Trading Strategies Using Technical Analysis

[oilman5]

With due permission from Raunak, i am copy pasting some of my past writing on market ,its old..........May2007
.....................................................Hope it clarify my position...........to contribute to traderji site
........................................
stock picking is an art...an experience hand can do it.
fundamental data gives the potential of future betterment.for a different industry ballgame is
different...futuristic business up has to be seen in light of profitability.
so some idea...on a sector.
hospitality and tourism ....on hotel.
theme of cram...export
banking...rate of interest...npa
............
next comes ta...its the reflection of price......what present traders r doing..
how far they r bullish?
here most traders make mistake........they presuppose to guess..[hoping accurately...forgetting its a
probalistic model]
its only DIRECTION CAN BE PREDICTED. not the target...
judgement must be for continuation[trend]..or reversal[mean reversion]
various tool r used to do same...some of them has superior guessing value.
hence for target...sar is better.
initial plan must be based on low risk strategy...and what works on present market condition.
risk analysis must be done...before entry.
ur news letter ...tradersedgeindia very helpful...
as a trader ur plan is short with trend bias ...hence relative strength plays imp role in stock scanning...
as price reflects all known event....we should spend money to get unknown news...which may affect
price
or otherway...we must study reflection of news on price......example.ongc result bad..price holding
910..its moving up rs5/- on monday...opens rs 7/- up on tuesday..holding..by 1300hr..it crosses days
open...hence promise higher up...soon break imp weekly pivot 923..and hold 928-929...hence a
promising up play,...for all good trader.
.........next factor...how u close a trade...and what u learnt from a trade.
its those analysis makes u a mature trader.
since u have asked i write something on daytrading...though it has influence on stock trading
THESE R HARD CORE FACT BASED ON OBSERVATION OF MARKET FOR LAST 6YR
.................................................. .................................................. .....
AUCTION CONCEPT IS VERY IMP FOR TRADING, NEGOTION OF BUYER AND SELLER ..A VALUE
ZONE,HIGHER UNJUSTIFIED A SELL PT,....LOWER AGAIN UNJUSTIFIED BUY PT.
...FOR A DAYTRADER LAST 0.5HR..TIME TO CLOSE TRADE[IRRESPECTIVE OF PROFIT/LOSS]
PROFESSIONAL MONEY MANAGER WHO BELIEVES IN TA LOOK FROM LONGER TIME
WEEK/MONTH.....START BUY THEN AS THEY HAVE MONEYPOWER.
normally we all lower price ....use for buy oppurtunity and use higher price zone for profit booking
oppurtunity.
in normal condition market stay at top or bottom a little .and stabilise at price equilibrium pt
IF WE LOOK FROM LONGER TIMEFRAME WE HAVE BETTER ANALYSIS TO TRADE
IMBALANCE OF PRICE IS OPPURTUNITY
HENCE PRICE TRY TO REACH QUICKLY TO BALANCE.
NOW TIME TO REACH THAT...IS OPPURTUNITY
WE must study behavior of market to understand it.
define ;RANGE DEVELOPMENT
NORMAL DAY
TREND DAY.....UP AND DOWN [nothing told consider up to put sp idea]
VOLATILE DAY
................
RANGE HELPS TO DEFINE DAY IN TIME
...............
CONCEPT OF CONTROL ; BUYER $ SELLER
................
PRICE NORMALLY GREED DRIVEN IS UP
PRICE UNDER CONTROL OF FEAR...DOWN TREND
MARKET MOVES FROM IMBALANCE TO BALANCE
THROUGH PRICE EXTREME/RANGE EXPANSION OR VALUE AREA..SLOW MOVE
..............
LONGTERM TRADER WATCH FOR OPPURTUNITY, SEARCH FOR A PRINT[REPEATATIVE TENDENCY OF
EDGE 'GIANT FOOTPRINT'
WHEN LARGE BUYERS COME PRICE MOVE UP AND WHEN BIG SELLORDER COMES PRICE FALL DOWN.
IN UPMOVES LIKE RESPONSES COME FROM GREED DRIVEN OBSERVER
..................
HENCE MARKET BEHAVIOR STUDY FURTHER BREAK UP 2SUBTLE ISSUE
1]IMBALANCED DIRECTIONAL MOVE
2]BALANCED ROTATION OF MONEY IN CYCLE /FOR SECTOR ALSO DUE TO CONSTANT CHANGE OF
