SH's MArket Correction Prediction Strategy

[Best of Luck]

Hi All,

Pls advice me on above queries.
Also if somebody can advice me on today's 3EMA level.
Is it 5348?

Some charting softwares has the facility to save the chart as PNG or Jpeg file.
Otherwise take a scrrenshot with some other software like Camtasia.

 

[Karanm]

WOW - This thread has suddenly gone active.

Ok guys - in this strategy, each trader has to define their own stoploss based on their money management rules. It can be a tick higher than the previous day's high (in case of shorts) or 1% of your trading capital.

This setup works 90% of the times, but will fail 10% of the times. Again its not a holy grail and please keep stoplosses.

In the current scenario, yes the markets have moved up and 3 EMA is not being touched for 2 days or more ... this falls in that 10% category of loss trades.

However please remember, with every passing day, the probabilities of 3 EMA getting touched goes higher.

Cheers
SH

Sir, Price of Gitanjali Gems had not touched 3EMA on 7/7/2010 & 8/7/2010 and 3EMA Value was at 137.13 on 8/7/2010. On 9/7/2010 Price did touched 3EMA but the Low was 140.30 and never went down 137.13, 3EMA Value of 8/7/2010

Sir, I would request you explain this Gitanjali trade. I am not worried about the failure of the above mentioned Gitanjali trade but want to understand how actually we should deal with these type of trades.

Sir, on 9/7/2010 Price is touching the 3EMA on third day but not the Value of 3EMA of 8/7/2010 for which we have Traded as per your 3EMA Statergy.

I would be obliged for your help & information.

Regards
Karanm

 

[spiritunit]

karanm,

This strategy is not as good as using with some stocks, it works great with nifty futures, if you're an investor in long term aspects, then use this strategy with weekly chart for stocks and it shows amazing results (as reported early by TH)

 

[Karanm]

karanm,

This strategy is not as good as using with some stocks, it works great with nifty futures, if you're an investor in long term aspects, then use this strategy with weekly chart for stocks and it shows amazing results (as reported early by TH)

Sir,
Kindly elaborate what exactly you mean by if you are an Investor in Long Term aspects, then use this strategy with weekly chart for stocks and it shows amazing results.
Do you want to say that just do Buying with this Statergy on weekly charts.

I would be obliged for your help and Guidance.

Regards
Karanm

 

[Tradewithhunter]

Sir, Price of Gitanjali Gems had not touched 3EMA on 7/7/2010 & 8/7/2010 and 3EMA Value was at 137.13 on 8/7/2010. On 9/7/2010 Price did touched 3EMA but the Low was 140.30 and never went down 137.13, 3EMA Value of 8/7/2010

Sir, I would request you explain this Gitanjali trade. I am not worried about the failure of the above mentioned Gitanjali trade but want to understand how actually we should deal with these type of trades.

Sir, on 9/7/2010 Price is touching the 3EMA on third day but not the Value of 3EMA of 8/7/2010 for which we have Traded as per your 3EMA Statergy.

I would be obliged for your help & information.

Regards
Karanm

Karan - There is no valid explaination to this scenario except that 1 out of 10 trades will be losing trades. In extreme trends, even the technical corrections dont come at the right time and can get delayed by a day or two.

The only way to manage this trade it to either keep a stop loss (based on your money management rules) or if you have really deeper pockets, you can continue to short at higher levels until 3 EMA is touched. The bottomline is that markets cannot run beyond 3 EMA for a long time. 90% of the times it will revert to 3 EMA in 3 days.... 5 % of the times it will revert in 4 days and the rest 5% it will revert in 5 days.

Cheers
SH

 

[Karanm]

Karan - There is no valid explaination to this scenario except that 1 out of 10 trades will be losing trades. In extreme trends, even the technical corrections dont come at the right time and can get delayed by a day or two.

The only way to manage this trade it to either keep a stop loss (based on your money management rules) or if you have really deeper pockets, you can continue to short at higher levels until 3 EMA is touched. The bottomline is that markets cannot run beyond 3 EMA for a long time. 90% of the times it will revert to 3 EMA in 3 days.... 5 % of the times it will revert in 4 days and the rest 5% it will revert in 5 days.

