some views on applied TA as appeared in traderji forum

[oilman5]

So in applying TA ,something useful comes forward.
1] economic sense /environment helps. MM /risk control/objectivity/flexibility /discipline/experience/trade journal/written plan before trade /ur comfort more important.
2] money flow can change any equation- BHAO BHAGWAN CHE ,dont challenge.
3] trend vs sideways market must be defined first. plan to trade both r different. learn to understand candle,basic support/resistance/ma + 2ma - this helps trend play.
4] oversold /overbought -channel ,accumulation/distribution -swingplay r useful in rangebound market.
5] When trend changes ,precede by zone of indecision-study in great detail.
6] sector rotation helps , throw away media influence.
7] for trend,use higher timeframe bias,use impulse.In uncertainity sit idle .
bye bye.

 

[oilman5]

Trading must start with keeping it simple, so other factors mentioned above U must know .
A learner should start with a basic software,Simple MA,2ma to know on market trend.
Soon he understands strength of trend changes ,so introduce ADX,( i prefer aroon). this can be done by 2ma also ,- it helps to understand Convergence show-TREND DIMINISHING,FLIP BY LOWER MA- OPPOSITE TREND START, CRISS-CROSS = NONTRENDING MARKET(so we plan to trade buy support/sell resistance now with lowertime swing). u have to use an oscillator to understand oversold/overbought -when to reverse(i use william%r).ST has given excellent guideline on it.
Soon with 1st level experiment with TA,its failure- u distinguish in particular level buy/sell works at particular market macro condition(sentiment analysis useful-p/e chart, advance/decline ratio) . So we find SUPPORT/RESISTANCE , condition for breakout or reversal this time.pivot ,wrb r helpful add-on.
some biases r called for-so we utilize pattern- V /^,SAUCER and INVERTED SAUCER -they can be used with nr4/nr 7 set up.Some counts on complexes so use ELLIOTT TERMINAL PT/TD SEQUENCE COUNTER TREND ENTRY. others use simple M/w or its variation triple top/bottom.
Master specializes on TRAP BOTH BULL/BEAR ,as well on SUDDEN REVERSE AFTER WEDGE .ALL OF THIS CAN BE IMPLEMENTABLE ONLY AFTER PURE PRICE ACTION STUDY BAR BY BAR.
USE OF HIGHER TIME FRAME BIAS/IMPULSE DIRECTIONAL TRADE-MAKES GOOD MONEY. when u know this /apply to earn atleast 2 yr month by month -SWITCH TO F&0 for leverage, - u have ur own bank to syphon off money from market.
i personally feel ,from own experience ONE SHOULD STUDY MARKET CONDITION NOW,what may happen NEAR FUTURE,- take position -TRADE MECHANICALLY WITH ENTRY /EXIT . UR COMFORT ZONE SHOULD BE EXPANDED , BUT stay out from novices/arguments/media distraction to maintain mastery/PMA.
Afterall only 3 things possible -price can decipher it- UP/DOWN/SIDEWAYS.TRADING HAS ANOTHER ELEMENT -SURPRISE , TACKLE IT IN UR PLAN.
in midway of a trade-learner journey with programming in indicator tool & its exercise - solve lots of nuisances MAKES U GOOD TRADER ,when u comeback again to read prices.
BHAO BHAGWAN CHE

bye bye permanently

 

[oilman5]

A small tip I want to give is dont rush into a trade. Wait patiently for a set up. Market gives good trades when it is extended in one direction and the market starts its journey in the opposite direction ( like a pendulum of the wall clock) and that is where a good trade is set up.So wait for the right set up and when set up presents itself pounce on a trade like a cheetah or a tiger. And always remember to take safety precautions by way of stoploss because the trades which we consider as best trades can fail and can be very nasty trades if we dont guard ourselves with proper risk control and stoploss.

If you do the above, success cannot remain far away.

Smart_trade

 

[oilman5]