PARTICIPANTS PSYCHOLOGY[GREED AND FEAR]
OPENION...Longterm openion of price reflects true value of stock
current value=todays value[all known and unknown openion hidden in price]
its imbalance we search for.....in weekly chart we see value shifting higher to see oppurtunity of
longterm buy
range extension[predictive] shows biasness of close,normally in a range day DAYTRADER do active
participation[whether earn or lose] at day top and at day bottom
now continuity of price at extension towards end of session provide biasness of watcher[better skilled
trader] to put money for future oppurtunity to earn with trend[continuation]
AT CLOSE TIME HIGHER PRICE BUYING ACTIVITY SUGGEST LONG TIME STRONG HAND BUYER ACTIVE
[OPPURTUNITY EXISTS TO EARN]
HENCE STUDY FOR OPPURTUNITY TO CONTINUATION OF IMBALANCE IS IMP WITH THE HELP OF 3
TOOL......PRICE,VALUE AND MARKET ACTIVITY.
wide expansion is good for daytrade.....from range to wider range ...to be watched for
now narrow range suggests 'side ways market'.....
INITIATION OF TRADE
.............................
1.WATCH[OBSERVATION]
2.RESPONSE i]extreme......STOP.
ii] favourable[ continue to hold or add]
other factor....problem of hope
3.now study specific case[with past data ,if ieod very good
4. failed expansion....too much too soon
5.trend termination...........trend of opposite....if proffesional fading coming with volume
..............
always ask current condition , value with mean [open high low close..mean] vs close price
HOW LONG TERM PLAY TRADER R THINKING ? R THEY UNCERTAIN ??
IF YES , DONT PUT MONEY......OBSERVE, LET OPPURTUNITY SLIP BUT DERISK
.....so now u test idea
check imbalance & direction of price move.......to reach a value in time and rupee from imbalance to
balance.
IF FAILED EXPANSION CAN GIVE FADE....OPPOSITE DIRECTION TRADE[VICIOUS MOMENTUM
NEXT COMES STRENGTH OF BUYER AND HOLDING POWER....VS MARKETING STRATEGY ADOPTED BY
MEDIA.....TO LURE THE WEAK MIND IN FORMING A CROWD RUN/CHASE
.....same way at bottom imbalance occur .........if new directional trend fail ? study....
oppurtunity or risk!!!
study neutral day and volatile day
...........................day 1,day 2, day 3, day 4, day 5.......@TOP ZONE AND BOTTOM ZONE
...........R U GETTING THE SIMILARITY ......HOPE NOW USE IT STOCK SP. CASE
now we actually watch this constantly unfortunately positional holding [blocked openion of direction]
CRIPPLE OUR READING[ANALYSIS CAPACITY]
...............
IMP OF LONGTERM TRADER, ACTIVE PARTICIPATION CREATES BULLISH BIAS . ON THE CONTRARY
AGGRESSIVE SELL BY THEM CAUSE DOWNFALL
WHEN THEY R UNDECIDED , WATCHING.....market stays in sideways
another imp observation ,....one first move fail[neutralise by counter selling] THEN AGAIN
MOVE ...........THIS NORMALLY HELPFUL, ACTUALLY 3RD MOVE HAS MORE STATISTICAL UPBIAS .
MIND IT ALWAYS.......PERCEPTION OF VALUE ITSELF IS VARIABLE
U MUST STUDY RELATIONSHIP WITH PREVIOUS DAY/WEEK......WHAT IS HAPPENING NOW?IN
MARKET ,IN THIS SESSION ..TODAY....THIS HR??
STUDY BALANCED DISTRIBUTION WHICH NORMALLY HAPPENS BUT AWARE OF POTENTIAL
LIQUIDATION PT
a bull is ready to liquidate for profit .......but where??
adding of new info [+ive dimention].....no risk....hence hold further for bigger profit.
but opposite direction move starts.....bull must liquidate to book money profit.
hence excess of profit[desire].....act a new dimention to an existing trade
.......VOLUME TO STUDY....BIG MEANS MORE ATTRACTIVE BUYER OR SELLER
HENCE STUDY AFTER OPENING WITH RESPECT TO YESTERDAY CLOSE .......HOW MARKET IS
BEHAVING TODAY [1/2 HR]...CRUCIAL .UNDERSTAND WHAT IS A TREND IN CONTINUITY..
WHETHER IT EXISTS AND FURTHER CHANCE OF CONTINUITY , ON THE CONTRARY imbalance and
move to extreme or mean reversion balancing move[no trade oppurtunity exist then]
ON THIS CONDITION ON ACTUAL MARKET CORRECT TRADE EXIST.....AND THIS IMBALANCE AND
MOVE TO EXTREME FACILITATE A TRADE[ CONTINUATION TYPE BUY SYNDROME TRADE WITH TREND]

