How to trade with an oscillator

[Raghavacc]

Hi ST,

Today I had similar experience.

I traded HDIL and first it remained in OB Zone ( Marked as OB ZONE 1) for more tan 5 bars which prevented me from going short once the stoch flipped down from that zone.

Then short triggered only when stoch stayed in OS zone (Marked as OS ZONE 1)for more than 5 bars. After that I shorted each pullback marked as S2 &S3 respectively.Thanks to you all the 3 trades were profitable.

My little observation.

Observation 1. Couldn't catch that extended move fully as First up Stoch stayed in OBZONE 1 for more than 5 bars.hence missed a move of around 4 Rs.Can we plug in this loophole?


Observation 2.. Refering to Saravanan's chart once the stoch stays in the 5 bar zone for the second time it generates some good trades.

PS: Just for my understanding can you please brief as to what is meant by "impulse wave"?

Regards
Raghav

 

[Smart_trade]

Hi ST,

Today I had similar experience.

I traded HDIL and first it remained in OB Zone ( Marked as OB ZONE 1) for more tan 5 bars which prevented me from going short once the stoch flipped down from that zone.

Then short triggered only when stoch stayed in OS zone (Marked as OS ZONE 1)for more than 5 bars. After that I shorted each pullback marked as S2 &S3 respectively.Thanks to you all the 3 trades were profitable.

My little observation.

Observation 1. Couldn't catch that extended move fully as First up Stoch stayed in OBZONE 1 for more than 5 bars.hence missed a move of around 4 Rs.Can we plug in this loophole?


Observation 2.. Refering to Saravanan's chart once the stoch stays in the 5 bar zone for the second time it generates some good trades.

PS: Just for my understanding can you please brief as to what is meant by "impulse wave"?

Regards
Raghav

My views on your observations are as under :

1) Though we are day trading,the upmove which resulted into extended OB today was actually started yesterday from OS zone...late afternoon yesterday and early morning today was a correction...so one way is buy in this correction and get out of long on trailing stops once osc gets into OB area...but short selling after it remained in OB zone for over 5 bars is very risky the success rate of this trade is very low and it can inflict serious damage by way of losses....( just see what would have happened if this trade was taken in Sarvanan's chart....our effort here should be not to be in each and every trade ( some of risky trades may workout well...)but be in low risk trades and avoid high risk trades...to get better hit rate and R/R ratio....

2) Your 2nd observation not clear...I dont see that in Sarvanan's chart...am I missing something ?

On Impulse Waves.....in Elliott wave analysis,a move is made of 5 waves of one smaller degree....wave 1,3 and 5 are impulse waves which make progress in the direction of the trend...wave 2 and 4 are corrective antitrend waves denoted by A,B,C, or a,b,c,etc....

Best wishes,

Smart_trade

 

[san77s]

Sir,
Today After the open, market reached OS region and stay there for 6 candle (Marked as "A") and latter it recovered. I was waited for a curve in STS to initiate a short. But it was not happened and STS reached OB region and stay there for only three candle invite us to initiate a short.

"B" is my entry point at 5277. From there it reached OS region and max down at this point as 5253.40. STS in OS region for more then 5 candle (Marked as "C") show the weakness of the market. i was booked my position, because i got more then 20 point. Thats enough for me.

Second trade initiate (Marked as "D") when STS stayed at OB for only 3 candle. Previous candle low was 5271. That was my entry point and hold the position.

S.T. sir if my observation was wrong at any point please correct...

Thanks & Regards,
S.Saravanan

 

[Smart_trade]

Sir,
Today After the open, market reached OS region and stay there for 6 candle (Marked as "A") and latter it recovered. I was waited for a curve in STS to initiate a short. But it was not happened and STS reached OB region and stay there for only three candle invite us to initiate a short.

"B" is my entry point at 5277. From there it reached OS region and max down at this point as 5253.40. STS in OS region for more then 5 candle (Marked as "C") show the weakness of the market. i was booked my position, because i got more then 20 point. Thats enough for me.

Second trade initiate (Marked as "D") when STS stayed at OB for only 3 candle. Previous candle low was 5271. That was my entry point and hold the position.

S.T. sir if my observation was wrong at any point please correct...

Thanks & Regards,
S.Saravanan

Yes Saravanan...there were only 2 good low risk entries in the chart today and both worked......it is better to have 2 trades and both correct than having 4 trades 2 correct and 2 wrong and end the day in breakeven...

