How to Use and Read India VixHow to Use and Read India Vix. How it impact the stocks and overall market index.
Chart Patterns
3 Trading Stats that you must haveToday’s topic is all about three trading stats that you must have.
If you remember I have spoken about the three step trading methodology in our talks at conferences and seminars. One of the components of the three step trading methodology is the optimisation component. This is when you’re looking at your stats to see how you can optimise your strategy or review your stats, look at what going wrong, what’s going well and what can be improved. In that review, there are a few stats that you definitely must be looking at.
The first one is reliability. What this means is basically the percentage of winners to losers. So we are really looking at how many trades actually won as opposed to those lost. For example, sometimes you can have systems where there’s a 40% reliability of winners and 60% losers. Or you can also have systems where you have 70% winners and 30% losers. You can have either one. Usually with swing traders when you’re looking for low frequency and high profitability strategies, the reliability of these reduces because each trade is looking at giving you a higher profit. Let me explain that as we come to the second point. So the first stat you need to look at is reliability of the strategy.
Here’s the second point. Not only is it important to look at how many times you’re winning – because that’s not really the whole picture – so the second point is where we need to know your average winner to loser. What we call average win to loss ratio. Basically this is very similar to your reward to risk ratio. One critical thing I must mention is that some traders say that they have to take a 3:1 reward to risk ratio trade or a 2:1 reward to risk ratio trade – that is all expected reward to risk ratio. You need to see how well is your strategy actually performing. That’s the most important point. What we’re then looking at is then we’re looking at the average. We know the actual winners, so how much did they make to the average loss that they made as well. So even though you may have a 40% reliability system, it’s only winning 40% of the time, if your actual win is say £200 to an average loss of let’s say £80, we’ve got about 2.5:1. So we’re looking at average win to average loss and that’s what you need to calculate in your stats. How much is it winning on average to your average loss?
The final thing you need to know about stats is expectancy. In terms of expectancy what you’re looking at is basically your average net profit. Your average net profit divided by your average loss gives you your expectancy. What this figure is actually telling you is how much each of your trades is making. For example, if you had 0.5 all it’s saying is that through the expectancy formula and normalisation factor what it’s telling you is that each trade is making you 0.5% profit.
Here’s a very quick tip for you, something to think about. If you want to increase that number you need to reduce the loss factor. This is why every single trade you take, the most important thing I keep stressing to traders, is to keep managing and focusing on the risk because the up-side will always look after itself. When you do that, when your average loss is minimal, that expectancy number really starts shooting up.
So these are the three things you can look at for improving and optimising your systems to see how well your strategy is doing. First is reliability, second is average win to loss ratio, and third is expectancy.
Do look at these stats, read up on them, or even post a comment or email us your questions if you have any challenges in knowing how to come up with these figures. We have trade log journals that measures this with all the formulas in our Traders Essentials Kit.
I believe this has been very useful for you to analyse your stats and analyse your strategy performance so that you know how and where you’re going wrong and how to optimize your strategy to push that equity curve into positive territory. That’s the end.
So give us your comments, give us your feedback and keep in touch. Until the next time, as we always say, stay disciplined, follow your plan and Trade Like a Master.
Turbo Breakout Setup: High-Probability Trades with Precision.NSE:CNXFINANCE
Hello Traders,
In this video, I have explained a Breakout trading setup that will generate only high-probability breakout trades, that have high success rate than another breakout.
The setup is based on a pure price action structure and does not require any indicators just we are using volume as a confirmation tool.
Why does this setup work?
The logic is very simple
let's talk about the 1st variation of this setup:- Fake Breakout
as you can see in this setup most of the time the structure completes after a fake breakout.
So that fake breakout means the short sellers in the correction phase trying to defend there stop loss and make prices go down but what do you think for how long they will be able to defend that zone when buyers' strength is increasing? so after that when buyers push the price a little above-failed breakout zone the price hits short sellers stop losses and include new buying at that level to push prices toward the sky.
What about scenario 2nd:- NO failed breakout but horizontal range inside trend resistance line.
When the trend Resistance line and horizontal line break at the same price point it invites many traders to put a limit order above that horizontal line and most of the short sellers also have put their stop loss when that zone hit the price again and start moving towards the sky.
Other factors and detailed setup have been explained in the video.
Any setup is useless without a pre-defined stop loss cause you need to focus on capital protection first then you can aim for profits.
Always take calculated risks and use proper position sizing.
This is only for educational purposes only.
Always trade with stop-loss.
I hope you found this idea helpful.
Please like and comment.
Share with Your Friends.
Keep Learning,
Happy Trading!
Intraday head and shoulder pattern trading This is a small video on how to calculate the target in the head and shoulder pattern which will allow us to place an alert using the tradingview tools. The tradingview tools make calculating the exact target based on the patterns a lot more easier. I hope this video helps the beginners, please note this is only for beginners and if you are already familiar with the patterns well then you may skip this.
How to identify Base Pattern Saucer with handle In This chart i have marked all the points. youcan easily find base patterns.
Classic breakout failure of triangle patternBank nifty hourly time frame.
