Saravanan Notes

AVNY's Failed Break out Strategy(Scalping)

FAILED BREAKOUT

After breakout,if price comes back to S/R line,then either it pulls back,and
resume the pr direction,or it will break the S/R line and will carry on,negating the earlier break out

ENTRY:entry is at the HIGH/low of the bar which closes ABOVE/ below the S/R
line

STOPLOSS: stoploss is above/below the pr pivot high/low

TARGET:as described earlier



Source

Trade entry-flow diagrame

CHANGE OF TREND(courtesy LANCE BEGGS)

UPTREND: when price is making a series of higher high and higher lows,it is called to be in up trend

DOWN TREND: when price is making a series of lower high and lower lows, it is in down trend

CHANGE OF TREND :In a down trend(series of lower low and lower highs),if price breaches the lower high,just before the lowest low,and then sustains above,it is a change of trend

same way in a up trend (series of higher high and higher lows),
if price breaches the higher low,just before the highest high,and sustains lower,it is a change of trend





Source

Trading Pullback Setups

Trading Pullback Setups

Pullback is one of the setup which defines my entry in a trending market (uptrend/downtrend). For past few days this setup is giving me good signals and R:R as Nifty is in an uptrend as well.

I learned about this setup in Lance Begg's book, so again no new invention from my side, but this is how I have interpreted it and this is how I am applying it in my day to day trading.

Criteria

- To trade the pullback setup the very first criteria I look for is a tending price movement. 3 min is my trading frame. So price should be in a trend in this chart. (Taking example of an uptrend), Lets say price is making a higher high and higher low, when price takes out the previous swing high it goes higher and I just let it to make a new high and wait for a pullback.

- This pullback should not make the newer low at the same level or below the previous swing low. If the new low is below the previous low, then the strength of the uptrend is finished, I wait for a new trend/pattern to be established. And if the new low is at same level as the previous low, price is more likely to trade in the range and goes in sideways direction. But here I take the trade (TST of sideways range low) and my target stays at the recent high.

Rules

The two very basic rules I trade upon are

-Trade in the direction of trend
-Trade against the weakness

Pattern

(Taking example of an uptrend here )

- When pullback occurs, it is basically few red candles dragging the price down or a series of green/red candles that makes the price to go down and gives me a chance of entering at lower level.

- Pullback in an uptrend is a bearish order flow, and I wait for weakness to appear in the chart to trade against that.

- Weakness is confirmed by a green closing candle (in 3 min chart) which indicates the 1st sign of weakness. This is the point where I watch both 3 min and 1 min chart.

- The subsequent candles should not break the low of the 1st green candle to confirm the weakness. Sometimes there appears a green candle but the next candle becomes red and closes below the low of prev green candle. SO here the bears are still in control and weakness has not set it.

- 1 min chart gives me the range after weakness sets in, and I decide the entry level, SL from 1 min chart. 1st Target is the prev swing high. As price comes near the swing high I move my SL to breakeven, and wait.

- IF price is taking out the swing high more bullish order flow is likely to come and taking price to a newer high, else if any reversal pattern appears I consider scratching my trade.

Steps in Trades

- Trade development (An ongoing uptrend and a pullback)
- Weakness in Chart (A green candle close and subsequent candle should respect the low making a new higher low)
- Trade confirmation & Entry decision
Switch to 1 min chart after the weakness, no candles should close below the 3min green candle's low
Let the price forms a range in 1 min chart. This is nothing but a level of resistance where other traders would be betting for more downside.
I put a buy stop order above this range with sell SL staying below the low of the green candle
When the resistance is taken out, short traders will be trapped and will run to cover their position pushing price to go higher.

Example (29 Aug NIFTY FUT Chart)



Trade Preparation

- Price is in an uptrend from previous day. It is marked as HH, HL in the chart.
- On 29th NF opend up, making a new high but failed to sustain there and fell. I immediately anticipated a pullback setup as long as price is making a low above 5260 (prev swing low)

Candle A

The candle just before the candle A shows weakness in bears with its long lower shadow and candle A itself formed out entry range. But subsequent candles fell more.

