a long pin candle, first is aggressive way second is moderate way, in aggressive way we buy immediately at the next opening price of day and moderate ways we wait for atleast 30 to 50 percent retracement of that long pin, now mostly i never buy aggressive way, it also depends how much u are gettng as a reward and how much is your risk, now first we will calculate how much shld be our reward and risk as a positional trader, now if u see then resistance zone is around 70 area and our logical stop loss level is nowhere downside, becz theres no support on the downside except on 38 area which is v far away, so we will put our logical stop loss below that recent pin candle , so that candle low is the final support for us becz it made a beautiful pin candle which shows lot of buyers entered that tme so we will put our stop loss below that pin which is logically 54 to 55, so if we enter agrressvly then our stop loss is of 4rs max and our reward is almost of 10 to 12 rs , so understd this thing whenever we enter in any setup then we need out rewards to be atleast double then our risks, only then we mke positions, if your risk and reward willl not be good then u cant get success in long run, so now we knw that even if we enter agressvly our risk reward is v good so next day personally i made a position for me also in vip for exit near 68 and my stop i placed in my head around 54, and rest is history,
so this is how u mke positions in long pin candles which shows u clear price action that yes there is a big rejection comng frm major levels and then see the larger trend, risk reward and enter in that position wth strict stop loss in your head, we will tlk about the importance of stop losses later aswell,
now i am postng few more diagrams of long pin candles price action setup
now the above diagram is of Bajaj electric daily candle chart in yearly tme frame ,u can clearly see the trend is up and stock made a beautiful long pin candle at the supports zone of 200 which is a v strong phycological number aswell and favt for buyers asusual and ofcourse there was 50day sma also gave a good boost and that long pin to the downside confirms us that buyers dnt wnt this stock to go below this level, this was my personal position aswell , i entered at 205 and exit at 240, so it gave a v huge profit and a big reward as well, long pin candles will 90 percent of the tme will mke u win and gve u good profits
the next diagram is as follows
the above chart is of Rs software now it didnt made a long pin to the downside but if u see that blue box which i marked, then u can see that first it made a day low and went quite low near 100sma but on the closing time it closed at days highs and thats quite a beautiful candle and big aswell, it gves us a clear price action that buyers were so large in numbers that stock instead of mkng a long pin actually closed at days highs and that was amazing thing, look at the trend it was up , 100 sma was near and near that movng average that all action happened, so this was my another personal trade where i entered at 165 but closed at 192 aswell, now why i didnt entered aggresively at the same day when that huge buyng candle created or next day, becz when i saw and calculated my risk and reward then i noticed, if i will enter aggressvly next day at 175 then my reward will be of 20rs max becz the near term resistance is around 195 to 200 area and my logical stop loss will be below 100day movng avrg which is below 160 or below that huge candle pin, so my risk wld hve been of 15rs if i enter agresvly at 175,
are u guys understandng now the concept of risk and reward, if i wld hve made position at 175 the next day itself then my reward was of 20rs and risk was of 15rs, so whats the point of mkng this position, i knw i got a v beautiful price action signal to buy on this setup but when i calculated then my risk and reward was not in my favor then i waited for it to come till 165 again very patiently and it made a low of 165 after few days and my order got filled at 165.20 , now after i got entered at 165 now my risk became v low becz my stop loss was around 158 so risk was almost for 7rs and reward becme v high of 25 to 30rs, becz the near term resistance was around 195, so i comfortably booked profits around 192, so thats how u tke benefits of price action on candles,
price action will tell u everythng but wth other factors u need to use your brain and mke a use of that beautiful signal of long pin candles or the big bullish pin candles lke we had one in Rs software,
now one more diagram i am uploadng
the above chart is of TITAN
you can clearly see the price action around 200 area where titan has its v strong horizontal supports and ofcourse 200 is ............... level i hope u all answer this blank
then it made a beautiful strong buying candle wth a down pin , which means first it went to days lows and then durng closng it actually closed at days highs and this candle was real big huge buying happened it it, clearly a perfect sign of buying entry,
one more diagram i am uploadng
the above diagram is of BATA u can see the long pin towards the down side at the v hot levels of 200sma, stock got such a beautiful buyng around 200sma and wth the trend u can see that was a perfect sign that stock is about to run aggressively towards upside again, if u notice its trend thats realy puree uptrend, and the long pin candle was a perfect sign for a fresh enter next day itself,
one last diagram
the above chart is frm uflex, u can all see it made a v long pin to the downside around its 200sma and tryng to hold that 200sma levels now, so it cld be a good buy around 65 area wth targets for 80 and stops around 58,
so i hope u all understood the basic first setup of price action which is very simple and 90percent of the times its very effective, if u follow your rules wth price actions setups u will win most of the time, now this first setup which i taught is called long pin candles, there are more setups of price action aswell which we will learn later, first we hve to go through other things and patterns aswell, we will tlk about patterns of candles next tme,
