Trading Strategies Using Technical Analysis

Which date should the meet be held?

  • February 27th 2011

    Votes: 19 59.4%
  • March 6th 2011

    Votes: 8 25.0%
  • March 13th 2011

    Votes: 5 15.6%

  • Total voters
    32
  • Poll closed .

SwingKing

Well-Known Member
#1
I am starting this new thread where I'll be providing trading strategies using Technical Analysis. In this thread I'll post strategies for Indian Stock Industry. Over the period of time I will provide the AFL's for the same. The best way to use this thread is to Understand and Master only One or Two setups. There is no point in running behind all the strategies in order to catch all the trades. Be sensible and be patient. Understand these setups and try and make your own strategy. That is the only thing which will get you profits in the market. Personally I don't use these strategies for trading or for investment. This does not mean that the strategies dont work. Most of these strategies include indicators and since Indicators are mostly lagging, I prefer to leave them out of my system. I have custom made a software and I trade on a completely different system. In the thread, I will be giving out stock recommendation for investment purpose (check the excel sheet). These recommendations are based on my custom made system. I don't prefer trading on the shorter time frame and most of my trades usually are on long term basis. Some AFL's are created by me with the help of other forum members like Anant. Special thanks to them for their invaluable contribution.


List of Trading Strategies (This list will be updated as new strategies are posted). Click on links below to directly see the posts.

Intraday Strategies

1. Rectangular breakout for Intraday Purpose (With AFL)
2. Using 5-Min Charts for Profit (Ascending triangle)
3. 15 - Minute Chart Breakout
4. 15 Min Intraday Setup
5. Classical Gap Setup for Intraday Trades
6. RSI and Bollinger Band Setup on 60 Minute Time Frame

Daily Strategies

1. Retangular Consolidation Pattern
2. Failed double top - Daily Pattern
3. 5 Day Momentum Trading Strategy (With AFL)
4. RSI Divergence Strategy using Daily Chart
5. Dual Time Frame Momentum Strategy
6. Using a trending Indicator (ADX) efficiently
7. Trading Positive Divergence on Daily Time Frame
8. Swing Trading with MACD and Stochastics
9. Trading Setups by Apurv

Weekly Strategies

1. 2-3 Week Swing Trade Setup
2. 3-4 Days Swing Setup (With AFL)
3. EMA Cross Over System
4. Turtle Soup Plus One (With AFL to spot the pattern)

Complete Trading Systems

1. Swing Trading Nifty & Bank Nifty

Other Useful Posts

1. Position Sizing in Investments
2. Importance of Data Validation and Data Accuracy
3. Importance of Getting in and Getting out of Trades
4. The "What If" Syndrome
5. Futures or Equities
6. Picking the right kind of stocks for Swing Trading
7. Setting Stop Losses
8. Position Sizing Techniques
9. Setting Stop Losses Using Historical Volatility
10. Focussed Approach versus Diversified Approach
11. Market Analysis Framework
12. Rollover Analysis
13. Setting Stop Losses Using Historical Volatility - Example
 
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SwingKing

Well-Known Member
#2
Rectangle Pattern

RECTANGULAR PATTERN ON WEEKLY BASIS


Tools – Candlestick/Bar Chart, ADX (14) and MACD Oscillator with standard settings

Trade Setup – The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. The pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either direction. This pattern is extremely effective and provides with good risk/reward ratio. I chose high beta stocks to cash in on the moves as quickly as possible.

Time Validity - I trade this pattern only on weekly charts. The reason behind this is simple. The more the data, the more reliable the pattern. Thus data and patterns on monthly charts are certainly more reliable than weekly chart. Some analysts do say that the weekly pattern should not extend beyond certain weeks. However, my research indicates that this condition may or may not hold true. Personally, I prefer the formation rather than the time frame.

When does it occur - This pattern can be found during consolidations, new highs and new lows. Some books do indicate that these patterns are typically consolidation patterns but I have found these patterns effective in nearly every situation.

How to trade it - Refer to the chart below. What we see is that HCC forms a bottom by forming a rectangle pattern. Usually there must be 4 points of contact in the pattern (as marked in the figure). However, in some extreme cases I have seen points stretching to 6-8. Volumes during the pattern should diminish and the NDI should be greater than PDI. Though NDI is greater than PDI, the stock instead of falling further consolidates in a range. This usually is the first clue for the stock validating the pattern. As the pattern develops and begin to show strength, the volumes, ADX (14) and PDI all start to pick up. This is usually the second clue and beyond this only the breakout confirmation is required. The breakout confirmation is usually recommended as validation of pattern breach. However, I personally prefer to see a gap up breach (check chart). I have found that gap up along with the previous clues mentioned works exceptionally well for this pattern. The stock usually runs up quite fast and doubles in near term. Though the gap up is rare, but if you find one, then latch on to it. Keep in mind the slope of MACD while buying. It should be positive and should have an upward bias.

Target - Add the range of the rectangle to the breaching level. This is the minimum target that can be achieved. The maximum cannot be predicted.

STOPLOSS - I would prefer not to refer to stop loss levels as every trader is different in having his own rules of money management. Please use your own rules for managing equity.

