How to trade doji candle like a legendhello everyone,
It's been a long that we haven't discussed anything here..
so our today's topic of discussion is how to trade/play with signs similar to Doji/ dragonfly/hanging-man etc
so we know the sign very well. we are referring here to the candlestick pattern, where there is some conflict between buyers & sellers & both keep trying to push/pull each other resulting in forming a candle where we usually see a small body candle having wicks on both sides.
so our next question is how to trade them..
1. Trend: before trading such patterns the trend should be known very well.
2. Once we have got the trend then wait for the small body candle.
3. Once we have got the candle, mark the high/low of the prior candle of the doji candle.
4. Wait for the next candle to form after the formation of doji candle.
5. once, the marked candle high/ low is breached on a closing basis you are all set to go!
examples shared
Example -1
Example-2
Example-3
Example-4
Example-5
Example-6
Example-7
Example-8
Example-9
I have shared multiple examples regarding the same & hope I be able to add some logic also..
Please note time frame must be kept the same while analyzing this setup.
I have shared entry & stop-loss levels only. will share stop loss technique in another post
Thanks for reading!!
Community ideas
BankNifty - The Last Move / Idea for 2022Disclaimer
There is a very high degree of risk involved in trading. Past results are not indicative of future returns.
Wishing You All A Happy & Prosperous New Year 2023 !!!
Short Video on Bank Nifty - The last move or idea for year 2022.
Last Price - 43115
Trading Strategy
Plan A - Important Support Zone 42900-43000
Index taking support close to this zone, we expect upside bounce 43500-43600 zone
Plan B - Important Resistance Zone 43500-43600
Kindly do your due diligence, If Index halts in 43500-43600 or close by zone upside, we expect downside move back into 42900-43000 zone
Plan C - Breaking Support Zone 42900-43000 & Holding below
Index while returning back if breaks 42900-43000 then we expect 42500 downside
Plan D- Critical Support Zone 42400-42500 if breached on downside
Falling below 42400-42500, It can attempt 41597 where we started our idea published on 23rd & 26th Dec 2022
---------------------------------
Last Ideas Published
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23rd Dec 2022 - Ending Diagonal Idea at bottoms of 41600
26th Dec 2022 - Bears, Bulls & Bounce 500+ Points
Introducing Minds! 5 Things you need to know.Social media has evolved to become an essential tool for traders and investors. Staying up to date with market narratives, sharing and reading top ideas, and directly collaborating with others all serve to make the medium an extremely important part of the research process. That’s why today we’re thrilled to announce the next step in that evolution - Minds!
In today’s post, we’re going to highlight a few ways to use Minds to improve the way you follow, share, and chat about your favorite symbols. After all, in markets, information is everything and this is another tool to build into your workflow:
1.) Think of Minds as a feed created by your peers – full of their opinions, notes, and shared news topics, all relevant to whatever ticker you’re currently looking at.
2.) Minds can be used to quickly measure the general sentiment for any symbol. Ask yourself what people are talking about and if it’s bullish or bearish.
3.) Accessible from any symbol page, or from the right rail (with the thought bubble icon), this unique format allows you to chat with other members of the community alongside your chart. Watch the chart and social conversation at the same time.
4.) Want feedback about a specific symbol? Head to the Minds feed for that symbol and share your questions or comments. Other traders will eventually see your posts on the Minds feed. They can then comment, upvote, and downvote to let you know what their initial reaction is. This feedback can be used to improve your understanding of a symbol.
5.) Minds can be used to quickly catch up on all the news about your favorite symbols. Head to a Minds feed and examine what people are saying. Is there breaking news? Links? Charts? Something else? Over time these feeds will become essential newsfeeds for you.
Minds is currently in beta, so please send us any feedback you have! Know that we are working diligently to improve it.
Finally - while Minds is open to all users to read, follow, and vote, only paying members (Pro, Pro+, and Premium) can currently post to the Minds feed and leave comments, similar to the other social tools on our site.
Let us know how you like it, and get out there and post your first Mind today!
Happy Holidays! 😎🌲
-Team TradingView ❤️❤️
A pill for missed opportunitiesPrevious parts of the post:
Part 1: My Three Comrades: the Chart, the Screener, and the Watchlist
Part 2: Two captains of the same ship
The market is an element we take for granted. It can't stop when we're busy doing other things, and it can't work if the stock market is off and you personally have work days.
