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Nifty50

Price Action MACD Strategy: Rules and BackTest ResultsTake it as educational unless you understand the details of this strategy. I suggest you to backtest yourself, to understand entries and exits, before putting it in your trading repertoire. Rules: ------- Only Long trades when price > 55 EMA Only short trades when price < 55 EMA ------------------------------------------------------------------------------------------------------------------------------- Time Frame 1H ------------------------------------------------------------------------------------------------------------------------------- Long Entry Preconditions: a) Price above 55 EMA b) MACD histogram above zero line --Positive Divergence seen on MACD signal line (a complementary condition for High probability Entries) Long Entry Trigger: Price break above Significant peak fractal of previous downwave OR the break above prior peak fractal high. Exit Strategy or Stop: Type 1 Exit Precondition: Negative Divergence seen on MACD signal line; and Trigger: Break below a consolidation level or the prior minor swing low Type 2 Exit Hourly close below 55 EMA Exit type I or type II whichever comes earlier ----------------------------------------------------------------------------------------------------------------------------- Short Entry Preconditions: a) Price below 55 EMA b) MACD histogram below zero line --Negative Divergence seen on MACD signal line (a complementary condition for High probability Entries) Short Entry Trigger: Price break below Significant fractal of previous upwave OR the break below prior swing fractal low. Exit Strategy or Stop: Type 1 Exit Precondition: Positive Divergence seen on MACD signal line; and Trigger: Break above a consolidation level or the prior minor swing high Type 2 Exit Hourly close above 55 EMA Exit type I or type II whichever comes earlier ------------------------------------------------------------------------------------------------------------------------------------ # If trade exited but price shoots back piercing out of 55 EMA or is already above/below 55 EMA , a break of previous peak fractal with MACD histogram above/below zero line triggers entry again. # Exit Strategy discussed above works well in long trades but chops in short trades. Tweaking a little by taking 1:1 or smaller targets (to previous support zones) instead of the Exit strategy may help in this issue. Backtesting From Jun till 20th July: *10558 SL 10626 = -68 10771 E10830 = 59 *10755 SL 10782 = -27 10810 SL 10758 = -52 *10732 E10570 = 162 10737 E10999 = 262 Net= +336 Results suggest that this strategy is too good in a trending market. Side ways market may give breakeven trades. #Trades with asterisk mark are short. Currently No trigger but bearish divergence on MACD # Older results in the following post Enough testing, now its time to trust this strategy. Enjoy the weekend Regards
NSE:NIFTYEducation
by Bravetotrade
6
Nifty: Cypher-Bat-Bearish AttackHi In my previous post on the index, I presented a bearish cypher and three levels on the chart. The first and second levels got hit while the third one has not. It made a low at 10417 right at the 50% retracement level mentioned on the above post. Since then it has been reversing. What do I expect now? What I see on the chart is the formation of another bearish bat pattern right into the downtrend line shown on the chart, which may give me a high risk reward opportunity to short. The bat PRZ (10870) coincides with an ABCD pattern shown in the chart, which has the D point completion at 10855. So I must consider 10855-10870 as a potential reversal zone. #This analysis will remain valid untill we close above 10930. But before that, where the index might take support (in the current micro downtrend) to shoot back up for the PRZ? I have come out a support zone of 10650-10680 which may act as a cushion for the markets. # 10558 should not be violated or else I will have to reassess the scenarios. OK..assume it hit the support, bounce to hit PRZ and reverse..then what would be the targets on the downside. Well !! that's tricky. As of now I can only say that it could either go for traditional bat targets at 38.2% and 61.8% retracement levels ( which I can update later) OR it may go for 61.8% Cypher target at 10325. I hope this analysis would help some traders to make better decisions. Wish you a happy weekend and profitable week ahead. Regards
NSE:NIFTYEducation
by Bravetotrade
14
Nifty: Cypher-BearishHi, Publishing a bit late in this downmove, but we 'll discuss few opportunities on the downside. First of all Nifty managed to close above 10785, did not hit the 11000 target but 10929 instead before the giant Cypher nibbled the bullish move. We might have some downside left in this move but perhaps this is not the place to short. Traditionally the first target for this pattern would be 10555 and the second 10325. But let's see how we may reach there. If markets pull back from here, I would look for selling opportunity in the 10690-10790 zone and hunt for the targets. But If market hits 10555 first, I ll look for selling opportunity in the 10620-10700 zone (one can also utilize 10555 level to scalp a long trade setup), and look for targets. As per books 11172 should be the stoploss but practically that's too high, so the current pivot 10930 can be taken as stoploss point which can be trailed if the trade proceeds in our direction. Hope this analysis would help some traders to take better decisions. Regards
NSE:NIFTYEducation
by Bravetotrade
4
Nifty: The Bat PatternHi All, Let's quickly get to the charts. I can observe a Bat pattern completed at 10180. This could be taken as a reversal trade setup with traditional targets at 10295, 10330 and 10365. So If this setup works I would be passively bullish for the above conservative targets. Only on break and close above 10420 (on this chart), I may again play for 10600. Further targets can only be derived after looking at the price action above 10650 level. What if 10140 is breached ( either after hitting above targets or otherwise). In that scenario, I will be bearish for 10000 psychological level target and the extended 9700-9750 target zone. Hope this brief analysis will help some traders to plan their trades well. Happy weekend and wish u all a more profitable week ahead. Regards
