Trading Strategies Using Technical Analysis
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2-3 Week Swing Trade Setup
2-3 Week Swing Trade Setup
Requirement Basic Knowledge of Candlestick chart with Stochastic Indicator (8,3,3) Settings. Simple moving Avg (22 period) and Simple Moving Average (50) Period.
Brief Introduction I came across this setup while reading a book on trend trading. This setup is extremely useful for weekly swing trades. At first this setup might look confusing, but I assure you once you master this, it is going to be one of the most rewarding setups you have come across. In some books this is also referred as the "Pullback Setup". What we need is a trending stock in either direction of the market. Trend can be identified by the slope of 22 and 50 day moving average. I will explain the buy side of the setup as once you understand this, you will easily apply it on the sell side as well.
Trade Setup - Pick a stock which is trending upwards with the slope of 22 day SMA and 50 day SMA being up. A typical setup occurs when the stock runs up a bit and then traces back to these averages. In some cases this stock might trace back to the 22 day SMA while in others it might trace to 50 day SMA. To identify which is the valid entry point, we need to have basic knowledge of candlestick patterns. We enter a stock WHEN the stock retraces back to either of the averages with stochastic (8,3,3) buy signal below or at 30 and with "doji", "bullish engulfing" or "hammer" being formed. All these conditions have to be validated before entering the setup. My experience says that most of the time a "doji" or a "hammer" is formed.
Example - In an example shown below, YesBank has been in an uptrend since early May. The stock has 22 and 50 day SMA in an uptrend. Notice how the stock has retraced to the 22 day SMA and formed a "doji" or "hammer" with the stochastic(8,3,3) giving a buy signal at or below 30. However, the slope of the averages must be largely up even during the retracement. I have marked the entry points with a circle where doji or hammer is formed with prices retracing to the averages and the stochastic (8,3,3) signalling a buy. All these CONDITIONS must be satisfied.
STOPLOSS - Unlike my other posts, here I would like to emphasize how to set a stop loss. If you are trading from a swing perspective, then keep a stop loss of 2% on the trade. I say 2% because when the trades are right, the gains are usually 5-8%. If you are trading from long term perspective then keep stoploss at the previous swing low.
Usage - This pattern can be used on DAILY charts for weekly swing trades or on daily charts for long term trend trading.
Please feel free to ask any doubts and if you want I will post one example for the same setup for shorting stocks.
2-3 Week Swing Trade Setup
Requirement Basic Knowledge of Candlestick chart with Stochastic Indicator (8,3,3) Settings. Simple moving Avg (22 period) and Simple Moving Average (50) Period.
Brief Introduction I came across this setup while reading a book on trend trading. This setup is extremely useful for weekly swing trades. At first this setup might look confusing, but I assure you once you master this, it is going to be one of the most rewarding setups you have come across. In some books this is also referred as the "Pullback Setup". What we need is a trending stock in either direction of the market. Trend can be identified by the slope of 22 and 50 day moving average. I will explain the buy side of the setup as once you understand this, you will easily apply it on the sell side as well.
Trade Setup - Pick a stock which is trending upwards with the slope of 22 day SMA and 50 day SMA being up. A typical setup occurs when the stock runs up a bit and then traces back to these averages. In some cases this stock might trace back to the 22 day SMA while in others it might trace to 50 day SMA. To identify which is the valid entry point, we need to have basic knowledge of candlestick patterns. We enter a stock WHEN the stock retraces back to either of the averages with stochastic (8,3,3) buy signal below or at 30 and with "doji", "bullish engulfing" or "hammer" being formed. All these conditions have to be validated before entering the setup. My experience says that most of the time a "doji" or a "hammer" is formed.
Example - In an example shown below, YesBank has been in an uptrend since early May. The stock has 22 and 50 day SMA in an uptrend. Notice how the stock has retraced to the 22 day SMA and formed a "doji" or "hammer" with the stochastic(8,3,3) giving a buy signal at or below 30. However, the slope of the averages must be largely up even during the retracement. I have marked the entry points with a circle where doji or hammer is formed with prices retracing to the averages and the stochastic (8,3,3) signalling a buy. All these CONDITIONS must be satisfied.
STOPLOSS - Unlike my other posts, here I would like to emphasize how to set a stop loss. If you are trading from a swing perspective, then keep a stop loss of 2% on the trade. I say 2% because when the trades are right, the gains are usually 5-8%. If you are trading from long term perspective then keep stoploss at the previous swing low.
Usage - This pattern can be used on DAILY charts for weekly swing trades or on daily charts for long term trend trading.
Please feel free to ask any doubts and if you want I will post one example for the same setup for shorting stocks.
re: "Trading Strategies Using Technical Analysis".
The problem with MACD is that it plots an average of an average of an average.
This is an extremely lagging indicator. As price moves first and MACD
second it is much more useful for longer-term trends. As a rule of thumb it
is lagging 5 periods on a candle chart. Consider using this on a 10-minute
chart, it is lagging 50 minutes. How useful can this be in day trading? However,
when picking out a longer-term trend, a five-day lag may not be too
harmful considering the time you intend to hold the position.
The problem with MACD is that it plots an average of an average of an average.
