Dear sabharwal ji,
When you buy at support levels makesure trend is UP, else it will be same as catching falling knife. And as a trader trading on stocks on delivery basis, it will hurt badly.
First make sure trend in UP, Then trade on pullbacks or on strength as reading from charts.
For ex. lets define a mkt as UP when its above 50 SMA, then my observation is strong stocks in uptrend corrects till 21 EMA only, and turn UP again. So this is quality of fast moving stocks.
On other hand, some slow moving stocks correct till 50 SMA and then bounce up, this goes on, till trend matures inn the eye of prefessional.
How trend matures, generally i have seen, there are period of consolidations on daily charts. These consolidation come at 50 SMA or like. So i always avoid fourth consolidation in uptrend. And i follow strict rules on third too.
why..???
As i have seen this goes well with thinking with eliiott wave too. Remember, first consolidation is '2'nd wave then second consolidation is '4'th wave. Afterwards if its an extended third wave you may see one more, but not fourth one. It should alert you, this is going too much. So if prices then pullback towards 50 SMA or like, then alert trend may be maturing, you can have that added clue from divergences on oscillators.
Now, for current run, yes i agree stocks riding in one side without much pullback. But thats the way mkt goes. It implies there are impatient buyers going in for every 5-10% fall in stocks. During such times, just trail your position with 21 EMA, or sit out if you miss. But dont try to jump.
Infact we in this thread, are continuously looking for longs since market was at sub 6000 levels.
Never, ever compromise with your rules...Market will be there forever, no single move should influence you.
