Trading NR7 setup

[rohangawale]

NR7 stocks of nifty triggered on 20th aug are:

[B]STOCK		HIGH		LOW[/B]
BHEL		2265		2226
DLF		383		372.35
GRASIM		2553.9		2501
HCL TECH	258.65		251.6
HDFC		2425.8		2375
ICICI BANK	734.8		714.15
INFOSYS		1996.6		1960
ITC		227.5		225
L&T		1519		1477.1
NATIONAL ALUM	333.7		325.1
NTPC		205.8		203.1
ONGC		1199.7		1170
POWERGRID	107.95		106.5
RANBAXY		305		299.55
REL CAP		812		793.1
REL COMM	248.4		242.5
REL INFRA	1113		1088.75
RPL 		119.45		117.2
SAIL		164.9		160.3
SUN PHARMACY	1205		1182
TATA CONSULTANCY508.4		498.1
TATA MOTORS	440		425.6
TATA STEEL	449.4		435
UNITECH		85.85		83.6

 

[rohangawale]

(Disclaimer - I could be wrong as it happens many times)

Happy Trading

Sir,
Yeh baat kuch hajam nai hui:clapping::clap::rofl:

 

[gurprB2J]

Thanks for clearing my doubts
gurpreet

 

[AW10]

Rohan Bhaiya, dekho nah.. Aaj hua hee nah.. mkt went up to 4500 level again after gap-down open.

Though that is not sufficient to change my view on bigger picture. We are not able to make convincing higher hiigh on daily timeframe. Just going up-down between 4400- 4500 range.. like last month we were playing the same game between 4500-4600 near last months expiry.
Weekly range is still contracting.. Just 225 points this week (last 4 entries in reverse orders were 260, 246, 249, 202) i.e. we are heading for NR4 week. I don't think we would be able to change weekly range of current week which is 4579 to 4353.

Lets see what market upfolds in next week.

Happy Trading

 

[vicky2005]

AW10... whats the best strategy to select stocks..if i want to hold them for say 15-30 days

 

[vicky2005]

I have a query... ITC gave NR7 day yesterday. and day before yesterday too...(Yesterday High was 227.5 and Low was 225).

Ideally we have to go short below low ...

today it opened at 226.90 then sharp fall within 15 seconds.. to around 221... so short should be initiated...but it started recovering... and went till 228.95.. (so if someone has taken short....he is in loss)...

is it normal? or just cos of volatility

 

[vicky2005]

not exactly but something similar happened in DLF too...

 

[AW10]

Vicky this phenomena is quite normal in breakout trading. Infact, Failed Breakout are more common then not.

If you look at ITC chart, it has support zone in 219/220 area. (just refer to 5 day intraday chart in Yahoo) Today it just opened /dropped near there.
Basic trading logic is Buy near Support and Sell near Resistence. Thats what professionals do..
Whereas novice traders do exactly opposite of that..
Though ITC broke NR7 low and yes the setup has given signal to go short.. But Our entry rules or our trading judgement should guide us. We need
to use common sense and decide that ,,, thoght some set of rules have given me signal.. but shall I risk my money and do what Novice trader do ? Does Reward/ Risk ratio in my favour or not.

For this short entry, if u had sold at 223 then stop would have been at 227. Support zone is 219/220 . that means risking 4 rs to make 4 rs. I wouldn't take this risk if reward is not worth the risk.
But if the same short, u could have got at 224/225 level, your reward /risk ratio would have been attractive.
I would look to short it only after it has crossed the 219/220 zone.

Whether trader ends up in loss or not depends on his trading rule..
If a daytrader has gone short on ITC in the morning, then his stop would not be at 227 but just 1 rs or so. And on reversal, he might have been stopped out.. but that was a signal to go long..so he might be
long at the same time.. By end of the day, he is still in net profit. Failed breakouts are more successful if you trade against the direction break i.e. direction that failed (in todays case, trade long)

If some one is taking swing position, then probably he might be net long now expecting further move up tomorrow. Plz refer to my earlier post about how to trade breakouts and reverse your position at stoploss level.

These are some of the factors that u need to put as Entry rule (or Non-Entry rules) before trading a setup. There is difference Between SETUP and ENTRY.
SETUP = there are dark clouds and heavy wind outside
ENTRY = shall i take my umbrella or raincoat or nothing. That is the decision u take.
Before taking this decision, we consider more factors like - If I am going to next buliding which is not even 30 seconds away, we skip taking umbrella. But if we are going to walk for few minutes then we
are better off taking raincoat cause umbrella is not enough for windy condition etc..

NR7 is just a setup. Please put in your approach to make trading decision based on this setup.

Hope my example above has given u you some ideas to think about..
Happy Trading

 

[vicky2005]

AW10 thanks

I am actually long on ITC since yesterday... I did consider 220 as support... and when yesterday it broke the High, i took long position, but today it went reverse.
I did not square off my position because ITC is a good stock and can be carried forward. And it did bounce back... and i am in profit of Rs. 4/- +.

Whats the best strategy to find stocks for good gains, if i want to hold them for a month or so? any ideas? thanks

 

[vicky2005]

Quoting a post written by a technical analyst of CNBC TV 18. Just for information as it is related to Narrow Range
"Thursday, August 20, 2009
Narrow Range ready for big move
For the past three days, the Nifty has compressed its action between a range - 4500 to 4380. This is good news, because such a narrow range is not likely to be sustained. Therefore, a breakout / breakdown is imminent. What will be the direction? Why not let the market tell us this.
wildeazoscar writes in comments - "And what is the big move target if 4730 is broken on upside? At least an amount equivalent of the trading range? That should guarantee 5660 at least!!"
Here is a valid point, and the I have thought about it, without reaching a conclusion. The Nifty is in a large trading zone between 3930 - 4730 approximately. A breakout should see an 800 point move (width of the trading range) which gives 5530. On the downside we have a target of 3130. For most of us, 3130 is easier to accept since we did see these levels just six months ago, but 5530?
Well, among numerous posibilities - (1) The upside target is reached in many months, with lot of volatility, (2) The target is not touched at all, (3) The Nifty creates the mother of all bubbles, taking itself to 7200 (target for the inverted head and shoulderwhich gets confirmed around 4760).
For 3930 to breakdown, we will enter a bear market. Why not? If the two reliance siblings keep on fighting, the Govt could one day announce gas a a national resource (put the gas under govt control) and that will bring the market down to 3100.

So, take one step at a time. Currently, we are looking at a narrow range. That breakout / breakdown will give a trending move. "