Usage - This pattern is effective in weekly and daily trades. However, I have also had considerable amount of success using it on intraday basis. If someone wants, I'll post how to use this in intraday setups.

 
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#4
re: "Trading Strategies Using Technical Analysis".

I am starting this new thread to address concerns of beginners who are new to Technical Analysis. In this thread I'll post patterns for Indian Stock Industry. Most of the patterns will be known to most traders. However, I club these patterns with other standard indicators to increase the validity for my own trades.

There may be other threads which post the same information. However, I would like to post the same in my own way of analysis. No two analyst use the same methods and indicators and hence this thread might be useful for few beginners. I'll post 2-4 pattern every week.
Thank you very much RAUNAKJI for starting this new post.:hap2:
I am beginner in TA & your thread shall be my 1st topic.:thumb:
I would request you to give basic information,links,sources(if possible:eek:) needed to understand your TA,so that i can get a complete understanding.
Looking forward to gain something genuine out of it:thanx:
 

SwingKing

Well-Known Member
#5
re: "Trading Strategies Using Technical Analysis".

Thank you very much RAUNAKJI for starting this new post.
I am beginner in TA & your thread shall be my 1st topic.:thumb:
I would request you to give basic information,links,sources(if possible:eek:) needed to understand your TA,so that i can get a complete understanding.
Looking forward to gain something genuine out of it:thanx:
I would certainly provide you with the kind of sources you want. But I'd like you to specify what you exactly want. As far as I am concerned, I use some standard setups for each time frame.

Weekly trades: I rely a lot on rectangle patterns clubbed with MACD, ADX, Trendlines, Volumes

Daily Trades: I rely on classic A-B-C pattern clubbed with MACD, Volumes and ADX

Intraday Trades: I use two setups (Rectangle pattern and Sure trend pattern) with MACD and MA.

As I explained the weekly setup in my previous post, I will be explaining the daily and intraday setups in the following posts.

So to understand what I do, you will require basic understanding in,

1)Candlesticks
2)Macd
3)Adx
4)Volumes
5)MA - Moving Averages
6)Basic technical patterns
7)Trendlines

Please address me as Raunak :) ...
 

SwingKing

Well-Known Member
#7
Rectangular Trading Pattern for Intra-Day Purpose

RECTANGULAR PATTERN ON INTRADAY BASIS

This is the "heart" of my day trading. And I hope it will benefit all. :)

Tools Candlestick/Bar Chart (5 Minutes), MACD Oscillator with standard settings, Support and Resistance levels on 5 Minute chart

Trade Setup The basics of this setup is very easy to understand. All you need to do is monitor selective stocks (high beta high volume) or the Index. The pattern to look out is usually a horizontal range in which the particular entity trades and then gives a breakout in either direction. This pattern is extremely effective and has occurred nearly 70 times in the past 11 months on Nifty. On an average one can find at least 3-5 trading days in a month where this pattern forms. The average points to capture on one particular move are about 20-60. These figures on based on Nifty analysis. However, with 50 high beta futures stock, this pattern is bound to occur in many stocks on daily basis. Top 48 beta stocks exhibit this pattern atleast 1-2 times. So on different days you might get different stocks exhibiting this pattern.

Buy Setup A typical buy setup occurs when the entity breaks out on the upside after trading in a horizontal range for most of the day. Buy at the closing of the breakout candle and keep a stop loss at the low of the previous candle. MACD slope in this setup should largely be up. The risk reward ratio of this setup is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25-35 points.

Sell Setup A typical sell setup occurs when the entity breaks out on the downside after trading in a horizontal range for most of the day. Short at the closing of the breakout candle and keep a stop loss at the high of the previous candle. MACD slope in this setup should largely be down. The risk reward ratio of this setup is extremely rewarding. Prior to the breakout ideally Nifty should have traded in the range of 25-35 points.

Important Notes Look at the slope of MACD when you enter the trade. Also, always take a note of where prices are trading with respect to their support and resistance.

Have patience and you will see this pattern occurring regularly.


I am posting two out of many examples I have for NIFTY alone. If you want to see this for individual stocks then let me know.


 
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SwingKing

Well-Known Member
#10
re: "Trading Strategies Using Technical Analysis".

Thanks raunak. Setups looks good and easy to implement.
And what about exit and trailing stop ??
Sunny there is a reason why I have not mentioned anything about trailing stop or exit.

Trailing stop - If one wants, in a short sell setup, the moment the current candle's high is taken out, the position can be squared off. However, the drawback with this is that often prices tumble again and the good move is missed out. I have researched 3 years of Intraday data and what I have found is that it is better not to keep a trailing loss. Instead what I do is that for NIFTY I keep a target of 20 points and keep the market running down. If the market turns around, then I square off the position the moment my 20 points profit is in threat. So this way, the minimum I make is 20 and the maximum is what luck throws at you. :)

Exit - Again this is subject to the choice of the trader. Out of 183 times (in 3 years) that this pattern has occurred, the NIFTY has fallen in the range of 20-30 '63' times and rest results vary. Hence, the minimum would be 20. I have a lot of trading capital and hence I take up huge positions in order to compensate for any loss in potential points. Hence, as a trader one must decide how much points he wants. For some 10-15 points is too much and for others sky is the limit. :)
 

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