I can help you with stock chart reading
- Thread starter vvonteru
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Thanks. Gone through a lot. Lost money. But, gained some experience. I want to share what I found. All the questions that were posed in here were asked by me before. Answers hopefull will avoid you loses if not get you gains. I say that, because if I avoid you a trade, it is as good as not losing money. Many traders don't realize that. Not trading is most important part of trading stocks.
Books:
1.TA of Stock Trends by Edwards&Magee
I didn't read this book. I know enough about TA. I read the books I have.
2.High probability Trading by Marcel Link.
I recommended (you should find the list at the beginning of this thread).
1. 2 books by Elder (atleast buy 1)
-- goes through the TA, Phsychology, Money Management
-- this is the beginning ground work.
2. Swing trading by Dave Landry (buy the one with title Patterns)
-- goes beyond books 1. This starts where book 1 stops.
-- This is the real thing.
-- This talks abouts patterns which are simple (lets not make trading complicated) which were discovered through experience.
-- Completly based on Pull backs.
-- Setup Junkie. Believes in "Trend is Your Friend".
3.High probability Trading by Marcel Link.
-- If you want to day trade, this can help
I don't know whether you can get in India. You can certainly check on Amazon. They do ship internationally. Aren't we global yet?
Whoever reads this article, I want to stress on simplicity. Don't think there is always secret behind the price movements. Specially, there is none when the market is so strong. Don't go after all those indicators (DMI, RSI etc etc). What is most important is Price and Volume. Price tells whether there is demand for it or not. Volume gives us the value for that demand. Every thing else is a potpourii of this data.
I use Price, EMA(8), EMA(50), EMA(200), Volume on top. In the middle, I use MACD. Last box, I use Williams or Slow Stocastic (if I don't have Williams). I am using EMA to get a feel for the average price. MACD is used for divergence (I already explained in this thread). Williams, I use it for overbought and oversold condition (Try not to buy where this indicator is above 80%. Don't sell (short) when this indicator is below 20%).
EMA(200) is for fund managers buy point. Anything below that are the fallen ones (dogs, don't touch them in this market). EMA(50) is a buy point for lot of fundamental stock investors. Avoid shorting at this point (wait for it go below this point and pull up). Stocks display elastic band effect over here. EMA(8) is the short one, which gives us the heart beat check of the current price.
Volume can help us for confirmation. If you are buying, look at the volume. For example, if the price is going up, volume is drying, we don't want to buy that stock. This is also divergence (secret underneath the price
)
Stock selection:
When you look at a chart, if you spend more than couple of seconds, then its not worth it. Skip it. Chart should not be complicated. It should be simple. Take a look at NIFTY chart. It should be simple as that. There were couple of stocks (SATYAMCOMP) mentioned in this thread. Look at them. Simplicity is the key.
More Info Later. Hang On.
Books:
1.TA of Stock Trends by Edwards&Magee
I didn't read this book. I know enough about TA. I read the books I have.
2.High probability Trading by Marcel Link.
I recommended (you should find the list at the beginning of this thread).
1. 2 books by Elder (atleast buy 1)
-- goes through the TA, Phsychology, Money Management
-- this is the beginning ground work.
2. Swing trading by Dave Landry (buy the one with title Patterns)
-- goes beyond books 1. This starts where book 1 stops.
-- This is the real thing.
-- This talks abouts patterns which are simple (lets not make trading complicated) which were discovered through experience.
-- Completly based on Pull backs.
-- Setup Junkie. Believes in "Trend is Your Friend".
3.High probability Trading by Marcel Link.
-- If you want to day trade, this can help
I don't know whether you can get in India. You can certainly check on Amazon. They do ship internationally. Aren't we global yet?
Whoever reads this article, I want to stress on simplicity. Don't think there is always secret behind the price movements. Specially, there is none when the market is so strong. Don't go after all those indicators (DMI, RSI etc etc). What is most important is Price and Volume. Price tells whether there is demand for it or not. Volume gives us the value for that demand. Every thing else is a potpourii of this data.
I use Price, EMA(8), EMA(50), EMA(200), Volume on top. In the middle, I use MACD. Last box, I use Williams or Slow Stocastic (if I don't have Williams). I am using EMA to get a feel for the average price. MACD is used for divergence (I already explained in this thread). Williams, I use it for overbought and oversold condition (Try not to buy where this indicator is above 80%. Don't sell (short) when this indicator is below 20%).