HOWEVER ANOTHER DIFFERENT BALL GAME CHOSEN BY A FEW PRO.
LOGIC..change can happen rapidly .observe[perception change of participants]
normally its dificult to understand change of trend due to bias[ so being minority these pro r in right
side of trade,unexpected event due taken care of]
study session 1 hr chart bias & gap fill..session 2 ...session 3...session 4 session 5
similarly in day 1 day 2 day 3 day4 ....day5......WHEN OPPSITE FORCE ATTACK ?
HOW IT ATTACK ........INDIVIDUALS PERCEPTION OF VALUE......MOMENTARILY WEEK HAND GO IN
UNCERTAINITY MODE AND ACT FOR SELF SABOTAGE.....THROW AWAY IDEA [IF AT ALL] IN
PANIC.......AND supply money to this cold blooded pro......as if natural loser[being weak disciplined
person]
HOWEVER STRONG HAND ALWAYS PROVEN RIGHT DUE TO CONFIDENCE[JUST LIKE RECENT ENTRY
@BSE14200......]STICK TO AND READY TO BUY , ABSORB AT FALLING PRICE CONSIDERING IT AS
FURTHER BUYING OPPURTUNITY
hence perception of same event has 2fold outcome/influence.......weak hand seller and strong hand as
buyer
.......as a normal person we r fearful of uncertainity , so any event which has financial implication we
watch, and try to derive its influence in short term and those who can think for long term,......size and
visinity.....a cluster zone can be created considering upper boundary price tag[target]....and lower
zone value [entry pt]
all we know condition affects price.......so plan should be ,
1]change of price up...sell oppurtunity
2]low zone...considerably buy idea....provided new percept not so bad
........dynamics of each case stock specific is different
....hence another idea .....surprise event
unlikely event
expected event ......has to be added.

