CENTURY TEXTILE : Risk/Reward 1:6

Long Centurytex

Entry 490
Stop-loss 473
Target 590
Risk/Reward 1:6

I explain more about my analysis later in updates.
Comment: Bullish Flag Breakout.

One thing i hate about all the chart patterns is placing a stop-loss at the pattern lows. That spoils a RR Ratio.

Bullish Flags are continuation patterns it assumes that the prevailing trend will continue after the breakout.
So why keeping stop-loss at the pattern low?
If the trend is strong then breakout will be as strong as a trend too.
I don't applying a re-test theory in my trading with short term patterns.

This are my views about trading short-term patterns. Critics are welcome to discuss.
Comment: It looks like a pullback is completed, and now ready to continue on going up-trend with a flag breakout.

We are trading probabilities, we can't predict future prices, but we can trade what is probable as per our learning and experience.
Comment: Centurytex 513 trading at 0.618% retracement. Closing above 0.618& re will be a good bullish sign.
Comment: Closed at 521.50 above 0.618 Re.
Comment: Trailing Stop-loss to the Entry price and using a covered call, lowering the risk.
CMP 530 SPOT & writing 30JAN 560 CE at 7.60

Comment: Century Textiles New 52 Week High. 449.80
Comment: Typo *549.80
Trade closed: target reached: Century CMO 600. The target of 590 Achieved, It's a 20% Jump.

However, my gains are restricted to 15% or 77 Rs due to a covered call. But Still it decent gain.


good dear can you explain all will get knowledge buddy
+1 Reply
@Shyam9999, Buddy, I already explained it. I posted the idea with entry-stop-target prices and then posted daily & weekly chart as further explanation in updates two hours later.
shashi.kiran shashi.kiran
@shashi.kiran, its just a start for short from 470
very nice analysis and the opportunity is spot on. however i beg to differ on the stop loss. i think we should go near the support. if we set it too close to the entry point there will be a risk of getting stopped out in the market noise and likely to lose a well spotted opportunity.
Equity-Earningz custardapplepy
@custardapplepy, Thank you bro! You point is very much valid. After market hours i will definitely discuss more about this. Why i am not keeping stop near to support in my trades. :)
Equity-Earningz custardapplepy
@custardapplepy, hello, Generally, I chose recent high or low as a stop-loss, the way stop is placed in NMDC, Gail, ICICIpru, Nifty & Concor. All stops are placed at their recent lows. The only mistake I made in placing a stop is in Dabur. I admit that I realized it later. I should have placed stops as I placed in the rest of the trades mentioned above.

In the case of century textiles, it's a bullish flag followed by a good impulsive move, so I'm assuming that breakout is a true one and it will start moving in its prevailing trend direction without falling back or rising again.

In a few chart patterns for example flags, wedges, ascending-descending triangles when they are as a continuation pattern, the gap between entry point and recent swing low is too wider. So I chose to keep stop-loss a few% below the breakout candle. Because keeping at pattern low, spoils RR ratio mostly. And while trading continuation chart patterns, I am compromising accuracy over risk-reward ratio.

custardapplepy Equity-Earningz
@Equity-Earningz, thanks a lot for your insights. i shall try to follow these too.
+1 Reply
Good analysis!!
@thiyaneshk, Thank you!