EMA(200) is for fund managers buy point. Anything below that are the fallen ones (dogs, don't touch them in this market). EMA(50) is a buy point for lot of fundamental stock investors. Avoid shorting at this point (wait for it go below this point and pull up). Stocks display elastic band effect over here. EMA(8) is the short one, which gives us the heart beat check of the current price.
Volume can help us for confirmation. If you are buying, look at the volume. For example, if the price is going up, volume is drying, we don't want to buy that stock. This is also divergence (secret underneath the price
)Stock selection:
When you look at a chart, if you spend more than couple of seconds, then its not worth it. Skip it. Chart should not be complicated. It should be simple. Take a look at NIFTY chart. It should be simple as that. There were couple of stocks (SATYAMCOMP) mentioned in this thread. Look at them. Simplicity is the key.
More Info Later. Hang On.
It all depends on your methodology. If you are person buying at 200 day EMA (always), why not. Look at the stock. If fundamentals (thats what fund managers look at 200 EMA) are good, but the stock is down for some temporary reason, they go in.
MACD is slightly turning positive, which in itself is not a big thing. The big thing over here is that this stock has lost lot of points and is at 200 day EMA. I looked at ROC indicator. It is going up. So what. I don't think you want to go just based on that. As I said, you have to be careful in using the indicators. You have to know their applicability, given the price movements.
Don't use indicators only to justify your entry in to the market. When I say that I mean, be consistent in using indicators. If you are using ROC for entry, use that always. Don't use ROC one time and the next stock use RSI. On the other hand, you can see lot of indicators for confirmation of information your regular indicator has given. (I always use MACD and Williams. Thats it).
For this stock, I will go for it (if someone is forcing me with a gun) based on the following reasons:
1. If my methodology warrants me to buy. Most important. Don't change your methodology in order to trade different stocks. Overall results will be skewed. I discussed this before in this thread.
2. Fundamentals look good at the long term. I admit I am bad (nor interested) at looking at fundamentals.
3. This stock technically uses 200 day support. Look at the chart on 2005 April and 2005 Nov. Both the cases, the stock jumped after trying 200 day ema. Hopefully, it does that this time too.
4. Draw a trend line joining 3 points (2005 April, 2005 Nov and current price). Trend line is not breached.
Negatives (I would not buy this stock for the following reasons):
1. This stock does not follow the regular market. Compare this stock's chart with nifty. No comparison! Nifty is above 8, 50 and 200 EMA. This stock is not. Select stocks that mimic the market (haven't I repeated myself enough already). Are you asking why? Because, you need stronger wind to sail. If nifty is the wind, the sector is the breeze. You need these to sail fast to reach your destination (money ). You don't want to stay in the middle of sea all by yourself right? (how do you feel if the market moved 100 points and your stock didn't even move 5 rupees. Even worse, it goes down).
2. For me, I am not a 200 day EMA player (Unless the market i.e., nifty is also at 200 day ema). I am a kind looking for stocks above 50, 200 ema. Need to mimic nifty. Simply said, my stock filter would be,
52 Week High and minimum 2 day Pull back.
I will go long above the 2nd day pull back.
Hope this helps.
MACD is slightly turning positive, which in itself is not a big thing. The big thing over here is that this stock has lost lot of points and is at 200 day EMA. I looked at ROC indicator. It is going up. So what. I don't think you want to go just based on that. As I said, you have to be careful in using the indicators. You have to know their applicability, given the price movements.
Don't use indicators only to justify your entry in to the market. When I say that I mean, be consistent in using indicators. If you are using ROC for entry, use that always. Don't use ROC one time and the next stock use RSI. On the other hand, you can see lot of indicators for confirmation of information your regular indicator has given. (I always use MACD and Williams. Thats it).
For this stock, I will go for it (if someone is forcing me with a gun) based on the following reasons:
1. If my methodology warrants me to buy. Most important. Don't change your methodology in order to trade different stocks. Overall results will be skewed. I discussed this before in this thread.
2. Fundamentals look good at the long term. I admit I am bad (nor interested) at looking at fundamentals.
3. This stock technically uses 200 day support. Look at the chart on 2005 April and 2005 Nov. Both the cases, the stock jumped after trying 200 day ema. Hopefully, it does that this time too.