 

[oilman5]

Contd
...............
Three main criteria to pinpoint potential Stock Picks
in expected event normally mean reversion towards value equilibrium occur
another 2 factor.....fundamental impact of an event and understanding time frame r imp.
normally higher time frame ,say weekly......has more bias...
however in case an unlikely event ,occurs as a shock, price and its value both move together towards a
directional bias until stability
hence give priority to surprise event as it act as oppurtunity
on the contrary if u r in wrong side , book loss early if possible reverse position
......remember for expected event after announcement normally price reacts to opposite direction
THIS INSIGHT HELP TO UNDERSTAND RISK BETTER IN TRADING.
buyers /sellers confidence and uncertainity r imp factor
actually buyers' dominance /sellers big volume attack....this 2 greatly influence price and so called
direction into 'oppurtunity' [threat to a fool]
wild move suggests thrust, when participant transfer from hesitent to aggressive ...wide range
occurs.where as openion based participation without rigid parameter and future uncertainiy cause wide
fluctuation [volatility]
hence a feel for value is vital
oppurtunity=price away from actual value
normally price fluctuate above and below value
execute=how quick u can act
depends on how much clearly u can visualise with certainity
always study from long term prospective,..what chance is there from present balance to go to quickly
imbalance and stabilise higher[new] balance zone
.....now ask ....will sombody buy at higher,if yes....ok..buy now.
for shorting , if u see big seller may come or not.
hence mean reversion is a good theory to apply in market
..........................
hence u check if at present
1] current market is undervalued or not [strategy]
2]study of imbalance in buyer'side
3]continuity factor
..................
hence reaction to news is an imp study to understand internal strength of market
...........................
confident trader[longterm mature buyer] vs. novice day to day [trouble lover]
...........................
remember current perception of value r always reflected in price
be ready for atleast 2 different event 1]unlikely.....2]expected one
play plan for both r entirely different.
for unlikely event,if u r in otherside ,damage is very costly,hence prepare for it,..as then price and
value both quickly goes against u,shockingly bigger loss
hence be ready in mental level for it[worst case scenario]
experience helps to understand this price/value/event relationship and expectation of people vs. news
and its reflection in price
this i call market dynamics of watchers
hence confidence and uncertainity of watchers[potential buyer/seller] gives only directional bias.with
uncertainity more rotation occurs ie. distribution phase
.................................
price distribution study
........................... study of ask vs. bid
1]10 -1030..first half hr
2]13-1330 lunch hr
volume or order flow study based on
3]15-1530[presently upto 16oo]close hr tick data[pib]
.................................................. ..............................
this study of tpo...time price oppurtunity concept u have to do for u [own research]
mine shall not validate ur plan....however i suggest to distinguish to understand
up day
down day
volatile day
.................
first half hr ..opening initial balance with yesterday close
lunch hr...observation of biasness development
closing hr...time to take action
................
most imp is long term holder[strong money] r participating or they r sensing danger...hence selling
delivery [distributing] to sit on cash andor taking money out
.............
normally all buyers want to buy low and sell at profit[high]
so categorise buyers......short term and long term in trading percept.
long term trader search for unfairlow price with bigger view with higher holding period
shortterm player search and book profit with quick imbalance
hence when break out style is visible ,ranging is moving up with interesting higher pivot break pt, with
perception of imbalance to continue.......long term player put big chunk of money near day end with high bias of continuity.
so short term day trade type player ,skillful in execution take its advantage ..with their computer
generated signal [an edge to take !%profit] continuously take profit with him as per his comfort
level ......he is happy , as his scanner suggest oppurtunity every now and then.....based on %up
list/volume up signal /a quick pivot break up.
however for long term buyer its not that easy........he has to search continuity of directional bias ,
ruthlessly buy out volume at top with money power to prove break out.
hence study on eod /weekly chart of impulse[main direction] and distribution [reaction]..
where this phenomena is going to happen now.
hence i repeat again ,good 1-2 day mometum players use to play to trade in the side of big money
player.
some other skillful player trade ..buy and sell in small targeted zone.
however when other players,new players vs. strong money players maintain equilibrium ....
hence plan of small profit with sector rotation occur as equilibrium tradezone facilitates buy low at
support and fade at weekly resistance pt.
so long term fund is out and watching as imbalance creation is aim for strong hand......with watch
when they found without news some strong resistance zone is touching again and again ,they test with
good money power ..can they break it? ,if yes, put it....and pull price price out of that resistance to
new imbalance with a hope of continuity ,luckily greedy buyer or fearful short seller, sometimes media
with news help them to fulfil target.
this balance area of around resistance line is test ground .....against new buyer by other pro seller or
experiment field for short term players, however ...continuity or holding several days over this new
acquired land [from bear]....severity of opponent comes down ...as a true pro they leave to win
against bull in other stock where high price on top may attract short seller.
corolliary: market moves directionally unless opposite [reaction against impulse]...strong orderflow
comes[attack by big sell].
......................
concept of whole [market] vs. part[individual stock]
..................
nifty component imp one r to be checked .....similarly for summation of total effect ie. play plan of
nifty.
similarly for intraday........first playplan
i]range is defined ....high/low in first 10min...[for av trader 1/2 hr]
balancing of flow in it.....when and where it showing range expansion.....show direction defined
ii]so verifying continuity of imbalance in mental level
[i do it,u can use suitable software for it]
enter the trade.....as strong order flow is coming inyour direction ,while breaking predefined
pivot ........
yes its the real intraday trade.
[however unless u know control of mind /experience.....hit of moment its not possible.