now i wnt u all to learn the importance of stop loss, its for both investors and traders aswell, what is a stop loss, stop loss is not to eat your money, its actually to save yur capital and your money to get stuck in one stock for years, stop loss is in your hands its your choice that u hve to use them at what levels, u just cant use stop loss on any random numbers or areas, there has to be a logical level to use a stop loss, i met so many people they never used stop losses, some say they were traders but they didnt use any stop loss and in a hope that there position will turn around someday they didnt book there losses initally and those traders converted themselves into investors now becz there money got stucked in that particular stock and they cant even mke next position now as there stock is so low of there buyng levels that they dnt think they will be able to book those huge losses, and some investors i met they mke positions for years to hold, even there position goes in profits for few months but instead of bookng profits or they dnt knw there logical exit levels then they just keep holdng there stocks for years and what happen is 80 percent of those people are now stucked becz there positions hve changed frm profits to losses becz stocks trends do gets changed aswell, thats why i always say to traders or investors, u shld hve logical exit levels in your head, if u dnt knw how to find those logical levels then ask professionals to tell u or learn to find becz its your money and this is a business not a casino where u cme to gamble, so treat it as a business and respect your capital, so stop losses will always save u frm going to huge losses or gettng stucked forever, now where to use stop loss, thats a point, we shld always use stop loss below a logical buyng level, lke if a stock support zones are at 100 to 105 area then the logical stop loss is not at 100 ok, its always below those buyng areas becz sometmes stocks do get below those areas for few minutes or hrs and later they go up becz that a v hot buyng area , so its always important to gve more space to your stop loss rather then tkng margins frm brokers and mke your position so heavy that u dnt even get sleep at nyt and all day also u r just lookng at your positions and emotionally or wth fear u mke some stupid decisions, so the logical stop loss wld be around 90 to 93 area, its better to gve mre space to yur postions to work for u always ok instead of buyng huge quantities and try to get rich in 1day, so i hope u all understd the importance of stop losses aswell , investors or traders shld hve a proper plan and they shld all be aware that how much percent return they lookng for, frm a particular stock instead of holdng it for years,
second thing is risk reward, which i hope i made it clear to u durng those diagrams which i showed above, risk reward is v essential part of anyone tradng rule, rewards shld always be double then your risk in any setup and we always calculate it by lookng logical levels, suppose u made 4 trades in 1 month as a trader and your reward is double in every trade, so even if u loose 2 trades still u will be in profits at the end of month, u win 2 and loose 2,, that means your reward u won 2 times in each wining trade thats 2+2 =4 and u lost 1+1 =2 times, so 4-2 =2 so still u won 2 times profits at the end of month, same goes for investors aswell ,
third thing i wnt to clear out wth u all is money management, now money management is a v important thing, it covers your risk rewards concept aswell and then other thing it teach us how much we shld invest or trade in a particular stock, if u read books then u will find every trader or investor they hve different theories about money management, becz it only depends on each one of ourselves that how much risk we can afford which let us get good sleep at night aswell, when money management comes to play then human emotion lke greed comes aswell, lets discuss wth 5 percent theory , lot of people will tell u hey dnt put more then 5 percent in any stock and someone will say hey dnt put mre then 50 percent, now how it depends frm trader to trader or an investor to investor,
lets say there is a trader A who has 1lakh rs and there is another trader B wth 1crore rs, now how if both of them will follow 5 percent rule of money management
trader A put 5 percent means 5000rs in 1 stock for 20 percent profit
So lets say Trader A made 4 positions and he put 5 percent in 4 stocks, so he invested 20000rs in 4 stocks
trader B put 5 percent as well thats 5 lakh rs for 20 percent profits in 4 stocks aswell ,
So Trader B put total of 20 lakhs thats 5 lakh each in 4 different stocks
so after 3 months both of them gets 20 percent return
so trader A earned 20 percent of 20000rs which he invested , that is 4000rs profit
Trader B earned 20 percent of 20 lakh rs that is 4 lakh rs profit
now both traders have to live wth this money so how come trader A will run his life wth 4000rs earnings so 5 percent theory doesnt go for him ok
lets say if trader A dnt go wth 5 percent theory and he puts 25 percent of his money in 4 differnt stocks for 20 percent return, that means he invested 25000rs in each stock as he has total of 1 lakh wth his as his capital,
then Trader A will get about 20000rs profit of his 20 percent return as his capital was low so he invested 25 percent each in 4 different stocks, where as wth trader wth huge capital cannot invest more then 5 perecent of his capital, so thats how money management depends frm trader to trader and investor to investor,
big investors hve huge amount of money thats why they put 5 to 10 percent in 1 stock understand, it depends on capital, i am not sayng u shld put all your money in 1 stock, never ever do that, always see how much u r comfortable wth and maximum use 25 percent atleast in 1 stock if your capital is small, u cant put 5 percent that s complete bullsh..
