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

[Saint]

An example of a Double Top in Punjab Tractors in 1999.

Once that trough breaks to new lows,an important area of support has given way.Once we get a break-down,this pattern that was so far a suspected DT,a probable DT,is now a confirmed DT.

Notice that pullback rally not able to take out that line of previous support.Now that line ,or rather area becomes an area of resistance.This pullback rally to this area becomes a place where you could add to your positions.

All the best!
Saint

 

[Saint]

Below is an example of another H&S pattern,this one in RANBAXY Monthly charts.Self explanatory.

Have a look at the Volumes in the Left shoulder ,then the Head ,and Rt shoulder,all in decreasing fashion.Then the increase in volumes in the breakdown from the neckline.

At present we are shooting past the neckline,but you have to wait and see how this month pans out,if we close this month end at 440-450 area or below,we might see a continuation in downtrend.

Happy Trading!
Saint

 

[reachjesal]

ahem.. hello everybody .. no waz up how are you .. coz i hardly know n e 1 here .. let me juz kick off with a suggestion as its my first post .. moderator(ji) y don v hava thread for fundementals as well.. and results unfolding this quarter , a results update thread would also be beneficial....
and yea traders do not have to be technically alwayz sound.. funda's also work as far as trading is concerned !
c ya !
Regards
jEz

 

[mgirotra]

Dear Saint

Am in a bit of a confusion. I am going with the assumption, that TA can identify patterns and trends and hence can try to optimize entry and exit points but not predict prices. If that is correct, I dont understand how a target price is predicted at the time of a entry recommendation. What am I missing??

best regds

Mohit

 

[Saint]

Dear Saint

Am in a bit of a confusion. I am going with the assumption, that TA can identify patterns and trends and hence can try to optimize entry and exit points but not predict prices. If that is correct, I dont understand how a target price is predicted at the time of a entry recommendation. What am I missing??

best regds

Mohit

Ah,Mohit,my friend........like Tera Hz,and Rahul,ever ahead of the pack.Your understanding is correct.Shall come to it over the nexr few posts.

All the best!
Saint

 

[Saint]

We have so far,as beginners to charts,looked into what a trend is.Are we in an Uptrend,Downtrend or Sideways Trend?We have looked into some terminologies..........lower highs and lows are called Declines.Lower highs and lows by themselves do not constitute a downtrend.Lower pivot highs and lows.we call it a downtrend.Higher highs and lows make up a rally.Higher pivot highs and lows make up an Uptrend.

We have seen some basics on Trendlines,Supports and Resistance.We realise that a break in an Uptrendline does not mean we are in a downtrend.A break in that Uptrendline merely means that the ongoing uptrend is in question.Breaking a previous pivot low,and then we say we are in a downtrend.

We have seen the basic Buy Setup,which is nothing so far.There are a few things to add to that as we go ahead.

Now we have started Chart Patterns............now the question that may arise is : Do we really need to know this at all?Can't we make beautiful profits even without knowing zilch on Chart Patterns?Well,the answer is a Yes and a No on both.

Our motive as traders trading the trend is to make profits as long as that trend is on,and to detect a change in trend and exit when that is seen.We therefore need not have the art of prediction.We identify a change in trend,latch on to that stk with a good entry,and hold till that trend changes.We therefore follow trends,and not predict them.

So,although you have many books that will tell you on what a first target is(no harm in getting out as prescribed),but the trader trading trends stays in as long as the trend is up unless something else is the bother.

Most importantly abt knowing Chart Patterns,it gives one an idea as to what the general population of tech guys are thinking.We have an ascending triangle.So everyone is expecting a breakout.Well,so are we.But if we get a breakdown,we take our stops and reverse strategy fast leaving those who don't do it in a Pray-Wish-Hope Mode and finally selling off at much lower prices fuelling the move down further putting a huge smile on our faces.

So know the patterns,so that we can all see what everyone is looking at.So that we can trade along with everyone else,or against them.But your basics are the most important.Trade the Trend and out when previous Pivots crack

All the Best!
Saint

 

[mgirotra]

Dear All

Saw this wonderful essay on applying Sun Tzu's Art of War commandments to trading and thought what better place to share it than this enlightning thread.