Small correction....see the second signal...you have to sell the crack of low of the red bar...and not the previous bar as shown by you...in this chart it hardly matters but just pointing you to correct sell level....

Have a portfolio of 2-3 counters to give you enough trades rather than expecting 4 trades in one scrip....and take only low risk recommended trades as per method....pass the other trades ....

Best wishes,

Smart_trade

 

[slah04]

Yes Saravanan...there were only 2 good low risk entries in the chart today and both worked......it is better to have 2 trades and both correct than having 4 trades 2 correct and 2 wrong and end the day in breakeven...

Small correction....see the second signal...you have to sell the crack of low of the red bar...and not the previous bar as shown by you...in this chart it hardly matters but just pointing you to correct sell level....

Have a portfolio of 2-3 counters to give you enough trades rather than expecting 4 trades in one scrip....and take only low risk recommended trades as per method....pass the other trades ....

Best wishes,

Smart_trade

Dear STda

I have been following your thread for quite a while and your explanations and examples are fantastic!. One thing I would like to know that when once I am into a flip position and subsequent 'buy' or 'short' as per the oscillator, when is the opportune time to exit? .. not until the oscillator ventures into non-neutral zone or can i use the %K -%D crossover, whichever comes earlier.

thks

slah

 

[Smart_trade]

Dear STda

I have been following your thread for quite a while and your explanations and examples are fantastic!. One thing I would like to know that when once I am into a flip position and subsequent 'buy' or 'short' as per the oscillator, when is the opportune time to exit? .. not until the oscillator ventures into non-neutral zone or can i use the %K -%D crossover, whichever comes earlier.

thks

slah

slah, thanks for the kind words.....

Once flip takes place,all qualifiers ger satisfied and a trade is triggered,you have to place your stoploss . The profit booking exit only after the indicator goes to other extreme and here we trail our profit booking level at successive bar's lows if we are long and looking to book profits....I do not take profits on cross of stoc and trigger as it throws us out prematurely from a trade with small profit....

Stoploss is the swing pivot low for long positions....if it is too far,low of the flip bar is a second best choice....low of the bar in which signal is triggered gives small stoploss but will sometimes get hit prematurely....

So we are risking 1 bar length and trying to extract 4-5 bar lengths...that is the R/R in nutshell.....

Smart_trade

 

[slah04]

STda,

For an oscillator entry for Long trades, the final qualifier is buying on the break of the High of the Upclose bar. ..

If the subsequent bar after the Upclose bar does not break the High, or for that matter, the High is not taken out by subsequent bars, will the entry still remain at the High of the Upclose Bar?

slah

 

[Smart_trade]

STda,

For an oscillator entry for Long trades, the final qualifier is buying on the break of the High of the Upclose bar. ..

If the subsequent bar after the Upclose bar does not break the High, or for that matter, the High is not taken out by subsequent bars, will the entry still remain at the High of the Upclose Bar?

slah

Yes,long trade entry is over high of the upclose bar....if the subsequent bars dont take out high of the upclose bar,it means that the expected upmove is not coming....so no long trade triggers.....

Smart_trade

 

[san77s]

S.T. Sir,
Thanks for indicating the correct entry candle in my pre. day trade.
Today i was initiate long when STS turn from OS in 9.55 candle with previous candle high is my entry point. ie 5264.50.
After the entry nifty moved upto 5273.45 (10.30 candle). At the time STS reached OB and stay there for only 3 candle and start its downward journey.
As per the rule we have to exit here. Am i right ?
But i didn't because its only 6 point from my entry so i stick my initial stop loss of 5256.35 (9.45 candle) ie the low before my entry.
For day trading i prefer to book with 20 point, but y.day nifty see visible sell when ever it goes to 5285 so i booked at 5283.
No trade was imitate after that.
Yesterday range with STS confuse my little bit regarding initiate and exit. So please help us to mark what are all the chances and entry,exit for the day.

Thanks & Regards,
S.Saravanan

 

[san77s]

S.T. Sir,
For me today's trade like Friday's one. Enter short at 5279.25 at 9.25 (based on 9.15 candle low ) STS trun back from OB with a stop loss of 9.10 candle high of 5295.
After my entry STS reached OS,OB for few time, but my stop loss save from early exit. The same as Friday this kind of situation how to handle, that i need your help here.
Please explain with this chart and how to trade in this kind of market.

Thanks & Regards,
S.Saravanan.