money management is quite a deep concept and even when i was in the beggining of my career i never used 5 percent theory , i always put that much capital which mkes me comfortable, and gves me good returns aswell as i am a professional positional trader, never tke margins frm your brokers, they gonna mke u loose big tme and eat all your account,
now wth the price action setup u learned today long pin candles You all are going to learn to art of chart reading and price action analysis. You will learn how to think, how to act and when to act. You will live breath and sleep trading. With one goal in mind,to win
You are not going to be promised any financial return, some of you will fail, some of you will go on to become professional traders after learning from my thread, My one hope is that you believe what you read here is my own personal experiences, this is the way I trade, the way I make my money in the markets. you cant expect to learn everythng on my thread but i am teachng u all the basics and some successful price action strategies which i personally use in my tradng aswell, but wth this phycology is also v important and we will tlk about that also later
if u combine market momentum and price action then its an edge for professional traders, there is a sayng that professional traders miss half of the great moves in the market and i agree wth that aswell. price action signals occurs on horizontal supports or resistances or on some hot points lke movng averages where most of the action goes between buyers and sellers.when i was in the beginning of my career i realize that i dnt hve to run after every trade in the market just for the sake of being in the markets all the tme, i come over that wth v strict rules even if i missed 5 to 6 good trades also i never break my rules, becz i realize as i was followng my rules i was becomg more and mre consistent performer and my trades were gettng lot success.
so this is how i found my edge in the market wth some special price action strategies and mkng myself to trade less, and trade only on those setups which mkes me comfortable,
even if u join any course or anythng, i dnt think u will be able to learn all becz most trainers teach nothng practical they will teach u stupid garbage stuff which never gonna help u, they actually dnt realise that market changes everyday aswell , so there is no holy grail system to mke u win every trade, its just your discipline phycology and your strategy will mke u successful
market is different everyday so dnt expect to make same trade tmmrw which u win today becz no 2 setups are the same,.there is no shortcut to win in markets we just hve to ride bus wth big fishes becz game is always in there control , retail investors and traders can only follow that price action which big fishes and instituions creates for us and gves us the signals.
good tradng comes wth years of practice and to hve a right mentor wth u always who shows a right path, i am always here for all of u, u can all post me questions.the journey to trading success is inescapably one of screen time and acquired
market knowledge, i cant promise u all, success in tradng but if u master the strategies and everythng else which i am teachng here , then your chances of mkng it to professional traders list are higher,
i want u all to know few things before mkng any trade,
you shld all think different frm other traders or investors in markets becz u hve to act as u see on candles not as u think or what other thinks, dnt use magical indicators, use long time frames on your charts, use patterns which u can easily identify we gonna discuss about patterns also in comng lessons, look for repeated patterns on a same tme frames which mkes easy for us to catch good setups , use your price action strategies and keep risk rewards money management stops and exit levels in your head always , u shld always hve a proper plan before mkng a trade,
ok eveyone now learn till now what i said here , read it again and again till u put all in your head, practice it, ask me questions, we will move forward to different chart patterns in further lessons and discuss about that, thanks to u all
