My personal Compilation of Various threads in TJ

MSN1979

Well-Known Member
#1
This material is not written by me. I am only copy pasting from other threads in TJ for reducing Noise. I would prefer if no one comments unless it is really important.

Teach A MAN TO FISH : Saint Sir

What is a Chart?
A chart tells us about the whole play of fear and greed, again and again, all over again. The chart of a particular time frame is therefore a study of fear and greed in the particular company or market in that time frame.

Types of Traders
Day Trader : He trades intraday. He buy and sells, shorts and covers within that day. He closes all positions by the end of the day. He takes no risks over night. He basically uses the 5 and 10 min charts for his trading with the 15min and the 60 min charts as backdrop.

Swing Trader : A trader who trades the daily charts, fine tuning his entry using the 60min charts. His trades last 2-5 days.

Position Trader : Nearly equivalent to investing, but nearly can be an important distinction. He trades the weekly charts which means he holds trades from weeks to months.

TRENDS

UPTREND : An uptrend on a chart of any time frame is nothing but a series of higher highs and higher lows.

DOWNTREND: A downtrend on a chart of any time frame is nothing but a series of lower highs and lower lows.

SIDEWAYS TREND : A sideways trend is nothing but relatively equal highs and lows.

TRENDLINES :

UPTREND LINE is nothing but a line that connects two or more LOWS, in a chart in an uptrend. The more points that meet up to this line, the stronger this line is. This trendline acts as support, as prices blast off, then pullback to this line before taking off again. Therefore, in an UPTRENDLINE, the 2nd point is always higher than the 1st point, and the 3rd higher than the 2nd.

DOWNTREND LINE is nothing but a line that connects two or more highs in a downtrend. Once again, the more number of points that connect ,the stronger the line is. This downtrend line acts as resistance. Each down move is followed by a pullback rally to this trendline which acts as resistance only to be met with more selling and lower prices. In DOWNTRENDLINE, the 2nd point is always lower than the 1st, and the 3rd lower than the 2nd.

Note: A break in the UPTRENDLINE signals a possible change in trend. So too with the break in the DOWNTRENDLINE.

1538207198297.png



we categorise trends into 3 categories
MAJOR : Simply put,major trends last for greater than 6 months.
INTERMEDIATE: Intermediate trends last between 3 weeks to 6 months.
NEAR TERM TRENDS Near term trends last from a few days to 3weeks.

From a charts perspective, the major trend is seen by looking at the monthly charts. The intermediate trend from the weekly charts, and the near term trend from the daily charts.

What is seen as a downtrend on the daily charts may be nothing but a pullback on the weekly charts, and is not even evident on the monthly charts. What is seen as a downtrend on the weekly charts and a catastrophic crash on the daily may be nothing but a monthly pullback.

The eye can only see what the brain knows. These early days are to be spent in teaching the brain so that the eye sees the pattern from a
mile.

TREND PIVOTS
Higher highs and lows form a rally. Lower highs and lows form a decline. We can have declines in an uptrend. We can have rallies in a downtrend. So now that we know that a series of higher highs is called a RALLY, how then do we define an Uptrend? An UPTREND on a particular time frame is a series of higher pivot highs and lows on that time frame. What then is a downtrend? Nothing but a series of lower pivot highs.

Therefore,in the above example,as each pivot is after a decline, and the pivot is the low after which the stock takes off again, we call them PIVOT LOWS.

Right the opposite in a downtrend. The stock declines from an area and then rallies to an area lower than the first, so on so forth. In this case every pivot is after a rally, and the pivot is that area after which the stock declines further to new lows.

As this pivot tells us of that high after which things go back to its declining ways, we call that a PIVOT HIGH.

So,in an uptrend, we have HIGHER PIVOT LOWS.How did we come to that? Each pivot low is higher than the previous pivot low. Therefore we call it higher pivot lows.
In a downtrend, we have LOWER PIVOT HIGHS. How did we come to that? Each pivot high is lower than the previous pivot high. Therefore we call it lower pivot highs.

