TRADING
My trading goes with the trend.
Market is unpredictable, what will happen next can never be predicted, so how we go with it, when should we enter? and when should we exit? These are the two questions which every trader every investor try to ask . Some investors follow blindly to their financial gurus and invest where they tell them too, some goes for the daily tips, some goes with the news, some goes with the luck.
Here we are not following anything blindly, we will be going by chart and will keep trend as our best friend. Most of the successful traders or investors advice that we go with the trend, So we will follow the same thing.
Here the trading is using the trend and pivots. We will try to go with the trend and we will enter and exit the market according to the trend.
Example of Entry, Exit and Reversal
Using the above chart, I will try to explain the Entry, Exit and Reversal of a trade.
We never know where the market will move in which direction, but we need to enter market so, what should be our point to enter, we can go through the previous days charts to look for the continuation or reversal trends, this will just give us a overview as to how the market has been moving but what will happen next only god knows. So just not going by luck or chance we try to go with the trend,
Entering a trade
We will enter long above the Pivot High giving some space from the exact pivot high level and
We will enter short below the Pivot Low giving some space from the exact pivot low level.
For eg suppose the PH is 3170, and Pl is 2600, then we can use some space like 30 points which we often call as Filter. This Filter is used to prevent ourself entering into wrong trade and most of the time, this helps us to enter a right trade.
So For our long entry would be at the PH + Filter = 3170 + 30 = 3200
And our short entry would be at the PL Filter = 2600 30 =2570
(The value of filter used over here is just for explanation purpose, One can backtest for finding the best possible filter and use it accordingly)
Stop Loss (SL), Stop and Reverse (SAR)
As soon as we enter a trade we need to put a stop loss, the reason for putting a stop loss is that if the trade goes against us, then we will loose limited money, but if we dont have any stop loss then we might loose all our money.
What is SAR?
SAR is a short form for stop and reverse, we use this type of stop loss when we want to be always in trade, suppose we are long, we keep our SAR at pivot low once that SAR is broken then we end our existing trade and enter a new trade after that.
What is the best SL or SAR
If we are long above PH then our best SL or SAR is below PL
And If we are short below PL then our best SL or SAR is above PH
What is trailing SL or SAR
Shifting to SL or SAR to the new pivot high and pivot low is known as trailing SL or SAR, We do this to prevent our profitable trade to go into loss and the loss trade to limit its loss.
What to look for after we enter a trade?
After we had placed our buy or sell order, one of our order gets triggered, we put our SL or SAR.
So, if we are short, then we keep eye on the Pivot High (PH) , we will be shifting our SL(Stop Loss) or our SAR(Stop and Reverse)to this new pivot high, as the trend continues to form new lower pivot high we try to shift our SL or SAR to this new Lower pivot high, if this lower pivot high is broken then we have a reversal in our trend then our SL or SAR is hit, SAR will put us in a new trade after ending the existing trade while SL will just end the existing trade.
And now when we are in long, then we keep eye on the Pivot Low (PL), We will be shifting our SL or SAR to the new higher pivot low(PL) , as the trend continues to form new higher pivot lows we shift our SL or SAR to this new higher pivot Lows, If this higher Pivot low is broken then we have a reversal in our trend then our SL or SAR is hit
How to maximize our profit?
We are able to maximize our profit using the trendlines, So what is trendline now, In uptrend we will connect two or more pivot lows using the semi-log and if we have a break in the trendline then at that time we exit the trade for half of the quanity and the rest we will exit at the break of the pivot.
Adding lots at pivot, booking or covering lots at support or resistance level will help you to add up more to your profit.
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