Candle B

This is the first green candle near 5300. The subsequent candles have also respected its low, but In 1 min chart you will see later that my proper entry setup is not formed.

Candle C

Candle C is the new high which is a lower high, so if next price is taking our Candle B's Low then the uptrend will be finished.

Candle D

At candle D my next green candle appeared at 5300 again making a double bottom. So this is not a simple pullback but a complex one with 1-2-3 reversal pattern.
Now after the sight of weakness I am switching to 1 min chart for looking at possible range and range confirmation which could not be possible near candle B.

Entry & SL



- Now to decide upon my entry and SL i have switched to 1 min chart.
- Firstly, the red circle in 1 min chart indicates no reliable range formation to trade on near candle B
- After candle D, next 2 candles are also green and have respected candle D's low.
- Near E, the red candle shows the traders betting on the downside. Here my range is formed to go long. As above E the short traders will be trapped.
- The red candle has also closed above the candle's low. So our trade assumption is still valid.
- Now once buy stop order is placed above the candle E i:e 5313, Once my buy will be executed, I wil put a Stop loss below 5300.

Trade Management



Price did hit my buy stop order, and SL is placed below 5300, The big red candle shows how short traders ran for covering their shorts. Once price reaches 5330 (T1) I moved my SL to breakeven. and my trade is secured

- After a new higher low, price rallied to make higher high, and my TSL is now below the new swing LOW formed.

Thanks to taiki

Source

ST's Risk Management

It is possible. Suppose you shorted below a pivot low, and after going some distance, the market comes back and closes above the pivot low which put us in a short trade, get out of that trade. If the breakout is genuine and strong, the market should not close above the pivot.

This works well for me as stops are small.but as a tradeoff it gives some some premature exits and thus diluting my success rate to less than 60 % but my RR is 6:1 which is unheard of in daytrading.

Just as an example today we had 5 loosing trades in which we lost 26-27 points , but last short trade made all the losses good. And on a good day we make 40-60 points or even more in nifty futures.

Think about such solutions and these are possible.

Smart_trade

Thanks Smart Trade

Source

We Love Tj - System (WLTS)

In this Thread Linkon Explains Intraday Systems based on CCI

Which also includes
Price Panel
St's pop corn AFL
woodies CCI panel

http://www.traderji.com/advanced-trading-strategies/52161-we-love-tj-system-wlts.html

SH's Intraday Strategy - ELH5

SH's Intraday Strategy

1. Get 2-10 trades per day
2. Profit target is 20 points and stop loss is also 20 points per trade (1:1 risk reward ratio)
3. To have 70% success ratio i.e if we get 100 trades per month ... 70 successful trades giving 1400 points profit and 30 losing trades giving 600 points loss ... Net profit of 800 points per month.

Above is the aim of this strategy - lets see if we are able to achieve it over the next one month or not .....

What do we need on our charts

1. We need 5 minutes Nifty futures real time charts
2. We need to plot 5 EMA (high) and 5 EMA (low) on these charts.

Thats it !!!

Entry rules

Wait for the trigger - The trigger is when we have 2 consecutive candle closes above 5 EMA (high) for BUY or 2 consecutive candle closes below 5 EMA (low) for SELL

Actual Entry - When we get one of the above triggers.... we wait for a small pullback and then jump in ... in case of BUY trigger, we enter longs when the price falls and gets close to 5 EMA (low)... in case of a SELL trigger, we enter shorts when prices rises and gets close to 5 EMA (high).

Exit rules

Simple ... 20 point profit and we exit ... similarly 20 point SL.

Linkon's AFL for the Strategy

MFE and MAE

Maximum Favorable Excursion is what was the maximum profit that the trade had before the trade closed, on line number 5 you see a trade that lost 2.5 points (P&L) but during the time the trade was open it was one time making 1 point profit, that was the Maximum Favorable Excursion for that trade.

Maximum Adverse Excursion is what was the maximum loss that the trade had before the trade closed, on line number 5 you see a trade that lost 2.5 points (P&L) but during the time the trade was open it was one time losing 5 points, that was the Maximum Adverse Excursion for that trade.



