If you have a positional trade then stick with your stop loss. Weekly momentum is still not positive. Whether it will get pos itive going forward, only time will tell. Whatever your reasoning was, just stick to your plans. It does not matter what I or other users say. Ultimately, market 's will decide where it wants to go.
M&M is in a very strong trend. Avoid shorting it. Also, the stochastic which you mention is in overbought zone now. It can re main there for a while and the stock can continue to remain up. Short weak stocks and Buy strong stocks. Avoid doing the opposite. Look for divergence in we ak stocks.
---my 2 cents on this topic.. (specailly from the way i practice it)
- Price is the main source.. and indicators are only derivative of price. So start with price chart.
- I pay attention to price pivots (or swing points - these are points where price has changed the direction) on the chart.. So any analysis is based on price pivots first..
- to identify divergence, take any two price pivots, and take the oscillator values at that time, compare them and interpret th em.
- If they are diverging, then u get a nice setup..Now go ahead and look at your precise entry rules to take a trade or wait for some more bars to develop - And if you get Convergence.. it is another signal.. Not to anticipate reversal but confirmaion of trend continuation .. so tr ade that as well.
- while taking a trade on the basis of divergence, keep monitring that oscillator has not negated the prev reading.. (i.e. from oscillator making lower highs, it has made new higher high).
- I don't call 0.1 or 0.5 differnece in RSI/Stoch as a divergence.. Hence define your own limits to call it divergence.. (say a tleast x% of difference). Similarly, the price peaks have to few bars away.. not just the 3rd or 4th bar.
Example - say as per EOD chart we in good up trending and intra chart (say 5 min TF) makes a negative divergence and after that it refu ses to fall for sometime, but it does enough to give negative feeling to many. Then we would get a flying move when price crosses above the h igh. This is because, all would have gone short seeing the divergence! The way I look for entry with trigger above high. To judge whether we are in cor rect trade not, you will find price would move 15-20 points minimum in next 5-10 min in favor.
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When u don't see divergence, then ther is potential that u might see convergence.
Look at the left side of the chart that u posted. In Nov, there was small pause in Stoch around 60 level, and then it broke -out from that on stoch. at the same time price also made new high..
In Dec starting, again there was breakout in stoch as well as in price.
Only in Jan, we see some divergence coming in.
In Early March, prev div that we saw in Feb got negated, price made new high and so the stoch.. and mkt flew to new high afte r that.
Hope you can catch some pointers from this and build further on it .
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---I wud like to share something from larry connors book... ---I have not experimented it yet and m still not sure on how this work s... just sharing with you all as ---I happen to learn this strategy this weekend only...
1. Stock must be trading near or at 3 months low
2. Today;s volume must be double the 15 days average volume (more than double is better) 3. Either today, tomorrow or day after, stock must close above its open
4. When rule 3 is met within next 2 days, buy above the rule 3 day high 5. Initial stop loss should be placed lil below rule 3 day low.
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I am no analyst nor a guy worth giving an opinion on the mkts but I feel that every transaction that happens in the mkt is a clash of opinion / ideology (the buyer wants the stock price worth a buy and the seller feels the opposite).
We can all have differences of opinion and thats the charm of the mkts and also of life. But there are civilised ways of putt ing forward our differences. And also when we put forward a differing opinion then we become party to a difference. Then let the Mkts in due course of time de cide who is correct instead of trying to pull someone down.
I am of the opinion that there are 3 kinds of people in this mkt.
The first ones (in a pathetic minority in terms of numbers, but the ones who dictate the flow) draw the graphs, the second ones analyse them and the thrid ones (read morons) keep pestering the second ones for their opinions.
Now I do not know of anyone (and trust me I have worked with many analysts/operators) who are mostly correct about the mkts.
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---You can try and use some filters as ADX. Everything mentioned here is a start up. It is not a complete system. ---You can use a basic setup mentioned here and create a system of your own with various filters and rules.
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Look at the big picture first. Now I am going to reply in point terms. Look at the chart while reading it.
1. Look where I have written point 1. I have marked it at a long white candle which was the swing high in mid June. Now, lets come back to the 13th July candle. What has this candle actually done? It has surpassed the previous swing high made almost 20 days back. This entire th ing happened in one session.