recently a chap on forex ,try to give golden nudget on trading(more to clarify on thought process)
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REF PT : U Have to take some pt to start, in basic physics on graph,o,o -x/y axis , time & price element .We will try to understand volatility ,trend and whether opportunity exists -from it.
Why price move? -because of supply/demand & sentiment.
Sell order already placed ,must be overwhelmed by new demand @ near an imp pivot where bias exists is key theme of OTA fame SAM Seiden.
when u observe/learn- 3 things may choose as technique - PULL BACK BUY,BREAKOUT BUY OR SUPPORT BUY.SUPPORT =FULL DROP PT, STD STRONGG GREED = BREAKOUT, PULL BACK ARBITRARY (DISCRETIONARY) ENTRY PT BASED ON FEEL FOR REVERSAL,TREND STUDY,CONFIDENCE TO TAKE A TRADE ON ORDER FLOW BIAS.
problem /soln lies by fixing the variable ;- timeframe in which u shall trade,timeframe u choose to understand bigger perspective (trend),smaller timeframe bias in impulse(quick decisive price move)- style fixing,understanding strength /holding capacity of support/resistance this time.
Hell of a time one normally spent(old saying myth 10000hr)- to understand directional bias NOW and good moneyflow shall come in near future (expectation buildup on entry of GIANT)
To understand we SEE left to right, but to trade we see right to left & VISUALIZE with high probability (as per individual )from present pt to RIGHT SIDE PRICE MOVE .A successful trade learner normally creates various WHAT IF SCENARIO BEFORE HAND,to tackle it as its happening nextday/next hr.
If u could not see the RIGHT (near future properly)- dont participate. If u can see the RIGHT very well(high probability) -play big bet.
Candle formation is nothing but a ref pt study in realtime ,trend= putting hope on continuation,momentum = use of trend with thrust,
stoic mind = debarred from pain/pleasure so can do visualisation of price move better. Training = observing ur mentor how is doing it
self training = practicing the same on simulated data.
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highest money awaits if u decipher counter trend pt, indecision time phase,high probability event- just read one post above ST's comment

 

[oilman5]

Further clarity on nugget
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1] trend factor
CONTINUITY CONCEPT - normally novices(fools from longterm investors which i also practiced some yr and discarded due to poor return,-believe it) a linear concept shall go up ,what goes down must go down further.This can be used instead of yr in month (max) - easily in week and day timeframe. Depending upon strength ,slope of trend -a great study of past price behavior ,we can create fairly idea how much shall be duration now. A rule of thump : if u see 3 day expected move -see in 10 hr ma chart. If u want to SEE a day move -watch hrly chart.
Impulse strength,and steepness helps to understand trend validity,- many a literature on Elliott clarified it.
Relative position of STRUCTURE with economic backdrop is crucial to understand trend continuity(nearly all pro even make mistake here)
Going in detail on price action study helps me immensely (1st hr at open /close) .Most of the time its in balance ,but with CLARITY in observation u know when Trend shall resume,as well as strong one - may even last a full day. If u r lucky enough may get a quarter full of trend.
Specialty of intraday price action: U HAVE TO DO VERY QUICKLY-understanding trend-DEFINE DAY,entry in direction of trend ,suitable stop validation(when u shall consider today is not trend day nor ur stock is trending),- target achieve and getting out .
ASSUMPTION ; TREND IS EASIER TO TRADE,LOGICALLY CLEAR . only good reference pt to start with- yesterday close,high ,low- next SEE LAST WEEK CLOSE ,HIGH.LOW - seeing price behavior there, how price has approached tells some characteristics on sentiment/moneyflow.
remember another tool -higher timeframe bias.MORE THE TIME IS HOLDING HIGHER REGION -STRONGER IS STABILITY ,so the trend in future .- read it as accumulation.only after mastering it can be a break out trader.
U may fib retracement -also to understand strength ,less in Retracement better is strength.
A higher High = sign of good trend and its continuation is lot of steam is left.
Remember when Higher low is breached ,doubt the trend and book profit.
Do a habit of detail study on EOD full day bar as well as HR bar - it clarifies trend or nontrend day very well in subconscous mind.
However Trend continuation depends on GIANT FOOTPRINT ,BIG FUND BUY/SELL can be seen on chart/delivery %. BECAUSE they do audit/loan giving know beforehand the quarterly result and use it -also spl research team in midcap find a good candidate a strong buy gives WRB.SO location of wrb ,structural study helps us in detail strength of trend continuation.Sometimes using hype of media at a strong p/e value ,they come to dump (take opp position against av joe- SIGN of exhaustion bar at top )
However from basic of Dow ,we know counter trend exist -profit book is natural ,so is ZIG-ZAG formation (only thing healthy trend has certain retracement limit)
So trend resumption of Greed(being bullish) or more participation in market (new moneyflow)- if that wont happen - slowly Distribution occurs ultimately diminishing speculation activity.
So faith on economy/ability of the country to prosper is reflected in TREND.But dont trade against big Giant FII, particularly when they dump.
So Trend and sideways whether accumulation OR distribution r part of market , sector rotation is strength searching in group based on Macro .
Its bank -unless showing strength country cant improve, next is infra + power ,then only longterm bull . Yes trade that expectation,but actually what we see in price???