The small investor's impact on the market is close to zero. Some may not like it, but I see it as a big plus. I'm not the only one. Even Peter Lynch wrote about this . It is because of our size that we small investors have the ability to get the best buy and sell prices on stocks. Just imagine an elephant and a mouse trying to drink water from a coffee mug. Who has a better chance?
Like the best sales, attractive stock prices don't last long. This also applies to the period of increased stock prices that are interesting to sell. To make sure you don't miss this time, TradingView has an alert service.
Why do we need an alert system? For our convenience. Once we have selected fundamentally strong companies, our next step is to keep an eye on their stock price so we can buy them at a price we can benefit from.
You remember our strategy, right? Buy rooms in a great hotel, and even during a sale period.
How do you monitor these "sales"? You have two options: to monitor the price chart yourself during the trading period, or set up alerts so that if the stock price reaches a certain level, you will receive an SMS message to your phone or email, or a push-notification in the TradingView app (depending on your settings). Agree, this is very convenient.
So how do you set up the alerts?
1. First of all, you must open the chart of the stock you are going to configure the alerts for.
2. Then click on the "Alert" button at the top toolbar of the chart.
3. Set the alert parameters in the settings menu.
How do I read the settings in this picture?
If the Apple stock price is less than $130 per share, I will receive an alert every minute, all the time the stock is trading below $130.
The alert I will receive will contain the following message:
AAPL Less Than 130.00
If you don't want to get an alert every minute, set the trigger to "Only Once".
4. In the "Notifications" tab, you can configure where the alerts and the sound will go. The system of customized alerts will allow you to use your time effectively. You will not be chained to the monitor and you can calmly wait for the cherished message.
In the picture you can see that alerts can come as:
- push notification to your phone (if you have the TradingView app installed);
- a pop-up window on your monitor;
- a letter to your email address;
- a message to a web address (advanced feature for developers);
- SMS to your phone, but via email (i.e. your email service must have the ability to send copies of emails via SMS).
As for my investment strategy, it's quiet enough to work on it even without alerts. Mr. Market doesn't often come with insanely interesting prices, so it takes time to get to the target values. It's like waiting for an astronaut from the Moon: he can't return to Earth in a day, you have to wait patiently, with the occasional peek at the situation.
So, I'm concluding my series of posts dedicated to the basic functions of TradingView. I advise you to "play" with the platform for a while to get used to it as quickly as possible. In fact, it has a lot of features that you will discover over time. For now, that's it.
In the following posts, we will begin to examine perhaps the most important aspect of an investment strategy, which is fundamental analysis. Get ready, here comes the part that will require the most concentration. But then you will be able to navigate this topic with ease.
See you next time!
'SANTA' of the 'TRADERS'This publication is dedicated to thanking the 'Santa' of the ‘Traders’ i.e. the 'Stock Market'.
The lessons given to us as a gift of the market, not only help us to succeed in the stock market but also helps us throughout life.
This 25th December i.e. Christmas let’s thank our 'Santa' and have a detailed look at 5 Great Gifts of the Stock Market and thank her for these
life-awakening gifts.
-> Discipline: The most important teaching in markets is discipline. As the wording of Jim Rohn states “Discipline is the bridge between goals and accomplishment” stock market develops that bridge.
The market has its way of teaching and punishing, I think all of us had witnessed its punishment whether in form of not keeping stop loss or not following your trade system.
Discipline plays a vital role in an individual’s life. As said by Horace “Rule your mind or it will rule you. ”The disciplined person has the power to rule his mind whereas others lack this ability.
-> Patience: Another gem cultivated by markets in our personality and harvested by us throughout life. One of the familiar names of our school time Benjamin Franklin says “He that can have patience can have what he will.” market first teaches this gem to us and then offer us what we wish.
We all have at least once missed taking the real profit by not waiting till the target is achieved but leaving the trade in midway though it was moving in our direction the reason is we lack patience and the market gives profit only to eligible ones so, either you be eligible or market will make you fit for it by its way.
-> Ability to conquer 3 gateways of hell: According to ‘The Bible’ there are 12 gateways to hell and among them, the most dangerous are Lust, Greed, and Anger.
The market helps its students in conquering those strong emotions. The beginner in the stock market has a strong lust for making money very quickly and greed for making lots of money without that kind of effort and when he fails in his motive anger gets born in his personality from where degradation or hell starts.
Those few people who still have not left the hands of the market get the knowledge to conquer those emotions throughout their journey in markets.