This in itself is a very bullish sign. If ever you would have entertained thoughts of selling, it would only be below the pre vious swing high. That is, below 70.
2. Now see where I have written 2. I have circled it at a place where you sold because of black candle piercing. In my honest opinion, that is not a piercing pattern. The black candle started above the 13th July candle, but did not penetrate enough to be verified as a piercing trade . Please remember, piercing pattern is valid only when the black candle, starts above a previous bullish candle and penetrates deep into the white candle (closes atleast below the half of white candle).
3. I haven't marked the point 3rd on the chart. THis is because this is more of a concept. Usually when you have a long white candle, the middle part of it becomes strong support. Till the price does not penetrate the mid point of the long candle, do not entertain any thoughts to sell.
4. Make use of moving averages for trend determination. Not for trading decisions. Think about this. Does market care which m oving average you look at??
What you should actually do:
Swing and Positional Trading
05 July 2015 02:16 PM
1. Always look at the intermediate swing high support
2. When using candlesticks, be sure to apply the concept properly. Everyone struggles, even I did, but once you understand wh at works and what does not, things are going to be much easier.
3. Always and always look at bigger picture before deciding to buy or sell.
4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a bu y on dip stock as of now.
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To be a Trader-20yrs Page 184
Checklist:
Day prior to set up day 1 has to have close greater than close of four trading session earlier: Y Set up :9 consecutive close less than close 4 trading days ago: Y
Set up Qualifier: n Ninth day's low less than 6th day's low: Y Countdown
13 close less than/equal to low 2 trading days earlier: Y Countdown qualifiers:
Close of day 8 of buy countdown less than close of day 5 of buy count down: Y Close of day 8 of buy countdown less than close of day 3 of buy count down: Y Close of day 13 is less than/equal to close of day 8: Y
Confirmation of entry
Price flip appear on day after 13 or before stop loss is triggered Y Cancellation
An intraday high which is higher than the highest close in setup/countdown: N An intraday high which is higher than the highest high in setup/countdown: N Close higher than highest close: N
Close higher than highest high: N Close higher than highest true high: N Contradictory set up appeared: N ... .
This time I m in need of guidance from the perspective of money management or trade management.
What do we do when trade is not going in favor of your analysis and neither it is hitting stop loss? Shall I get out of it with minor loss especially market is at the stage wherein it can have explosive move either side? I have been holding FDC for last 20 days or so and it is not hitting stop loss and neither moving upward. I m at loss of around 1 rs per share including brokerage… shall I get out of it?
I am a short term trader and usually hold position for couple of weeks... however, I have enough capitalization to hold position further.
As far as I go, if a stock is not hitting your stop loss, then it is definitely going in your favor. So just hold on to the position and see. FDC is low on volatility;
both on day basis and Annual basis. Hence, it will give returns with respect to its volatility. Always consider the stocks volatility (historical) before deciding upon your level of expectation. Recently the stock is trading with good volatility.
FDC should come down (consolidate) little more before it starts to move forward. Keep SL of 85-86. The double top that you see on the daily frame is as of now a fake one. Let's see. I'll track this stock. Overall the stock is in a good bullish structure.
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When the number of correction candles increase, it does not always signify bears gaining control. In this case, even though the number of bearish candles are increasing, the stock is undergoing mere consolidation. The correct way to interpret this is that the "Cycle or the waiting period of the stock is increasing". This means, anyone now wishing to buy this stock, should be prepared for a little bit more holding time than the situation was on the previous minor cycle. Hope this helps.
I have been building up positions in Adani from 530 levels. Hence for swing perspective, I had a 40 point profit on average. I purely exited based on this. It may well go up and had it been for Investment purpose I would have held on to the stock. But for Swing trades I always have some % profit booking zone and Adani reached those zones. Moreover, I found Lupin on friday, and hence had built up huge futures positions in it. Was up by 4% today, so that kind of also begins to enter my profit zone.
So if you want a one line answer, here it is. "I prefer to buy at weakness and sell at strength". This is applicable to swing trades only.
