Hi Karan,
The answer to your questions on this page:
The entry/exit technique has been explained by Savant on several pages in this and the mother thread on different occasions. In a nutshell it is as follows:
Let us say the trigger was generated on day T0.
When you get a Buy signal, you will be trading it next day (day T1). On the trading day, observe the price movement. If it touches or exceeds the previous day's High (day T0) then you can trade on day T1. When the price on day T1 reaches or exceeds the high of day T0, wait for the price to come down and then take an entry. It is not possible to give exact entry price. It is left to the individual.
If on the day T1, the price does not reach the high of day T0 but trades below it for the whole day, then don't enter but wait for next day (day T2). On next day again same technique. Wait for the price to reach or go above the high of day T1 (not T0) and wait for retracement and then enter.
If the price does not retrace, enter at any convenient price.
This is a general rule. If you have confidence that the stock is going up then you need not wait for the high of T0. You can enter at any convenient price on T1 even if the price does not reach high of T0.
The Buy price I am using in the updates are not real trade prices. I am just taking the mean of Open and Close as buying price. I assume most traders would enter anywhere within the Open and Close. A few lucky ones may actually trade at or near the low and the unlucky ones may enter near the high. But the difference will not matter much especially when the target is reached. This is how I got the entry price of SHREECEM.
Now, coming to why it was taken though the price did not reach previous high. This is where your judgement comes in. What I have done (and doing when posting the triggers) is to look at the Support and Resistance. For SHREECEM I will explain it with its chart below:
In this chart of SHREECEM the mean price is plotted instead of OHLC. The price plot is the grey colored line. There are four other colored lines labelled R1, R2, R3 and S1. These colored lines are Support/Resistance lines.
In the beginning of April, the price has peaked and then started falling. From the peak price the resistance line R1 is plotted. This is the first level restance and is the strongest resistance will be observed at this line. The price goes on moving away from this R1 and therefore a second resistance line R2 is drawn from a lower peak. Likewise we have one more resistance level R3 drawn from a still lower peak. The last line S1 is drawn from a trough and it is a support line. This will give strongest support to the price till it is broken downwards. Later on when price goes on increasing we will be able to draw more support lines which will be above S1. You can see how the price tries to reach the resistance levels and falls back to lower levels. Once a resistance line is broken and price moves above it, that resistance itself becomes a support.
In the beginning of August the price has finally broken above R3 twice. In the first attempt it has fallen back to lower levels but in second attempt it has reached a higher level. Though it is again falling after the second peak, it has not broken the R3 (which is now a support) and still above S1. There is a possibility that it will take the support and bounce back and break above R2 also. Finally it has to break above R1 where it will find highest restance and once it happens it will start shooting up.
Because of this analysis I have taken the Buy signal in SHREECEM and taken the trade even though the previous day high was not broken. It is quite possible that my analysis may go wrong and price may fall below S1. In that case we will exit and wait for a new low and turn around from there to get an entry.
The technique I have described above is not yet fine-tuned. Therefore I have not discussed it yet. One of its limitations is that it can not be applied to all the stocks across the board. We have to detect the turning points for each stock and draw the S/R lines for individual stock. Therefore, I first screen with 20 MA and apply this technique to only those stocks which have given a BUY/SELL in 20 MA filtering. Only those which pass this second filtering are posted. That is why many times you see some of the triggers which you get in 20 MA filtering are not posted by me.
-Anant
