Anything about technical analysis

[sharmaravi]

thank u for your valubale suggestion.

 

[AW10]

Hello Ppl,

I am confused. Help Needed.

Whenever I enter a stock with a SL, more often than not the SL is hit and I am taken out of the stock.

(I use 2% to 2.5% as my SL OR nearest low)

Now the problem is during intraday the stock does hit the 2% SL OR nearest low and bounces back and then goes to hit my target of 5% intraday or in a few days.



what to do?

Sanjoy

Sanjoy,
You are making the typical mistake that most of us make while placing stoploss. Market
care least about your 2% limit or any price level that u use as stoploss level.
Market has its well defined reversal points (pivot high/ pivot lows).. These are the points
where price had changed the direction in the past. That means at those points, the fight of bull and bear has taken the turn. So in future, those turning points act as logical point of price stabilisation (support/ resistance)..
So if you happen to select any random price level, then ofcourse that will be hit. Stoploss should be at the level where charts show real support..

If that point is too far and amount risked is too much for the account size.. then try reducing qty of stocks.
I have gone thru this stage and now I use the approach as explained above. I generally give 1% /few Rs. margin at historical pivot levels to be on safer side.

Hope this helps.. Happy Trading.

 

[AMITBE]

Hello Ppl,

I am confused. Help Needed.

Whenever I enter a stock with a SL, more often than not the SL is hit and I am taken out of the stock.

(I use 2% to 2.5% as my SL OR nearest low)

Now the problem is during intraday the stock does hit the 2% SL OR nearest low and bounces back and then goes to hit my target of 5% intraday or in a few days.


what to do?

Sanjoy

This is an old query and has received a few replies, but this is another view:

Sanjoy, for people who take breakout entries, as the trade begins to move in positive direction, 'trailing stops' are raised along with price, often at percentage points, or breakeven or nearest low, or whatever.
Price more often than not will retrace back to that breakout area, or that previous low, or that Fibo point or that trendline or whatever, thus taking out the stop.
On the other hand, entering at a pullback following a breakout while a safer bet, has it's own ambiguities. As price retarces to breakout area, that level is an entry point for both longs and shorts depending on how one sees things. Longs because that's what the textbooks prescribe, and shorts because there is no promise that price will not sink through and go back to weakness.
So now, stops are placed. There is a limited logic to where stops should be placed. There's not a lot of variations available here whether you are conservative or not. These stop levels are common knowledge to even an average skill chartist.

Here's where the game often moves to market sharks/operators. There is something called 'stop-running'.
These people know where the stops are hidden. Not because they have abnormal powers but because millions of entries and stops are placed at predictable and logilal points each day. They observe well. They just push the price through these levels thereby running the stops.
Why do they do this? That depends on what their plans are.
If the plan is to take the price up, they may have a reason for shaking out the piggyback riders. Piggybackers, sometimes also 'weak hands' may create 'noise' and jerky price action, which disturbs the gameplan. There's nothing better than dump the suckers, snatch their trades and be on their merry way.

This post is not hinting at not having stops. Take the hits, it's expected from you, but don't go numb and stare at the screen in dismay. Be alert and ready if the trade appears compelling, jump right back in according to plan B if there is one but only if there is one. Else, look for another opportunity.

 

[Cactus]

Entry level is definitly important but if we could consider the range of stock the possibilities of hitting the stop could be reduce.

do the stock has reached at top of it's daily range ? do it is trading at it's higher/lower peack of the range....? are we entring in the direction of stock even after reaching at the top of the range......?

Picking Top/bottom could be hard but not impossible, and require pecence. bollinger bands along with range study are quite helpful for placing the stop.

 

[ramling]

Sir,
Could you please explain with an example about Averag True range on technical analysis for setting stop loss.
Thanking you.
With thanks,
S.Ram

 

[Cactus]

S.Ram,

It is not about ATR or it's setting. It is about range (H-L) depend on a certain period.......

here is brief........

http://tudaaldalmainpaatpat.blogspot.com/2008/09/stop-loss-big-mistery.html

Sir,
Could you please explain with an example about Averag True range on technical analysis for setting stop loss.
Thanking you.
With thanks,
S.Ram

 

[imsurana]

why dont u try pivort supports and resistance regarding the same