Important Posts by Smart Trade_ Part1
- Thread starter Gaur_Krishna
- Start date
Friday 20-12-2013 was a big trend upday giving 125 points move in Nifty Futures.On such strong trend days if one can identify possibility of a large range day somewhere during the day, it is extremely profitable to take positions and hold till the end rather than trying to sell each rally and trying to buy each decline. This " fancy dancing " succeeds 1-2 times but it has a danger of loosing good positions and market running without us on board and we traders chasing the markets.In fact we not able to buy at lower prices and having to chase the market is also a strong sign that the market is in run away mode.
I have in some of my old posts mentioned tell-a tale signs which help us identifying a large trend day somewhere during the day. I have found that having an eye on Advance /Decline ratio and midcap index also is helpful on such days.On Friday, the A/D ratio was consistantly up from the beginning with more than 3 scrips advancing for every 1 scrip declining. I have not found A/D indicator useful as a stand alone indicator but coupled with other indications it is very helpful in giving us confidence for holding our long positions till the end and not selling them early.
Every trader must have few of such strong trend days encashed to the maximum to remain ahead in this game.
Smart_trade
I have in some of my old posts mentioned tell-a tale signs which help us identifying a large trend day somewhere during the day. I have found that having an eye on Advance /Decline ratio and midcap index also is helpful on such days.On Friday, the A/D ratio was consistantly up from the beginning with more than 3 scrips advancing for every 1 scrip declining. I have not found A/D indicator useful as a stand alone indicator but coupled with other indications it is very helpful in giving us confidence for holding our long positions till the end and not selling them early.
Every trader must have few of such strong trend days encashed to the maximum to remain ahead in this game.
Smart_trade
Oilman5 has posted some good posts from my old posts in the following thread.
http://www.traderji.com/members-disc...trading-4.html
Most of the old members must have read these posts already but few new members may find them interesting.
Smart_trade
http://www.traderji.com/members-disc...trading-4.html
Most of the old members must have read these posts already but few new members may find them interesting.
Smart_trade
If one can capitalise on 2-3 large trend days in a month and few sideways days....but with very low loosing days, then every week and definately every month will end into profits.Keeping our loses small and latching on to big moves ( and not getting out early on these days) is the key to consistant profits.
Trading profits are like the water tank example we all studied in our school maths. The inlet taps ( meaning profits) should have higher capacity than the occasional outlet taps and few cracks....( meaning losses) then the tank will never be empty.
Smart_trade
Trading profits are like the water tank example we all studied in our school maths. The inlet taps ( meaning profits) should have higher capacity than the occasional outlet taps and few cracks....( meaning losses) then the tank will never be empty.
Smart_trade
Many asked questions about operators and manupulators. They are not aliens from some outer space...they are traders like us but they operate in cartel.Some of the manupulations they do are as under :
1) Front Running : This is the most common and most simple manupulation.Operators have contacts with dealing rooms of brokers handling FII orders and they get to know which institution is buying/selling what today. They then take positions in advance and when the institution orders hit the market, suppose it is a large sell order, then prices drop and then these operators cover their short positions. Many will argue that FII brokers keep strict vigilance and they are not allowed to communicate fron the dealing room but this is plain false...news always gets leaked with FII name and the qty which they want to sell etc...This is a crime in US but in India it is a common everyday practice.
There are many others ...I will just name a few of the manupulations:
2) Circular Trading or "scrip chalana" in local parlance.
3) Insider Information. It is so rampart that in India 70% of big deals trading is on insider information.
4) Supporting the price : Do you know that some large industrial houses have separate dealing rooms to support the prices of their company stocks ?
5) Bull Traps and Bear Squeeze : The most remembered one was when a large bear operator who hammered a Petro company's stock before its public issue was squeezed by the company management and forced to cover at huge loss . Many old timers will know this case.
6) Concentrated Hammering : This was more used when we had open outcry system at various stock exchanges located at different parts of the country.
Apart from the above, espionage, spreading roumers and many other types of manupulation takes place regularly.
But remember that the operators walk with the heavy boots and they leave their footprints in the sand by way of volumes. So just observe price and volumes.
Smart_trade
1) Front Running : This is the most common and most simple manupulation.Operators have contacts with dealing rooms of brokers handling FII orders and they get to know which institution is buying/selling what today. They then take positions in advance and when the institution orders hit the market, suppose it is a large sell order, then prices drop and then these operators cover their short positions. Many will argue that FII brokers keep strict vigilance and they are not allowed to communicate fron the dealing room but this is plain false...news always gets leaked with FII name and the qty which they want to sell etc...This is a crime in US but in India it is a common everyday practice.
There are many others ...I will just name a few of the manupulations:
2) Circular Trading or "scrip chalana" in local parlance.
3) Insider Information. It is so rampart that in India 70% of big deals trading is on insider information.
4) Supporting the price : Do you know that some large industrial houses have separate dealing rooms to support the prices of their company stocks ?