NSE:NIFTYEducation
by Bravetotrade
Nifty Analysis II : Harmonic Ratios and The Price ActionWhenever Raman, one of my best friend, sits in front of Television and hears a Technical analyst he could not stop himself saying," ho sakta hai wahan tak chala jaye..neeche bhee aa sakta hai..oopar bhee ja sakta hai..bc..inko kush bhee pata nahi aur hame bevakoof bana rahe hain". The psychological setup of people like him is so rigid that we can never convince them that TA is all about probabilities. At present we are in a similar situation, where index is approaching 10036 and many traders are waiting for the index to touch 10000 mark for either banking their profit or sell short. But why 10036 is so important? yes, it is 1:1 price extension taken from Feb.2016 lows. In Harmonic patterns, 100% extension (AB=CD) is said to be of great importance. There are full fledged chapters on AB=CD. The basic structure of the pattern is that AB and CD legs should be similar in price as well as time..well !! you can say approximately if not precisely. So that's it? No. The twist is that this pattern acts as a basic building block of many other harmonic patterns and there are many variation to it. Depending on several factors (can't discuss in this post), CD leg can extend much greater than AB -- 1.272, 1.618 or higher (read Larry Pesavento). We will try to discuss some parameters here while applying them on NiftyWeekly chart. Parameter 1: No. of bars Ideally AB=CD has same no. of bars in both the legs. But if CD has more no. of bars, call it a weaker leg and has greater chances of ending up as 1:1 Parameter 2 :Range of Bars The beginning of CD is the most important event. If it begins with a wide range bar or a gap, consider it at least 1:1 and chances of extending further are great. The more number of wide range bars in this leg, the better. Parameter 3: Slope of the Legs The higher the better. If CD leg is steeper than AB, there are better chances of extension rather than 1:1 Taking these parameters into consideration we can see that in NiftyIndex the CD leg has not been as enthusiastic as AB (See notes on chart). 1) No. of bars in CD are more than AB. 2) None of the bar ranges 4% (except one). The Average Range of wide range bars in CD is approx. 2.5%, whereas it is 4% or higher in AB. Notice that the range declined after 9000 mark, whereas it should have increased at break above this level. 3) Yes, slope is one parameter where CD can compete with AB. But CD does not have better slope than AB. On the basis of above discussion, we can say that there are greater chances of CD = AB. Remember that there are no better indicators than time and price action. So better follow them rather than any pattern. Dun be as rigid as Raman. Hit like / comment if you think these observation can be useful. Trade safe, stay healthy. Best Regards Bravetotrade
NSE:NIFTYEducation
by Bravetotrade
2
SURVIVA : Need of the Hour !Hey Guys, Happy Weekend & this weekend is pretty long one too. Enjoy the weekend to core & try more charting which makes you better at trading. So What should be your basic expectation from Trading ?! To be Billionaire overnight ? yeah guys, millionaire not in our list anymore, too much of crowd in that zone (or) To make every trade right ? (or) To become professional trader ? (or) To make decent money everymonth ? Not yet, don't choose your options too soon because the right perception/choice : SURVIVA... Not just beginners even for those who are in trading for sometime, your main aim should be : To Survive in Trading field. Why Surviva became most important factor here ? Take a moment away from your charts, come fly with an Eagle's perception over trading world what do you see there ? Institutions, Hedge Funds, proprietary trading firms with money overflowing in their coffers,Big Sharks with deep pockets, Banks & Broking firms with best brains in the world. Not over yet, sharpen your sight, the best brains in the world compunded with advanced codes, HFT strategies which executes trade in fractional seconds, perfect analytical reports on their desk & highly productive team on demand anyday,anytime. That's an exponential combo you can't even imagine of... What does a beginner/rookie have ? An intel inside PC or Apple maybe, with non-buffering hi-speed internet for you-tubing. No, Don't land on the ground, Be the eagle...Weigh their probability of success if they face (Firms vs Rookie) against each other, watch the battle between former & later, do you think some common'er with no survival instincts or tactics, can survive this battle & come out unscathed ?? The odds are same as someone jumping out of plane without parachute & surviving. So, You or Me or Someone else can't survive here ? Only if there is Survival Instinct within you. It's broader topic : You should have a Plan, You should have discipline, You should be ruthless against your emotions - kill them, You should have the capital & Most of all you should stop your bleeding in battlefield which is losing capital gradually over time. Stop Trading till you find that way for consistent wins. A simple question friends, will you play a game if odds are stacked against you ? Will you go in for some battle knowing that you don't have plan ? Finally, will you wage a losing war ??? None will do that DOT Have a Plan n Discipline.Our aim is not to take hedge funds or bigsharks head on, we are not interested to take sides with them also. Then,what else ? We will just wait for the right opportunity to evolve in the Market & We seize them with utmost discipline. That's how SURVIVA works... We will have our part of losing trades, but we will eventually get more consistent winners than losers overtime. Don't just aim at generating profits in the Markets, SURVIVA is the mantra to sustain here... Open Discussion's most welcomed...