-> Faith in yourself: One of the famous quotes by Ralph Waldo Emerson is “The best lightning rod for your protection is your spine.” market strengthen that spine so that we as its student can withstand any kind of storm in our life.
Taking any trade based on your analysis requires self-belief on the early days people hesitate but later they rely on their analysis because the market has taught them self-belief.
-> Crush your arrogance: Market is popular in crushing the arrogant guy along with this removing any trace of arrogance in his personality. The famous wording says “Close some doors today. Not because of pride, incapacity, or arrogance, but simply because they lead you nowhere.” market as a kind teacher keep a keen eye on her student for arrogance as she knows that as soon as arrogance arises person starts his fall.
All of us had witnessed that whenever we start thinking that we have mastered markets and try to neglect discipline market slaps us badly to awaken us that we are still newbies and still had to learn a lot.
I believe these 5 are the most valuable gifts of the market but if you have any gift of the market much valuable in your life please mention it in the comments.
Finally, Merry Christmas to all my trader mates.
The stock market gives success only to eligible ones so, either you be eligible or the market will make you fit for it in its own way.
Gap Trading Combined With Supply & Demand ZonesWhat Are Gaps?
Gaps are nothing but Price of a Stock moving up and down sharply with no or little trading happening between the previous days close and current days open. Gaps show an ultimate picture of imbalance between supply & demand. Gap formations are due to many fundamental and technical reasons.
Most common example, when there is an announcement of company earnings. Gap Up or Gap Down is imminent the next trading day due to positive or negative news. A trader can profit from gaps provided he/she can identify the type of gap and its location with perspective to Institutional Supply & Demand Zones.
Gap Trading Strategy using Supply and Demand Zones
A lot of traders are fearful of Gaps and see it as a threat & aren’t comfortable carrying positions overnight. However, for a professional Supply Demand Trader, these Gaps aren’t threats on the contrary they provide high probability trading opportunities, when combined with Supply & Demand Zones.
Four Gap Structures That We Look At:
1. Inside Gaps
2. Outside gaps
3. Novice Gaps
4. Professional Gaps
1.How to Identify & Trade Inside Gaps?
Inside gaps are created when Price Opens between the prior Day’s High and low. Often these gaps fill quickly on the same day. Inside gaps can be mainly used for quick intraday trades, provided they happen at strong supply & demand zones.
Gap Up into a strong Supply Zone provides a good short opportunity, whereas Gap Down into a strong Demand Zone presents a good long opportunity. Let’s see an example:
2.How to Identify & Trade Outside Gaps?
Outside gaps are created when Price opens beyond the Prior days High and low. These gaps generally do not fill on the same day. They indicate the establishment of a new Trend or the continuation of the existing one.
One must wait for quality Supply & Demand Zones to form after the gap and wait for a pullback to join the new move. Let’s see an example:
3.How to Identify & Trade Novice Gaps?
When price gaps in the same direction of the current trend, then it is called a Novice Gap. Novice gaps as the name suggests are created by novice trader emotions and are excellent opportunities to find high probability trade setups.
Gap Up or Gap Down after extended moves into quality areas of Supply & Demand, offer us high probability Short & Long opportunities respectively. Let’s see an example:
4.How to Identify & Trade Professional Gaps?
When price gaps up in the Opposite direction of the current trend, it is called a Professional Gap or a Pro gap. Pro gaps represent a significant imbalance between Supply & Demand.
Pro Gaps generally occur after extended moves in one direction, taking the amateur traders completely by surprise. They generally bring about trend change. Pro Gap Down & Pro Gap Up form high probability Supply & Demand Zones. Pull back to these zones provide us with opportunities to enter at trend change points. Let us see with an example:
Nifty: At 50 day EMA and my trading viewNifty
In my last take on Nifty futures when it was at 18687, I had given a target of 18258.
I exited from the trade in Futures very early ( I too am human and can get scared sometimes) and then went with some Call short position for better risk management.
If you see the Nifty Futures chart now...
Nifty futures made a low of 18231 / 18223 and so far has managed to stay above 18258 odd levels on closing basis. (400 plus points... Not bad to get the levels right at least from analysis angle)
Coming to Nifty Spot chart we see 50 day EMA at 18191 and Nifty managed to stay a tad above so still there is hope for the Bulls for a late Santa Claus rally.
Put Call Ratio is at 0.61
Given the set up, and data parameters, I would not consider any short positions for now.
