Trading Strategies Using Technical Analysis

[SwingKing]

Hi Raunak ...

1. re the Pattern for the Lazy Souls which I had posted for Sun Pharma .. Your views

2. Another one on the same basis ... again your views

SM Bro,

Though the pattern looks fine for Bharti Shipyard, I'd still prefer to stay away. It has huge overhead resistance around 280-300 and hence I will entertain thoughts of buying this stock only if it breaches this level.

If you look at other stocks in the same sector, there is not much movement in any stock barring Pipayav and Essar. Hence, there is no visible signs of broad based buying. I would keep this on my list and will watch it. It may test previous resistance, but beyond that price has to show its bullish. Till then, I will prefer to park my money in much better and "in" favor stocks.

Tc

 

[SwingKing]

Thanks a ton in advance Raunakji.

The mind always resists to see what is happening in the markets.

The mind remains in anxiety of greed or fear thinking of the past or anticipating the future.

It always tries to find an opinion about the direction and tries to stick on to that.
Or in other words it wants some thing concrete.
It is not flexible enough to change with the change.

(How to develop this ).

How to see the prices and trade with out keeping an opinion ?

Does this mean that don't do your homework ?
Don't do analysis ?
Because by doing analysis mind gets an opinion.
The opinion framed or the belief that the prices would go up or down is the key obstacle for trading.
Which again creates resistance.

Best Regards,
-JK

Jagan,

What you have analysed is very true and congratulations to have got this right in such an early stage. Now, coming back to answering your query.

Markets neither know Fundamental Analysis, nor does it know Technical Analysis. There have been proponents of both fields and yet somehow they are so wrong. Fundamentals argue about valuations, P/E, Growth and Technicals argue about Patterns, VSA, Market Profile etc. Does the market actually care about these? Well, I have seen stocks dropping like there's no tomorrow even when there P/E/Valuations were indicating 'Buy'. Similarly, patterns, VSA etc fail more often than they work. Hence, both methodologies are prone to fallacies.

What does an investor do then? Well, the answer lies in our mind. It is not that Fundamentals and Technicals don't work. It is just that one has to hone his own skills to judge when these will work. This unfortunately comes only with persistent practice and discipline. Both these fields have immense value, but that value needs to be unlocked by conquering our mind. And that my dear is not an easy task.

Have you ever thought why market analyst try and justify Technicals and Fundamentals? Answer to this lies within our psychology. Our mind has a habit to compartmentalize all the information available to us. It is within this compartment that we seek an answer to all the investment related queries. If the compartment and the information within it is not organized and appropriate, no matter how hard we try, we would never succeed. Hence, the answer to all your queries is the word "Organize". You have to see what you believe in and then have to organize your thoughts in a way where picking stocks becomes just another habit for you.

Don't worry and keep trying. We have all been in this similar situation. The one's who never give up are the one's who always succeed.

Tc

 

[oilman5]

Jagan,

What you have analysed is very true and congratulations to have got this right in such an early stage. Now, coming back to answering your query.

Markets neither know Fundamental Analysis, nor does it know Technical Analysis. There have been proponents of both fields and yet somehow they are so wrong. Fundamentals argue about valuations, P/E, Growth and Technicals argue about Patterns, VSA, Market Profile etc. Does the market actually care about these? Well, I have seen stocks dropping like there's no tomorrow even when there P/E/Valuations were indicating 'Buy'. Similarly, patterns, VSA etc fail more often than they work. Hence, both methodologies are prone to fallacies.

What does an investor do then? Well, the answer lies in our mind. It is not that Fundamentals and Technicals don't work. It is just that one has to hone his own skills to judge when these will work. This unfortunately comes only with persistent practice and discipline. Both these fields have immense value, but that value needs to be unlocked by conquering our mind. And that my dear is not an easy task.

Have you ever thought why market analyst try and justify Technicals and Fundamentals? Answer to this lies within our psychology. Our mind has a habit to compartmentalize all the information available to us. It is within this compartment that we seek an answer to all the investment related queries. If the compartment and the information within it is not organized and appropriate, no matter how hard we try, we would never succeed. Hence, the answer to all your queries is the word "Organize". You have to see what you believe in and then have to organize your thoughts in a way where picking stocks becomes just another habit for you.

Don't worry and keep trying. We have all been in this similar situation. The one's who never give up are the one's who always succeed.

Tc

...............................Hats off to U.........TC
btw..........who is this sumogain ad ......some sort of teaching Psychology in ur city of Pune.......[ if u r one them the pioneer , i shall definitely come to listen ur lecture, though i think u r of far higher level,.......ur single trade on Nifty.....then changing view & adeft to bullish view.......really proves u r exceptionally GOOD]
regards

 

[SwingKing]

...............................Hats off to U.........TC
btw..........who is this sumogain ad ......some sort of teaching Psychology in ur city of Pune.......[ if u r one them the pioneer , i shall definitely come to listen ur lecture, though i think u r of far higher level,.......ur single trade on Nifty.....then changing view & adeft to bullish view.......really proves u r exceptionally GOOD]
regards

Thanks for your kind words Oilman5.

I am not related in anyway to SumoGains Company/Ad/Training.