In a sideways trend, we have nearly equal pivot highs and lows.

Series of lower pivot highs and lows is called a DOWNTREND.
We have a higher pivot high and a higher pivot low. We are in an UPTREND.

SUPPORT AND RESISTANCE
SUPPORT is that area where buying interest exceeds selling interest, and therefore a previous decline gets halted at this area and turns back up again.It is marked by drawing a horizontal line connecting two or more bottoms.

RESISTANCE is that area where selling pressure exceeds buying interest. It is an area where previous rallies get halted and turn down again. It is marked by drawing a horizontal line connecting two or more tops.

Support and Resistance are not absolute points. They are areas. When Support breaks to the downside, we call that a Down Side Breakout or
Breakdown. When Resistance breaks to the upside, we call that a Breakout.

When we get a breakdown below support, that area of support now becomes an area of resistance. Have a look at the JNPR charts below. That area of support broke down and that same area is now acting as Resistance.

A breakout above Resistance, and that same area of resistance now becomes a new Support.

1538208805331.png


The below is another example.CSCO trading in a tight range. Then we have a breakout above resistance. That area which was previously resistance now becomes Support, as prices use that floor for the next rally.
1538208868259.png


Yet another example :GOOG(Google )trading on the NASDAQ. Through November to early January, we have higher pivot lows and highs (UPTREND). Then we have that turn around in Mid-Jan. So long as GOOG did not break that previous pivot low of around 422, It was still in an uptrend. Then we have that ugly bar on the daily charts that broke previous pivot lows. Are we in a downtrend now? No. But as far as we are concerned, the uptrend is over. Then we have a rally back to the 450 area in the later part of Jan. This is making a lower pivot high as compared to the previous pivot high. Now are we in a downtrend? Looks more and more likely. But not confirmed as yet. Then that gap down and lower prices taking out the previous pivot low as well. Now we are in a confirmed Downtrend.

1538209079958.png


A break in an Uptrendline is not a Downtrend. It merely tells us that this uptrend that we have been trading and making profits from is now in question. So too with the Downtrend line. A breakout above the downtrend line does not mean that the stock is now in an uptrend, it merely means that the downtrend is now in question.

1538209447217.png


TRADING with TRENDS,PIVOTS and SUPP/RES
BUYING DECLINES &SHORTING RALLIES :

Let's make this as simple as we can. We know what an uptrend is, a series of higher pivot highs and lows. Vice versa in a downtrend. Now, for some rules. We only BUY in an uptrend. So long the uptrend is held, we do NOT think of shorting.

The most often repeated line "The trend is your Friend", means we never cross the trend.

The trend is UP, we buy declines.

When the trend is DOWN, we short rallies

Therefore,it is very important to be able to detect the change in trends in the first place. Our minds must work like this.

Look at the charts. Take the weekly charts. Why, the weekly? Because we are looking at intermediate to long term. Are we making higher pivot highs and lows? If the answer is YES, then we are in an UPTREND. And in an UPTREND, we think "BUY DECLINES". That's it!!

If the answer is NO, the previous pivot low just got cracked to the downside ,We are thinking of getting out of our longs in that particular stock or index. Now we are thinking, "SHORT RALLIES" In a downtrend, every rally is a shorting opportunity. In an Uptrend, every decline is a
buying opportunity.

The market changes from Uptrends to Downtrends, again and again. We are not here to predict tops and bottoms. We are not here to anticipate anything. We are here to follow the trend. And as uptrends change to the down, we change from BUYING DECLINES to SHORTING RALLIES.

Originally Posted by rahulg77
Hi Saint,
I have a few questions. When we talk about an uptrend we buy on small corrections. but in a downtrend i did not understand when we say every rally is a shorting opportunity. can u explain the process of shorting. Another question is we see a uptrend on the weekly chart and we enter. now we see a minor correction coming in and we think of buying at declines. But what if that particular downtrend itself ends in a lower pivot low than the previous one. What should our trading strategy be. we will of course have a S/L in place but then it could again go up.
Hope I am clear.
 