2] Time factor
time is ultimate resource in life, Clarity is key.Opposite is confusion .As we all know various sentiment/view (trend idea) always exist in market and in very small time unit ,PRICE is always in equilibrium.Since equilibrium is not tradable, how its breaking,how far it can go,continuity of move clarity is part of trade plan[ visualization to act]
lower the time -easier to see,but more random, so i find 10min candle i can see while forming ,and little ability to decipher it. Many a good software/master trader may deal in 5min/3min -and thats their superiority (idea is same).
take Any std candle bar, high is normally attack pt of bear, low =buy start of bull. To understand what i try to say create 5no X 2min bar at left, and combo 10 min bar on Right.Now observe keenly action on price behavior while forming next 10 min(also see left side 5 bars)- clarity on seeing 5 small bar to create one , equilibrium tendency -sideways characteristics will be in build in U. In sometimes u may see,bias- bias to break on top (u may choose bottom also ,for bullish i am chosen )- uptrend is coming. U can trade it, earlier entry is better ie. while its breaking ,particularly if its imp Pivot.
NOW in indian market daily u can see it normally 915-1000 as well as 1430-1530.First half with no news, OR against published news, 2nd half assuming good moneyflow trade in the direction also in big size( may used to hold for days).
My observation is news planted to sell and get out, 1430- time to act by giant. The luxury of a trader is this 2hr is sufficient to run family engine.( ofcourse it has taken many yr to understand /implement it)
Now depending upon capability/experience- courage/clarity/conviction and confluence effect on MA SLOPE, REVERSAL PT AT HIGHER TIMEFRAME ,OLD GAP PT we can do it more easily.
Somebody like me who r basically countertrend player(entry at taking out of last
impulse by atleast equally strong reactionary force with Vol) may prefer to entry at imp support pivot/FIB RETRACEMENT(various % value) confluence pt, provided price has shown exhaustion.AND ENJOY THE FRUIT WHEN NEW TREND RESUME. but i loss when it dont happen ,remember counter trend entry as timing with small profit target /high loss potential if traded without stop, ur skill to get out early and but ad when right makes u to use it with success.
another theme is ADDing of time - half hr bull candle + half hr bear candle= one hr doji
Similarly Engulf formation , Hammer & inverted formation -similar concept we use to learn Clarity with Synthetics -drawing payoff A+B=C ,anchor leg + safety leg =forming option strategy

So we understand and try to clarify -3 group successful traders breed exist (one may be mixed)- COUNTER TREND - TOP/BOTTOM SEARCHER - ENTER SMALL ,BOOK LOSS ,WHEN CONFIRM HIS EARLY ENTRY TRADE BIG
TREND TRADER: BELIEVES IN 1ST PULLBACK OR BREAK OUT, EARN BY MOMENTUM- FEEL COMFORT IN LATE ENTRY (LET TREND RESUME THEN ENTER ATTITUDE)

VOLATILITY TRADER : breaking of small zone, price shall go in higher energy stabilization level(volatility cycle theory, extensively used by F&O market. They watch /observe low vol small range sideways market.
Problem is when we trade at random price ,dreaming of trend- or bring our hassles from emotional mind.

 

[oilman5]

further addition on nugget
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1] some price zone has bias like pivot,support line, - we must be extremely careful watching how price reach there.we should thought in terms of probability -for breaching or bouncing from there. some times price suddenly lose interest -ie. participants r taxed ,so take rest mode(low volatility zone)
2] Typical candle formation at those zone ,helps us predict whether behavior of price is at random or some predictability after reaching there.So many times price prediction is not possible , but some times its as easy to pick up cadbury from a 3yr kid. trade then
3] we have to be very decisive in profit booking as well as loss impact control. Dilemma is enemy for a trader so unlearn it at learning phase.(wrong trade is very much ok)
Infact a great trader is nimble one to move in multiple timeframe, a small time frame riddle used a big profit move,but when uncertainity comes sit idle.

 

[oilman5]

some reality based trading comments from ST
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There is no single method which will work in trends and in sideways ranges. The moment the market shows us that it is in sideways range, we have to start selling near higher boundries and buying near lower boundries.The sideways range is indicated only when the attempt to breakout out of the upper boundry is failed and market comes back in the range and then we get out of long positions without waiting for our stops to get hit.

Just like how we traded todays breakdown failure....we were expecting a large and fast move down but when market came back in the range or pivot low it broke, we got out of shorts trades much before our stops are hit....making money even on failed trades.

Reply on thought process on flexible trade......"It is my experience that when such gap down happens, the market after a rally goes back to the bottom and most likely breaks the bottom and makes a new bottom."
..................Answer:Initially only shorting...no thoughts of going long because the trend was definately down.. But after the trend changes that means after we taken out VPH after putting a higher VPL in place, then we can think of long trades.

Market can change its trend anytime and we have no control on that so we have to align ourselves with the most current trend we are in.
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Nothing can predict a range day or widening or megaphone day in advance. The range or sideways day becomes apparent after if fails to trend in either direction..but today after the trend change the market trended....else we would get out of long positions on any pivot low break.

Posting today's nifty Futures 3 min chart with swings marked.