Source

2652 Theory

Though this Thread Looks Old Many have worked Need to Study further


http://www.traderji.com/day-trading/25307-best-way-day-trading-2652-theory-trading.html


daily Backtesting Thread
http://www.traderji.com/day-trading/38476-daily-back-tested-figures-2652-theory-day-trading-3.html

AFL for This Strategy
http://www.traderji.com/day-trading/33259-amibroker-afl-dhiraj-2652-method-21.html#post557371

Experiance

3)Pride:

Originally Posted by .Pride.
8 yrs back: I wanted 100% per month returns...I would spend all my free time trying to make strategies that would make me those kind of returns...I would try different indicators...I would stack many indicators...I would tweak the
ir settings...thinking that the holy grail lies in some secret settings...I would not look at any charts higher than 5min

6 yrs back: After facing regular losses, I removed some indicators...reduced my monthly targets to 50%...thought up some more strategies...

4yrs back: Got frustrated with the continued losses...thought that trading was not for me...took a sabbatical...came back with a fresh mind and thought of new approaches...was still trying to make a lot of money fast...

3yrs back: Instead of focusing on trading stategies, started understanding money management techniques as well...finally understood the redundancy of indicators...started to look at higher time frames...started feeling that even 20% per month return would be great...

2yrs back: One line that changed everything for me:

"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."

Now: I trade using daily charts...no indicators...feel that even 50% per annum returns would be great...my winning trades are usually 2-3 times my losing trades...I can afford to be right only 35% of the times and still be very profitable...and I have all the time in the world to pursue my hobbies...

It took me 8 yrs to realize this...maybe this post can help someone cut his time by a couple of years

2)Linkon:
First thing u have to accept the fact that making money from the market consistently is not easy. Its easy to get a winning trade but getting consistent is a lot tougher than most people like to believe.

Most people think its all about getting a good system and then developing discipline to follow that system. Thats the second disappointment as execution is always poor and tendency is to fight the market. If market is up 100 points u want to short the market and u find reasons to short from the chart always on regular basis. Somehow they all hit sl.

Itdoesnt work that way. It never has and never will. Accepting uncertainty and getting rid of the need to be right all the time is the first sign of maturity. Thats a level when u realise how difficult things really are. Once u over come this phase, u realise the importance of market structure and listening to the market. What it wants to do and how good a job it is doing in trying to do what it wants to do... that's the first time u feel u are in sync with the market. Now your old system that gave continuous losses suddenly becomes a big win generator.

Its a long long journey. very few survive...! but totally worth the trouble and pain...!
Linkon7

1)ST:

I missed this, I read it so many times that I forgot to even paste it in my book. ST says how tough his initial path was and how he beat the odds, if any one have it please paste the link here. Apologies ST for missing your journey, I don't know how i missed it but I had gone through it numerous ways and numerous occassions.

Here is the best, from our Saint,

http://www.traderji.com/words-wisdom/19078-trading-profession.html#post149810

ST's Post
http://www.traderji.com/day-trading/84180-possible-earn-money-consistently-every-month-day-trading-6.html#post806449

AW10 Post


Since I started active trading (in 2006), It took me first 1 yr (probably I am not a quick learner) to realise that patchy track record of few wins and more loss, or more small wins v/s few big and really big losses will not make me trader.

Then went into structured education, certification, mentoring and gradually my trading has taken the U turn in next 1 year. Fair bit of time has gone into knowing me and my trading personality/requirement. I had to address all dimension of trading (TA, system development, psychology, position sizing, business planning, trading software and platform, discipline etc), not just TA and Entry singals.

Currently running into 4th year of my trading, I am still learning and sharing my
knowledge /experience. I don’t think the this will ever stop.

I had been passive, buy and hold investor for long time (since harshad mehta's time.. infact I gave up a equity research job in Nov-1994 - one of my biggest missed opportunity which I could not see at that time after just 1 yr of industry experience)..But I don't count that as trading, cause back then I never knew what active trading is all about.