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MSN1979

Well-Known Member
#2
Hi Rahul,
Every rally in a downtrend is a shorting opportunity, meaning we sell first and buy back later. The reverse of buying. When we get a downtrend, we look to short or we stay out of the fall. Of course, there's all those restrictions of not being able to short except in futures, etc. The whole idea is that we do NOT buy in a downtrend. We look to either short or stay out. Only when the trend has given a move to the UP, do we think of
buying. It is a rule that you do NOT break.......therefore the importance of first being able to detect the trends and the change from one trend to another. And then following the discipline. However juicy a stock is, and whoever tells you, that a stock is undervalued, fundamentally great, and the CEO is the brother-in-law of. you, being a trend tech trader, will listen to all he's got to say, then pull out your charts, realise that
maybe he is right, maybe he is wrong, but your charts tell you that this stock is not yet in an uptrend, and that is that. You DO NOT BUY, as you do not buy in a downtrend.

As for the 2nd part of your question. yes, a risk that all traders take and may not exactly work out. Therefore the stop. However great the probability of success in any trade,we still have stops at important pivotal areas. We are only too happy with success, but if that is not to be, we do not mind the small losses either. Another clarification, a stock put in lower pivot highs and lows. It is clearly in a downtrend. Then it put in an impressive rally from the bottom. Are we in an uptrend? NO, not yet at least. Then the stock retreats and puts in a higher pivot low as compared to the previous pivot. Now, looks more and more like a change in trend. Then it confirms the trend change by making a higher pivot high as well. The stock is now
clearly in an uptrend. Now your brain says, BUY DECLINES. And true enough you get that decline. You bought in and horrors of horrors, the stock went on declining to lower pivot low than the previous low. Your stop at the level of the previous pivot is triggered. You are out, and looking elsewhere for another trade. The answer to your last question: You take your stops and get out of that trade. As far as this stock is concerned, it continues its downtrend. And ,as always, in a downtrend, WE DO NOT BUY. We keep it on our watchlist. We track it, we stalk it, but we do not buy. Till we get a trend change that is.

THE BUY SET-UP
Okay, now that we know what an Uptrend is,and that come what may, we will stick to our rules, which is: First detect the change in trend which requires a higher pivot high and low, then once we are in an uptrend, we BUY DECLINES. Now comes our next point of worry. Yes we got our uptrend, and now the declines. But when do we buy? Do we buy on the first day? Is there anything else we are looking for before we come to that decision? Have a look at the chart of EDUCOMP below. We have a decline after that big bar. Bearish candle No 1,we do nothing. We wait. Bearish candle No 2,we do nothing. Bearish candle no 3, things looking more and more juicy. Then we get that bullish candle. That first bullish candle is still making lower highs and lows, but is giving us an indication that bulls are gaining in strength. Now we are ready to strike, and
yet, we do not move. We now look to buy, we do not buy as yet. We buy when the next candle takes out the previous candle's highs. We are in the trade. Our stop is the low of that pivot i:e 254-2(to give it some room)=252 In EDUCOMP, we are getting our next buy set up as of now. We have three bearish candles and then that bullish candle so far reflecting a change in sentiment and therefore a possible change in direction. And like before, a buy set up means we look to buy, we do not buy as yet. When the next candle takes out this week's high, then the trade is triggered.

Below is the chart of POLYPLEX CORP just denoting how the trendlines are drawn. The Uptrend lines therefore act as Support, once cracked to the downside, notice how the Downtrend lines act as resistance. In what way does this knowledge help us in our trading? We detect a change in
downtrend, and we enter the stock, once again using all that we have learnt so far. The trendlines allow us to stay in that trade as long as the trendlines hold. The moment we get a close below the Uptrend line, we are out. If you are looking to short, wait for a feeble rally towards the former uptrend line. That's an area to short. Vice versa for the downtrend lines. Have a look at the 2nd chart of POLYPLEX, self explanatory.
 