A good triangle pattern formed but broke down like brittle glass just after giving an hourly close above the breakout level. This is a classic study opportunity to understand how breakouts fail. Even a positive close doesn't mean anything unless price action supports it.
PS: One can always go short from the low of hourly candle with a very tight SL as major trend is up.
Inverse head and shoulder pattern Inverse head and shoulder pattern. I h&S pattern is a bullish pattern which signifies the continuation of price for upside.
Setup - Hight tight flag | Part - IThis is the first part of the video series where I will explain how a high tight flag setup should look like. This will help you shortlist your focus stocks from the stocks that your scanner throws out.
A high tight flag setup should have the following characteristics. Here I am using daily timeframe:
- The pole is steep. Means high percentage move in a few days.
- Pole consists of big and high volume candles which close at top of the range
- The flag (pullback) should be shallow - retracement less than 50%, preferably less than 30%
- The pullback length should be less than 10 candles. More than 10 indicates lack of buying urgency from institutions, hence dying momentum
- From left to right the flag should get tight (small range candles) and volume should start drying indicating lack of sellers
We go through these three examples to explain the point above:
- IRCTC
- CHOLAFIN
ABCAPITAL
How to react based on market conditionsHow to react based on market conditions..
It is very important to hold your cash and keep patience before making new trades and entries..
Power of 25, 75, and 125-Minute Timeframes in the Indian MarketSelecting the right time frame for technical analysis is a crucial decision for any technical analyst. In the Indian market, the trading session lasts for 375 minutes, starting from 9:15 AM and ending at 3:30 PM. While many traders commonly use the 30-minute, 1-hour, and 2-hour time frames, these intervals often result in incomplete candles, which can distort the accuracy of the analysis. Instead, opting for the 25-minute, 75-minute, and 125-minute time frames can provide more complete data, leading to more informed trading decisions.
Drawbacks of traditional time frames:
When using a 30-minute time frame, there are 13 candles formed, with the last candle representing only 15 minutes of trading. This disrupts the technical analysis process. By switching to a 25-minute time frame, traders can overcome this issue and work with 15 complete candles per trading day.
Traditional 1-hour time frames produce 7 candles, including a final 15-minute candle, which interrupts the smooth flow of technical analysis. By adopting a 75-minute time frame, traders can obtain 5 complete candles, offering a more comprehensive perspective on price movements.
Instead of confining analysis to a 2-hour time frame, which results in an incomplete final candle, traders can harness the power of a 125-minute time frame. With 3 complete candles per trading session, each representing a 125-minute interval, a more comprehensive understanding of price dynamics can be achieved.
Benefits:
Enhanced accuracy in analysing price action, as each candle represents a complete interval of 25, 75, or 125 minutes.
Reduced gaps in price action, as each candle becomes a complete unit of time.
Clearer depiction of trends with fewer distractions from incomplete candles.
Improved visibility of trends, as each candle provides a more representative snapshot of the price action.
A more holistic view of the market, aiding in the identification of key support and resistance levels. If you utilize concepts like RBR, RBD, DBR, and DBD, it is recommended to use these time frames, as the presence of an incomplete candle can inadvertently impact your analysis. You may mistakenly consider the last incomplete candle as a base or leg candle, which can affect your overall analysis.
Conclusion:
In the Indian stock market, precision and accuracy are vital for successful trading. By embracing unconventional time frames like 25 minutes, 75 minutes, and 125 minutes, traders can enhance their technical analysis capabilities and gain a competitive edge. Although these specific time frames are available through TradingView's paid plans, traders without access can still utilize traditional time frames. However, it is essential to recognize the limitations and potential disruptions caused by incomplete candles. Embracing the power of these alternative time frames unlocks a clearer and more comprehensive view of the market, empowering traders to make confident trading decisions.
This article is written by Afnan Tajuddin with the aim of encouraging Indian traders to adopt powerful timeframes commonly used by professional traders, to enhance their technical analysis skills.
If you found this article helpful, please consider following me for more analysis and educational articles. Your likes and comments are appreciated, as they motivate me to provide more analysis for you. If you have any questions, feel free to ask in the comment box below.
Thank you for reading this educational article.
Try to be a Pattern ObserverWe can see the patterns repeat in charts
One has to be an observer when viewing charts, if you focus on patterns and check similar pattern in history, you will be able to judge what next can come with the stock
Pattern Repetition:
Historical patterns tend to repeat themselves in the market due to the influence of human psychology and market dynamics. By observing and studying patterns, traders can gain insights into how the market has behaved in the past, helping them make informed decisions about future price movements.
Pattern Identification by Considering Safety in Analysis!Pattern Identification on any Timeframe!
Importance of the Factor of Safety in Projected Target To avoid the Losses!
How to identify Patterns and Project the Target on the chart!
I have selected NVDA weekly chart for Technical Analysis. Here the Head and Shoulder pattern formed on the Top. We can see the previous trend of NVDA was an Uptrend so the probability of high that trend will get reversed after the neckline breakdown and the price has given breakdown to the neckline and it went down.
