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Trend Analysis

One BO, different entries and it's psychology!As a breakout & retest is complete, it gives the best scenerio for entry with compliance to the rules of money management as RR ratio and position sizing are considered as major components while entring a trade for a trader. In this case, a low has been established at 665 which will act as a point for SL placement in the near future. Types of traders entering into this trade: #1. Agressive traders: These traders wait for a buyers candle to form after a retest on the trendline and as soon as the candle forms like in this case, a buy stop order at the high price of the candle is placed. This is a risky bet but this reduces the SL significantly while providing the best possible RR ratio for the position. #2. Conservative Traders: Here, as the breakout is complete and the stock establishes a High (in this case 739.85(Doji candle High)) and when the retest is done, these traders wait for the high (739.85) and place a buy stop order at this price giving the safest possible entry in theory. Though this distorts the RR ratio a little bit as SL remains the same but the probability for upside is high. This entry works on the Dow Theory as Higher Highs and Lower Lows starts to form which indicates bullish view. This is why it is said that trading is 20% execution and 80% waiting.
NSE:PRINCEPIPEEducation
by abhinavjain97
Trying to catch an ITC breakoutI tried multiple times to catch a breakout on ITC and it has had it's ups and downs. 1st position I built was on 1st June. I tried to be a little greedy with the possibility of a reward, chose Options. Bought 220 CE and ITC being ITC promptly retraced back below resistance, and pretty much wiped out the money in the position. The 2nd time I tried a month later when the pullback looked promising, and this time I went with a Future contract instead. It again fizzled out and I had to exit early as the Future position was naked and had started to bleed losses. The 3rd time I built the position the right way. I hedged my futures with just OTM puts, thereby capping the loss possibility. With the hedge margin benefit, I could open double the position and that offset the "loss" due to hedge. Once that was done, I was free to maintain and hold the position for as long as needed till a breakout did occur. Why was I confident about a breakout? Well ITC has been forming a multi year symmetrical wedge - with Lower Highs, and Higher Lows. Though this has an equal chance to break both sides, at a price point near 200-215 ITC is very fairly priced even for a consolidating market - and given the bullish market sentiment, quite underpriced comparatively. For now I am continuing to trail SL on ITC and for the medium term expect it to make an up move to catch up with the rest of the market. Learnings : 1. Stay away from naked options no matter how attractive they look . Though the rewards on Options looks awesome on paper, it is very very difficult to time a larger move correctly. More often than not, with a reversal you will quickly erode capital. Better avoid them to gain longer term rewards. 2. Always hedge your futures. You can in fact make more returns on a hedged position with twice the buildup, than you could with a naked single position - and you will still spend only half the margin requirement. 3. Be patient with your trades. Many a time we're looking for quick returns, especially if we're new in the market. The trick is to slow things down and look at the bigger picture. Make sure you limit your losses, and ride your winners for long - till they turn around decisively.
NSE:ITCEducation
by libinbond
1
How to place a logical stop-loss in Options?In general, a logical stop loss varies from one situation to another. Some of the logical stop losses can be: 1. Swing high/low 2. Low of the Hammer/Inverted hammer 3. High of the Shooting star/Hanging man 4. Low of the demand zone 5. High of the supply zone If you are trading in options, broadly there are 2 ways to set a stop loss. There are: 1. Place the SL using the spot chart 2. Place the SL using the Options chart Explanation: 1. If you place a stop loss using the spot chart, then you don't have to see the Options chart. But you won't be able to calculate exact loss beforehand because the movement of spot vs options is not linear and depends on Option Greeks. This is a simpler method since you just have to see a single chart. Just enter and exit the trade using the spot chart only. 2. If you place the stop loss using the Options chart, you will be able to calculate the exact loss beforehand. For checking the options chart, you will have to use your broker's terminal or use some paid third-party site. Tradingview doesn't provide option charts. This method is a bit difficult as compared to the first method. The steps that you need to follow are: a> Check the spot chart. b> Execute your buy/sell order. c> Notice the logical stop loss in the spot chart d> Check the same SL in the options chart 4. Now open the options chart of the option that you bought/sold. 5. See the relative position of the stop loss in the options chart. (Whatever SL that you selected in the spot chart in step 3, select that same SL but now in options chart.) In the above case, suppose you Shorted Nifty. So, you can either buy a PUT option or sell a CALL option. The stop loss in both cases is as follows: If you buy a PUT option: If you sell a CALL option: 6. Now that you have chosen your stop loss, just place your stop-loss order. That's it, you are done. Read the post a few times and you will be able to understand the process. Don't complicate things. I hope you find this post useful. Also, if anyone is interested in getting a PDF version of this thread, then you can message me, I'll provide it. Disclaimer: This is NOT investment advice. This post is meant for learning purposes only. Invest your capital at your own risk. Happy learning. Cheers!
