Price Action Trading Method.

[TraderDude]

@ TD:
MACD divergences are observed between the closing prices and the signal line.
The OP probably wanted to say that the divergence in MACD is under making.

Correct. But i like to see it on the histogram. It's a kind of variation from the normal divergence you see on the signal line. since it represents the difference between the MACD and signal line.

 

[vikrit]

@ TD:
MACD divergences are observed between the closing prices and the signal line.

Refer to MACD divergnces here.

Correct. But i like to see it on the histogram. It's a kind of variation from the normal divergence you see on the signal line. since it represents the difference between the MACD and signal line.

murthy and TD, can you tell where you have read "normal divergence are observed/seen on the signal line"

till now i have read that check divergence on MACD line; signal line (avg. of MACD line) crossing MACD is used as confirmation. same mentioned on given link. see following images.

 

[murthyavr]

murthy and TD, can you tell where you have read "normal divergence are observed/seen on the signal line"

Vikrit,

It was my bad, my typo.

Yes.. they are observed on MACD line, you are right!

 

[kumar17vijay]

Oh ... Completed first reading at this thread since yesterday.
Nice thread to learn ..., TraderDude. Great work.
Will be reading again and again to gain some knowledge.
As I am newbie , will be studying this method and practicing it.
Thank you very much ..to , Trader Dude and all others .

 

[pdeoghare]

Hello,

A couple of questions for Traderdude or anyone who can help:

1. Drawing Support and resistance lines :
For this method, do we only refer daily charts. Or we also check the latest level in hourly or 30 min charts.

2. Stock selection
I do study Nifty but not trading it yet. I think I need more practice before I move to derivatives. I will trade Nifty or other futures only if I am consistently successful in cash for around 4-6 months.
So considering that I am trading in cash, which stocks works better with this method. I know its more of individual choice but I have seen Traderdude trading SBIN or Bajajauto with this method. Should I stick with limited stocks or keep exploring. What works better?
My choice as of now is Bhel, DLF,SesaGoa, Relcapital, Relinfra, and few more.

Please reply as per convenience.

Thanks
Pallavi

 

[linkon7]

Hello,

A couple of questions for Traderdude or anyone who can help:

1. Drawing Support and resistance lines :
For this method, do we only refer daily charts. Or we also check the latest level in hourly or 30 min charts.

2. Stock selection
I do study Nifty but not trading it yet. I think I need more practice before I move to derivatives. I will trade Nifty or other futures only if I am consistently successful in cash for around 4-6 months.
So considering that I am trading in cash, which stocks works better with this method. I know its more of individual choice but I have seen Traderdude trading SBIN or Bajajauto with this method. Should I stick with limited stocks or keep exploring. What works better?
My choice as of now is Bhel, DLF,SesaGoa, Relcapital, Relinfra, and few more.

Please reply as per convenience.

Thanks
Pallavi

Support and Resistance are basically levels where the higher time frame participants have historically found value in price. They are the big volume people who provide the floor / roof to a trading range.

Sup / res are universal in all time frames. Smaller the time frame, more the details we get. Ideally, we give importance to 4-5 times out trading timeframe for providing us the S/R frame work.

Like if i am trading 5 min, then 30 min time frame is ideal. If i am trading EOD, then weekly time frame will give me better idea of where my turning points might be.

For stock selection, My personal way of gauging the stock basket is to use volumes traded as a the main criteria. Since i trade the futures, my criteria is minimum 10 contracts trades per minute. The information can be obtained by downloading futures bhavcopy from nse. For cash market, a minimum 50 K to 100 K is a good way to create the basket.

 

[TraderDude]

Most stocks were down today.

Everyone's favorite - NIFTY

@pdeoghare,

S/R should jump out at you. A 10 yr old should be able to identify S/R levels. Most importantly if you see flips in S/R levels, those are key levels. Watch price action there.

About stock selection. like i said if you pick a low price stock, you will need a large order to make any kind of profit and it will be difficult to get a large order filled. By large order i mean in hundreds or even thousands. e.g any stock who price is less than 200-300. For these kinds of stocks best to trade in futures. Another thing about stock selection , pick the ones which have good volume. use any site like money control , you will get a nice big list. There are some stocks which are less liquid and the same thing happens either your orders don't get filled or your stops will be skipped, which is dangerous to your account. There are about good 20 stocks along with NIFTY , that provide good volume. use NSE site for picking most active stocks , F&O.

If and when you decide to trade with nice big account, you simply cannot trade low price stocks on 5-15 min time frame. your orders are just not going to get filled. you can try this, but try not to lose money.

So did anyone catch a good move today?

 

[TraderDude]

More learning material for beginners. Watch for these patterns at S/R levels which are round Nos or close to it.

Note : these patterns will not work at all locations. THEY MUST APPEAR AT THE POINT OF CONFLUENCE.

Outside bar

Inside bar

Pin bar

Key reversal bar

Two bar reversal

 

[kumar17vijay]

Hello TraderDude sir
Will you suggest some basic books for price action method.
I am noob , so I don't know from where to start.
I have completed reading this thread but I need more basic information . So please refer something .
Also please tell tools required for the plotting those charts.
What are software required , or data feed .
Somewhere you mentioned Amibroker.
I don't know how set up all things , but I am very much interested to learn all these things.
Please help over this.
Thanks.

 

[TraderDude]

Hello TraderDude sir
Will you suggest some basic books for price action method.

I would suggest Martin pring on price patterns. It covers a lot of Technical analysis in depth. A good book. Start with that..

Also please tell tools required for the plotting those charts.
What are software required , or data feed .
Somewhere you mentioned Amibroker.

About charting software and data feeds, i currently use livecharts from esignal. I have tried almost all feeds from Indian data providers and NONE of them are good. either there is some issue with their feed or the software that gives the feed. I was struggling to get the feed fixed most of the time rather than focusing on trading. Don't bother with any indian data providers , you will end up in lot of frustration. Hence i went back to esignal - no hassles , quality feed and decent charting package. I am also looking at firstcharting, but doubt they will be able to provide proper support.
About Amibroker , its an ok charting package , but no proper feed to it and difficult to configure basic things. I am not a amibroker expert , but i found it very frustrating to work it. MT4 is the best charting package, it's easy to use and helps you focus on your trading.

Good luck.