Thoughts on Day/Swing Trading

[ashwani chadha]

Dear SLM uncle,

Thanks for your kind words. I am happy that the ideas /methods presented are useful in your trading.I have used these methods for many years myself too.....These methods are being traded profitably in realtime trading by many.

Profit taking in daytrades is a delicate balance between two contradictory and often conflicting principles of " grab your profits,else they will disappear...." and " Let your profits run"......daytraders need to have a different mindset than swing traders or position traders and they have to take profits on first sign of market going against their trade direction.

So if we are short , and market after going down for 3-5 bars, stops making new low and goes sideways,prints a aggressive pivot and if sideways range's top is taken out, take profits. If market makes a hammer with long tail and the hammer's top takenout, take profits but instead of top getting taken out, the low is cracked ,come forward and add in your short positions.....candlestick patterns come handy here....

But the above should not be confused with getting scared and taking quick profits without any reason. That we avoid....you will see that on first two short trades in the charted quoted by you we took quick profits but we waited and added in 3rd trade....why ? because there was no indication of market reversing and we got a big trade and we booked profits at the support levels shown in the chart. While booking profits, flags are the worst enemies of daytraders.....but based on the previous bars one can anticipate the flags and stay clear of them. We need to stay in the profitable trade for a long time to let the trade mature too.......

Regarding options , yes you can trade options when you get a trade signal on the charts. So if you get a signal to short the market, you can either buy ITM puts or ATM puts and ride the trend. You can also sell ATM calls....that choice is really based on your estimate of how strong the down move will be.

Best wishes,

Smart_trade

thanks for your above use full post

 

[sibumajumdar]

They say that trend is your friend but that statement needs a qualification that it is your friend as long as it is not about to end.......how does one know that the trend is strong ?

I use following critaria to judge how strong the trend is...and when it is about to give explosive move. The technique I follow is based on Trends knowledge from William McLaren and also from Saint....All credit to them, I just apply that knowledge to the markets....

See those magenta colour lines on the chart ? Those are the lines showing gaps in the earlier top and the reaction bottom after breaking the tops....these gaps show that the trend is strong and about to blow off.. .... After such gaps the trend accelerates.....you can see that on any chart, any time frame......if coupled with other techniques, it gives great confidence to hold the positions, add and wait till the trend is about to end.....

Smart_trade
__________________

Dear ST Sir,

Though this post regarding GAPS, i have some query about some entries. Hope u will clear my doubts at your conviniences.....

1) Basis of 1st long entry is not clear to me...is it previous days close crossed after gap dn opening ? If so, then why not enter long at crossing of prev day's LOW / PH at 15hrs or PH at 13.30hrs (11 Apr ).

2) Sir, was it wrong to add 3rd while crossed sidewise -Pivot High at 3rd magenta colour line instead of break of PH much higher price. I understand your reason is blast after GAP.

Clarification from your side will help me to great extent to follow this set up. Hope iam not bothering you with silly queries.....Thanks....SLMuncle

 

[columbus]

is it advisable to day trade with OPTIONS with watching levels in NF...SLMuncle

Yes, it is advisable to trade in Options rather than to trade in futures because
options are less sensitive than futures on 2 grounds:

a.Options deal with premium
b.ATR in options (in absolute terms) is less than Futures.

 

[sibumajumdar]

Dear SLM uncle,

Thanks for your kind words. I am happy that the ideas /methods presented are useful in your trading.I have used these methods for many years myself too.....These methods are being traded profitably in realtime trading by many.

Profit taking in daytrades is a delicate balance between two contradictory and often conflicting principles of " grab your profits,else they will disappear...." and " Let your profits run"......daytraders need to have a different mindset than swing traders or position traders and they have to take profits on first sign of market going against their trade direction.

So if we are short , and market after going down for 3-5 bars, stops making new low and goes sideways,prints a aggressive pivot and if sideways range's top is taken out, take profits. If market makes a hammer with long tail and the hammer's top takenout, take profits but instead of top getting taken out, the low is cracked ,come forward and add in your short positions.....candlestick patterns come handy here....

But the above should not be confused with getting scared and taking quick profits without any reason. That we avoid....you will see that on first two short trades in the charted quoted by you we took quick profits but we waited and added in 3rd trade....why ? because there was no indication of market reversing and we got a big trade and we booked profits at the support levels shown in the chart. While booking profits, flags are the worst enemies of daytraders.....but based on the previous bars one can anticipate the flags and stay clear of them. We need to stay in the profitable trade for a long time to let the trade mature too.......