_top,high
I 1UPPER ZONE
I_
I 2MID ZONE,EQUILIBRIUM VALUE
I_
I
I_3 LOWER ZONE ,BEARISH BIAS
..............LET US STUDY THIS FIGURE, KEEP STRONGLY IN MIND
FOR OUR SIMPLICITY WE SEE AS A DAY BAR, HIGH.MIDDLE,LOW
middle maintain balance,some body called mean value....with a random +/- small value
a zone of equilibrium ,trade will try to facilitate near to it.
now total day bar.....dissect in 3 part, 1part top
2 part middle
3 part bottom
hence a daily range divide in 3 sect.......further study of a day activity.
imp thing is close, by defn end of day close defines....after fight by full day among bull vs. bear....finalscore.....where they maintain equilibrium
some body use crude 1/3 each, somebody modify total range 0-20 top
20-80 middle
80- 100 low
its in percentage of total day range, for deep study of close
i prefer for indian market , top 15%upbias
15-85%middle equilibrium range where fluctuation normal,mean reversion works
85- 100% bottom value for -bias
somebody prefers to calculate with pivot idea,someone with mean range ...top..bottom,
whatever may be chosen ...structure is same .........a top bias ,an mean equilibrium,a bottom bearish
bias
.................we have to think now where is close, that way the biasness.
closing on top........strong upward bias
middle zone....any thing can happen
bottom....suggest bearish bias
now after day close.....all news info,new development...money extra available to put market
reflect quickly with next day opening.
as to facilitate trade day trader search for balance ,longterm player search for imbalance....entry idea
and exit plan for both of them r different[in longterm we search for continuity]
now this similar concept can be put in hr bar range and weekly bar
normally higher time frame has more influence
however for simplicity we study hr bar here to understand impact on day trade from microlevel,
now on that particular range closing on top suggest we r interested
next hr bar more wide...moving with higher price zone decides to enter bullside..with big order flow
coming in same direction
continuity 5-6bar creates a total day picture......with further strong bias
hints....friday close bar study ,close at bottom .....has given me computer generated short signal in my
simple 10hr dema,close cut down]
.............role of observant and vigilant
..................................................
all we know ftse market of opening .....affects around 14hr in trading......and opening bias of nasdaq in
tech shares.
now beginning must be observed carefully[in fluctuation as well as orderflow]
price must be treated as supreme ............holding of price over a particular value ...in a particular
duration suggest lot of things
yes its the secret of trading
hence study of imbalance and test trade r imp.
...now after new price discovery it has a typical tendency to reach new balance , old resistance
bounce .....idea of test validity of new price strength
somebody puts in oldway of impulse......and distribution [reaction]....upto a particular retracement
value,
however next flow is all imp .......as it gives all important continuity of imbalance.....as seen in pennant
and flag pattern
in other words orderflow or new money is vital.
imp oppurtunity occurs if continuiity can be seen,......VISUALISE for higher time frame .
the delivery trade by close........drying the float uplift price normally further up
some of us in this field of trade experiment put this mean value +/- 2sigma.....a balanced zone with
typical past data calculation for 'sigma' value...in this days of statistics,for them monthly once new
value based on 20 trade day better.......however i warn too much math make trading less profit
worthy....as its the execution and sense of survival that counts after stoping self sabotage,...holding
the profitable trade sufficiently take care of u and ur family.dream big should not be motto,learn big
and live in reality
.................
normally high value order occuring in the stable zone slowly seen....as all r ready to watch for volume
play.market moves as perception of value[fundamental] changes.as all [different time ,different style
players participate in market simultaneously view and analysis is not so easy[in fact very difficult time
consuming process for me six year to learn and i am putting this hypothesis].......thats why an
organized analytical view help.
key component r 1]interest of shortterm buyer[intraday]
2]interest from weekly chart[view from intermediate term]
3]interest of swing style [eod study followed by av]
hence organize trade from this 3 element[put 3 different power spec. to see different view
and now give weightage]..........VISUALISATION IS KEY TRADE TOOL, IT ONLY HELPS TO ACT WHEN
OPPURTUNITY/THREAT COMES .........otherwise fear/greed put u wrong trade..
put u in info paralysis,courage not to act.......u can be an analyst but not a trader.
larger time player has thats why better judgement,as considering temp fall they can buy in strong bull
run.
report publication and its impact change in near term value.......later when bruice die down they enter
slowly if long term view is that really good.in all time frame balancing occur through movement of
price from quick imbalance[impulsive] to reach next probable balanced zone. volume suggests
aggressiveness of participant
study of std 1-2-3 pattern[a-b-c named by others] is always helpful to understand change in value
perception
successive session continue ie. biasness of trend.uncertain buyer/seller can not hold trade
linda has suggested first this simple break up of a range bar in 3sect......higher as 1, middle
equilibrium and 3 low as down bias......now close gives more mathematical judgement than foolish
openion style trade,.....see at close where more activity is ,in tick chart volume by more activity
suggest buy by short term moody buyer or deep pocket longterm player .....
study of time and distance move by price clears it......
time when it breaks and move up very imp.
influence of current pice[close of last] also to be seen.close shows final sentiment of that particular
time frame ..balance pt of bull/bear.now come influence ........if influence of price towards back
[rationality].....price goes back to mean reversion.
if confirmity of irrational by price........up and up or by gap up ......concept of greed or trend fulfils.now
most market participant believe [mean of total ie. market majority] it shallmove up....really it will
move up.
this is the forward move of price......confirmity.
........................
normally most of time market maintain balance[equilibrium].
short term break of balance shown in long term chart[weekly]...gives oppurtunity when strong money
players[biased] participate in trade with a vbiew to hold.
imbalance strength can be studed by volume , price roc also imp.....also study distribution [price relationship]
majority time after new value discovery price move quickly occurs by impulsive move to reach new
stable zone. a forward price driveness occurs in market, based on earlier close and feed by
media.among all timeframe player higher time frame has max influence [dominance]
.......................recognisation of trend..............
to define a trend ,a ref pt has to taken..it may be yesterday close ...mean pt. or opening stabilise
another factor,.....market needs time to develop trend [continuation]..ie. market must show some
move , then opposite direction force has to be neutralised, then only new direction strong trend move
possible .
step 1; study in 'balance area'
so which direction imbalance is building up
step 2; now in relation to bigger picture ...how a trend may form
so fairly low..fairly high] ...which one is breaking with thrust ....govern..move in future
however sometimes stabilisation occurs ,hence price flatly fluctuate high/low of a range...in side
ways.hence a band study is critical and how many times it touches to break at top or bottom[say
3].now when at what context reversing in price with volume thrust is very imp
now if down value is not breaking , then upthrust may bring easily a move of trend .
the path of least resistance .....another concept to be put forward.similarly market if can not trade
up ,anticipate a test in downside ,
hence check reverse at top.....unfair top value, reverse at bottom unfair bottom value.
.....however equilibrium in middle not to trade........and watch only
we also watch condition that affect value .it helps in our decision making process of trading
1]imbalance in move
2]balance of rotation in money [sector rotation] as uncertainity play plan
3] about to; termination and sharp move in opposite direction
4]continuation of past main strength
..pl use this concept in actual trade.
cashflow[money flow] is based on news flow....new development causing watcher participate to join ,
samely if big sell occurs cash go out of system, causing downfall of market.

