Dear Saint,
This is my first letter to you. I must thank you for helping people like us. Great job done.
For last one week I have been reading and trying to understand your "teachings" about fishing a fish and happy that I have learnt a lot though many things are to be cleared as yet. Because of my location, job nature and knowledge in share trading, i don't go for daytrading or swingtrading but in position trading only. Normally I use "limit" option facility of ICICIDIRECT.com wherein I can put my BUY/SELL signal the previous night.
In the present chart, I would request you to clarify some points. When you say, " If the index/stk goes above the pivot marked as Option 1,Buy with your stop at recent pivot lows".
My queries are,
1) When you say index goes above the pivot, is it the intra day movement above the pivot (i.e.shadow ) at which we have to buy the stock or closing high (i.e. bar) above the pivot? Because the stock may go above the previous pivot high (marked by pink arrow) momentarily during the day and settle lower (Closing) than that.
2) Shall we consider pivots or highs/lows for drawing trendlines?
3) I have observed that whenever we consider longer time frame (say 2 yrs) on a weekly or daily chart, the trendlines appear to be steeper (on the screen) than that with shorter time frame , say 6 months or 3 months, for same pivot highs or lows. Would you please tell me which time frame is the best for weekly and daily charts to draw trendlines?
I shall be glad if you clarify these doubts.
Thanks in advance.
Regards,
Raju
If I try to give answers to questions posed towards Saint, I hope Saint wouldn't mind provided that I have become so nice a fan of his after reading his post "Teach a man to...".
Guys, I must admit that it's a piece of jewell that Mr Saint has created. I've read it some 5-6 times from first to last till now and believe me every time I read it afresh, I discover some 2-3 vital points that I left out in the previous reading.
Ans to Q 1) Since u don't do intraday trading, by principle, u shudn't make trades based on 2 mins or 5 mins or 15 mins data. Never ever mix two timeframes. Whatever decision u have to take, say buy/sell (because of pivot crack on the upside/downside) take it based on EOD charts and not on intraday movements.
But once u r into trade, put ur stoploss daily using the "limit option" as u mentioned and that will be based on ur previous to previous bar's low. That means, if your previous 2 bar's low is cracked on the downside even on intraday movement and even if momentarily, never hold on to that trade. Immediately get out.
Ans to Q2)U shud draw trandlines connecting pivots only.
Ans to Q3)That's obvious, because, over the long term any share price always trends up. Which timeframe u will use for drawing trendlines will depend on what is the timespan for ur trading. If u r planning to maintain ur holdings for 6-12 months, u shud draw trandlines on 2-3 yrs chart and if u r planning to trade for 1-2 week u shud draw trandlines on 1-2 months data.
Saint, pls point out if I've committed any error in answering the qs. Ur valuable addition to these will definitely add to our knowledge base.
Cheers
d j sinha
