How to trade with an oscillator

[rangarajan]

Dear Smart,
Can u please attach todays NF & explain how u would have traded it esp because,between 12.55-13.15,it was under 20(8,3,4- 5mts TF).ie 5 bars.
So,it was not a buy when it trades above 20 & only a short on every rise as per theory.But,it never looked back & made new high.
Where i had gone wrong in reading the chart

 

[Smart_trade]

Dear Smart Trade,
I am attaching todays NF. Between 12.55 to 13.15,NF was trading below Stockhatic20(8,3,4),ie5bars.So on every rise,it was a short & not a buy above 20.
However,it never looked back & any short would have been a loss.
Pl explain,how u would have traded this.
I am unable to attach the chart as it says 'exceeds limits'.My knowledge on computer is limited.

Rangarajan,


At 13:55 the market was definately looking weak......but every trader has to remember that markets can reverse anytime .....I was short at that time too....but was short at higher level. But the moment market rallies above the pivot high as shown , I would cover 50 % of my short position.Will cover balance 50 % above 1:45 high ,a strong bullish bar. Then comes the real trade......see the markings on the chart. Market stayed above OB zone, went into small sideways correction and broke out. Go long there....then add and there was no indication of any weakness till the end.

Do not consider any method /technique as infalliable. Price is the king. Always give more importance to price action.

Smart_trade

 

[ashwani chadha]

Rangarajan,


At 13:55 the market was definately looking weak......but every trader has to remember that markets can reverse anytime .....I was short at that time too....but was short at higher level. But the moment market rallies above the pivot high as shown , I would cover 50 % of my short position.Will cover balance 50 % above 1:45 high ,a strong bullish bar. Then comes the real trade......see the markings on the chart. Market stayed above OB zone, went into small sideways correction and broke out. Go long there....then add and there was no indication of any weakness till the end.

Do not consider any method /technique as infalliable. Price is the king. Always give more importance to price action.

Smart_trade

thanks for above perfect explaination

 

[rangarajan]

Thank u Smart.
So,shall i say that any short on Pull back ( similar cases of 5 Bar O/S situation),should be closed if the Pivot High is taken & perhaps it could be a RSL.
And what level could have been ideal for short since u had stated that u were short at higher level.Or is it only a chance of higher level.
Also,when a stock is at O/B zone for more than 5 bars,long to be taken only on retracement say below 80.Ofcourse,no shorts to be attempted.
But,it never happened & still u had recom to go long on sideways consolidation above 80.Pl educate.
I dont trade NF,but everyday test yr theory & today is the first time it had Misbehaved

 

[Smart_trade]

Thank u Smart.
So,shall i say that any short on Pull back ( similar cases of 5 Bar O/S situation),should be closed if the Pivot High is taken & perhaps it could be a RSL.
And what level could have been ideal for short since u had stated that u were short at higher level.Or is it only a chance of higher level.
Also,when a stock is at O/B zone for more than 5 bars,long to be taken only on retracement say below 80.Ofcourse,no shorts to be attempted.
But,it never happened & still u had recom to go long on sideways consolidation above 80.Pl educate.
I dont trade NF,but everyday test yr theory & today is the first time it had Misbehaved

I will reply after market hours....

ST

 

[balasoft80]

Hi ST,
Could you please clarify the following questions in bit details when your time permits? Thank you

1. As per stochastic rules (6. Sell when the low of the down close bar is broken on downside), we have to short break of the down bar close. Rather than bar break,if we go for the pivot low break it may have the high success rate. Please let us know your suggestions on this. But drawback of this method could be SL as it may require more points.

2. In case of stochastic more than 5 bars in the OB region, allow price to take LH and go for short in the break PL as per Raghav. If price doesn't take LH then go for long in the PH break. correct?

3. I dont know this is right place to ask this question. But this will help many novice traders like me to avoid whipsaws. Considering the yesterday scenario, I was not aware that IIP data release. I have shorted minifty at 5043 and kept SL as day high + 3 that is 5061.25. With in a time the price went to 5060 and came down to shorted price and it was jumping here and there. I just escaped by 1 point and I had no clue to keep it or come out. But some how it went in my way and booked 20 points profit. The samething happened during the RBI policy announcement too.