I have projected the downside target by projecting the head to neckline length below the neckline. But we all know that, the things which are given in a theory doesn't work 100% all the time. So to avoid the buffer between Theory and Practical I have projected the line parallel to the neckline from the projected taregt so we should exit our position without waiting for the Theoretical projected target. This is my personal view to exit from our existing position without waiting till the end. Most of the time what happens is price reversed before our projected target. That's the reason i am sahring this Educational Idea to achieve maximum profit by considering Factor of Safety or You can exit your trade by achieving 80% - 90% of your projected profit.
If you like this Educational Idea then Comment Below!
Thank you!
[E] The Bollinger Bands Indicator - IX Conversely, if you change this to a higher setting, 30 periods, for example, then the indicator will be less sensitive to price movements. This will result in smoother wider bands that price will reach and break through less often.
This will offer less trading opportunities, but the signals will be more reliable.
[E] The Bollinger Bands Indicator - VIIIIf you change this to a lower setting, 10 periods for example, then the indicator will be more sensitive to price movements. This will result in choppy and narrower bands that price will reach and break through more often.
This will offer more trading opportunities, but the signals will be less reliable.
[E] The Bollinger Bands Indicator - VIIYou can also use the distance between the bands to indicate how volatile the price of an asset is.
If the distance between the bands is large, this indicates high volatility.
Conversely, if the distance between the bands is small, this indicates low volatility.
[E] The Bollinger Bands Indicator VIIf price reaches the upper band, this means it is relatively high and the asset could be overbought. You could look to sell an overbought asset on the assumption that its price will fall towards moving average.
Conversely, if price reaches the lower band, this means it is relatively low and the asset could be oversold. You could look to buy an oversold asset on the assumption that its price will rise towards the central moving average.
[E] The Bollinger Bands Indicator - IIIIf price reaches the upper band, this means it is relatively high and the asset could be overbought. You could look to sell an overbought asset on the assumption that its price will fall towards moving average.
Conversely, if price reaches the lower band, this means it is relatively low and the asset could be oversold. You could look to buy an oversold asset on the assumption that its price will rise towards the central moving average.
[E] The Bollinger Bands Indicator - IVIt is important to remember that just because price may reach the outer bands does not always mean it will reverse. Always look for further confirmation from another indicator, or by using candlestick analysis.
[E] The Bollinger Bands Indicator - IIThree main lines make up the Bollinger Bands indicator.
The first of these, the central band, is a simple moving average.
The second and third, the upper and lower bands, represent levels at which price is relatively high or low, compared to this moving average.
[E] The Bollinger Bands IndicatorThe Bollinger Bands Indicator is an oscillating indicator.
Traders use it to measure the volatility of a market.
The Bollinger Bands can help you to identify points at which the price of an asset is high or low relative to its recent average. This can in turn help you to predict when the price might rise or fall to its average level.
Large time frame analysis significanceWho should use this?
Larger time frames are used by swing traders and long-term investors who are interested in the overall trend and direction of the market.
Advantages?
Broader Perspective: They help traders and investors to see the overall trend and direction of the market over a longer period, which can be useful for identifying larger price patterns and longer trend
Reduced Noise: This can help traders to filter out market volatility and noise that may be present in shorter timeframes, and focus on more significant price movements and trends that are relevant to their trading or investment strategy.
Higher Reliability: Longer timeframe candlesticks represent a larger sample of price data and are less prone to false signals or market noise. This can result in more reliable and accurate technical analysis, which can be beneficial for making informed trading decisions.
Less Frequent Trading: A more relaxed trading approach or having limited time for actively monitoring the markets.
Note: it's important to carefully consider your trading or investment strategy, goals, and risk tolerance when choosing a timeframe to use in your analysis.
It should suit your personality and characteristics.
You should keep a track of global indices and fundamentals before estimating the next move.
dual top pattern explained in simple form The dual top pattern is a popular technical analysis pattern that can signal a potential trend reversal. This pattern is formed when the price of an asset reaches a resistance level twice and fails to break above it. The two peaks of the pattern look like two mountain tops that are approximately equal in height, with a dip or valley in between them. The neckline of the pattern is drawn by connecting the lows between the two peaks. A breakdown below the neckline is considered a sell signal, as it suggests that the price is likely to continue to decline.
The dual top pattern is an important tool for traders because it can help to identify potential trend reversals. However, it's important to confirm the pattern with other indicators and analysis before making trading decisions. For example, traders might look for other technical signals such as a bearish divergence or a break below a key support level to confirm the dual top pattern. Additionally, traders may use fundamental analysis to gain insight into the underlying factors that are driving the price movement of the asset.
Overall, the dual top pattern is a powerful tool for traders to identify potential trend reversals, but it's important to approach it with caution and to use other analysis techniques to confirm the signal before making trading decisions.
In the below example, a newbie too would be able to learn and practice trend reversal using double top pattern
Dual top pattern = potential trend reversal.
Look for two mountain tops with a valley in between.
The resistance level was reached twice but was not broken
Draw the neckline by connecting lows between the peaks.
A breakdown below the neckline = sell signal.
Remember, the dual top pattern can be a powerful tool for traders to identify potential trend reversals, but it's important to confirm with other indicators and analysis before making trading decisions.