 

[DanPickUp]

-----------------------------------------------------------

 

[oilman5]

pl read
..................
so i continue to put idea further some r repeated to show better imp.
...........................................
so at low value ,with least interest sell diminish.so range ....high -low , imp to watch on context when
and why occurs. its also variable of session 1-session2--session 3 has some relation to predict
continuity and or reversal . in an established higher time reference range balance trade occurs.but
considering oppurtunity cost this zone with small range not to be traded as least oppurtunity
exist.axism of trade =test of top and bottom .now with spring action by thrust imbalance break that
zone at top or at bottom ,attracting further buyer/seller and another new equilibrium attempt is
made,however strong media hype can fuel addition of new buyer/seller. distribution of capital is
another theme.
monthly bar...top1TOP SIDE HAS UP BIAS, 3BOTTOM ZONE ...BEARISH
I
ZONE1 I........
IMIDDLE ZONE
I........
ZONE3 I
I...BOTTOM
.................................PL STUDY THE FIGURE ,HERE HIGHER TIMELY BAR,SAY MONTHLY BAR
BROKEN IN 3SECT.short term players r playing here as usual with buy low sell high, in this
equilibrium , however testing at or bottom r watched by long term player....to see who shall win ,bull
or bear.........also watched by market master..........the game of short term player vs. investor as a
whole ......to see equilibrium and business prospect of country.
hence closing in relation to above mentioned picture , 1---upbias
3 ---down bias
now question is in near future at market index is going to violate mid equilibrium and shift to show
continuity[for india .....yes for somedays]
now we know 2things r only possible
i]directional move
ii]balanced rotation in range
it is the cash flow[fii money] govern and guide this 2.....how it shall be distributed ?
higher cash flow into the market=upward direction.thats why trade location is to be studied ,after
entry in a particular price .new buyer r ready to continue to hold mode,then only uptrend is
possible .now in balanced range case, in top ....money is taking out of system causing a fall[test at top
and distribution of money]
now see watch study how much actual buy/sell occur here [nseindia....% of delivery].
............................
expectation factor/ma study as suitable smoothing is helpful[50dma certainly guide idea of
intermediate term].u have to take biasness of higher time to check tenacity.also durability of cash flow
and how much r left out or sitting idle??
at top of range ,some times range expansion occurs .this is key for a trendiness.at what pt shortplayer
throws towels...book loss gives strong up move[thrust like yesterday]
similarly at unfair low and after stop loss triggered by battered bull ;.....buy comes after some day
from mature fund managers......as bigger sell no more exist .
hence i repeatTOP SIDE HAS UP BIAS, 3BOTTOM ZONE ...BEARISH
.....hence both offset of unnatural high and unnatural low offer oppurtunity to observer/experienced trader.
now after little fall[distribution] so it is downside pause. here take breadth....2nd attack by bear to be
expected......if they fail normally another attempt is made , fortunately if it holds ,
there is only one plausible move...UP.
for analysis we go for micro detail ,study critical value zone and moneyflow near it. study how close
affect and test and behave after creating imbalance and thus oppurtunity
day 1;open 10-1030
mid 1300-1330
end hr 1500--1530
.....
I ZONE 1
I....
I ZONE 2
I....
I ZONE 3
I....
CONCEPT OF RANGE BAR, compare with close yesterday
in hrly bar study use last bar continuation idea
..............................
factor: with growth of media and internet , investment money comes instantly to market after news.
a mix up in various timeframe player ,hype by media, fear of individual make trading a complex
process .
......hence money flow is most critical element as in upmarket, money and index both r up
however in balance case, equilibrium to middle value ......tendency is normal .
our aim is to search for directional move
news ....its impact,unexpected readiness is must for a trader.say.....a bullish report comes , market
but dont rally .....sign of great danger,,,,,,sell all holding ....be ready for short
.......................
hence visualise near term activity
study market's current condition
understand participant's vs. watcher's role .......range idea ,balanced zone
next comes can u watch price and learn and predict?
still its difficult to say ...a break out is going to be beginning of new trend......but thats the aim.
till now last 6yr back test data showing bar by bar ......based on yesterday close and next day
trend ,increase of bank balance by trade ....loss in greed ,methodologically i can say in indian
market,in a weekly range bar, close near upper 15%value....has up bias
close near bottom 15% has -bias, and in between 70%,35%+/- is unpredictable .
so around top, new money entry into the system break the top........always consider this longer time
frame view , u trade or not.
note....central mean area has tendency of price cluster.
............................
imp of av price .....it shows the activity out of noise,hence very valuable for intermediate term
study.say take study of 6day, a weekly chart of 5day with data of yahoofinance helpful ,to understand
continuity.........near term activity[predictive mode].
anticipate future is another style......or hope and hold ,expecting break out in future[long term
bullishness like indian market].remember av has price bias of direction in long term.
present condition of market
..................................
what exist now? imbalance or balance
long term view and short term view
if imbalance exist ,go with the move .....in balance case fade or watch.
now in weekly frame imbalance bias of upside must be taken as buy oppurtunity .
next question is where position should be held longer?
so normally unless normal signal is not valid,..short the same trade in smaller size .....allow it to move
to price restoration .....again take small position and watch
.....hence this 2 factor ..1[price and 2]participant r governing factor......when phenomena is controlled
by price ....its better to buy at break pt after break out.....also sell by fade at rally.
memember money flow is mother of all activity .longer timeframe has more control ...to guide
duration.calculate different av [ma] to continuity in intermediate term
.........
near term whether top is holding or not, very critical part of study.
strategy for balance[zone] and rule for imbalance .....r strategically as well as tactcally different
ability of a trader
.................
1] see near term activity in longterm context
2] as a person [pro] aim to build up when toenter and how long to hold?
a time frame weekly is helpful
trade zone:mean pt keep balance with ma
hrly equivalent range expansion shall show trend ....market shall decide to stay there or break it
[continuity]......thats the study giving clue at each hr....an excellent view put forward on nifty future
by STOCKPICKS moderator