Regarding options , yes you can trade options when you get a trade signal on the charts. So if you get a signal to short the market, you can either buy ITM puts or ATM puts and ride the trend. You can also sell ATM calls....that choice is really based on your estimate of how strong the down move will be.

Best wishes,

Smart_trade

Dear ST Sir,

Thanks for your prompt reply. My doubts cleared to some extent. After few more reading if not comprehend fully then i shall again bother you with my silly queries. Plz bear with me. I hardly know much abt TA. Deep study abt flag/ candle stick formation needed for me. Beside yours i also go through thread of RAGHAVji who is great proponent of your PA set up. HE beautifully explained very simple way your GAP theory. Thanks to him too.

Thanks again.....SLMuncle

 

[Smart_trade]

Dear ST Sir,

Though this post regarding GAPS, i have some query about some entries. Hope u will clear my doubts at your conviniences.....

1) Basis of 1st long entry is not clear to me...is it previous days close crossed after gap dn opening ? If so, then why not enter long at crossing of prev day's LOW / PH at 15hrs or PH at 13.30hrs (11 Apr ).

2) Sir, was it wrong to add 3rd while crossed sidewise -Pivot High at 3rd magenta colour line instead of break of PH much higher price. I understand your reason is blast after GAP.

Clarification from your side will help me to great extent to follow this set up. Hope iam not bothering you with silly queries.....Thanks....SLMuncle

1) First long entry is because we had a gap down opening, the first candle is a hammer and market went into the range of earlier day. I was looking for a pivot high above the red line marked.....so waited for 1-2 bars . If not pivot , atleast I need couple of bars strongly closing above the red line to go long. This is to avoid weak upmove, just closing the gap and again breaking down. Wanted the market to show real strength before I take a long trade. Ideally in such cases, I look for a Pivot high above the red line, and some sideways basing action and then the PH getting taken out.........but here market showed strength right from the first bar so just went long over couple of strong close bars closing above the red line.

2) Yes the light magenta line is a great place to take 3rd add but we already had initial position plus 2 adds and I did not want to take a 3rd add too close to the second add. One has to remember that adds should not be too close otherwise if the market suddenly reverses, then your last 2 positions give you a loss putting the entire trade in jeopardy. But if you add a small quantity at the magenta line.....that was a nice place to add.

Smart_trade

 

[Smart_trade]

Posting a 5 min Bank Nifty Futures chart of 12-AUG-2011. Observe how the market failed at blue/red TDST line not once, twice but thrice......this gives a confidence to trade from short side......likely locations of trades marked on the chart.

Smart_trade

 

[sibumajumdar]

Dear ST Sir,

I am much wiser after reading your 2 replies to my various queries. For EXIT/Profit booking PIVOT is not the only criteria which you explained so simple way. Many many thanks for the same.

BTW i am going through your TDST set up. Fully understood but yet to know how to trade the set up. Your subsequent posts will make us confident of that too.

Thanks again & let Almighty Bless YOU, so we are not deprived of your knowledgeble posts . Hope you fully overcome your back problem.....SLMuncle

 

[EagleOne]

Amen to that.

...
Thanks again & let Almighty Bless YOU, so we are not deprived of your knowledgeble posts . Hope you fully overcome your back problem.....SLMuncle

 

[sibumajumdar]

ST Dada rocks.....:lol::clapping::clap:

Dear Raghav,

I got a very clear idea about STda's GAPS from your thread where you explained it with bar lines in a very simple way & thanks for the same. But i have a query to get cleared from you....

You have marked gap lines between break dn Pivot Low & top ( not PH ) of green bar which is neither a rally nor a sideways PH but simply a print of AP ( or iam missing something ) . My doubt, is this gap valid. Please help me to get my doubt cleared.....Thanx again....SLMuncle.

 

[Smart_trade]

Dear Raghav,

I got a very clear idea about STda's GAPS from your thread where you explained it with bar lines in a very simple way & thanks for the same. But i have a query to get cleared from you....

You have marked gap lines between break dn Pivot Low & top ( not PH ) of green bar which is neither a rally nor a sideways PH but simply a print of AP ( or iam missing something ) . My doubt, is this gap valid. Please help me to get my doubt cleared.....Thanx again....SLMuncle.

This gap is valid because the green bar is an aggressive pivot. But more than the pivot , what we are looking at is after breaking the pivot low, in a bounce move how high the market goes. If it is unable to go in the pivot low broken area,then it leaves a gap and shows weakness in the market and indicates that the downmove will accelerate.

So after breaking the low of the green bar , we knew that the bounce could go only as high as the green bar aggressive pivot high which was an inside bar......which shows tremendous weakness and (indicated that the market will drop like a hot potato )the market downmove accelerating ....which it did.

Smart_trade