This is an extremely lagging indicator. As price moves first and MACD
second it is much more useful for longer-term trends. As a rule of thumb it
is lagging 5 periods on a candle chart. Consider using this on a 10-minute
chart, it is lagging 50 minutes. How useful can this be in day trading? However,
when picking out a longer-term trend, a five-day lag may not be too
harmful considering the time you intend to hold the position.
Re: 2-3 Week Swing Trade Setup
hey raunak...got your point about swing trading moving average setup....but what can be right moving average setup for intraday purpose?????.....i mean...they give many false signal in intraday.....
2-3 Week Swing Trade Setup
Requirement Basic Knowledge of Candlestick chart with Stochastic Indicator (8,3,3) Settings. Simple moving Avg (22 period) and Simple Moving Average (50) Period.
Brief Introduction I came across this setup while reading a book on trend trading. This setup is extremely useful for weekly swing trades. At first this setup might look confusing, but I assure you once you master this, it is going to be one of the most rewarding setups you have come across. In some books this is also referred as the "Pullback Setup". What we need is a trending stock in either direction of the market. Trend can be identified by the slope of 22 and 50 day moving average. I will explain the buy side of the setup as once you understand this, you will easily apply it on the sell side as well.
Trade Setup - Pick a stock which is trending upwards with the slope of 22 day SMA and 50 day SMA being up. A typical setup occurs when the stock runs up a bit and then traces back to these averages. In some cases this stock might trace back to the 22 day SMA while in others it might trace to 50 day SMA. To identify which is the valid entry point, we need to have basic knowledge of candlestick patterns. We enter a stock WHEN the stock retraces back to either of the averages with stochastic (8,3,3) buy signal below or at 30 and with "doji", "bullish engulfing" or "hammer" being formed. All these conditions have to be validated before entering the setup. My experience says that most of the time a "doji" or a "hammer" is formed.
Example - In an example shown below, YesBank has been in an uptrend since early May. The stock has 22 and 50 day SMA in an uptrend. Notice how the stock has retraced to the 22 day SMA and formed a "doji" or "hammer" with the stochastic(8,3,3) giving a buy signal at or below 30. However, the slope of the averages must be largely up even during the retracement. I have marked the entry points with a circle where doji or hammer is formed with prices retracing to the averages and the stochastic (8,3,3) signalling a buy. All these CONDITIONS must be satisfied.
STOPLOSS - Unlike my other posts, here I would like to emphasize how to set a stop loss. If you are trading from a swing perspective, then keep a stop loss of 2% on the trade. I say 2% because when the trades are right, the gains are usually 5-8%. If you are trading from long term perspective then keep stoploss at the previous swing low.
Usage - This pattern can be used on DAILY charts for weekly swing trades or on daily charts for long term trend trading.
Please feel free to ask any doubts and if you want I will post one example for the same setup for shorting stocks.
Requirement Basic Knowledge of Candlestick chart with Stochastic Indicator (8,3,3) Settings. Simple moving Avg (22 period) and Simple Moving Average (50) Period.
Brief Introduction I came across this setup while reading a book on trend trading. This setup is extremely useful for weekly swing trades. At first this setup might look confusing, but I assure you once you master this, it is going to be one of the most rewarding setups you have come across. In some books this is also referred as the "Pullback Setup". What we need is a trending stock in either direction of the market. Trend can be identified by the slope of 22 and 50 day moving average. I will explain the buy side of the setup as once you understand this, you will easily apply it on the sell side as well.
Trade Setup - Pick a stock which is trending upwards with the slope of 22 day SMA and 50 day SMA being up. A typical setup occurs when the stock runs up a bit and then traces back to these averages. In some cases this stock might trace back to the 22 day SMA while in others it might trace to 50 day SMA. To identify which is the valid entry point, we need to have basic knowledge of candlestick patterns. We enter a stock WHEN the stock retraces back to either of the averages with stochastic (8,3,3) buy signal below or at 30 and with "doji", "bullish engulfing" or "hammer" being formed. All these conditions have to be validated before entering the setup. My experience says that most of the time a "doji" or a "hammer" is formed.
Example - In an example shown below, YesBank has been in an uptrend since early May. The stock has 22 and 50 day SMA in an uptrend. Notice how the stock has retraced to the 22 day SMA and formed a "doji" or "hammer" with the stochastic(8,3,3) giving a buy signal at or below 30. However, the slope of the averages must be largely up even during the retracement. I have marked the entry points with a circle where doji or hammer is formed with prices retracing to the averages and the stochastic (8,3,3) signalling a buy. All these CONDITIONS must be satisfied.
STOPLOSS - Unlike my other posts, here I would like to emphasize how to set a stop loss. If you are trading from a swing perspective, then keep a stop loss of 2% on the trade. I say 2% because when the trades are right, the gains are usually 5-8%. If you are trading from long term perspective then keep stoploss at the previous swing low.
Usage - This pattern can be used on DAILY charts for weekly swing trades or on daily charts for long term trend trading.
Please feel free to ask any doubts and if you want I will post one example for the same setup for shorting stocks.
hey raunak...got your point about swing trading moving average setup....but what can be right moving average setup for intraday purpose?????.....i mean...they give many false signal in intraday.....
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