4. Draw a trend line joining 3 points (2005 April, 2005 Nov and current price). Trend line is not breached.
Negatives (I would not buy this stock for the following reasons):
1. This stock does not follow the regular market. Compare this stock's chart with nifty. No comparison! Nifty is above 8, 50 and 200 EMA. This stock is not. Select stocks that mimic the market (haven't I repeated myself enough already). Are you asking why? Because, you need stronger wind to sail. If nifty is the wind, the sector is the breeze. You need these to sail fast to reach your destination (money
). You don't want to stay in the middle of sea all by yourself right? (how do you feel if the market moved 100 points and your stock didn't even move 5 rupees. Even worse, it goes down).2. For me, I am not a 200 day EMA player (Unless the market i.e., nifty is also at 200 day ema). I am a kind looking for stocks above 50, 200 ema. Need to mimic nifty. Simply said, my stock filter would be,
52 Week High and minimum 2 day Pull back.
I will go long above the 2nd day pull back.
Hope this helps.
Hi!
Have been following this thread since inception. One of the gr88 threads of the forum.
My query id about 2 days pull back. Do you use this pull back as entry trigger
simply without any further analysis or you match it with MACD & Stoch signals?
Again, if the pull-back has to touch certain leve as well or pull back of any degree will cause a trigger?
Hope I am clear in putting it into words.
Thanks & Regards,
Have been following this thread since inception. One of the gr88 threads of the forum.
My query id about 2 days pull back. Do you use this pull back as entry trigger
simply without any further analysis or you match it with MACD & Stoch signals?
Again, if the pull-back has to touch certain leve as well or pull back of any degree will cause a trigger?
Hope I am clear in putting it into words.
Thanks & Regards,
Pull back,
Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.
Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.
1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You ). This will lead to stock losing some points. How much, depends on the stock price. Based on the experience, you will figure it out.
2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Trigger your stop. Then don't take off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your position. Don't micromanage. Once you are in the stock, give it a chance. Think before you go in. Not after.
3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.
Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take the bite.
Thats it. Is that easy or what. Thats what I mean about simplicity.
Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.
Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.
1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You
). This will lead to stock losing some points. How much, depends on the stock price. Based on the experience, you will figure it out.2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Trigger your stop. Then don't take off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your position. Don't micromanage. Once you are in the stock, give it a chance. Think before you go in. Not after.
3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.
Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take the bite.
Thats it. Is that easy or what. Thats what I mean about simplicity.
Last edited:
DAVE LANDRY's SWING TRADING PATTERNS--- can you pl provide me any free e-book link to get the e-book if available. I would like to read it. I am available at [email protected]
vvonteru said:
Pull back,
Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.
Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.
1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You ). This will lead to stock losing some points. How much, depends on the stock price. Based on the experience, you will figure it out.
2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Trigger your stop. Then don't take off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your position. Don't micromanage. Once you are in the stock, give it a chance. Think before you go in. Not after.
3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.
Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take the bite.
Thats it. Is that easy or what. Thats what I mean about simplicity.
Look for a pull back for atleast 2 days. You can be conservative and wait for more than 2 days. I know people who enter after 1 day pull back. I don't.
Is 2 day pull back enough? How do I know if it is a pull back versus sell off versus no change. It all depends. Read further.
1. The whole idea of pull back is that somebody is taking profits after a good run (Wouldn't You
). This will lead to stock losing some points. How much, depends on the stock price. Based on the experience, you will figure it out.2. If the stock has more than 7 days of pull back, its more than a pull back. Some times, stocks do 2 to 4 days pull back. Trigger your stop. Then don't take off, but don't go down either. This happens when market conditions are not right. That doesn't mean you should quit your position. Don't micromanage. Once you are in the stock, give it a chance. Think before you go in. Not after.
3. If a stock loses 7 to 10% in the last 10 days, its may be a sell off. Atleast you would think before you go in.
Would I just use pull back to enter. Not true.
1. I am selecting the stock which made 52 week high (just like nifty). That tells me the stock is strong.
2. I look for clean chart. Not lot of gaps. Looking for trending stocks.
3. I look at MACD for convergence and no divergence.
4. I look at Volume to make sure it is not drying up.
5. I look at the sector of the stock to also have made 52 week high and has pulled back. If this is not true, I don't take the bite.
Thats it. Is that easy or what. Thats what I mean about simplicity.
cheers,
nkpanjiyar
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