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

[Saint]

Pankaj sir,

Excellent suggestion seniors like you, amitbe, jaideep, vince, satya etc.. could answer the questions and Saint could also answer whenever he feels something needs to be added or is answered.

This will take part of the load of Saint and he will be able to continue with the training.

I hope Saint will continue with his training lessons in this thread of late owing to the volume of questions (which is a good thing shows ppl r interested and learning) I do not think he has the time to contunue with the training.

Agreed Marcus,Pankaj........sometimes a bit of an overload of questions to answer,although asking questions is part of learning and has to be encouraged and therefore answered.And yet,it tends to slow things down......Basically,no real solution to the problem,except to answer them all and go ahead.Requires a superhuman effort though with limited time.....but doing the best I possibly can.

Saint

 

[Saint]

Hello Saint!
Marcus and Pankaj..both are SO right.Please start the next part of your writing.You write so good with so simplicity and step by step way......that it's not possible to wait more.
All experienced as well as novice members are eagerly waiting for you.Please start that beautiful learning journey.
God Bless You.
Disciple.

Thank you,Disciple,for your very kind words.......

Saint

 

[Saint]

hi i m new in this thread, here is very good things about share market, one of these - teaching fundamental rule is very apprieciated. i request to friends to learn to catch fish in chines style.

friends just learn catch up


yours

sanjiv

Hi Sanjiv,

From what I understand,I think you are referring to learning Fundamental Analysis...........there are many within the forum whom I respect for their knowledge of Fundamentals.Like Pankaj(pkjha).Suggest you get in touch with him to learn some fundamental stuff.

This thread is limited to the trader who believes in trading using charts,a trader who follows trends,a trader whose primary objective is to make as much profits as possible in the simplest method possible.

Saint

 

[Saint]

Hi Saint,

If a Security in down trend, but Momentum indicatiors (like Stochastic, RSI) generate buy signal in some interval of time due to oversold position. I want your guidance on following points:

1) To determine the right time to buy.
2) To find out down trend is over or price may be reverse
3) Suggest an indicator to overcome this problem

Regards,

(moneypick)

Hi Moneypick,
Depends on the timeframe of the downtrend...........if we are talking daily charts and the stock is in a downtrend,meaning it is making lower pivot highs and lows,and momentum indicators on that daily charts tell you oversold,it NEVER is the time to buy........The right time to buy would be if we make a higher pivot low and you get confirmation once a previous pivot high is taken out.So,the important thing is always PRICE,PRICE and PRICE.

Question 2 is answered by the answer to question 1 above.

An indicator to overcome this problem?None................stay with price,pivots and trends.An indicator may at best confirm to you what you should already be knowing.For eg.We have a strong uptrend,indicatorrs tell us that we are overbought,what do we do?Nothing .We hold..........The uptrend gets stronger and stronger.The indicators continue to be overbought.We Hold.Now we start breaking previous pivots,we sell,whatever the indicators tell us.

My suggestion:Learn Trends,Pivots and Patterns.........then go with the flow of the trend.But do learn abt the various indicators.Because they may come in handy in shorter time frames,and for the pure fun of it.

Saint

 

[munchikana]

I think some rules must be set by Saint with the help of Traderji for this thread. Sorry to say, now it has become very difficult to pick up those informative and educative posts posted by Saint in this thread. Because, this thread is full of praises and other non essential materials. I hope at least Saint does not require moral booster doses in the form of praises and congratulations. Guys keep the unnecessary postings to the minimum. If at all it is necessary, start a seperate thread where you can heap your congratulations on Saint. Start another thread where you can have questions and answers on the matters taught by Saint. Sorry Saint, I too wrote another inconsequential letter in your valuable thread. I hope and pray that I have not hurt any one's feelings through this post. Guys please understand the importance of this thread. Keep it as pure as possible. Do not adulterte it with unnecessary stuff.

 

[Saint]

A SUMMARY:

We have,at various times and places during this thread,done the below:

a.Trends-Secular,Primary,Intermediate,Short Term Trend
b.Pivots

Knowing just these two tell us where we are on that particular chart.As we had discussed many a time before,first we need to know that a secular uptrend is made up of several primary uptrends and downtrends.Each primary uptrend is made up of several intermediate uptrends and downtrends.And each intermed uptrend is made up of several to many short term uptrends and downtrends.Of course,each short term uptrend is made up of several to many intraday uptrends and downtrends.

An uptrend is made up of higher pivot highs and lows,each pullback within that uptrend is called a decline.A downtrend is made up of lower pivot highs and lows.A move up within a downtrend is called a rally.

Why do we know these things?As we had discussed before we need to know that a chart is in an uptrend,because then and only then are we interested in going long.We buy in an uptrend.We could buy the breakout from a sideways consolidation phase,we could buy the declines within an uptrend........but in an uptrend,in anticipation of a certain level,we NEVER NEVER SHORT.The mind must be educated to understand that one does not short in an uptrend.