1) We opened with gap down on bad news and in first 3 bars we made a bottom and a small rally started. This rally we have no idea where it will end...it could be at 8245-55 or 65 or higher.

2) It is my experience that when such gap down happens, the market after a rally goes back to the bottom and most likely breaks the bottom and makes a new bottom. But if the gap down is after sustained and steep fall lasting for 2-3 days or more then there is a chance of V shaped reversal. The downmove had just started on Friday so V shaped reversal on the first bottom was not expected but still we have to guard against that.

3) After the rally, the market broke the red line and that was the first indication that the rally is probably over. So the good place to short was below 8231 and we had a well defined 15 points stoploss at black line shown.

4) By this time the market had distributed for number of bars. If it was to give V shaped reversal, the market would have covered lots of distance in first few bars...that did not happen so V shaped reversal at this point was ruled out.

5) Market broke the low it made in first 3 bars and It was expected that the downmove will accelerate. But market came back above the pivot low it broke...this was certainly a bad news for bears. Bears should have taken some profits at round figure of 8200 and then balance short position should get covered at any of the blue dotted lines marked.

While shorting, our attempt should be to catch it as high as possible but after it turned down with clearly defined stops..
Yes ,the short term trend changed at the blue dotted lines.

Previous VPH is takenout after higher VPL gives more confidence that the trend has changed and the higher bottom is in place. If previous VPH is taken out after lower VPL ( Meaning abscence of higher VPL), then the trend is likely changed...but for confirmation of trend change we need higher VPL and higher VPH sequence.
...................... what ST mentioned are basics, around which we can create a system for trending markets. For trading markets, we have to trade the failures near price boundaries. On channel it is a different ball game again. As you know that channel is semi trend semi sideways, in this case if you trail on every swing low we will get stopped out , so we need to be gauge the market and trade our system accordingly.
......Today afternoon in nifty was clear trend as per 5 min tf, hence we can enter long with minimum risk.

Today I was not wrong on the direction of the markets.The short trade I took in the morning was correct as the market direction till then was down, there was no way to predict that the market will change its trend.....but after the market changes its direction we have to change our direction too and start trading from long side....no point holding on to our direction and loosing money....

A trader can be said to be wrong if he anticipates the bottom and buys in a falling market and market continues going down....similarly he is wrong on the direction of the market if he shorts a rising market anticipating or predicting end of the rally. Market changing its trend during the trading session, a trader is not at fault.On the contrary he is to be happy that he was right on judging and trading both the trends.
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[oilman5]

Q:Till yesterday everyone was expecting a downfall of atleast 200 which almost happened with a gap down. I did not understand reason of reversing soon and that to same day. Is this can be guessed from technicals.
At 7874 market was for long time I thought up turn is steamed out even on 5 min chart it was on overbought position. But at 2 pm it broke up and up. How can we identify that tend is still intact when stoch is showing overbought or oversold?
REPLY:
1) When market is selling off last 3-4 days and then on some news it opens with a big gap, there is a strong possibility of reversal.

2) In a trend, the oscillators become overbought and if they stay in OB zone for more than 5 bars, it indicates a strong trend move and the market will keep moving up irrespective of overbought condition.This is how oscillators work. I have mentioned this phenomenon in my thread " How to Trade With an Oscillator"

At 2:00 NF brokeout and the short sellers must have come in to cover after they realised that the market is breaking out and the rally is fuelled by short covering.After 2:00 the trapped side was that of traders who shorted in the morning gap and they rushed in to cover their positions.

This is how the market always moves.

Smart_trade

 

[oilman5]

trade learning is very difficult for new learner. As they have no clear cut view, even on what to learn.
most novice way to join in bull market- sure way to disaster.
yes u require some knowledge on Fundamental, TA and mostly on psychology.
now before start of trade learning -read Risk management.
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in reality trading = application of all of them + transformation of self to earn irrespective of market condition.
Market condition guessing is not possible ,unless u do it urself(spoil ur money to know what condition u can predict in near future ,based on price behavior, and how u react to save or make money on perceived opportunity)
so u learn to survive to take next step, -use pma.
basic feed on fundamental in india- equitymaster/capital market.
read good traders approach in traderji/elitetrader.
if affordable join OTA, as they allow to practice retake to clarify on self/trading.
remember u have to put atleast 5000hr effort, even with best advice/guide before survive alone in this market (i was novice for 10yr and still make many novice mistake)

 

[oilman5]

fixation on a timeframe
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time to take a trade = best intraday first 45min.
short term swing= last 1 hr.
all trade plan ,must be done before - execute only at market hr.
professional intraday trader prefer to play momentum - on pivot break , based on skill . PROP trader of fund houses std plan is play against news, so trade against popular result news.
simple support/resistance , short /long by divergence - ,candle bias= sufficient arsenal. learn to not emotionally involved more imp.