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

[Saint]

Hi Praveen,

Good questions as always,but unable to access the .rar charts.For convenience,could you attach it in some other form?

Sorry abt that...


Saint

 

[bvpraveen]

Hi Praveen,

Good questions as always,but unable to access the .rar charts.For convenience,could you attach it in some other form?

Sorry abt that...


Saint

I've attached the files in MS Word format.

[Just wanted to add one point in Question1 - Ofcourse we can sell 50% of our stocks when the trendline is broken.]

Praveen.

 

[Saint]

Hi Saint,

Thanks a lot for your explanation.

I've got many doubts. Here I will ask three more:

1. Refer to "chart 1". With reference to your comments above : "Every time we take out the previous pivot high,keep raising stop losses to the immediate previous pivot low".... Why do we need to wait for the pivot high to be taken out? Is it not enough if we find a "valid pivot"(which ofcourse is according to your pivot theory)? Because we might be missing "great" profits, if downtrend begins.

Praveen,trailing stops are always in an uptrend that pulls back and resumes in its journey......therefore the line above,every time we take out the previous pivot high,keep raising stop losses to that immed prev pivot low.In your chart 1,you have drawn two possibilities,the reversal and the resumption.As all trailing stops are,they are meant for only in a resumption of an uptrend.

Once again,we have the start of an uptrend and it gives us a decline ,an entry point.We enter with a stop below the previous pivot low.The moment we take out the prev pivot high,raise it to the immed pivot low,and so on so forth.

Shall clarify more with charts...

2. Refer to "chart 2". As you had told, the pivots formed should be used for stop loss depending upon our time frame. But how to find out whether the pivot formed is valid for "our time frame" and should we move the SL or not?
My view is that, we need to come to the conclusion depending upon the pullback of the uptrend The minimum criteria would be : "pullback be 1/3rd of the uptrend". Hence, with reference to the attached chart, for medium time frame traders, the stop loss should be "black coloured" stop losses, and not red coloured stop losses, as the stoplosses at red coloured pivots are at lower pullbacks. What is your comments, Saint?.

Right,and a few indicators can help us with that as well.And some retracement concepts.We'll be going through them later.....but right about the above depending on the time frame.

3. Disadvantage of being a short term trader: Again refer to the Chart 2. Consider a short term trader, who has entered into the trade after the first black coloured SL1 according to your theory[at the beginning of the red coloured line]. Hence his stoploss will be red coloured SL1....then SL2. He is out at SL2 when its taken out. If you see his net profit, its a small amount, compared to the up trendline between black coloured stoplosses SL1 and SL2[actually it will be more clear in some live chart]. Do you think its a limitation of being a short term trader?

Waiting for your kind reply,
Thanks,
Praveen.

No,my friend......when you trade a weekly chart,an intermediate trend,you would be entering with a bigger stop(because that's where the previous pivot low is),which means that you would be buying lesser no.of shares.In a short term play,you would be buying more shares as your previous pivot low and therefore your stop is relatively near.

Position sizing is therefore of paramount importance.

Shorter the time frame,maybe more the noise.......but small move,large move is taken care of by position sizing.

Saint

 

[Saint]

Re: Queries From students of Saint

Hi! Saint,

I would be grateful if you could please guide on drawing support & resistance lines on charts where there is a lot of noise. A few examples would be much appreciated.

Am attaching a chart of Alok Textiles (NSE Symbol = ALOKTEXT). I would be grateful if you could please draw the resistance lines & upload the same for me.

Also, does one draw the lines on the daily charts or weekly charts?

The reason why I am asking is because on some of the daily charts, it takes some doing to identify support & resistance levels.

Please do advise ...

Thanks & regards,
Gobatman

Hi Amit,

Don't force the lines if they are not clear cut......agreed in this case ,they are all over the place.

Same with the weekly charts,don't try to force the lines.

Below the chart of Alok with a few trendlines..

Saint

ps:alok mthly should have read as alok weekly

 

[Saint]

Hi Praveen,

Many are ways to trail stop,the one below is using pivots.Trail stops are after we have made an entry,and the trend moves in our favour.We use trail stops to take as much of the move as possible.

Saint

 

[Saint]

Looking at some patterns other than the traditional h&s ,double top,triangles,etc......we had a brief look in at Wide Range Bars.A wide range bar could be the start of a big move up or down.After a long uptrend or downtrend,a WRB could be the signal of the end of the move as well.

This goes in hourly charts,or smaller time frames than that as well......

Saint

 

[gobatman2001]

Re: Queries From students of Saint

Hi Amit,

Don't force the lines if they are not clear cut......agreed in this case ,they are all over the place.

Same with the weekly charts,don't try to force the lines.

Below the chart of Alok with a few trendlines..

Saint

ps:alok mthly should have read as alok weekly

Hi! Saint,

Thanks for your reply. Think you overlooked part of my query: Do you draw the support & resistance levels on the daily or weekly charts.

Thanks & regards,
Amit

 

[bvpraveen]

Hi Saint,

Thanks for your detailed explanation with charts.

Praveen,trailing stops are always in an uptrend that pulls back and resumes in its journey......therefore the line above,every time we take out the previous pivot high,keep raising stop losses to that immed prev pivot low.In your chart 1,you have drawn two possibilities,the reversal and the resumption.As all trailing stops are,they are meant for only in a resumption of an uptrend.

Saint, I've learned this concept in this thread itself. My actual question is : "Can't we move up the stop loss to the immediate stop loss(which is just forming now, say 75% complete, which has not taken out the previous pivot high yet) which is about to take out the previous pivot high?" Why do we need to wait for the previous pivot high to be taken out?

I remember your words in this thread, while explaining when to enter the trade:"...after three bearish candle, we had one bullish candle and we need to enter that trade once the previous candles high is taken out and the previous low will be our stop loss....". Haven't we found out pivot low here?

[Please leave out this question, if I'm digging into it]

Praveen.

 

[mfire]

Thank you Saint. Your trailstoploss chart of abb has cleared concepts of tailing stoploss with me. It has helped to a great extent. I have admirer of your thread I read vorciousely but seldom I write. Thanks again Sir.
Mohan Agnihotri

 

[Saint]

Re: Queries From students of Saint

Hi! Saint,

Thanks for your reply. Think you overlooked part of my query: Do you draw the support & resistance levels on the daily or weekly charts.

Thanks & regards,
Amit

Hi Amit,

If trading the short term,both......when trading the intermed term,the weekly .

Saint