sorry, it's not googlepages, it's a blogspot chart...
Here's the link
It is of Nifty Spot and it auto-refreshes itself every minute.
WHAT IS IT?
It's a 5min chart of Spot Nifty, with various Exponential Moving Averages.
HOW TO TRADE?
Well, the author of this intraday mechanical system says to buy when Red crosses over Green AND Green crosses over Black. ie Bullish Crossover...
It says to reverse the position when the reverse happens ie Bearish crossover.. BLAH BLAH BALH
<YAWN>
THIS IS ALL KINDERGARTEN STUFF, AND IT'S ACTUALLY JUST ANOTHER "LAGGING" INDICATOR LIKE ANY OTHER TECHNICAL INDICATOR.
Someone may favour MAs more, like I favour RSI more. So, no negative comments about this system. It's like a case of a glass half-filled with water. What you see (half empty or half full) is how u deal with it.
WHY AM I BORING YOU ALL WITH ALL THIS & HOW IT'S CONNECTED WITH GAP OPEN DAYS?
Here comes MY part. I don't wait for crossovers... But, with experience, I know when there will not be a cross-over and how to benefit from it...
First of all, a gap open should be of atleast 40-50 points (visible gap) in any direction.
Let's take an instance of a
GAP DOWN OPEN:
In such a case, normally the lines will appear in this order from top to bottom:
Yellow
Orange
Black
Green
Red
I am concerned more with the last two lines: Red & Green...
After a gap down open, it may move further down or it may consolidate. There may be an attempt of pullbacks throughout the day. Intraday traders have to use such pullbacks to enter/initiate short trades.
In this chart, it will appear that RED line is trying to move towards the GREEN line.
WHEN EITHER THE RED LINE OR NIFTY PRICE BAR TOUCHES THE GREEN LINE FOR THE FIRST TIME, THAT IS THE LEVEL TO ENTER SHORT.
Stop should ideally be the Black line; but I would suggest to be with the price chart as is front of you.
I have actually not tested for an ideal stop loss, because in my study of this system in last 6 months, around 8 out of 10 times, THE FIRST KISS OF THE RED & GREEN LINES is respected, and Nifty completes its pullback & resumes its downmove.
GAP UP OPEN:
In such a case, normally the lines will appear in this order from top to bottom:
RED
GREEN
BLACK
ORANGE
YELLOW
Here again, in consolidation & pullback attempts, RED will move down towards GREEN line.
Ultimately, when RED LINE KISSES GREEN LINE FOR THE FIRST TIME, most of the times, there's a U-turn from that level, and Nifty resumes to move upwards. This is where one should go long.
Ideal stop loss is when PRICE moves below Black line.
SOME POINTS TO NOTE:
1. This is not for positional traders. It is meant for pure intraday traders, who know how to use TICK, 1min & 5min charts, for placing ideal stops, and confirming that GREEN line is indeed a decent reversal level.
2. All lines are moving averages - obviously, don't expect a fixed RED/GREEN/BLACK line values.... They change as the day progresses.
3. There's no hard-n-fast rule for targets. Book 1/4 or 2/4 or 3/4 at a level what charts suggests as a reasonable hiccup level, and trail the balance lot...or follow whatever u have been doing.
Answering to Ankit's query too, there's no "mai-ka-lal" mechanical system which DEFINES a target. If u enter long when RSI is sub-30, then u must exit when RSI reaches 70.
4. As mentioned, it's the first kiss/meeting of RED & GREEN lines, where one has to initiate a trade & where Nifty is expected to take a U-TURN.
The 2nd kiss MAY or MAY NOT prove to be contra.
But, I have noticed that on or after 3rd attempt, there's an actual breakout (or breakdown, as the case may be), and price moves towards BLACK line or further.
So, one may use it in such circumstances too...
I have been observing & trading this system for more than 6 months now. I want it to spend 1 month here in CLASSROOM thread, before shifting it to our LIBRARY thread.
But remember, we need decent gap open days...
hehe