5) Bull Traps and Bear Squeeze : The most remembered one was when a large bear operator who hammered a Petro company's stock before its public issue was squeezed by the company management and forced to cover at huge loss . Many old timers will know this case.
6) Concentrated Hammering : This was more used when we had open outcry system at various stock exchanges located at different parts of the country.
Apart from the above, espionage, spreading roumers and many other types of manupulation takes place regularly.
But remember that the operators walk with the heavy boots and they leave their footprints in the sand by way of volumes. So just observe price and volumes.
Smart_trade
Quote:
Originally Posted by manishchan View Post
Great point ST da. Thanks you ! But could you please share how to trade/avoid this. Example : Let's say I'm long and price starts to decline, is it wise to wait for >30 points of drawdown to see if trend has changed. We would be losing our profit in that. Another scenario : Let's say I entered short after a long trend reversal (after pin bar on HOD etc), how to know if the price is going to go below 30 points or not ? I mean should we wait for 30 points of dip to enter short ? That would be like losing most of the profits.
========
You got me wrong. If we are long , we go on booking profits at important resistance points. And on dips we enter long again. We dont wait for market to drop 30 points.....30 points is too much to risk. But on trend days ( let us take uptrend example) most of the dips will be shallow or small sideways action.
Another point to note is when we book profits and the market does not give us an opportunity to enter again at lower levels but we have to enter at higher levels than the level where we booked profits means that the market in in strong uptrend mode....so dont expect deep corrections.
There is one exception to the above. We can observe this on most strong days and is one of my favourite plays. Just before last 1 hour that means just before 2:30 there will be a deep correction which most bulls will be stopped out.(Many traders are aware of this phenomenon and these traders call it 2:30 factor) It is for shaking the weak bulls and throwing them out before the end play starts. Here bulls loose their long positions. This is where I use my 30 points thumb rule.I will not hold my long positions in that 30 points dip....I will probably book profits much earlier. But when the 2 O'clock correction goes to 15-20 points, what I do is I buy from 15 points from the top till 20 points from the top...and keep my stoploss at 30 points from the top ( can use some nearby pivots also ). So on my first buy I risk 15 points and on next lots 10 points..if the stops are hit, I will loose that. But if the uptrend continues after shaking out the bulls, then the last 1 hour the market accelerates. This is what happened on Friday.When the market takes out the high after this deep correction, it is almost certain that it will trend up till the end so buy every dip now, but now market wont give many chances as it has to do all the move in last 1 hour. This play gives almost 4:1 Reward to risk ratio and is one of my favourite trades.
I have just poured my thoughts above...not sure whether it explains the process clearly.
Smart_trade
Originally Posted by manishchan View Post
Great point ST da. Thanks you ! But could you please share how to trade/avoid this. Example : Let's say I'm long and price starts to decline, is it wise to wait for >30 points of drawdown to see if trend has changed. We would be losing our profit in that. Another scenario : Let's say I entered short after a long trend reversal (after pin bar on HOD etc), how to know if the price is going to go below 30 points or not ? I mean should we wait for 30 points of dip to enter short ? That would be like losing most of the profits.
========
You got me wrong. If we are long , we go on booking profits at important resistance points. And on dips we enter long again. We dont wait for market to drop 30 points.....30 points is too much to risk. But on trend days ( let us take uptrend example) most of the dips will be shallow or small sideways action.
Another point to note is when we book profits and the market does not give us an opportunity to enter again at lower levels but we have to enter at higher levels than the level where we booked profits means that the market in in strong uptrend mode....so dont expect deep corrections.
There is one exception to the above. We can observe this on most strong days and is one of my favourite plays. Just before last 1 hour that means just before 2:30 there will be a deep correction which most bulls will be stopped out.(Many traders are aware of this phenomenon and these traders call it 2:30 factor) It is for shaking the weak bulls and throwing them out before the end play starts. Here bulls loose their long positions. This is where I use my 30 points thumb rule.I will not hold my long positions in that 30 points dip....I will probably book profits much earlier. But when the 2 O'clock correction goes to 15-20 points, what I do is I buy from 15 points from the top till 20 points from the top...and keep my stoploss at 30 points from the top ( can use some nearby pivots also ). So on my first buy I risk 15 points and on next lots 10 points..if the stops are hit, I will loose that. But if the uptrend continues after shaking out the bulls, then the last 1 hour the market accelerates. This is what happened on Friday.When the market takes out the high after this deep correction, it is almost certain that it will trend up till the end so buy every dip now, but now market wont give many chances as it has to do all the move in last 1 hour. This play gives almost 4:1 Reward to risk ratio and is one of my favourite trades.
I have just poured my thoughts above...not sure whether it explains the process clearly.
Smart_trade
Originally Posted by Cubt View Post
Thanks Smart,got it. I always wonder why people like u who r more experienced in market always stick to Index futures?? Why not stock futures?? In stocks, we have many choices, always there will be some stocks which makes higher high or lower low n easy to trade. Whereas Nifty often stuck in some range and many gap up or gap down..
Could you please share ur inputs.