Considering these scenarios, what are the important factors that could affect the market during day trading, how to get aware of this and how to overcome this? Any suggestion would help novice traders to stay away from market in these scenarios rather than getting stopped out.


Thanks
Bala

 

[Smart_trade]

Thank u Smart.
So,shall i say that any short on Pull back ( similar cases of 5 Bar O/S situation),should be closed if the Pivot High is taken & perhaps it could be a RSL.
And what level could have been ideal for short since u had stated that u were short at higher level.Or is it only a chance of higher level.
Also,when a stock is at O/B zone for more than 5 bars,long to be taken only on retracement say below 80.Ofcourse,no shorts to be attempted.
But,it never happened & still u had recom to go long on sideways consolidation above 80.Pl educate.
I dont trade NF,but everyday test yr theory & today is the first time it had Misbehaved

I was short below 12:40 low ....the correct entry was below 12:35 low.....please go through the entry qualfiers mentioned in the thread.In any trade you have to keep stoplosses......no technique is going to work 100 % of time. If the 50 % of the earlier swing gets negated, I always get out and book my loss no matter what....

When the market is in OB zone for more than 5 bars it normally wont give you deep retracement........it may give small retracement or sideways as the market is in a hurry and it wants to get down to its business of trending higher without wasting much time.

Smart_trade

 

[Smart_trade]

Hi ST,
Could you please clarify the following questions in bit details when your time permits? Thank you

1. As per stochastic rules (6. Sell when the low of the down close bar is broken on downside), we have to short break of the down bar close. Rather than bar break,if we go for the pivot low break it may have the high success rate. Please let us know your suggestions on this. But drawback this mathod could be SL as it may require more points.

2. In case of stochastic more than 5 bars in the OB region, allow price to take LH and go for short in the break PL as per Raghav. If price doesn't take LH then go for long in the PH break. correct?

3. I dont know this is right place to ask this question. But this will help many novice traders like me to avoid whipsaws. Considering the yesterday scenario, I was not aware that IIP data release. I have shorted minifty at 5043 and kept SL as day high + 3 that is 5061.25. With in a time the price went to 5060 and came down to shorted price and it was jumping here and there. I just escaped by 1 point and I had no clue to keep it or come out. But some how it went in my way and booked 20 points profit. The samething happened during the RBI policy announcement too.

Considering these scenarios, what are the important factors that could affect the market during day trading, how to get aware of this and how to overcome this? Any suggestion would help novice traders to stay away from market in these scenarios rather than getting stopped out.


Thanks
Bala

1) If you wait for the pivot , your entry will be delayed and it will be late entry and as you said stoploss goes further away. If you consider all entry qualifiers then those are sufficient in my view.

2) When Stochastics is in overbought region for more than 5 bars, I will look to go long at the best possible place....but will never look to go short...it is dangerous. Market takes 12-15 bars to dissipate the energy and shorting within that period is dangerous .I am sure Raghav must have said something else in some other context.

3) IIP numbers, RBI Policies....market becomes volatile......we have to accept that as part of the game..... and try to play quick moves very fast......if you cannot trade such fast moves , best is to be out and get in once market stabilises.

ST

 

[rangarajan]

I was short below 12:40 low ....the correct entry was below 12:35 low.....please go through the entry qualfiers mentioned in the thread.In any trade you have to keep stoplosses......no technique is going to work 100 % of time. If the 50 % of the earlier swing gets negated, I always get out and book my loss no matter what....

When the market is in OB zone for more than 5 bars it normally wont give you deep retracement........it may give small retracement or sideways as the market is in a hurry and it wants to get down to its business of trending higher without wasting much time.

Smart_trade

Once again Thank u.
Looking back at the chart,the NF did not misbehave fully as originaly stated.
As per procedure,it was a short below 12.35low(approx 5050) & came down to 5010, ie 40 points which by my standard is Fantastic.

After that is diff storey & yr explanation to be kept in mind.

Once again i could vouch confidently that i had googled extensively for similar strategy on Stochastic,but nowhere i could find such Excellent & Simple explanation as given by you with charts in Traderji.

 

[balasoft80]

Hi ST,
Here is another small clarifications. Please let me know your thoughts

Thanks
Bala