NSE:NIFTYEducation
by johntradingwick
9
Anatomy of Cup & Handle Pattern Explained with examples ☕What is Cup & Handle Pattern ? 1.A cup and handle is a technical chart pattern that resembles a cup and handle where the cup is in the shape of a "u" and the handle has a slight downward drift. 2.A cup and handle is considered a bullish signal extending an uptrend, and is used to spot opportunities to go long. 3.Technical traders using this indicator should place a stop buy order slightly above the upper trendline of the handle part of the pattern. Some Examples from -MY OWN ANALYSIS :- ----------------------------------------------------------------------------------------------- ----------------------------------------------------------------------------------------------- ---------------------------------------------------------------------------------------------- --------------------------------------------------------------------------------------------- 1 Cup with Handle Base 2 Saucer Base The Saucer base is basically a long, drawn out cup base. Characteristics of a Saucer are: 1. A depth of 12-20%. 2. A length of 7 weeks to more than a year. 3. If a handle forms then the buy point is the peak just before the pull back plus 10 points. 4. However a handle will often not form after the long period of this base. If there is no handle then the buy point is the peak on the left side of the saucer plus 10 points. 3 Tight Closes and Narrow Price Spreads Double Bottom Flat Base – (Second Stage) Second stage base that follows an uptrend off of a stage 1 proper base (cup with saucer, saucer, double bottom ) and an uptrend Tight Closes and Narrow Price Spreads Prior Sequence 1. Uptrend 2. Proper Base 4 Ascending Base – (Second Stage) Second stage base that follows an uptrend off of a stage 1 proper base (cup with saucer, saucer, double bottom ) and an uptrend Pull-backs occur at general market declines Square Box – (Second Stage) Second stage base that follows an uptrend off of a stage 1 proper base (cup with saucer, saucer, double bottom ) and an uptrend Buy Point = $ 0.10 above highest peak < 10-15% 4 – 7 Weeks 5 3 – 4 Weeks Tight – (Second Stage) Second stage base that follows an uptrend off of a stage 1 proper base (cup with saucer, saucer, double bottom ) and an uptrend. Volume over 3 – 4 weeks is well under control Weekly closes within 1%, however, 1 week can be 1.5% Opportunity to add High Tight Flag The pattern forms when a stock surges 100% to 120% in four to eight weeks. The stock then corrects 10% to 25% in three to five weeks. The ideal buy point is the high of the flag plus 10 Points Breakout from Proper Base followed by price run-up of > 100% within 4-8 weeks 3 – 5 weeks correction between 10 – 25% Buy Point = 0.10 higher than peak of correction 6 Base on Base If an uptrend is less than 20% and the stock builds another base, it's called a "base-on-base" pattern and is counted as part of the previous base Conclusion The cup and handle pattern is a bullish continuation pattern triggered by consolidation after a strong upward trend. The pattern takes some time to develop, but is relatively straightforward to recognize and trade on once it forms. As with all chart patterns, trading volume and additional indicators should be used to confirm a breakout and continuation of the original bullish price movement.
NSE:FEDERALBNKEducation
by ReviveTraders
8
Understanding Price using Timeframes!Initial Understanding on Weakly TF: 1. Pattern: A clear Inverted H&S pattern is formed which took around 3 Years to form and that signifies entry in the Stage 2 i.e. Mark-Up. 2. Volume: Volumes has seen a drastic jump this year as compared to previous years, which again tells the presence of bulls. 3. Resistance Zone: A number of times resistance zone between 275 and 288 has been tested multiple times making it weaker and weaker. It is normally seen that when zones either support or resistance are tested multiple times, a break from the same results in great rally on a single side. 4. Moving Averages: After a bearish crossover completed in Oct-2018 the bear trend was established which was broken in Dec-2020 with a bullish crossover and rising averages indicating the trend shift from bearish to bullish. When the price broke and the candle is formed, there lies the two possibilities i.e. (a.) A successful BO (b.) A BO faliure A successful BO is confirmed only when the High of the alret candle is taken out, which here is done. Therefore, we can say a successful BO has been completed. It does not mean that it is sure shot rather the probability is in the favour of buyer. Daily Chart Trend Continuation With around 250 days of sideways momentum which also formed a right shoulder for the pattern on Weekly TF. Here, with mixed signals throughout the year no opportunity was given to the buyer to add shares in the portfolio but on Sept-1 a clear trend started to form indicated by rising EMA. This gave the confidence to add the stock into the watchlist and add some alerts to time the entry. Hourly Chart For entry A close above the short term trendline is the zone for entry. Here, the price is indicating all the positives for a successful BO as observed in the weekly TF.
NSE:KOLTEPATILEducation
by abhinavjain97
4