NSE:NIFTYEducation
by InsiderB
38
Weekly Educational Series - PART 2 ---------- Continued from Weekly Educational Series - PART 1 ; ---------- 3. Expectancy So, now we have got our risk reward ratio and winrate. We move on to calculate the expectancy of our trading strategy. The formula is, Expectancy = (Probability of Win * Average Win) – (Probability of Loss * Average Loss) So, in our scenario, where, Risk Reward Ratio = 2:1 Winrate = 60% we get, Probability of win = 60 % = 0.6 Average win = Reward = 3 Probability of loss = 40 % = 0.4 Average loss = Risk = 1 Putting these values in the formula, we get ; Expectancy = ( 0.6 * 3 ) - ( 0.4 * 1 ) = 1.8 - 0.4 = 1.4 Here, we get an expectancy of 1.4 , that is 1.4 is the average rupees you can expect to win per rupee at risk. {Example : you do 10 trades with 3:1 Risk Reward Ratio ; you win 60 % - earn 6 trades * 3 Rupees (18) you lose 40 % - lose 4 trades * 1 Rupee (4) you end up earning 14 Rupees even when you were right just 6 out of 10 times } This is a positive expectancy model, which we seek, to ensure that we will earn money in the long run. Professional traders aren't worried if their trade hits stop loss, because of this reason , that they know they will earn money ultimately. --------- NOTE : So, after learning all these concepts, what I want you to do is, from now on, pull out your charts and journal, see what works and what doesn't, set a specific strategy, determine the Risk Reward Ratio suitable to it, paper trade / real trade / past data - have a look and find out the winrate Calculate expectancy. What answers do you get ? Is it positive or negative ? How much can you expect to earn in the long run? -------------- Ok, so that was the first post, the essential basics of trading, and utmost requirement of a trading plan. I would like to hear from you all 3 things, 1. Whether you were able to understand and found it helpful ? 2. Whether you want more posts like these ? If yes, on what topics? 3. What does your expectancy come out to be ?
NSE:NIFTYEducation
by dravya
17
Weekly Educational Series - PART 1 For the benefit of other traders, I am starting a weekly educational series where i will be covering lots of topics related to trading which everyone should abide by. It will be in simple language and easy explanation so that everyone can understand. There will be further detailed explanation of nuances if required by the members. So, starting with the first post, BASICS OF TRADING | PART - 1 Technical analysis is a part of trading. It doesn't make money in itself, but how you actually use that analysis and then trade, is what makes money. Many traders believe the myth of timing, and hope that one day they will be perfect in analysis and start making money. But trading is not hope, it's math. We come here, to earn money, and how we do that consistently ? By using math. Let me explain you how. No matter what indicator you choose, what timeframe you trade in, you trade options, futures or commodities; basically, anything you do in trading, you should remember these 3 things which will help you be profitable in the long run. ---------- 1. Risk Reward Ratio : How much are you risking to get estimated reward ? Are you risking 5 Rupees to gain 15 Rupees ? Then your ratio would be 3:1 . ( Remember this is a R multiple and not rupees So, a 3:1 ratio can be any of these, risking 10 to get 30 risking 100 to get 300 risking 500 to get 1500 ) Easy ? Just calculate how much you want to risk for every reward you hope to get. Be it, 2:1 3:1 5:1 doesn't matter, according to your trading style, determine this. ---------- 2. Winrate : So, once you have decided, how are you going to trade, and fixed your risk reward ratio, then you take only those trades which fit the Risk Reward Ratio criteria. Then, do, at least 25-30 trades, on paper or for real, as suitable. Analyze your results. What percentage of the trades were winners and hit target ? and what percentage of the trades were losers and hit stoploss ? Assuming you followed the risk reward ratio criteria properly, let's say, you find out that, 18 out of 30 trades , you achieved your target ; and , 12 out of 30 trades, you hit your stop loss. This, gives us a 60% of winrate. (18/30) * 100 , that is, ( no. of winners/ total no. of trades) * 100 Once you have got the results of this, we move on to the third step. ---------- Continued on Part 2 . There's a limit on description length. I''ll link it below. Thanks.
NSE:NIFTYEducation
by dravya
4