=======
One can push large volumes in Index Futures without affecting the price too much.It has excellent liquidity and depth. Stocks can be manupulated over a short period of time but Index Futures it is difficult to manupulate.
We trade stocks futures too like RIL,SBI,ICICI bank,TCS etc..but strictly stick to large cap nifty stocks. They have less erratic moves than their midcap brothers.
Smart_trade
Thanks Smart,got it. I always wonder why people like u who r more experienced in market always stick to Index futures?? Why not stock futures?? In stocks, we have many choices, always there will be some stocks which makes higher high or lower low n easy to trade. Whereas Nifty often stuck in some range and many gap up or gap down..
Could you please share ur inputs.
=======
One can push large volumes in Index Futures without affecting the price too much.It has excellent liquidity and depth. Stocks can be manupulated over a short period of time but Index Futures it is difficult to manupulate.
We trade stocks futures too like RIL,SBI,ICICI bank,TCS etc..but strictly stick to large cap nifty stocks. They have less erratic moves than their midcap brothers.
Smart_trade
Originally Posted by Cubt View Post
Thanks for ur input, Smart.
How about choosing stop loss for day trading options? Is it better to follow nifty chart or option chart?
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If you are trading options on options chart, put stoploss as per options chart. Both options chart and futures chart have their own drawbacks. Future chart stop might get wrongly hit when cash/future premium changes, options chart stops may get wrongly hit due to change in volatility. But when I trade options, I keep stops at options chart levels and they work pretty well.
ST
Thanks for ur input, Smart.
How about choosing stop loss for day trading options? Is it better to follow nifty chart or option chart?
========
If you are trading options on options chart, put stoploss as per options chart. Both options chart and futures chart have their own drawbacks. Future chart stop might get wrongly hit when cash/future premium changes, options chart stops may get wrongly hit due to change in volatility. But when I trade options, I keep stops at options chart levels and they work pretty well.
ST
Originally Posted by RAAMAKANT View Post
Hats off ST Da...
You are the Live University of Market.
How keen and specific observations you have ?
Today got another Thumb Rule for Nifty. Thank You Sir for sharing.
========
Nothing like that Raamakant, just have been in the markets for little longer and I watch each tick and try to see what the market is saying....it has become a habit over the years...
Smart_trade
Hats off ST Da...
You are the Live University of Market.
How keen and specific observations you have ?
Today got another Thumb Rule for Nifty. Thank You Sir for sharing.
========
Nothing like that Raamakant, just have been in the markets for little longer and I watch each tick and try to see what the market is saying....it has become a habit over the years...
Smart_trade
Originally Posted by Cubt View Post
smart,
I have a qquestion, today I was day trading with options, nifty CE 6200. I entred the trade after 1pm when the nifty was holding firmly above 6225.bought at 60 and sold at 70 and made 10k profits in few mins in sudden spike. However, I bought again at 70 and there was a support arounnd 65 in nifty CE 6200 chart. So placed stop loss at 60, around 2pm there was a sudden 20 points fall in nifty due to tat nifty call 6200 came down to 56 and hit my stop loss. Later end of the day it reached 110. My question is how do we set stop loss for trading options for intraday? Should it be any percentage level from cost price,or based on nifty levels or based on nifty option chart??
========
You are right...around 2:00 pm there was a deep dip which gave a doubt of a trend changing to down...many stops were hit there but market did not confirm the trend change and it resumed its uptrend. That is the time I posted that if the market now breaks the top of the day and goes up, many shorts will be trapped and they will run amuck towards the end of the session to cover and thereby adding fuel to the fire.
So nothing wrong in getting stopped out...but re-enter when the trend resumes is the way to go.
As a thumb rule, if nifty declines by more than 30 points from the top, there is a good chance of uptrend ending.....as intra-trend dips during the day rarely go below 30 points.
Smart_trade
smart,
I have a qquestion, today I was day trading with options, nifty CE 6200. I entred the trade after 1pm when the nifty was holding firmly above 6225.bought at 60 and sold at 70 and made 10k profits in few mins in sudden spike. However, I bought again at 70 and there was a support arounnd 65 in nifty CE 6200 chart. So placed stop loss at 60, around 2pm there was a sudden 20 points fall in nifty due to tat nifty call 6200 came down to 56 and hit my stop loss. Later end of the day it reached 110. My question is how do we set stop loss for trading options for intraday? Should it be any percentage level from cost price,or based on nifty levels or based on nifty option chart??
========
You are right...around 2:00 pm there was a deep dip which gave a doubt of a trend changing to down...many stops were hit there but market did not confirm the trend change and it resumed its uptrend. That is the time I posted that if the market now breaks the top of the day and goes up, many shorts will be trapped and they will run amuck towards the end of the session to cover and thereby adding fuel to the fire.
So nothing wrong in getting stopped out...but re-enter when the trend resumes is the way to go.
As a thumb rule, if nifty declines by more than 30 points from the top, there is a good chance of uptrend ending.....as intra-trend dips during the day rarely go below 30 points.
Smart_trade
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