Tc

 

[SwingKing]

Trading with MACD and Stochastics

Tools Candlestick/Bar Chart , MACD Oscillator with standard settings, Stochastic 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. My preference is more towards Index. Now, everyone absolutely loves trading with Stochastic and MACD. But in my Opinion, they use these tools in the wrong way. Stochastic and MACD are extremely valuable tools and one needs to use them correctly in order to profit from them.

Buy Setup Usually, traders begin to buy stocks when they see the stochastic cross below 20/30 or any level. Though this is profitable sometimes, it leads to serious draw downs in the long run. The value of stochastic crossover increases tremendously when it is used with MACD. Next time whenever you see a stochastic cross, wait for the MACD cross to happen. In other words, if one stock exhibits stochastic crossover, begin to watch it. Start looking at the MACD, if the MACD cross happens, then take that trade. Essentially we are using MACD as a trigger to enter trades.

Important Notes At times, it will happen that Stochastic crosses for a Buy and then by the time MACD crosses for a Buy, Stochastic would cross for a Sell trade. Under these circumstances, always trust the MACD cross. Stochastic will eventually turn up and will move up. To enhance the profitability, one should always trade this setup in the direction of the main trend. Furthermore, this setup will work well in stocks which depict high volatility.

Short Setup - Exactly opposite of the Buy setup.

Targets - Aim for 3-5% Gain.

Example - Look at the example below. I am not going to take you deep down in the History. Hence, I have attached example of Bank Nifty for the Year 2010. With this setup, you would have captured every down move and up move in this year. Whipsaws are common for this strategy as it is for every other, but once you get the hang of it, this is again profitable. I have plotted the recent down move and up move as example. Go back and history and see if this makes sense to you. Try and visually identify this setup. Don't pick up your trading platforms and code it. The more you trade this visually, the more accurately you will identify the false signals. Computer cannot see what the human eye can. Remember, this is no Holy Grail !

Have patience and you will see this pattern occurring regularly.

Tc

 

[vinst]

Hey Murtaza,

Nice find...Surely if price for Sun Pharma breaks out of falling channel it can show some spike but I have doubt [ "I may be wrong here " ] about "Cup and Handle" pattern posted. C&H is more of bullish continuation pattern rather than reversal as marked in chart.

Any views/counter views ?

The chart shows a continuation pattern only, not reversal. stock has shot from 50's to 300 and if we still think reversal has not happened, then we are missing something.

regards
vin

 

[biggles]

hi raunakji,

very absorbing and beneficial writeups and strateges. thanks.

could u give an assessment of the index (with chart) over the weekends. It will be helpful to many of us to understand the weekly trends.

thanks

 

[MurAtt]

BUT I have not marked it for reversal or going short rather for going long ...

Hey Murtaza,

Nice find...Surely if price for Sun Pharma breaks out of falling channel it can show some spike but I have doubt [ "I may be wrong here " ] about "Cup and Handle" pattern posted. C&H is more of bullish continuation pattern rather than reversal as marked in chart.

Any views/counter views ?

The chart shows a continuation pattern only, not reversal. stock has shot from 50's to 300 and if we still think reversal has not happened, then we are missing something.

regards
vin

 

[FanaticTrader]

BUT I have not marked it for reversal or going short rather for going long ...

Okie friends, let me try and explain my point one more time. For C&H pattern the depth of the cup should retrace 1/3 or less of the "previous advance" which is current case is not present. The price kept falling from 850 levels in 2008 till 44 levels in March 2009 before heading north and making intermediate high of 346 and then falling in downward sloping channel. Cup & Handle pattern is currently formed in daily charts of Tata Motors where after a strong uptrend price took a breather and is forming a small Cup and Handle. Hope this clarifies my point

 

[alroyraj]

Jagan,

What you have analysed is very true and congratulations to have got this right in such an early stage. Now, coming back to answering your query.

Markets neither know Fundamental Analysis, nor does it know Technical Analysis. There have been proponents of both fields and yet somehow they are so wrong. Fundamentals argue about valuations, P/E, Growth and Technicals argue about Patterns, VSA, Market Profile etc. Does the market actually care about these? Well, I have seen stocks dropping like there's no tomorrow even when there P/E/Valuations were indicating 'Buy'. Similarly, patterns, VSA etc fail more often than they work. Hence, both methodologies are prone to fallacies.

What does an investor do then? Well, the answer lies in our mind. It is not that Fundamentals and Technicals don't work. It is just that one has to hone his own skills to judge when these will work. This unfortunately comes only with persistent practice and discipline. Both these fields have immense value, but that value needs to be unlocked by conquering our mind. And that my dear is not an easy task.

Have you ever thought why market analyst try and justify Technicals and Fundamentals? Answer to this lies within our psychology. Our mind has a habit to compartmentalize all the information available to us. It is within this compartment that we seek an answer to all the investment related queries. If the compartment and the information within it is not organized and appropriate, no matter how hard we try, we would never succeed. Hence, the answer to all your queries is the word "Organize". You have to see what you believe in and then have to organize your thoughts in a way where picking stocks becomes just another habit for you.

Don't worry and keep trying. We have all been in this similar situation. The one's who never give up are the one's who always succeed.

Tc

But the key question is whether you would trade the price action ,if it has a compelling significant move ,opposite to your view before market opening or would stand your ground and enter only once the price action reverts to your view?
I know its a tough question.