Thoughts on Day/Swing Trading

[4xpipcounter]

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Girish, Nifty is a freight train, which means candlestick patterns can get thrown out the window. I posted 3 charts to show what I am talking about.
I don't think Smartrade would consider this an impunity on his thread, so to add validity, I'll say this entire move from circa 5700 was forecasted in my thread on July 22.

You referenced the BB's, and so for your benefit, I posted them in the 1st chart. As a personal preference I like to use the 28,2 and 28,3 settings. 28 is the amount of candles <> in a complete cycle. BB's measure a standard deviation, so 28 is applicable and measurable for a cycle.
Statistical fact-- Under an SD, sigma 2 is hit 5% of the time and sigma 3 is hit 2% of the time, but those numbers are higher in any dynamic measure of an SD. Therefore, the 2 (white) should serve as a warning for an entry, but not a signal.
The 3 could be considered an entry point after the break from the band, but look at the strong southward indication. Simply put, it is saying it is still not the most advisable time for an entry to go long. This could mean a consolidative eastward motion to the median, and then another sudden drop.

The 2nd chart is showing the importance of viewing price action the next TF up. The weekly shows a clean bounce off of respective TL's drawn from the daily and weekly, along with a close under the cloud. With the tenken and kijun pointing south, that could only add up to a strong move south.
Another point is the deep blue straight S line at 5171. That was a longer term support that meant once it was broken, it would mean a leviathan type of break. Even though a correction could be forthcoming, it is very clear this market is headed further south.

The 3rd chart is the daily that also shows the break of its cloud under the TK combo, and after that the gap you were talking about. This was highly predictable because of the confluence on the daily, weekly, and monthly TF's. Add to that the blue support line being broken, and this is a recipe for this train to stay on the southward track.

I hope this answered, at least in part, how to know when the trend started, and to know if it is going to stay that way.

hi stda,
wish an early recovery from illness.
in the meantime, i m putting one more querry as i m confident of a very neat and easy to understand /remember answer from you.
the market remains ragebound and starts suddenly trending.newbies like me who use simple techniques mostly suitable for trading market, get caught in action on wrong foot. i use bb for daytrading and enter when band is pierced and next candle lie in bb with reversal signal like doji, hammer etc.alongwith stoch signal. but today, evenafter complying all rules sl were hit. on hindsight, i inferred that market was trending, particulary banking sector. so my question is while daytrading how one will come to know that market has started trending.
other than moving averages, what else one should keep focussed- any indicator, any pattern. here i must confess that your method of widening gap in current swing low and previos swing hi could have been useful but need practice. if you can put a few more examples on same, it would be easy to remember gap phenomenon
regards and once again best wishes for your health
girish

 

[Smart_trade]

Hi ST sir and all the other members,

Does any body have the AFL that can detect the Wolf wave formation. I have one that can detect the harmonic patterns, but needed wolf wave afl just for study purposes.

Thans in advance.

No, I dont have any AFL for identifying Wolfe waves. Just train your eyes to spot the WW patterns. The trick is to identify 3rd wave which is a bit higher than wave 1 in upmove....and then wait for overshoot of 1-3 line with large volume to complete wave 5.....and once you have a reversal bar,take the trade and wait for the market to hit 1-4 line.Whenever you see sideways market, expect Wolfe wave to be forming there....

Smart_trade

 

[Smart_trade]

Girish,

My best advice is trade intraday on price action. Moving averages, oscillators etc always have a lag and a bit late for trading intraday. Concentrate on intraday supports/resistances,larger timeframe trends,consolidation and distribution happening during the course of the day. Also keep an eye on breakouts/breakdowns failures and rejections....they set up great trades in opposite direction with very tight stops.

Smart_trade

 

[girishhu1]

Hi Girishu1, try co-relating RSI also along with stochs, post ur charts and results here.

hi timepas,
thanks for guidance. next time onwards i shall posat the querries with charts.
regards,
girish

 

[girishhu1]

Girish,

My best advice is trade intraday on price action. Moving averages, oscillators etc always have a lag and a bit late for trading intraday. Concentrate on intraday supports/resistances,larger timeframe trends,consolidation and distribution happening during the course of the day. Also keep an eye on breakouts/breakdowns failures and rejections....they set up great trades in opposite direction with very tight stops.

