HIGH PROBABILITY TRADING SETUP METHOD EXPLAINED
A typical high probability setup example and also the possible mistake of impatient traders post purchase and the cost of the mistake.
FOLLOW THIS METHOD AND SEE YOUR RESULTS A YEAR LATER. YOU WILL REMEMBER ME AND THIS POST.
Illustration is PCJewellers chart.
(This is only an illustration. This is not a trading call on PCJewellers stock).
Refer the accompanied chart and correlate the following to understand better.
A) BUY AT THIS CANDLE AS THE FOLLOWING COMBINATION IS OBSERVED.
1) LONG TERM RESISTANCE CROSSED WITH VOLUMES GREATER THAN
20/30 PERIOD MA.
2) RS INDEX SPIKING UP ABOVE 20/30 PERIOD MA AND PREFERABLY MAKING A NEW HIGH ATLEAST OVER THE PAST 12 MONTHS OR SO. (THIS INDICATOR UNFORTNATELY NOT AVAILABLE IN TRADING VIEW. HENCE NOT ABLE TO DISPLAY HERE. ALTERNATIVELY CAN BE FOUND IN AMI)
3) MACD HISTOGRAM HIGHER THAN PREVIOUS HISTOGRAM LINE AND ABOVE ZERO.
4) STOCHASTIC CROSSOVER SHOULD HAVE ALREADY HAPPENED AT ANY POINT.
(4 IS ONLY A SUPPLEMENT)
BUYING COULD BE TYPICALLY ANYWHERE BETWEEN BREAKOUT POINTOF 295 AND
HIGH OF 395 WITH A STOP A TAD BELOW
THE BREAKOUT LINE 250.
B) STOCK DROPS TO A LOW OF 316 IN THE NEXT
MONTH AFTER PURCHASE MONTH. IMPATIENT
TRADERS USUALLY SELL HERE AT A LOSS BECAUSE THEY LOOK AT LOWER TIME FRAME CHARTS WHICH GIVES A FALSE BELIEF THAT THE STOCK IS BOUND FOR A DROP, WHILE PRO TRADERS DON'T AS THEIR STOPS
ARE AT 250 AND MORE IMPORTANTLY THEY KNOW WHERE THE PRICE IS WITH REFERENCE TO THE LONG TERM CHARTS (BIG PICTURE).
C) WHAT FOLLOWS IS A STAGGERING RISE OF 100% (316 TO A HIGH OF 600) STOCK REWARDS TRADERS WITH PERSEVERANCE.
Studying the higher time frame charts gives a better perspective of the structure and clarity in buy / sell decisions. Definition of higher time frame depends on the traders patience. If a trader is willing to hold for few months typically 3m - 12m or even more, then the study of charts should start with monthly chart. Decision should be done only based on higher time frame charts. Lower time frame (typically weekly / daily) can be used only for entries.
FOLLOW THIS METHOD AND SEE YOUR RESULTS A YEAR LATER. YOU WILL REMEMBER ME AND THIS POST.
Illustration is PCJewellers chart.
(This is only an illustration. This is not a trading call on PCJewellers stock).
Refer the accompanied chart and correlate the following to understand better.
A) BUY AT THIS CANDLE AS THE FOLLOWING COMBINATION IS OBSERVED.
1) LONG TERM RESISTANCE CROSSED WITH VOLUMES GREATER THAN
20/30 PERIOD MA.
2) RS INDEX SPIKING UP ABOVE 20/30 PERIOD MA AND PREFERABLY MAKING A NEW HIGH ATLEAST OVER THE PAST 12 MONTHS OR SO. (THIS INDICATOR UNFORTNATELY NOT AVAILABLE IN TRADING VIEW. HENCE NOT ABLE TO DISPLAY HERE. ALTERNATIVELY CAN BE FOUND IN AMI)
3) MACD HISTOGRAM HIGHER THAN PREVIOUS HISTOGRAM LINE AND ABOVE ZERO.
4) STOCHASTIC CROSSOVER SHOULD HAVE ALREADY HAPPENED AT ANY POINT.
(4 IS ONLY A SUPPLEMENT)
BUYING COULD BE TYPICALLY ANYWHERE BETWEEN BREAKOUT POINTOF 295 AND
HIGH OF 395 WITH A STOP A TAD BELOW
THE BREAKOUT LINE 250.
B) STOCK DROPS TO A LOW OF 316 IN THE NEXT
MONTH AFTER PURCHASE MONTH. IMPATIENT
TRADERS USUALLY SELL HERE AT A LOSS BECAUSE THEY LOOK AT LOWER TIME FRAME CHARTS WHICH GIVES A FALSE BELIEF THAT THE STOCK IS BOUND FOR A DROP, WHILE PRO TRADERS DON'T AS THEIR STOPS
ARE AT 250 AND MORE IMPORTANTLY THEY KNOW WHERE THE PRICE IS WITH REFERENCE TO THE LONG TERM CHARTS (BIG PICTURE).
C) WHAT FOLLOWS IS A STAGGERING RISE OF 100% (316 TO A HIGH OF 600) STOCK REWARDS TRADERS WITH PERSEVERANCE.
Studying the higher time frame charts gives a better perspective of the structure and clarity in buy / sell decisions. Definition of higher time frame depends on the traders patience. If a trader is willing to hold for few months typically 3m - 12m or even more, then the study of charts should start with monthly chart. Decision should be done only based on higher time frame charts. Lower time frame (typically weekly / daily) can be used only for entries.
Trading is my passion.