Teach A Man To Fish And.........

[rajesh.sadhanala]

Hi Karthik,Ragh_Ash,Agilent,Ajay,Allepian,Rahul,

Thank you all for your kind words and your very warm remarks.

AGILENT :Great idea.Shall put in the list of contents over the next few days.And looking forward to your contributions.

RAGH_ASH :One thing at a time,we'll come to Volumes ....let us take it slowly and steadily.

AJAY :Great idea,maybe you could run a sort of class in the Chat room.10:30-11:30 is a bit too late as per my time,but when I can join in,only too glad.

All the best!
Saint

Hi Saint,

I think I am the last one to congratulate u. We are lucky to have u around.

And the way u r using examples is like amazing. It can't me more practical than any other thing. Excellent stuff. To be frank enough, I am gaining a lot through this thread rather than "New Intermediate Uptrend".

I could say this thread as the best atleast for me . Hope with this thread I move from 3rd to 4th

Have a nice time

Regards
Raj

 

[rahulg77]

Hi Saint,

Thank you for all the replies. Its all clear for me now till what you have covered. And I have to say all of you senior members have a lot of patience and thats another thing we sould learn in addition to TA. Looking forward to your next topic.

Rgds
Rahul

 

[Saint]

Hi Saint,

I think I am the last one to congratulate u. We are lucky to have u around.

And the way u r using examples is like amazing. It can't me more practical than any other thing. Excellent stuff. To be frank enough, I am gaining a lot through this thread rather than "New Intermediate Uptrend".

I could say this thread as the best atleast for me . Hope with this thread I move from 3rd to 4th

Have a nice time

Regards
Raj

Thank you for your warm remarks,my friend.....and looking fwd to you moving to the 10th and regularly taking profits out of the market,bull,bear or otherwise.

All the best!
Saint

 

[Saint]

Okay,we have now a rough idea on trends,pivots,trendlines,supports and resistances...........these are our basics from which all our trading takes place.And yet,it can only be to our advantage to know of chart patterns,volumes,indicators,etc.They help to increase the odds before entering and exitting a stock.

But although we are going into all of the above,it is imperative that we keep things as simple as possible.The problem with keeping things simple is that you may not get to boast to your neighbour or relative your superior intelligence,but huge profits await the simple mind.So,since we are learning all of this only so that it can be applied practically,we keep things very very simple.

Let us get into CHART PATTERNS next.

All the best!
Saint

 

[Saint]

Chart Patterns

Again and again,certain patterns seem to develop on our charts.And we realise that the probability of reversal or continuation is greater with certain patterns.Not saying that the reverse cannot take place.Anything is possible and therefore we have our stops...........but these patterns usually either reverse or continue trends.Knowing abt chart patterns is one more weapon in our arsenal.

Two types:

a)Reversal Patterns:These patterns reverse trends.Eg.Double Top,Double Bottom,Head and Shoulders,Cup n Handle.

b)Continuation patterns:These indicate a possble contination in trends. Eg.Triangles,Bull flag,Bear flag,Pennant

REVERSAL PATTERNS
1.Double Top :This pattern can happen on any time frame.........this halts the uptrend and starts a downtrend in that stock or index.
-Also called as M Top,coz it resembles an "M".

-If double tops are bearish,triple tops are even more so.

-Volume is higher on the first peak,and lesser inthe 2nd peak,and starts picking up on breakdown from the 2nd peak.

-There has to be a distance between one top and the other to qualify as a Double Top.Needs at least 3 month difference if you are looking athe daily charts.

-Now take the trough between the two peaks.......breaking that level is confirmation of a change in trend to the downside.

==So,summarising,let us say we are looking at the daily charts of any stock.We need to have a top put in,let us say January,and then another top at the same area,let us say in April.The rally to the first top came in good volumes,and then a pullback on low volumes.The rally to the second top came in relatively low volumes and then the declines coming in relatively stronger volume.It may be a double top,but you cannot call it one till the trough between the two tops is taken out.Then we can call it a double top.Also called as M-TOP.

-How does knowing this help us in our trading?
We have a great uptrend on good volume and a pullback on lesser volumes.....so far so good.Now the 2nd peak formation starts to form with much lesser volume as compared to the 1st peak,and then a breakdown on high volume........this gives us an indication to exit our longs if we are short term players as trendlines get broken to the downside.But without confirmation,we are officially in nothing more than a sideways trend with possible fall downwards.Now the trough gets broken and usually the stock retraces back........We are now officially in a downtrend.The time to short has arrived.Short a half at the retracement,and short the other half below the low of the bar that closed below the trough line.
Target :The distance between the peak of the "M" to the trough of the "M"......add that to the low of the bar that broke the trough line.That's our target point.

2.Double Bottom:Same as above,it halts a downtrend,and starts an uptrend in that stock or index.
-also called as "W"bottom.
Trading strategy and measuring techniques are just the opposite to the above.

All the best!
Saint

 

[vizzie]

Okay,we have now a rough idea on trends,pivots,trendlines,supports and resistances...........these are our basics from which all our trading takes place.And yet,it can only be to our advantage to know of chart patterns,volumes,indicators,etc.They help to increase the odds before entering and exitting a stock.

But although we are going into all of the above,it is imperative that we keep things as simple as possible.The problem with keeping things simple is that you may not get to boast to your neighbour or relative your superior intelligence,but huge profits await the simple mind.So,since we are learning all of this only so that it can be applied practically,we keep things very very simple.

Let us get into CHART PATTERNS next.

All the best!
Saint

Hi Saint !!

Got 2 know bout this thread today..
amazin stuff, my frnd..
kudos..

cheers
vizzie

 

[roneeth]

Hello Saint,

Wonderful thread.....somehow had missed this thread.
Thanks for enriching us with your knowledge and all the efforts you have taken in starting this thread.

With Best Regards

Roneeth

 

[Saint]

Thank you,Vizzie and Roneeth,for your kind words......sincerely appreciated as always.

All the best!
Saint

 

[rahulg77]

Hello Saint,

What would be the time duration be for a weekly chart. Is 3 months a minimum requirement or can it vary to lesser time period.

Rgds
Rahul

 

[Saint]

Hello Saint,

What would be the time duration be for a weekly chart. Is 3 months a minimum requirement or can it vary to lesser time period.

Rgds
Rahul

Hi Rahul,

Actually no hard and fast rule......some books tell you that a month apart still qualifies.Yes ,on a weekly or monthly charts that would be maybe years apart.Also,you get these patterns on an intraday basis as well.

Importantly,one can only say that a pattern is a Double Top for sure once the trough gets taken out.Till then you would say that we are in a pullback or sideways pattern.

Another fact,forgot to mention yesterday.....The longer the period between the peaks and the greater the height,expect the reversal to be greater.

But you know that high that you see in the daily charts and then a pullback and then back to former highs in the next few days.........that is what is NOT a double top.There must be considerable period between the peaks.If you are looking at the hourly,then you must have at least more than 30 bars bet the 2 peaks.

All the best!
Saint