My trading setup:
I would consider taking a bullish stance for the next 1 - 2 week with 18114 / 18080 in Nifty spot as my SL.
If I see things favorable (on the downside Nifty should not breach 18114 -18080 levels), I would consider selling Put options as it provide some margin of safety.
On the upper side if Nifty manages to take out 18244-18262) on hourly chart, I might consider some aggressive bets on the long side as well with 50 day EMA or 18178 as my SL .
Pharma sector showed some promise today and could be the dark horse going forward. Keep a watch on the sector.
Do let me know if you find the analysis and insights helpful.
Like and Follow for more ideas like these...!!!
Take care & safe trading...!!!
Disclaimer
- The view expressed here is my personal view
- Past performance is not a guarantee for future predictions
- I have been wrong in the past and can be wrong again in future too
- Use this for educational purpose
- Any decision you take, you need to take responsibility for the same
- It's your hard earned money. Treat it wisely
- Trade / Invest keeping in mind your trading style, goals and objectives, time horizon & risk tolerance
- if trading in F&O, understand that F&O trading involves risk
- Do take proper risk management measures
- Do your own analysis and consult your financial adviser if need be
Rising wedge pattern IGLIGL
Key highlights: 💡⚡
📈On 1D Time Frame Stock Showing Breakdown of Rising wedge Pattern .
📈 Strong bearish Candlestick Form on this timeframe.
📈It can give movement up to the Breakdown target of below 378-.
📈Can Go Long in this stock by placing a stop loss above 445+.
📈 breakdown this can give risk:reward upto 1:4+
5 Things to remember about bull marketsHey everyone! 👋
Bull markets are a time of optimism and growth, and they can be a great opportunity for making substantial gains. However, it's important to remember that bull markets don't last forever, and it's crucial to approach them with a healthy dose of caution while keeping your eye on your long-term goals. 🙂
Here are a few things to keep in mind when dealing with bull markets:
🚨 Don't get caught up in the speculative frenzy
It's important to remain level-headed and avoid making impulsive decisions based on short-term gains. Take time to thoroughly research any trades you're considering. It’s always good to focus on ideas with strong fundamentals as well as technicals.
📚 Keep an eye on valuations
In a bull market, it's common for stock prices to rise, sometimes to levels that may not be justified by a company's fundamentals. For investors, it can be important to keep an eye on valuations and make sure the stocks you're investing in are reasonably priced.
🔔 Be prepared for reversals
Like all good things, the Bull markets too eventually come to an end. Hence, it's essential to be prepared for a downturn. It’s always good to manage risk exposure by employing techniques such as diversification and hedging.
💸 Control your risk
It's natural to want to hold on to the positions that are performing well, but it's important to remember that bull markets eventually come to an end.
If you've made substantial gains, trailing may be a good option to lock in profits should things change quickly. Letting the winners ride by continually trailing your positions is one good strategy for improving a trade’s Risk-Reward ratio.
📈 Keep a long-term perspective
Trading is a marathon, not a sprint. Bull markets can be a great opportunity for gains, but it's important to keep a long-term perspective about your goals. Did you miss the big moves? Don’t get angry and make bad decisions. There will be more opportunities down the road to apply what you’ve learned.
Bull markets can provide excellent opportunities, however, they must be approached with caution and with defined personal goals. Consider the risks and rewards of each investment, keep an eye on valuations, and always be prepared for a downturn.
We hope you enjoyed this post! Please feel free to write any additional tips or pieces of advice in the comments section below.
See you all next week. 🙂
– Team TradingView
Do check us out on YouTube and Instagram for more awesome content!
NBCC - Price Breaking Out At High Volumes - A Retest In ProgressNBCC
Price has broken out a major resistance and is doing a pull back at low volumes.
A upside of 35 % is in the stock if it manages to stay above the critical support as mentioned in the video.
Target is the major resistance.
Cheers,
priceNpedia
Japanese Candlesticks: Game of Body and ShadowsSo, in the last post we learned how to build a simple line chart based on the tape. Each point on the chart is defined by coordinates from the time (X scale) and price (Y scale) of a trade. But some stocks are traded at a frequency of hundreds of trades per second, at different prices. The question arises: which trade price to choose from this set?
