Beyond Technical Analysis
How to Combine Basic Technical AnalysisTrade by Combining Basic Technical Analysis. How to enter in a trade by combining basic knowledge of Support/resistance and Candlestick patterns and Chart reading.
Trade what's happening...not what you think is gonna happenAs soon as we see a breakout on the chart we form a basis ( or have a belief ) that the stock will burst and go upside.
We should not try to predict the market. Instead, we should wait and let the market tell whether the breakout is false or true.
You can crosscheck with other indicators. I personally use PRICE ACTION data i.e. after breakout the upper trend line previously acting as resistance now should act as Support.
Risk management - Enter 30% position at breakout, if the trade fails then your loss will be only upon 30% position. If the price respects the upper trend line then you can execute your remaining 70% position.
There is a big difference between predictive technical analysis and reactive technical analysis.
Predicting is trying to forecast where prices will go in the future and taking trades based on that belief.
Reactive trading is based on taking a trade after a signal has indicated the beginning of a trend.
The biggest leap to profitability comes when we stop taking trades based on what we think should happen in the market, and instead learn to trade signals that react to what is happening.
Note - The market doesn’t care about your opinion. It will go where it wants to go based on all of the participants’ actions. Get in the habit of going with the flow, and avoid trying to predict where the flow is going.
What are Relative Strength charts & how to use them!This is a quick guide into using relative strength charts (or RS charts) that will help you pick stocks that are stronger than the broad market or identify sectors/industries that might outperform the broadmarket.
Trader's Queries & Newbie's corner - Can everybody trade? Part 3Today I am writing about one of the most asked questions. Most traders face this situation. Only very few take necessary steps to rectify it.
Query : After making huge losses, I am putting my money again in trading. It is painful to get loss, Every time I get loss, I panic, still I am adding money to capital and trade. It affects my peace of mind. What to do? A
Answer : A trader should know the difference between trading & gambling.
Trading : The trader has back tested strategy and trade with proper risk, money & trade management. Not impulsive in trading.
Gambling : No strategy or trade set ups. Trades will be placed on impulsive thoughts. Dont know the reason for taking a trade.
So now how to take control of your actions?
Step 1 : Take a break from trading for few days. Think about the mistakes you have done.
Step 2 : Believe you have the power to change your bad trading habits.
Step 3 : I will give you an example. If you take a bus to delhi, you will reach delhi only, not Mumbai. To go to Mumbai, you have to take Mumbai bus not a bus to delhi. Similarly doing the same thing which gave you loss wont make you profitable in the present. This is important for you understand it. Then only you will look for ways to rectify your trading mistakes.
(To be continued...)
6 Mistakes most traders do in trading6 Mistakes most traders repeat in trading. Not beginners but even experience traders face these issues.
Hindustan Copper Falling wedge pattern & Bullish kickerFalling wedge pattern ( black lines ) breakout.
The falling wedge pattern is interpreted as both a bullish continuation and bullish reversal pattern which gives rise to some confusion in the identification of the pattern. Both scenarios contain different market conditions which must be taken into consideration.
The differentiating factor that separates the continuation and reversal pattern is the direction of the trend when the falling wedge appears. A falling wedge is a continuation pattern if it appears in an uptrend and is a reversal pattern when it appears in a downtrend.
Here it is appearing in uptrend. Hence continuation pattern.
Continuation or (Reversal) Pattern:
1.Identify an uptrend or (downtrend)
2.Link lower highs and lower lows using a trend line. The two lines will slope downwards and converge
3.Look for divergence between price and an oscillator like the RSI or stochastic indicator
4.Oversold signal can be confirmed by other technical tools like oscillators
5.Look for break above resistance for a long entry
Key points to remember:
1.Identification of the trend is crucial
2.Both continuation and reversal scenarios are inherently bullish
3.Both patterns present favorable risk to reward ratios as they generally precede big moves
Here is how you identify a bullish kicker:
1.The pattern starts with a bearish (red/black) candle
2.The second candle gaps to the upside, and opens above the previous day’s close. It continues straight up and ends as a bullish candlestick.
3.The gap should not be filled by the wick of the second candlestick, but be left untouched. In other words, the candlestick has a tiny or non-existing lower wick.
The pattern occurs after a downtrend, it instead might be a sign that the market has gone too far, and is about to revert. Here the bullish kicker becomes a sort of reversal pattern.
The first candle in the signal continues with the current trend, moving downward, but then a major event causes the second candle to gap up. The price bursts upward with bullish enthusiasm. Thus, the Bullish Kicker candlestick pattern portrays a strong change in investor opinion. Not only is there a bullish candle following a bearish candle, but the strength of the switch resulted in a gap between the two candles.