We short in a downtrend(plz,I know that certain things are not possible in the Indian mkts,obviously one can do only what one is allowed to dne could short using derivatives,or stay out and wait for an uptrend).In a downtrend,we get a sideways consolidation phase,we short the breakdown.We could also short a rally within that downtrend.When we get a rally in a downtrend,we could capitalise on that move on a smaller time frame by going long.But in that larger time frame,we are looking to SHORT.We are not looking to guess bottoms,we are not looking to anticipate certain areas from where we are going to bounce upwards,we SHORT every rally ina downtrend till that downtrend no more is one and we get a Trend Reversal to the Upside.

c.Trendlines
Do we only get out of a long position once pivots are broken and the downtrend is confirmed?Nope...........we draw trendlines using the semi-log.A trendline break and we are out half,and a pivot crack,and we are out totally.How to draw the various trendlines has been discussed in various posts in this thread,please do go over it.

d.Chart Patterns:

Alright,we know about trendlines,pivots and trends,is that not enough to know?Isn't this knowledge enough to plunder profits from this markets?YES,and a vehement YES..............But learning some chart patterns can do no harm.In fact,a continuation pattern gives us a good place of entry,and gives us a potential target area.So too with a Reversal pattern,we get an entry and a potential target area.So,do we need to learn Chart Patterns?Well,many just follow pivots and trends,and do not require Chart Patterns,that's basically your call to make.

Our objective as a trend trader is to latch on to a Trend Reversal,and use our knowledge to stay with the trend as much as possible.But the question that hits our head is:Right,we know all this stuff,and now we know that we will buy half on a higher pivot low,and add the other half over the previous pivot high.........but what about stops?Where do we take our profits?Do we take profits at all?Then,of course,how many shares do we buy?Etc,Etc....

Tomorrow,we can go through the Stops and Profits part.

All the best!
Saint

 

[moneypick]

All the best!
We have,at various times and places during this thread,done the below:

a.Trends-Secular,Primary,Intermediate,Short Term Trend
b.Pivots

Knowing just these two tell us where we are on that particular chart.As we...............
Saint

Hi Saint,

Can you please explain with charts, when uptrend is end and downtrend will start and those points which we must remember in that situation.

Thanks & regards,

(moneypick)

 

[Saint]

Hi Saint,

Can you please explain with charts, when uptrend is end and downtrend will start and those points which we must remember in that situation.

Thanks & regards,

(moneypick)

Hi Moneypick,

All there within this thread,with charts.Please go over them......

Thank you.

Saint

 

[Saint]

Stops :

Whenever there is a trade that we get into,we put in a stop.The stop is that area where we say,"Enough is enough!"The stop is not put in after one has lost 80% of our portfolio and one has given up with life.I see it quite often here where one gets in on a tip because someone says so,and then take a huge loss and then say that the trade was stopped...........A stop is a predetermined level,put in BEFORE the trade is got into,the word BEFORE being an important word.I hope I do not sound lunatic when I say this:

BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE..............

That stop that one has determined BEFORE the trade can be a mental stop.A mental stop is one that is not exactly broadcasted to the broker,etc.........it's a technical level the break of which one does not stay in the trade any longer.Now,the irony of this mental stop is thislease DO NOT keep the mental stop in the mind.WRITE DOWN the stop.........If one entered SATYAM at 650,with a stop at 620,and a potential target of 750,write it down.

SATYAM,entry-650,stop-620,tgt-750,rew:risk=3.33:1,etc etc

If SATYAM hits 620,that is it,one is out of that trade.One either looks elsewhere,or plans a reentry into Satyam,.........but what one never,ever,ever,ever,ever,ever,ever does is to let the stops get blown through,then hold it,pray to God,run to the nearest temple,church or mosque,pray even harder,and then try to strike a bargain with God if HE manages to pull the stock back up,beat the chest,shout at one's wife,have sleepless nights,all the while allowing it to slide,all because one wants the stock to get back to breakeven.

Trading is a profession.It's a business.It is not a place where one hopes to strike lucky,you could ,maybe once,maybe twice.......but the person who does not have a strategy ,a plan ,will in the long run come to ruin.As the famous saying goes,"Plan your Trades and Trade your Plan."

A predetermined written down stop is vital for long term success,it is vital for our mental balance,and only a disciplined trader adhering to his/her plan can see the multiplication of wealth,and a regular flow of profits.

Once again,to re-stress......a stop is planned and written down BEFORE the trade!!!!!!!

I apologise for sounding like a broken down tape recorder on this one.......but I do hope that as a beginner to trading,one does realise its importance.

All the best!
Saint

 

[Saint]

STOPS :

There are many types of stops,.......the ones that come to mind.

a.INITIAL STOP

As described many times,this is the stop that we put in before we even put in that trade.This stop can be placed with your broker if in intradays,else,a written down exact point after which no more nonsense is going to be taken from this trade.

b.TRAILING STOPS

As the stock moves higher,we use trail stops.Again,there is software that does it,of which I have no idea.There are very many methods that does it using pivots,or moving averages,or two-three previous bars break method,etc
Whatever the method used,the most important point is that once the trade moves in the direction required,the stop has to move up to breakeven first,and then upwards,till stopped.

c.TIME STOP :

When the trade does not go your direction in that specified time,and money could be deployed elsewhere,and the initial stop is also not taken out,one employs the time stop or boredom stop.

So,that covers that.............the moment we get into a trade,and the trade never sees green,and hits our INITIAL stop,that's it.We are stopped out.The trade goes in our direction.We apply TRAIL stops.After getting into a trade,and nothing exactly happens,and that wasn't part of our strategy,then we could employ a TIME stop.

Whether we take a TIME stop or not is our call to make...........but no compromises if the INITIAL stop is hit.We are out,and that's that.

All the best!
Saint