Interval charts were invented to solve this question. The most popular is the Candlestick Chart . They appeared in Japan three hundred years ago, when the Japanese exchanges were trading rice. They were invented by a trader named Homma. Apparently, being tired of drawing a lot of points on charts, he decided that it would be more convenient to show the price change over the time interval. So, what he came up with.
Let's take a time frame equal to one hour and plot a 1-hour candle on the basis of the following tape:
FB $110 20 lots 12/12/22 12-34-59
FB $115 25 lots 12/12/22 12-56-01
FB $100 10 lots 12/12/22 12-59-12
FB $105 30 lots 12/12/22 12-59-48
A candle consists of a body and upper and lower shadows. Like a float. The body is formed from the open and close prices of a certain time frame. In our case the hour interval is from 12-00-00 till 12-59-59. Only 4 deals were concluded in this time interval. The price of the first deal is $110, which is the opening price of the period or the so-called " open ". The price of the last deal was $105, which is the period closing price or " close ". These two prices are enough to form the body of the candle.
Now let us move on to the shadows . The upper shadow is drawn at the maximum price of the interval (115$) and is called " high ". The lower shadow is drawn at the minimum price of the interval ($100) and is called " low ".
The shape of our candle is ready. However, it should also have a content, namely the color. What is it for? Let's take a look at another candle.
Here we can see where is the high and where is the low. But how do we know which is the open or the close? After all, the open is not always at the bottom of the candlestick body, as in the previous example, it can be at the top.
To understand where is the open and where is the close, Homma has invented to paint the body of a candlestick in black, if close is lower than the open, i.e. if the price in the interval is falling (falling candle or bearish candle ).
But if close is higher than open, the body of the candle remains white, it will indicate the growth of price during the interval (rising candle or bullish candle ).
Sometimes a candlestick has shadows, and the close price is equal to the open price. Then it will look like a cross. This candlestick is called a doji .
White and black are the classic colors for the bodies of Japanese candles. However, you can come up with your own colors. If you want the rising candles, for example, to be blue, and the falling orange - you're welcome. The main thing is to make it convenient and understandable for you.
So, one candlestick allows us to understand where we had the first trade, the last trade, the price maximum and minimum in a given time frame. But it does not allow us to understand how the price changed within the interval: when the maximum or minimum was reached and what was happening within this price range.
But the problem can be easily solved if we switch to a smaller time frame. If we look at the daily candlesticks (this is when the time frame of one candle is equal to one day), and we want to see what was during the day - we switch to the hourly time frame. If we want to see even more details - we switch to 15-minute candles and so on down to the seconds. But you and I will most often use daily timeframes, so as not to be distracted by the fluctuations that occur during the day.
To be continued :)
Pullback Trading Strategy - RulesPullback Trading Strategy over 80% Success Rate
Rules
Moving Average - Price should above 200 Period Moving Average
Entry - 10 Period RSI Below 30
Exit - 10 Period RSI Above 50
Stop Loss - Recent Swing Low
I hope you understood the pullback trading rules.
Chart 1 : Reliance 9.68% Up
The price was clearly above the 200 Period Moving Average in the chart below, and the RSI 10 period was below 30, indicating that the pullback rule was satisfied.
Chart 2 : SBIN 9.4% Up
The price was clearly above the 200 Period Moving Average in the chart below, and the RSI 10 period was below 30, indicating that the pullback rule was satisfied.
Chart 3 : TCS 3.13% UP
Pullback rule satisfied
Chart 4 : Bank Nifty 2.51 % UP
Chart 5 : Wipro 3.76 % UP
I hope you enjoyed it. Please share and comment if you found this content useful.
Wyckoff Phases in PracticeWe all know that market moves in Phases. The four most popular phases are –
1️⃣Accumulation
2️⃣Markup
3️⃣Distribution and
4️⃣Markdown
Mr. Wyckoff analyzed these phases further, esp. Accumulation and Distribution, to understand the price behavior for potential opportunities to trade/invest in the market.
In this tutorial I am going to have a brief discussion about Accumulation-sub-phases of the market with the help of an example that I came across today.
✅ Phase A
🚩Starts after a major downtrend.
🚩Begins with a selling climax (SC) - Large down bars with abnormally high volume (see B).
🚩SC is followed by the largest rally in the major downtrend, associated with good buying volume. This Automatic Rally (AR) represents the change in character (ChoC) of the market - buyers taking over.
🚩Market retest the level B with a lower volume (supply) – Secondary Test (see D).
✅ Phase B
🚩Usually the longest phase.