The Bullish Kicker signal often occurs after a major surprise in the news that is announced before or after market hours. Something drastic has happened, causing a great shift in investor sentiment, and a reversal will inevitably follow. The larger the gap between the two candles, the more significant the signal.
Combining chart patterns with other technical indicators wave out any false signal if generated. Therefore adding any one of the other indicators like Volume, Stochastic, RSI, MACD support etc. with chart patterns, one can further enhance the probability of the pattern to happen.
Basics of Price Action | Multi Candlestick PatternsBasics of Price Action | Multi Candlestick Patterns | Basics of Technical Analysis
The best trades work almost right away.A breakout trade will work almost right away from the start, if the breakout happens with huge momentum and then you see Doji candles or hammer then there is a problem with follow-up. A bullish breakout must always be accompanied by a good follow up, else it cannot sustain. Bullish breakout needs good bullish candles, not Doji.
Note-As soon as you enter a breakout trade it has to work within 15-20 days.
If it does not move with huge momentum then exit it after 15-20days with whatever the result may be, don't wait for the stop loss to hit or for your target. The above rules apply only to Swing trade and breakout trading.
Newbie's Corner - Part 2 Can everybody trade? Every expert trader was once a newbie trader. Every Pro trader was once losing money consistently. And everybody starts trading with zero experience. Why very few only become a successful trader? How a person approach trading decides it. If you want to swim, you know very well theory knowledge wont help, only experience helps you to swim.
Someone will instruct you and wearing a life jacket you will be learning. Also in the first day itself you wont learn to swim in sea. You will start with a pond or small river. Similarly in trading, technical knowledge is your life jacket. So many study materials are available in internet about trading to improve your basic knowledge and to paper trade. Learning from an expert trader saves your time and increases your trading/learning curve. Using small position size is like swimming in pond. Its not like you can learn if you have big amount as capital. Big capital increases your fear & greed drastically and as a newbie it will be tough to handle.
Common Stock Market Mistakes every beginner have facedCommon Stock market Mistakes every beginner have faced. I will add 2nd idea soon based on mistakes in trading journey.
Newbie's Corner - Can everybody trade?Trading is one of the most glamorous businesses. Why it attracts so many? Why people jump in to trading without any second thought? Any profession needs certain education, specialized degree in it to succeed. In trading anybody can trade if a person has money, demat account, internet and computer/mobile. Unlike other jobs trading don’t need any job interview. You are your own boss(yaay :)) . You have full freedom and also responsible for your actions. These are the advantages which attract people to invest their hard earned money.
Now lets see the disadvantages. Let me explain it with an example. Can a person do surgery on the first year of medical science? Can he do surgery even if an expert surgeon gives proper instruction in the operation theatre? Answer is “No”. Similarly in trading, without experience a person cannot make consistent money.
So before investing your hard earned money just ask yourself, “Am I qualified to trade?” This will make you to take proper steps to become qualified for trading.
Trading is the only business which has unlimited profit & it gives abundant money to the traders who are qualified to get it...
Basic of Price Action | Candle Stick PatternsBasic of Price Action | Candle Stick Patterns. All single candle stick patterns explained. How they different from book in live market.
Banknifty upcoming days support and resistance i am using trend based fib extension in daily chart
if u see Dow theory chart pattern in bank nifty daily chart i am marking level,
trend based fib ex.... wonder tool for upcoming days support and resistance levels,
bank nifty todays fall exactly support 35000 level on (... 23.60...) level on fib golden level support,
if u good for long opportunity on fib 23.60 support level your stop loss below 50 points and strictly maintain your R/R Ratio,
NSE:BANKNIFTY
Newbie's Corner - Confidence about tradingOnce a newbie trader becomes an experienced newbie trader with knowledge, why he is still struggling in trading? With good trading strategies, good trade setups, and technical knowledge about indicators, he will be trading with confidence. But why he is not having confidence?
I will explain two important factors here. First one is the expectation of holy grail strategy or trade setup. This type of expectation comes when a person is not ready to understand that 100% success trades are not possible. People who have this type of expectation will follow one strategy for some time, then switch to another one when they get few losing trades. They spend their money, time and energy in finding new strategies & testing it for some time before finding some other new strategy.
Next factor is not having sufficient understanding about the strategy or trade setup. It makes a trader to lose interest on his strategy once he encounters few losing trades.