Here goes

"According as circumstances are favorable, one should modify one's plans.

We should only add to winning positions and never average down on a loser. Profits are carried by momentum, and if you are on the right side of momentum, you can make a lot of money. When losing, stick to the plan and exercise stop losses. When winning, increase position size as new entry signals are confirmed.

"When you engage in actual fighting, if victory is long in coming, then men's weapons will grow dull and their ardor will be damped. If you lay siege to a town, you will exhaust your strength."

If the expectation of your trade is not working out in a timely fashion, then you have read the market wrong and it is best to exit the position.

"It is only one who is thoroughly acquainted with the evils of war that can thoroughly understand the profitable way of carrying it on."

If you think the stock market is fair, quit trading immediately.

"Hence the saying: If you know the enemy and know yourself, you need not fear the result of a hundred battles. If you know yourself but not the enemy, for every victory gained you will also suffer a defeat. If you know neither the enemy nor yourself, you will succumb to every battle."

If you know the market and know yourself, you will consistently profit. If you know the market but not yourself, your success will be random. If you do not know the market or yourself, you will consistently lose money. Success in the stock market is not just about the market, it is also about knowing how you react to fear and greed.

"The onset of troops is like the rush of a torrent which will even roll stones along in its course."

The trend is your friend.

"The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy."

Good traders know that they can consistently make money, and that confidence fuels them to consistently make good decisions.

"To lift an autumn hair is no sign of great strength; to see the sun and moon is no sign of sharp sight; to hear the noise of thunder is no sign of a quick ear."

Great traders see more than the obvious.

"There are not more than five primary colors (blue, yellow, red, white, and black), yet in combination they produce more hues than can ever been seen."

Keep stock trading simple. You need only understand support, resistance, optimism, pessimism, price volatility and abnormal behavior.



I loved the short piece. Hope all of you find it interesting as well.

Saint I hope you dont mind my posting this here..

best regds

Mohit

 

[SGM]

Hello Mohit
Nice post.

"The good fighters of old first put themselves beyond the possibility of defeat, and then waited for an opportunity of defeating the enemy."

Good traders know that they can consistently make money, and that confidence fuels them to consistently make good decisions.
Mohit

I don't know how the "the good fighters of old first put themselves beyond the possibility of defeat,... but we all can with the use of Stop Loss and sticking with our Position Sizing based on good Money Management
A good one ... Protect your self first and then wait for an opportunity of defeating the enemy!
Regards
Sanjay

 

[rajesh.sadhanala]

yes, got it!! That means, if it goes above 106 then the uptrend is in question and ,it will be in our watchlist and we wait for it to cross 110 , which is when we will be sure of the uptrend and we are in trade.
thnx

Sorry for replying to late. My aplogies. If its crosses 110 then it is confirmation of the uptrend but to be on the trade it is better to buy declines rather on the rally. Here the rally would be the pivot low higher than previous pivot.

Regards
Raj

 

[rajesh.sadhanala]

Hi Rahul,

As you rightly pointed out,depends on your strategy.If you've been playing the uptrendline all along,you are not about to tolerate any break in the uptrendlines.One crack and you are out........on the other hand,if you are willing to give it some room,wait for the break of the previous pivot low as that gives you a clearer idea of a change in trend.

Which one do you do?I personally would get out half my position on a trendline break,leaving my stops for the back half a bit below the previous pivot low.If taken out,I am out.

Just have a look at Satyam below.....I had been playing the trendlines all along.Had been in it from late Sept till date.That ugly move last Friday took out half my position,but still in back half as the previous pivot lows were not cracked yet.If you got out full on Friday,you would not have been wrong either.

Happy Trading!
Saint

Sorry Saint to come on with questions so late, Everything seems ok to me but trendline break and previous pivot low are two things we used intermittently. I assume that both are one and same.

Whenever the previous pivot low is broken then Uptrend is in question So we get out of the trade.

Here in this context what is trendline break, is it small crack in the uptrend move, I mean is it a decline or anything else. When I looked at the weekly charts on Satyam (7th Apr) it is small decline. Saint, pls add If I am missing out anything.

Thanks a Lot
Saint