🚩High volume during rallies (eg. E) and lesser during retracements.
🚩Even if volume is high during retracements, price fails to make new lows.
🚩More secondary tests (see F) held at the support zone (B and D).
🚩Market consolidates testing supply and demand with no particular direction – Consolidation.
✅ Phase C
🚩The smallest but most important.
🚩Usually ends with a Spring (not in the above case).
🚩You would see final shakeout of weak buyers. Price dips underneath the support zone (B, D and F) and reverse sharply back above support.
🚩Perhaps the best time enter for those who like to take low risk high probability trades.
🚩In the above case G was just another test of support Zone.
✅ Phase D
🚩You would see swift action in this phase. Wide up bars (with high volume) and small down bars (with low volume).
🚩This also represents the change in character which now differs from the consolidation phase.
🚩ChoC - Notice two blue rectangles and the price action in them.
🚩Price breaks the resistance zone (mostly the high of automatic rally).
🚩It again retests this resistance which now starts acting as support. This is called the Backup action.
🚩This is perhaps the best time for those who like to enter after confirmation.
✅ Phase E
🚀Accumulation is over and a trend is established.
Not all bear markets end with these accumulation-sub-phases. You may often see V-shaped recoveries just like what we experienced after March 2020 lows. But you will surely find some stocks or markets that moved in line with Wyckoff phases.
Thanks for reading.
Do like and comment.
📣Disclaimer: The views are personal and theoretical. Apply your own due diligence before making your investment decisions.
10 Reasons why Most traders lose moneyHey everyone!👋
Trading & investing is not easy. If it were, everyone would be rich.
Here are a couple of time-honored tips to help you get back to basics.
Lack of knowledge 📘
Many traders jump into the market without a thorough understanding of how it works and what it takes to be successful. As a result, they make costly mistakes and quickly lose money.
Poor risk management 🚨
Risk is an inherent part of trading, and it's important to manage it effectively in order to protect your capital and maximize your chances of success. However, many traders don't have a clear risk management strategy in place, and as a result, they are more vulnerable to outsized losses.
Emotional decision-making 😞
It's easy to feel strong emotions while trading. However, making decisions based on emotions rather than rational analysis can be a recipe for disaster. Many traders make poor decisions when they are feeling overwhelmed, greedy, or fearful and this can lead to significant losses.
Lack of discipline 🧘♂️
Successful trading requires discipline, but many traders struggle to stick to their plan. This can be especially challenging when the market is volatile or when a trader is going through a drawdown. Create a system for yourself that's easy to stay compliant with!
Over-trading 📊
Many traders make the mistake of over-trading, which means they take on too many trades and don't allow their trades to play out properly. This leads to increased risk, higher brokerage costs, and a greater likelihood of making losses. Clearly articulating setups you like can help separate good opportunities from the chaff.
Lack of a trading plan 📝
A trading plan provides a clear set of rules and guidelines to follow when taking trades. Without a plan, traders may make impulsive decisions, which can be dangerous and often lead to losses.
Not keeping up with important data and information ⏰
The market and its common narratives are constantly evolving, and it's important for traders to stay up-to-date with the latest developments in order to make informed decisions.
Not cutting losses quickly ✂️
No trader can avoid making losses completely, but the key is to minimize their impact on your account. One of the best ways to do this is to cut your losses quickly when a trade goes against you. However, many traders hold onto losing trades for too long, hoping that they will recover, and this can lead to larger-than-expected losses.
Not maximizing winners 💸
Just as it's important to cut your losses quickly, it's also important to maximize your winners. Many traders fail to do this, either because they don’t have a plan in place, telling them when and how to exit a trade. As a result, they may leave money on the table and miss out on potential profits.
Not Adapting 📚
Adapting to changing market conditions is paramount to success in the financial markets. Regimes change, trading edge disappears and reappears, and the systems underpinning everything are constantly in flux. One day a trading strategy is producing consistent profits, the next, it isn't. Traders need to adapt in order to make money over the long term, or they risk getting phased out of the market.
Overall, the majority of traders make losses because they fail to prepare for the challenges of the market. By educating themselves, developing a solid trading plan, and planning out decisions beforehand, traders can improve their chances of success and avoid common pitfalls.
We hope you enjoyed this post. Please feel free to write any additional tips or pieces of advice in the comments section below!
See you all next week. 🙂
– Team TradingView
Do check us out on YouTube and Instagram for more awesome content!