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MSN1979

Well-Known Member
#3
The eye can only see what the brain knows. These early days are to be spent in teaching the brain so that the eye sees the pattern from a
mile. Pour over your charts and train yourself in detecting which trend the stock is in currently. It is a first step but an important first step.


Personal Practise Session : Train Brain to spot a trend.
Date:30-09-2018
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Daily Chart on TS
 
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MSN1979

Well-Known Member
#4
Daily Chart- Long halt on DT then Double top, BOF, Break of Trendline. Price tried to recover from weekly important resistance
1538397618718.png


60 M: DT started but not confirmed, waiting for a new VPL to be formed.
1538402731486.png
 

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MSN1979

Well-Known Member
#5
Overall marking on HTF has given me great confidence of correctly identifying good S/R Zones. It may be too soon to say but I was able to catch the trend yesterday in right direction ( It could be a fluke) so more future trends identification is a must.

So according to Saint Sir, we should keep 60 and 15 as backdrop for intraday trading. I would try to align my thinking as per following

60 M UT + 15 M UT = Clear Longs
60M Sideways +15 M UT = Will need to check if I can frame any rules for longs or No Longs here
60M UT + 15M Sideways = Will need to check if I can frame any rules for longs or No Longs here
60M DT + 15 M DT = Clear Shorts
60M Sideways +15 M DT = Will need to check if I can frame any rules for Shorts or No Shorts here
60M DT + 15M Sideways = Will need to check if I can frame any rules for Shorts or No Shorts here

60M : Continued. Break of Last DM was UT in Question. Then a Pivot below Dm was taken out was start of DT. As seen above price recovered from major WV support Zone. A lower VPL is expected at LOD.

15M:
 

MSN1979

Well-Known Member
#6
15m: On 15 DT is confirmed, where as in 60 DT only Started

1538455165231.png


5M: 60 is Start of Dt but not confirmed and 15 DT confirmed.

IMP Observation points: ERL present on 5 different then 15, ERL trade would trigger earlier in 5 then it will take price higher then trades will trigger for 15 min ERL traders. Causing some chain reaction ( expected, only a guess). Price consolidated to sideways near support and then took a breakout.

Seem to have missed a valid long yesterday, mp close above erl.

1538456808163.png
 
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MSN1979

Well-Known Member
#7
My head was not in place for last few days, so I avoided trading and reading.

HTF Weekly is same as earlier
Daily : Swingers would be attempting to short last DM of 575 and dragged to 557.50 So thinking shorts on daily. Price got rejected at last WV and a strong rejection was seen at those levels. Price again trying to move down to WV. In this fall Tata Steel does not seem to be participating as the price is moreover trading in a range so far then falling free.
60M: Thinking shorts on 60M
15 M :
 
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MSN1979

Well-Known Member
#8
1546917408648.png


Target to post this till 7-02-2019
------------------------------------

Entry was ok, need to work on SL
Will change SL to 1 candle high, If a WRB candle I will avoid entry

Entry on Break of Yellow
SL on Blue, SL hit by 0.5 paisa and then price moved in same direction of breakout.

Entry 490.75
SL 492.15
Risk: 1.4
Comission and Taxes .35
Total Loss : 1.75
Max Risk allowed : 4.65
Damage to capital: 0.29%
==============================================================================================
 
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MSN1979

Well-Known Member
#9
1546918874060.png

Setup for learnign purpose : Breakout, Pull back, Failure of Pullback @ point 2
 

MSN1979

Well-Known Member
#10
1546922818112.png


Entry was Incorrect, SL was Pivot Low
Wait for Candle close to enter after trend change

Entry on Break of Yellow
SL on Blue, SL hit

Entry 491.35
SL 488.5
Risk: 2.85
Comission and Taxes .35
Total Loss : 3.2
Max Risk allowed : 4.65
Damage to capital: 0.65%
Total Damage = 0.29 + 0.65 =0.94%
 

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