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Nice piece of work. Frankly, I did not see so many things are in favor of this stock. I am more the "Feel" kind of player. If I "Feel" it is good, I just go for it.
The stock is relatively weak and hence I am buying it. I'll sell it when it shows strength. Regarding stop losses, my rules are little different than what book teaches. I don't kind of look at previous swing lows that often. I monitor the prices continuously and from that I get a feel of whether the prices are going to slide or going to take support.
If you are talking from text book perspective, then I do feel the SL set by you is appropriate. On the whole Divergence part and ADX part mentioned by you does bring some value.
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I don't know how you pick a stock for swing trades. But for me, fundamentals don't form a part of swing trades. However, if this is the way you do it and are successful at it, then do not change your method.
As far as technicals are concerned, if markets remain healthy, ABAN should see levels of 925 and 948 for swing perspective. On very shorter time frame, the stock can also undergo consolidation. Hence, be patient.
Checklist
05 July 2015 02:18 PM
U R BASICALLY LEARNING FROM RAUNAK AKA SWINGKING ,AS COPY PASTED IN MY LAST THREAD'- METHOD HE HAS CHOSEN -Q & A - AS WELL AS EXPLANATION
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4. Most important, define what you want to do with the stock first. In my opinion, clutch auto should not be sold. It is a buy on dip stock as of now.
Waiting to enter .... was on radar ... just at the blue TL. Solid support there .. it i just retracement ... check the volume (not in the attached charts .. imo it should be on decreasing vols) and then the bounce should be super ...
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What is your holding period?
Which instrument have you invested in ? Equity or Futures
Anyway, if u have bought equity, keep holding it. Banking sector is doing very well. If you have bought futures, then you have to decide when to exit it. On short term stock is positive.
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In IDEA according to weekly charts, can this be called as a possible breakout from the descending triangle formation? We had high volumes too last week(though, it was a red candle) when it broke out.
So, is this valid formation?
It looks like it is a valid formation. However, I would still wait before actually buying this for investment. Let it show so me strength.
Stock however is strong on momentum on lower time frames. Hence, looking good for swing trades.
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My 2 paisa...
I agree... I wud wait for previous swing to be carried out if it is descending triangle.... Fundamental thought behind descending triangle is, bears r in power and pushing price down with the maintained lower highs (swing points) and bulls are also having some strength to not let price go below certain level and hence maintaining equal lows (swing points). When we got higher break out from descending triangle means, bears are getting t ired and bulls have hit final stroke.. it cud be coupe de grace by bulls but what if bears are not actually tired.. They are just setting back and preparin g themselves for final stroke???!!! so just to make sure who is getting control I wud wait for previous swing high to be carried out with momentum....
Had this been Ascending or symmetric triangle, I wud think of initiating trade on break out...
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--How do we interprete these 3 candles made by NIITTECH? 1st long bulling white candle, 2nd not so long but good sized black ca ndle, 3rd again not so long but good sized black candle...
As Per Steve Nison, many time we shud or we can combine 2 candles against first one to reach to particular pattern.... so on a similar note, can we say NIITTECH making bearish engulfing or dark cloud cover???
Kindly give your opinion from your observation on indian market for this type of patterns.?
Look at the chart below. Your chart had too many lines, so read carefully what I have written on your chart.
Look where I have marked previous resistance. It is precisely at a place where bearish engulfing was formed and this now beco mes our primary support area (Resistance turning into support).
Also look at the base of a long white candle. Usually mid level and low level of a long white candle becomes important suppor t. Hence we have two zones very close to each other which form good support levels. Also if you look below the long white candle support zone, near levels of 183, NIIT reversed near mid of june. Hence this intermediate swing top is also a support. So you have three support zones around 190, 186 and 183. If stock goes below these, its time to exit.
These candles do not represent anything as of now. First candle is not a piercing pattern nor is it engulfing one. However, t hey do represent new resistance zone at 200. Hence anyone holding this stock should only add further positions once the stock is above 200 levels.
Always always and always see where is your candle pattern emerging. Ask yourself, where is the previous support. In this case strong support zone is in 180-190 zone. Stock is in a good bullish wave structure. Even if support breaks, we need to review our view again.
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