The solution to trade confidently lies in back testing. Usually professional traders back test their strategy at least for the past 4 yrs. This makes them to understand how their strategy works in different market situation and to know the trading edge. Have you back tested your strategy? If not now is the time for back testing...
Less Trading Better Earning .. #WIPRO 500 days - 6 opportunitiesWipro gave six huge opportunities where simple consolidation patterns had formed and price have pulled back slightly.
An entry upon the breakout and exit close to the high could have resulted in massive gains just trading one stock 6 times.
This is proof that trading more stocks is not key to making more money.
Do not trade just to trade out of habit because that will sooner or later cause you grief and losses. Invest in good opportunities, trade with patience and with proper risk reward setup.
“If most traders would learn to sit on their hands 50 percent of the time, they would make a lot more money.” - Bill Lipschutz
Ascending Triangle BreakoutOBEROIRLTY: Swing trade
Ascending Triangle Breakout
In Ascending triangle pattern the upper trendline is flat, while the lower line is rising.
This pattern indicates that buyers are more aggressive than sellers. It is considered a bullish pattern and is usually resolved with a breakout to the upside. The pattern is completed on a decisive close above the upper line.
This breakout should see a sharp increase in volume .
The upper resistance line should act as support on subsequent dips after the breakout.
Ascending Triangle Measuring Technique
For the ascending triangle, traders can measure the distance from the start of the pattern, at the lowest point of the rising trendline to the flat support line. That same distance can be transposed, later on starting from the breakout point and ending at the potential take profit level.
The illustration above shows the distance from A to B can be transferred higher up, from C to D, in order to project a possible take profit level.
How to trade Ascending Triangle Pattern
After viewing a strong break above resistance, traders can enter a long position, setting a stop at the recent swing low and take profit target in line with the measuring technique.
Note- False breakouts are possible (traders need to manage risk accordingly )
My advice is to risk only 2% of your trading capital. Buy 30% of your position at CMP & if price respect levels of 676 then execute your 70% position.
The whole idea is to lose less money when you are wrong and to win more money when you are right.
An Amazing investment opportunity with a CAGR of 40-50% !!!" MIRAE NYSE FANG+ index ETF " is an ETF that will track the NYSE FANG+ index which tracks WORLD'S BIGGEST 10 COMPANIES. The FANG+ Index is composed of 10 equally weighted technology stocks—Facebook, Apple, Amazon, Netflix, Alphabet, Alibaba, Baidu, Nvidia, Tesla and Twitter. All the 10 stocks have equal weightage i.e 10%.
1)This index has delivered a return of 46.8% compound annual growth rate (CAGR) over the past five years in rupee terms. In other words, a rupee invested in the index would have multiplied almost seven times in five years.
2) The ETF has an expense ratio of 0.33% which is very low.
3) This is an awesome opportunity for Indian investors to invest in the international market and the world's greatest innovators. Also, it will help in diversifying the portfolio of investors.
4) These 10 companies have a market cap of $7.7 trillion—nearly three times the Indian market; and revenues of $1.09 trillion—3x of the Indian government’s total receipts.
5) Indian investors will also get the benefit of rupee depreciation.
6) If we talk about the risk on paper terms, since it is a concentrated portfolio so definitely there is a risk. But in my view, if we don't invest in the world's top 10 companies and invest it somewhere else then there is more risk!! These all companies are high growth companies and will continue to grow and innovate in the coming years as well. So definitely, it is worth investing.
ETF is available on NSE with code MAFANG.
What is Inverse Head and Shoulders Pattern?Inverse Head and shoulders Pattern is the mirror image of head and shoulders pattern.
Read about Head and Shoulder Pattern here:
Inverse H&S Pattern is bullish reversal pattern. Signals the traders to enter into long position above the neckline.
Volume play a major role in both H&S and Inverse H&S Patterns. Usually the spike in volume on breakout is considered as a great signal for bullish entry.
Again a suitable target can be obtained by measuring the distance between head and neckline of the pattern and using same distance to project the target .
After the neckline breakout there is also a probability that prices can be retrace again to neckline due to lack of demand . Prices can only rise if again there is more demand which will lead to bullish uptrend.
Also if the neckline slopes slightly upward that is the sign of greater market strength thus gives further conformation to go bullish on Inverse H&S Patter .
Let us know what do you think about Inverse H&S Pattern? Please comment your views/doubts!
As always nothing works every time in
markets. Please do your research before taking any position. This is only for Educational Purpose.
We are covering all Major Reversal and continuation patterns in this series.
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Next Pattern we will cover: Round Bottom Pattern
