Trading as a part time profession.

I want to know rajendrani, how come a short was not initiated at the candle where the current SAR resides? Doesnt the PL of prior 2 bar was broken on that day? I am curious as I had thought the other day that this PL break must have triggered a short.
Kindly enlighten

Happy Trading

Cup and handle or rounding bottom acts as a good accumulation pattern. The gradual down move of the price with decreasing volumes shows that the selling pressure is reducing. At the center, the price is lowest with low volumes as the supply and demand are balanced. As the demand increases price slowly moves up with the volumes expanding. At the peak again high volumes show the climatic demand. If the supply increases dramatically and the prices are coming down with high volumes then this may form as double top pattern. If the prices are moving down slowly or consolidating sideways with low volumes then it indicates that supply is diminishing. When the fresh buying starts volumes increases drastically and the new highs are made, as the sellers at the previous top close there positions and the new buyers come in and price zooms up. This pattern works as a continuation as well as reversal (inverted cup and handle) and has a very good risk-reward ratio.

There are so many cup and handle formations, here are few:

L&T:


DLF:


Nifty: Volumes are not supportive, though

Trading the five minute pivots.

Rules and method for trading the pivots using 5 min chart.


Before we go with the 5 min pivot trading method,
First we need to understand the concepts of how to derive the filters and recognizing the pivots.
I had posted the same long back on request of ankit. Will just add the same over here so that its there for quick reference.

Filters: Small and Big

In the above example using the pic, I am going to show you how we choose filter for next day. As the trading ranges decreases when the market is down and it increases when market is up, so we also will try to change our filter accordingly so that we dont get whipsawed by using a very small filter or dont get any trade because of very big filter.

To get the filter for next day trades using the 5 min pivot method, we switch our charts periodicity to daily charts and in that we click on the ATR indicator. It will give a particular value. We will use this value to find our filter.
For eg: In the above chart, The ATR for nifty on 17th March, 2009 was 86.41
So, we will use 10% of the ATR as our small filter and use 15% of ATR as our big filter.
So, Small filter as 10% of ATR = 8.6
And Big filter as 15% of ATR = 12.96 approx~ 13.0

Now, why do we need two filter, big and small and how and when to use them.
In 5 min chart we will have many pivots, we have to identify the good visual pivot and change our SAR or our entry point to that level, These visual pivots may be strong or weak, so in order to prevent ourself from wrong entry we will be using this two different filters.
For strong visual pivots we will be using small filter
For weak visual pivots we will be using big filter.
For sideways congestion pivots use big filter.

Strong Visual Pivots

In the above pic, we see a clear pivot visual pivot, as the next two bar has a Lower low and a Lower High, and both the bar is of same colour which is red means the price has gone down. So the Pivot high what we have here is a strong visual pivot.
Small fiter to be used for this kind of pivot

Weak Visual Pivots

In the above pic, we have a weak visual pivot, as the next two bar following has a clear Higher High and Higher Low, but both this bar is of different colour one green and one red, means price went up in the first bar and then came down. So, this pivot what we have here is a weak visual pivot.
Big filter to be used for this kind of pivot

Sideway congestion Pivots

In the above pic, the picture says it all that we have a sideways movement, So we will not be considering any of the high and low as pivot high or pivot low instead we will just combine all this high and low and put as the highest high as our pivot high and the lowest low as our pivot low.
Big filter to be used using this kind of pivots.

Here now we got the idea of the pivots how to find them how to identify weak and strong and how to use the big and small in reference to the small or weak pivots.

For the filter part, where i had told about 10 and 15% for small and big filter respectively, some feels it big, so you can change it accordingly. you can either try with 7 and 10 % of ATR.

Other pic which I had posted yesterday in other forum, so as to understand the pivots properly was this, so that you can have a better idea as to how to confirm the pivots.

Now keeping all these in mind, now we will go with the trading

For you to understand I had made some screenshot as to how the day progress and how to trade it using the pivots. Agaiin some of my way you might fight it little complicated, but as you try this method to number of charts by yourself, you will find this as the very easy method.

I have also applied here a consolidation pivot, usually I dont use the consolidation pivot, But its upto you, as how you want to take forward with that.

I am taking the example of yesterdays trade (29th May, 2009)

continued

Continued

This completes how we go with the trading using the 5 min pivots