Cheers
SH

SH Sir,

In Gitanjali case, Price did touched 3EMA after 2 days on 9/7/2010 (7/7/2010 & 8/7/2010) but never touched the 8/7/2010 3EMA Value of 137.13 and Low of 9/7/2010 was 140.30

Sir, Failure I can understand is part of any Statergy but here the probelm is that Price did Touched 3EMA on 3rd day but never touched 3EMA Value of 8/7/2010, here Statergy was a Success but Trade was a Failure.

Sir, I have checked and found in many Trades this happens where 3EMA is
Touched by the Price on the 3rd Day after a gap of two days but never touched the 3EMA value of Day 2, hence in all these Trades your Statergy is a Success but Trade is a failure and Result in Loss.

Kindly help and Guide us.

Regards
Karanm

 

[Tradewithhunter]

SH Sir,

In Gitanjali case, Price did touched 3EMA after 2 days on 9/7/2010 (7/7/2010 & 8/7/2010) but never touched the 8/7/2010 3EMA Value of 137.13 and Low of 9/7/2010 was 140.30

Sir, Failure I can understand is part of any Statergy but here the probelm is that Price did Touched 3EMA on 3rd day but never touched 3EMA Value of 8/7/2010, here Statergy was a Success but Trade was a Failure.

Sir, I have checked and found in many Trades this happens where 3EMA is
Touched by the Price on the 3rd Day after a gap of two days but never touched the 3EMA value of Day 2, hence in all these Trades your Statergy is a Success but Trade is a failure and Result in Loss.

Kindly help and Guide us.

Regards
Karanm

You are absolutely right ... prices moving up will pull up 3 EMA so the candle might touch 3 EMA on third day but it might still be a losing trade.

However I dont think that should happen for more than 10% of such trades... look in GItanjali charts ... identify last 20 such trades and let me know how many times this has happened.

Cheers
SH

 

[Karanm]

You are absolutely right ... prices moving up will pull up 3 EMA so the candle might touch 3 EMA on third day but it might still be a losing trade.

However I dont think that should happen for more than 10% of such trades... look in GItanjali charts ... identify last 20 such trades and let me know how many times this has happened.

Cheers
SH

SH Sir,

Thanks for your prompt reply.

I will check Gitanjali Gems as you have said and inform you.
Sir, Kindly guide me - Can this Statergy of your's be used with some other Time frame which can give better Trades.

I got a reply that this Statergies works excellent on Weekly charts, specially for Positional Trades but without your help & guidance, I will not able to Trade

Kindly help and Guide.

Regards
Karanm

 

[Karanm]

You are absolutely right ... prices moving up will pull up 3 EMA so the candle might touch 3 EMA on third day but it might still be a losing trade.

However I dont think that should happen for more than 10% of such trades... look in GItanjali charts ... identify last 20 such trades and let me know how many times this has happened.

Cheers
SH

SH Sir,

I have checked Bank Nifty from Jan'2010 till date to the best of my abality.
We got 6 Trades in Bank Nifty as per 3EMA Statergy of your's.
3 were Winning Trades and 3 were Failures.
Net result would have been a Loss as Profit in 3 Winning Trades were much less than 3 Failed Trades.
Bank Nifty Price have not touched 3EMA for last 4 Days.

Sir, kindly giude and inform me where my calculation is wrong.

Regards
Karanm

 

[Tradewithhunter]

SH Sir,

I have checked Bank Nifty from Jan'2010 till date to the best of my abality.
We got 6 Trades in Bank Nifty as per 3EMA Statergy of your's.
3 were Winning Trades and 3 were Failures.
Net result would have been a Loss as Profit in 3 Winning Trades were much less than 3 Failed Trades.
Bank Nifty Price have not touched 3EMA for last 4 Days.

Sir, kindly giude and inform me where my calculation is wrong.

Regards
Karanm

Please check, Banknifty 3 EMA has been touched by 3 candles out of 4 in the last 4 days ....

As i quoted in my previous post, sometimes a sudden breakout from a narrow range would mean 3 EMA not being touched... but it should be only once in a while.

I had primarily written these rules for Nifty futures, you need to find out other stocks on which it works ....

Cheers
SH