2terms impulse[quick distribution] and reaction[development]....standard ta meanings r used also
higher time has dominant influence ,....normally impulse case move is up....then is reaction
...............
tradezone[development]........
1range established
2 value area rotation occuring
3higher time is diminished by small small move in opposite direction [more in number] . repulsive by
small insignificant move
now suddenly quick move starts in opposite direction
4.old support/resistance define activity with sp. limit pt
major idea mean reversion
................now conversion to
impulsive system[quick distribution]
1. trade range expansion
2.beginning of a new higher timeframe move [bias]
touching higher ref pt[resistance ]and continue and break it to move forward
price influence is dominant
...........now with is trade zone reference and a big picture clarification with price and a breaking of
critical price level ,early u can capitalise oppurtunity.hence see current activity,short term
development,longterm impact [continuity idea].
create this idea for buy/sell and taking position ,particularly understand impulsive strength.....spring
coil'mechanism.wgere as at trade zone idea of trade is different ....low bottom test
in trade zone define first std resistance..recent top
std low support.....bottom
middle=balanced value
.................................
whether this top ,calculated from higher time frame is unfairly high?
then at top fade shall occur.....it means at high pt low volume sell ....but its coming contineously.
however in start of trend ,market is controled by active participant ie. force to join in it strong
money ,....normally create a forward drive. hence after continuation of higher top , break out continue
[development of trend]..........it is searched for more money ....hence participant[stronghand ] r imp
factor as they continue to hold,however ....if if its not backed by strong fund,.....holder become
panicky, and start liquidating position .
hence do solid grasp of this theory[ hi i am a theoritician ....with sufficient trade experience only in
indian stock market]......follow this principle to trade in cash or future[mature player only]....
first define reference pt with longer time frame
1] weekly
2] then watch near term activity
3]see then how participant r behaving.....in particular price area
since the theory is long enough .......some imp hints r to be repeated.
1]what is mean value in longterm
2]past distribution phenomena'trade zone'in higher time frame
3]cash flow plan of u and market participant
4]smaller time frame approach to study directional break
5]start of a trend vs. narrow rotation in top/bottom
6]directional trend depends on new events and market development with strong moneyflow
7]execute rapidly decisively with big picture in mind
8]new cause and hence change in perception of value
9]whether distribution [tradezone] is showing same bias in shorter timefram ie. wavelet
10]more news /activity is tandem with price behavior ....or suggesting directional play by news event
11] still keep ready for unnatural event
12]even after entry , near time judgement based on price has to be seen as well as who is active
participant
13]longterm development
14]down day factor
15]test at zone[top].....how long u shall hold?........when sell come against u .....in context of today/or
from higher time frame big volume seller
16]when to go for short?study critical price at new top?
17]in lower time zone what is the value ......if volume poor, so is higher mean reversal
tendency.....hence fade trade plan.....
now where new buyers r uncertain?this is first criteria for short.....next media help to propaganda ,
seeing market at balance with slight -bias,....now sell big .....break down .
...when it try to reach equilibrium at bottom.....cut down excess ...normal profit booking ....and some
short r hold....see by price with hope what near term suggest....if again down contd......just hold and
book profit.
theory of short at top
..............................
is it a major resistance?
no strong buy observed at higher pt
if it cannot trade up, logically it should now test a bottom /mean value .....in downside .
as participant r uncertain ,so they shall definitely liquidate position by following law of volatility.....with
this evidence we may join in short.
....where to liquidate?if with liquidation at bottom , new selling r coming .....hold further.
.......when market slowly reach upside ....and again start coming down ....go short.
prepare playplan first.....its not easy
first clear with holding position.....exit from all long position
...............................always judge possibility vs. actual ....and concept of part vs. whole
....only after some yr case basis trade ....then only trade aggressively.
.....
but remember....longterm frame has more influence ......hence short against trend not
commendable .......[seen the masacre of bear last 2days]
.....................................
volume
..........
volume confirms liquidity and price distribution, actually used for confirmation of price strength.it may
help in your decision making tree.
1]trend is going to continue??purpose is react early
ask question ...to clarify ...what market imp.participant r doing ?buying or selling..or in distribution
[watching]
in trade zone ....again see as per range in middle no participation , near top.....high volume
participation with good % delivery.......take risky entry
near bottom low volume participation ...again take entry....support buy.
...........
can we distinguish buy volume vs. sell volume?in higher range with price up,volume up phenomena is
good .
in lower range , higher volume suggest sell volume.
........
next question is at lower volume at down day who is buying it?....definitely long term informed buyer r
buying with good idea on company /near future.remember long term buy is done at comparative lower
price ......with different play plan of sleeping money.
cash flow up
...............
higher volume near top suggest interest by strong hand .....a short term aggressive play plan.
total volume tool
.................
creating momentum more than double volume ,compare to 10day av. is good.observe when down
volume brings strong buy .....quick up move [not allowing to stay in bottom].......it suggests whenever
good news flow comes , probability of strong upmove.
similarly if low price brings more activity ,price shall have to go down .....to stabilise first.decrease in
volume in low price ......stock has no more interest,however bottom is near.
if low no trade @top,.....buyers seem to be not confident .......hence fall is imminent
in general volume pick up suggests more participation of public in direction of price.
advertisement of commercial when marketing.....play to lure participant is natural....
so it can be a tool for oppurtunist trader ........
more activity [normal type distribution ] @ av zone.......is balancing action......watch only.
ultimate shift to topside or bottom zone has some utility.hence expected behavior in trade
zone .........buy at lower value and sell @higher value [channel play]
but who is behind to change it........to create a new trend?
hence sudden sell by pro at lower value means they expect bottom further, similarly buy by them at
top.......means they have reason to be greedy[unexpected event ]