Smart_trade

thanks stda for reply. i will try to remember this next time. regards
girish

 

[girishhu1]

hi 4xpipcounter,
thanks for detailed answers alongwith charts.i hope interaction with people like you would help me bending my mind like a trader.you said,
This could mean a consolidative eastward motion to the median, and then another sudden drop.
how true and practical
thanks again and regards,
girish

 

[4xpipcounter]

Girish, you are welcome. Smartrade also alluded to a point I implied, and that is price action. "Price action" was weaker on the trip north, then it was south, then consolidated. According to price action, along with the R that was pointed out, it could only mean a reversal back to the DOWN for the market.

hi 4xpipcounter,
thanks for detailed answers alongwith charts.i hope interaction with people like you would help me bending my mind like a trader.you said,
This could mean a consolidative eastward motion to the median, and then another sudden drop.
how true and practical
thanks again and regards,
girish

 

[Smart_trade]

SET UPs and TDSTs

I use Set ups and TDST which are sub systems of Thomas DeMark's Sequential method. I find that these TDST levels act as very good support and resistance levels. I use these levels to initiate new trades and also to book profits from my existing day trades and swing trades.

1) SET UP :

A.BUY SET UP ( Set up leading to a buy signal)

A buy set up is complete when we have a period of 9 consecutive bars whose closing is less than close of the bar 4 bars earlier

so if we call current bar as T then its closing has to be less than close of the bar 4 bars earlier i.e. T-4....so CT<CT-4 should be satisfied for all consecutive 9 bars.....if this relationship is discontinued...the set up gets cancelled and fresh set up needs to start afresh.

B.SELL SET UP ( Set up leading to a sell signal )

This is a mirror image of buy set up.....

A sell set up is complete when we have a period of 9 consecutive bars whose closing is more than close of the bar 4 bars earlier

so if we call current bar as T then its closing has to be more than close of the bar 4 bars earlier ie T-4....so CT>CT-4 should be satisfied for all consecutive 9 bars.....if this relationship is discontinued...the set up gets cancelled and fresh set up needs to start afresh.

Power of 9

In a buy set up after 9 bars the market exhibits a peculiar tendency. On 8th,9th or 10 th bar market makes a short term low and goes sideways to slightly up move....this is called Power of 9

In a Sell set up after 8th,9th or 10th bar the market will most likely make a short term top and go sideways to down in Power of 9

The following points are to be remembered in case of set ups :

1) Set up requires minimum 9 consecutive bars following a particular relationship. The set up does not end on 9th bar....it continues till the bar closing relationship is maintained.....

2) After Buy set up is complete, draw a horrizontal line from the true high of the first bar ( true high means high or the earlier bar's close whichever is higher ). This is called a TDST line......this acts as a resistance to any up move.

After Sell set up is complete, draw a horrizontal line from the true low of the first bar ( true low means low or the earlier bar's close whichever is lower ). This is called a TDST line......this acts as a support to any down move.

3) Low of the bar 9 of Buy set up will be generally lower than low of the bar 6 ....if it is not, then in next 3 bars low of bar 6 will be broken.

High of the bar 9 of Sell set up will be generally higher than high of the bar 6 ....if it is not, then in next 3 bars,high of bar 6 will be broken.

We will post some more examples of set ups to understand it better....

Smart_trade

 

[Smart_trade]

Posting examples of a Buy set up......a buy TDST ( blue line ) and sell TDST ( red line )

The TDSTs work great in smaller timeframes such as 30 min/15 min /5 min or even 1 min chart....

In the next post I will try to demonstrate how these TDST lines could be used for trading intraday or swing positions.

Smart_trade

 

[EagleOne]

Morning, ST
It is so good to see your posts. Always a pleasure to read them. Thanks.
I hope you are feeling fit, and not over-exerting yourself for our benefit.

Take care, ST, and enjoy the long weekend.