Investors' Holy Grail - The Business/Economic CycleThe business cycle describes how the economy expands and contracts over time. It is an upward and downward movement of the gross domestic product along with its long-term growth rate.
The business cycle consists of 6 phases/stages :
1. Expansion
2. Peak
3. Recession
4. Depression
5. Trough
6. Recovery
1) Expansion :
Sectors Affected: Technology, Consumer discretion
Expansion is the first stage of the business cycle. The economy moves slowly upward, and the cycle begins.
The government strengthens the economy:
Lowering taxes
Boost in spending.
- When the growth slows, the central bank reduces rates to encourage businesses to borrow.
- As the economy expands, economic indicators are likely to show positive signals, such as employment, income, wages, profits, demand, and supply.
- A rise in employment increases consumer confidence increasing activity in the housing markets, and growth turns positive. A high level of demand and insufficient supply lead to an increase in the price of production. Investors take a loan with high rates to fill the demand pressure. This process continues until the economy becomes favorable for expansion.
2) Peak :
Sector Affected : Financial, energy, materials
- The second stage of the business cycle is the peak which shows the maximum growth of the economy. Identifying the end point of an expansion is the most complex task because it can last for serval years.
- This phase shows a reduction in unemployment rates. The market continues its positive outlook. During expansion, the central bank looks for signs of building price pressures, and increased rates can contribute to this peak. The central bank also tries to protect the economy against inflation in this stage.
- Since employment rates, income, wages, profits, demand & supply are already high, there is no further increase.
- The investor will produce more and more to fill the demand pressure. Thus, the investment and product will become expensive. At this time point, the investor will not get a return due to inflation. Prices are way higher for buyers to buy. From this situation, a recession takes place. The economy reverses from this stage.
3) Recession :
Sector Affected : Utilities, healthcare, consumer staples
- Two consecutive quarters of back-to-back declines in gross domestic product constitute a recession.
- The recession is followed by a peak phase. In this phase economic indicators start melting down. The demand for the goods decreased due to expensive prices. Supply will keep increasing, and on the other hand, demand will begin to decline. That causes an "excess of supply" and will lead to falling in prices.
4) Depression :
- In more prolonged downturns, the economy enters into a depression phase. The period of malaise is called depression. Depression doesn't happen often, but when they do, there seems to be no amount of policy stimulus that can lift consumers and businesses out of their slumps. When The economy is declining and falling below steady growth, this stage is called depression.
- Consumers don't borrow or spend because they are pessimistic about the economic outlook. As the central bank cuts interest rates, loans become cheap, but businesses fail to take advantage of loans because they can't see a clear picture of when demand will start picking up. There will be less demand for loans. The business ends up sitting on inventories & pare back production, which they already produced.
- Companies lay off more and more employees, and the unemployment rate soars and confidence flatters.
5) Trough :
- When economic growth becomes negative, the outlook looks hopeless. Further decline in demand and supply of goods and services will lead to more fall in prices.
- It shows the maximum negative situation as the economy reached its lowest point. All economic indicators will be worse. Ex. The highest rate of unemployment, and No demand for goods and services(lowest), etc. After the completion, good time starts with the recovery phase.
6) Recovery :
Affected sectors: Industrials, materials, real estate
- As a result of low prices, the economy begins to rebound from a negative growth rate, and demand and production are both starting to increase.
- Companies stop shedding employees and start finding to meet the current level of demand. As a result, they are compelled to hire. As the months pass, the economy is once in expansion.
- The business cycle is important because investors attempt to concentrate their investments on those that are expected to do well at a certain time of the cycle.
- Government and the central bank also take action to establish a healthy economy. The government will increase expenditure and also take steps to increase production.
After the recovery phases, the economy again enters the expansion phase.
Safe heaven/Defensive Stocks - It maintains or anticipates its values over the crisis, then does well. We can even expect good returns in these asset classes. Ex. utilities, health care, consumer staples, etc. ("WE WILL DISCUSS MORE IN OUR UPCOMING ARTICLE DUE TO ARTICLE LENGTH.")
It's a depression condition for me that I couldn't complete my discussion after spending many days in writing this article. However, I will upload the second part of this article that will help investors and traders in real life. This article took me a long time to write. I'm not expecting likes or followers, but I hope you will read it.
Have a great day :)
@Money_Dictators
Why Grasim can blast a brief anaysis!!NSE:GRASIM is looking Good to enter if you want to invest in Nifty Infra for the upcoming weeks.