 

[oilman5]

another fine touch
....................................
concept of under value buying
........................................
identify volume with selling and buying ........is entirely different , and wrong assumption /analysis will
be costly
for volume analysis
.......................ask question?
1]what was the activity in this session
2]how does this activity in larger move
note: higher volume at topmost pt,with price maintaining strength suggest actually strong hand buying
total volume[say 5hr adding a day]suggests further activity required to continuity of direction
new event + development at that time .also to be checked in this context.
price vs. volume .....activity occuring where ?
top
middle
bottom
.......
at top its ok,at lower also ok
but if at middle ,it does not have any directional bias ,simply mean area efficient market
condition.......random trade zone,profit by luck......a losers game
infact good news to upmove suggest ......be ready for show,
low volume with up price suggest buyers r nervous[normally individual stock presedence is different
actually].........price fall is soon expected .
.....so take very small position and see....on individual stock basis on real time test and analysis.
tick data higher volume play at top value suggest strong hand play plan
delivery % at day trade......
new mf/fii buy,
weak hand play[call buyers]
hence higher price tick volume at closing hr, suggests strength/interest by player
....let u try to correlate with news ,....study whether break out shall fail or confirm?

summary again
....................
1]inflow of money in a particular stock generally push price up
2]in balanced area[sideways market] play within range .....buy at lower pt
3]a forward price influence occur with trend
4] normally balance exist in trade ,however its tilt that to be studied
5]play in upper zone is bullish , study it in higher time context
6] failed to brake suggest top fall
7]volume thrust .....reversal in trend
8]considering trend .....buy/sell ....action must be at top /bottom......not inbetween
9]range expansion suggest biasness
10]time-price-oppurtunity study
11]unlike event must be seen in context,if hints r it may continue .....danger
12]understand value.......fairprice
maket activity is nonrandom,it can be deciphered with strong judgement,at top of price when nomore
buyer available price shall come down.same ay after market fall ,no more seller available ......price
shall start to move up.
13]we search for continuation or change[reversal]
14]its the imbalance make trend
15]last 45 min is time to trade with break out on delivery......its the long term player's buy style we
shall follow.
...................................
hope all trader enjoy this fruit of study on market on last 6yr
btw. trading is a risky game rarely suits individual.
So u enjoy ..............Hope Raunak dont mind ...........
Thanks Mr G.........to bring my past

 

[oilman5]

-----------------------------------------------------------

..................
Ya i read his 4books , i good trainer..........
YOU really think well DAN:clap:
Regards

 

[SwingKing]

In regard to whatever discussion has happened, I'd like to post my opinion in the form of a song that I really love. Here are the lyrics of the same. I have highlighted the most important points in Bold.

On a warm summer's eve
On a train bound for nowhere
I met up with the gambler
We were both too tired to sleep
So we took turns a-starin'
Out the window at the darkness
The boredom overtook us, he began to speak

He said, "Son, I've made a life
Out of readin' people's faces
Knowin' what the cards were
By the way they held their eyes
So if you don't mind my sayin'
I can see you're out of aces
For a taste of your whiskey
I'll give you some advice"

So I handed him my bottle
And he drank down my last swallow
Then he bummed a cigarette
And asked me for a light
And the night got deathly quiet
And his faced lost all expression
He said, "If you're gonna play the game, boy
You gotta learn to play it right,

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
Know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done

Every gambler knows
That the secret to survivin'
Is knowin' what to throw away
And knowin' what to keep
'Cause every hand's a winner
And every hand's a loser
And the best that you can hope for
Is to die in your sleep"

And when he finished speakin'
He turned back toward the window
Crushed out his cigarette
And faded off to sleep
And somewhere in the darkness
The gambler he broke even
And in his final words
I found an ace that I could keep

You've got to know when to hold 'em
Know when to fold 'em
Know when to walk away
And know when to run
You never count your money
When you're sittin' at the table
There'll be time enough for countin'
When the dealin's done



Hence, strategy or no strategy, training or no training, almost anything and everything in terms of strategy makes money in the market. The essence is to know when to exit. In my opinion, very few training courses show the exit door. This song is completely applicable to markets. As they say, beauty is in the eye of the beholder.

Tc

 

[jagankris]

Raunak Bhai and Experts,

I expect a range bound sessions in the next few days.

With my little knowledge of options.

As on Now
Nifty Max pain at 5900.
TS max pain at 620.

Pls recommend the sectors where roll over is happening at a faster rate.

Thanks in advance.

Best regards,
JK

 

[Sureyes]

Here is the two gems from a beautiful sufi poem tells us the True pupose of learning...


In the school of mind you
learn a lot, and become
a true scholar for many to look up to.
In the school of Love, you become
a child to learn again.

by Abu-Said Abil-Kheir
(967 - 1049) Timeline


Suresh

 

[rrmhatre72]

Hi Raunak,

Pls advice on IDBI.
Yesterday I sold it @183.5 & it went down till @172.
Again it started recovering & covered it @176.7.
can I go short @181 with 185 as SL & take positional trade in it?