Understanding "Buy Above & Sell Below"

[sudesh.ach]

Recently I started playing with trade and some terminology I couldnt understand. Below are one of them

"Buy Above 202 Target 208, 212 Stop Loss : 197
Sell Below 214 Target 208, 206 Stop Loss: 218
".
Could anyone please help me in understanding the meaning of "Buy above" and "Sell below" ?

Thanks in advance

 

[Nava]

Recently I started playing with trade and some terminology I couldnt understand. Below are one of them

"Buy Above 202 Target 208, 212 Stop Loss : 197
Sell Below 214 Target 208, 206 Stop Loss: 218
".
Could anyone please help me in understanding the meaning of "Buy above" and "Sell below" ?

Thanks in advance

Hi,

Buy above means you have to buy the shares just above that given price. This is beacuse in Intraday the price will move quickly after reaching some particular levels.

So that you have to buy above that level. This levels are based on Pivot/Support/Resistance.

Sell below is vise-versa.

 

[mave_rick]

Recently I started playing with trade and some terminology I couldnt understand. Below are one of them

"Buy Above 202 Target 208, 212 Stop Loss : 197
Sell Below 214 Target 208, 206 Stop Loss: 218
".
Could anyone please help me in understanding the meaning of "Buy above" and "Sell below" ?

Thanks in advance

"Buy Above" indicates you have to buy the scrip above the specified value. If the price reaches that value,for example, in your case "Buy Above 202", then it will gain strength to go further up and reach your target level. Otherwise, it the does not reach "202", the scrip may not have strength and hence may go down.

Similar is true for "Sell Below 214", it is above 214, then once it reaches or goes down below 214, it may weaken further and will reach your target.

Hope this is clear to you....

Regards,
mave_rick

 

[AW10]

Buy Above 202 Target 208, 212 Stop Loss : 197

As answered by others, It is clear that stock is in buy zone above 202 so you shd be the buyer in this zone. But there are other factors that has to be looked.
If I have to use these number for risking my hard earned money, this is how I will go about it.

1) Is the stock in Buyzone now i.e. > 202 ? i.e. I will be buyer here
2) Has the recent move been upward or downward ? i.e. stock is not falling from 210 and going down. I want to ensure that it has crossd 202 coming from 201.. not coming from 203..
3) What is my risk ? Current market price minus Stoploss price. say stock CMP is 202.5 then the risk = 202.5- 197 = 5.5 Rs.
4) what is possible reward ? at target 1 and at target 2 ? so reward for T1 = 208-202.5 = 5.5 and for T2 = 9.5
5) What is my Reward to risk ratio (RRR) ? for T1 RRR = 5.5/5.5 = 1. For T2 = 9.5/5.5 = 1.7

Now taking the decision becomes 10yr old kids job. Is it worth risking 5.5 rs to make 5.5 and take risk.. or u are better off skipping the trade and keep you 5.5 Rs in pocket without any risk.
Notice that these numbers will change depending on your entry price .. so if u get entry at 205.. with stop at 197, then RRR will be 3/8 for T1 and 7/8 for T2. That means it makes no sense to risk 8 rs for making 3 rs of 7 rs.

Hope this helps in getting into right thought process.. i.e. thought process of pro trader.

Happy Trading

 

[sudesh.ach]

Dear All,

Thanks a lot for very descriptive information...
Looks like trading is not for me, am in huge loss ... :-(


Have a great day!!!

 

[conancare]

Hi AW10,
Your post is very informative. What do you thing regarding making investment in current market situation ? What kind of investment do you prefer ?

Regards,
Conan

 

[AW10]

Before making any opinion about investment /trading decision - very first question to be answered is "What is the timeframe ?". Otherwise, it doesn't serve any purpose because there are different trends in different timeframes.

I trade stock, futures, option, etf. Used to be in Mutual funds but came out after developing belief that if they can loose my money then so can I.. My timeframe is <1 day for intraday, <1 week for swing and > 1 month for position trades. In most of the cases exit signal is given by the system so there is possibilty that I get stopped out from position trades in short time. Thats in not a problem cause re-entry is always possible and it is better then holding loosing position.

Happy Trading.

 

[Nava]

Before making any opinion about investment /trading decision - very first question to be answered is "What is the timeframe ?". Otherwise, it doesn't serve any purpose because there are different trends in different timeframes.

I trade stock, futures, option, etf. Used to be in Mutual funds but came out after developing belief that if they can loose my money then so can I.. My timeframe is <1 day for intraday, <1 week for swing and > 1 month for position trades. In most of the cases exit signal is given by the system so there is possibilty that I get stopped out from position trades in short time. Thats in not a problem cause re-entry is always possible and it is better then holding loosing position.

Happy Trading.

Hi AW10,

I am doing positional trading, but struggling to fix some strategy.

Can you share your Stragtegy of
ENTRY
SL
TRAILING STOP
PROFIT BOOKING and EXIT

for Positional Trading...?

 

[biyasc]

As answered by others, It is clear that stock is in buy zone above 202 so you shd be the buyer in this zone. But there are other factors that has to be looked.
If I have to use these number for risking my hard earned money, this is how I will go about it.

1) Is the stock in Buyzone now i.e. > 202 ? i.e. I will be buyer here
2) Has the recent move been upward or downward ? i.e. stock is not falling from 210 and going down. I want to ensure that it has crossd 202 coming from 201.. not coming from 203..
3) What is my risk ? Current market price minus Stoploss price. say stock CMP is 202.5 then the risk = 202.5- 197 = 5.5 Rs.
4) what is possible reward ? at target 1 and at target 2 ? so reward for T1 = 208-202.5 = 5.5 and for T2 = 9.5
5) What is my Reward to risk ratio (RRR) ? for T1 RRR = 5.5/5.5 = 1. For T2 = 9.5/5.5 = 1.7

Now taking the decision becomes 10yr old kids job. Is it worth risking 5.5 rs to make 5.5 and take risk.. or u are better off skipping the trade and keep you 5.5 Rs in pocket without any risk. Notice that these numbers will change depending on your entry price .. so if u get entry at 205.. with stop at 197, then RRR will be 3/8 for T1 and 7/8 for T2. That means it makes no sense to risk 8 rs for making 3 rs of 7 rs.

Hope this helps in getting into right thought process.. i.e. thought process of pro trader.

Happy Trading

i feel, it is worth risking 5.5 rs to make 5.5 (only if my trading strategy produce more than 60% success rate).

 

[AW10]

Hi AW10,

I am doing positional trading, but struggling to fix some strategy.

Can you share your Stragtegy of
ENTRY
SL
TRAILING STOP
PROFIT BOOKING and EXIT

for Positional Trading...?

Nava, I am sorry, but I believe that even the rules that are working for me will not work for others. There are so many systems available freely on net, given in books, discussed in TJ.. it is not difficult to find a system.
But most of the time, they don't work for majority of people but works very well for some people. Problem is not with the system but it is with the trader who has not found the system that meets his requirement / his psychology/ his account size/ his time requirement etc.

I believe in "Teach a man to fish... " rather then giving them fish.. So please don't expect readymade system from me. But I will be the first person (maybe) to come and help anyone who is starting to develop a system.

Plz chk out at my "Trading NR7 setup.." thread where the discussion is leading toward system development. That is one of the setup that can be traded for longer timeframe.

Happy Trading