Even though volatility in the market has started to increase. It is stable and holding its levels Positively.
With every Swing in it, volatility is reducing & it can give huge returns in a shorter period.
One Can take Stop loss near the zone of 1760 (Tight SL) and 1700 as a (Loose SL)
Trade horizon can vary on movement of the stock, (Ideally 3-6 months)
I'll keep you updated here so make sure to follow for updates. and you can ask questions in the comments.
Follow for Such Ideas
'RESUME' the trend journey with a 'PAUSE' candleDefinition:- As the name suggests pause candle is the candle formed in between the trend, the change is usually opposite the trend
i.e. if the underlined script is moving in an uptrend then the pause candle will be of negative change and the color will be red and vice-versa.
The pause candle indicates a pause in fresh positions by market participants and an entry chance for players expecting reversals.
Also, it's an opportunity for new players to enter the trend i.e. for those who have missed the initial trend.
Rules or Characteristics of a pause candle:-
1. Prior candles should be aggressive i.e. large candles of the opposite color.
2. It is generally of very small size as compared to the previous one and of the opposite color.
3. Volume is considerably low as compared to previous candles.
4. The RSI level of the spot where this candle originates is usually between the band of 35-75.
The psychology behind the pause candle:- In the market everything has a cause and a reason similar pause candle also conveys its message to the market players.
The generation of the pause candle signifies that there is fatigue among the participants who were driving the stock or are taking some break.
Also, it alerts that new hands have entered into the trend and are trying to offer resistance. Those who are looking for reversals spot this candle and enter into
trade with the hope of reversals, they are generally weaker hands.
Bigger hands those who were the driving force of the trend also want the new player to enter the trend so that they hunt them down and resume the
rally at a lower price.
How to trade pause candle:- Now, as small players, we don't know what goes inside but try to predict the message through the candle. If a pause candle
is formed it doesn't mean the exhaustion of trend or reversal rather indicates a pause in fresh market position.
But, here the aggressive trader enters with trades opposite to the trend. At this stage, two cases arise, note talking for an uptrend:-
-> The next candle's high crosses above the high of the pause candle:
Maximum times this is the case that arises, here the candle after the pause candle crosses the high of the pause candle now what does this indicate?
The indication is that the trend drivers or bigger hands are active again and those who have taken a position against the trend are trapped and will
try to escape hence, the move will be much sharper as compared to the initial trend.
How to benefit in this case? When you spot such a pause candle that is formed after a continuous trend set it to alert candle and wait for the next candle
to form. If the next candle crosses the high of the pause candle take the position along the trend and your stop would be the low of the pause candle which is generally
too small and ride the sharper trend which is usually equal to the initial one.
-> The next candle's low crosses below the low of the pause candle:
Though not arises usually sometimes it does occur, here the candle after the pause candle crosses the high of the pause candle now what does this
indicate?
The indication is that the trend drivers or bigger hands are in the backseat and are not seeing further upside also there is a chance that they can book
profits at this level.
How to benefit in this case? When you spot such a pause candle that is formed after a continuous trend set it to alert candle and wait for the next candle
to form. If the next candle crosses below the low of the pause candle take the position against the trend and your stop would be the high of the pause candle which is generally
too small and ride the reversal trend which is usually half of the initial one. This case comes under the reversal candlestick patterns on which earlier an article was published
by me but here we are concerned about a pause candle after which rally resumes.
Here, is an example of a different scenario though it doesn't match the above said cases but still the background is of a pause candle.
HIL was trading above a rising trendline and suddenly breakdown the line after which we see continue 2-3 red candles following the candles a pause candle is
formed with all the above-discussed properties but rather than showing the sharp downfall it again forms a pause candle but note stop loss is not triggered.
Here 3-4 pause candles are formed and finally it breakdown all the low with a big red candle and then afterward we saw a huge, sharp downfall.
The motive to explain the above example was that though sometimes we don't see rapid action but if your stop is not triggered and the candles are with
the low volume then you can assure that a sharp move is pending and sooner or later it will happen.
Note: The only constraint is to identify the correct pause candle for which you can refer to the above-said rules are very important. Sometimes the candle after the pause candle
crosses both the high and low of the pause candle in that circumstance you have to check the color of the candle, for uptrend it should be green then you can
take the position else if it's red then wait for the next candle, and vice-versa for the downtrend.
