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How to define the Daily Bias for the Day? Determining the likely direction of the market for a particular day can be both challenging and cumbersome. Many traders find themselves overwhelmed by the multitude of data points and differing indicators. However, using a structured methodology, one can systematically analyze the chart and create a daily bias for the day. If you are an intraday trader, you can use a combination of the Daily chart for the bias and the 15-minute chart for the entry, or alternatively, you can use a 75-minute chart for the bias and a 5-minute chart for the entry. Steps to Identify the Daily Bias 1. Identify the Most Recent Swing High and Swing Low The first step in defining the daily bias involves identifying the most recent swing high and swing low. This can be done manually, or you can use ready-made indicators available on trading platforms such as TradingView to plot these points on the chart. Understanding swing highs and lows are fundamental concepts in technical analysis, representing the highest and lowest points within a specific time period. These points can indicate potential reversal areas where the market may change direction. 2. Divide the Region into Two Equal Parts Once the swing high and swing low are identified, the next step is to divide this region into two equal parts. This can be achieved using the rectangle tool in TradingView. Make sure to enable the middle line feature within the rectangle tool to visually divide the two sections. The middle line acts as a crucial reference point, providing a clear visual boundary between areas of perceived higher and lower value. 3. Define Retail and Wholesale Areas After dividing the region into two parts, the upper section is termed the “Retail Area,” where prices are considered expensive. Conversely, the lower section is called the “Wholesale Area,” where prices are deemed cheap. This concept stems from the basic economic principle of supply and demand, where higher prices in the Retail Area suggest selling opportunities, and lower prices in the Wholesale Area indicate buying opportunities. 4. Focus on Buying and Selling Opportunities With the areas defined, the next step is to focus on the appropriate trading opportunities. When prices are in the Retail Area, the focus should be on “Selling” opportunities. When prices are in the Wholesale Area, the focus should be on “Buying” opportunities. This methodology, known as “Curve Analysis” or determining your Bias for the day, simplifies the decision-making process by providing a clear framework for evaluating market conditions. Example: BankNifty 75-Minute Chart Let’s look at an example to understand this better. Here we have the BankNifty 75-minute chart. We have identified the most recent swing high and swing low on the chart and divided the section into two parts. The current market price is in the Wholesale Area, which means that on your execution time frame, which is 5 minutes, you will be focusing on buying or “Long” opportunities. Now, proceed to the lower time frame and identify your key levels of interest using support, resistance, demand, supply, or any other technical analysis tools. Observe how the supply zone on the chart played out beautifully and how prices fell from the Retail Area. This example illustrates the practical application of the methodology, demonstrating how historical price movements can inform future trading decisions. While the above steps provide a solid foundation for defining the daily bias, incorporating the following advanced tips can enhance your trading efficiency: 1. Use Multiple Time Frames Integrate multiple time frames to gain a comprehensive view of the market. For example, use the Daily chart to determine the overall bias and the 15-minute or 5-minute chart for precise entries and exits. This multi-time frame analysis allows traders to align shorter-term trades with the broader market trend, increasing the likelihood of successful outcomes. 2. Incorporate Technical Indicators Employ technical indicators such as Moving Averages, RSI, and MACD to corroborate your bias. Confirming signals from multiple sources can provide greater confidence in your trades. These indicators serve as additional tools to validate the defined bias, offering insights into market momentum, overbought or oversold conditions, and potential trend reversals. 3. Monitor Economic News Stay updated with economic news and events that could influence market movements. Important news releases can cause significant price fluctuations, impacting your defined bias. Economic indicators, such as GDP reports, employment data, and central bank announcements, can have profound effects on market sentiment and price action. 4. Practice Risk Management Always practice sound risk management strategies. Define your risk tolerance levels and use stop-loss orders to protect your capital. Never risk more than you can afford to lose on any single trade. Effective risk management involves setting appropriate position sizes, diversifying trades, and adhering to pre-defined risk parameters to safeguard against unforeseen market movements. 5. Keep a Trading Journal Maintain a trading journal to record your trades, strategies, and outcomes. Analyzing past trades can help you refine your methodology and improve future performance. A detailed journal provides valuable insights into trading patterns, strengths, and areas for improvement, fostering continuous learning and development. Conclusion Defining the daily bias for the day is crucial for successful intraday trading. By following the structured steps of identifying swing highs and lows, dividing the price region into Retail and Wholesale areas, and focusing on appropriate buying and selling opportunities, traders can streamline their market analysis. Remember to use multiple time frames, incorporate technical indicators, stay informed about economic news, practice risk management, and maintain a trading journal. With these strategies in place, you can effectively navigate the markets and enhance your trading performance. I hope you all find this article useful. Do give your valuable feedback in the comments section.
NSE:BANKNIFTYEducation
by VishalSubandh
5
Phases of the market - The "AMD" Effect In trading, the terms accumulation, manipulation, and distribution represent distinct phases of market behavior, driven by the strategies of large institutional players such as banks, hedge funds, or market makers. These phases reflect how these entities operate to achieve their objectives while influencing market psychology and price movements. At the core of these phases lies the concept of supply and demand. However, recognizing where these phases occur within the market is crucial for traders. Let’s break them down for better understanding: Let us breakdown these terms to understand them in a better way : 1. Accumulation Phase : This is when big players, like banks or hedge funds, start buying a lot of shares of a stock or asset without causing the price to rise too much. They do it quietly so that others don’t notice what they’re up to. The price tends to remain flat and trades within a narrow range since fewer trades are happening. A lot of traders tend to loose the plot here since they are unable to understand if this accumulation is occurring in the wholesale area or the retail area and this is the KEY!!! If prices are accumulating in the wholesale area it is more likely the prices are going to push to the upside than downside. This phase is generally ignored by most retail traders and investors as they consider this as a dull market environment. This is highlighted in a yellow rectangle on the chart. 2. Manipulation Phase : This is a phase where big players intentionally create sharp price swings to confuse or scare smaller traders (retail traders). The goal is to trick people into making the wrong moves, like selling too early or buying at the wrong time. Usually the big players create sudden spikes to the upside or downside. These spikes in general trend to hit majority of the stop losses of the retail traders causing them to loose money more frequently. Many smaller traders lose money here because they react emotionally or fall for fake signals, not realizing they’re being played by smarter, bigger players. This is highlighted in a blue rectangle on the chart 3. Distribution Phase: This is the stage where the big players move the market significantly to the upside or to the downside depending upon the prices being in the wholesale or the retail section. This phase generally tends to have higher volumes. Majority of the retail traders tend to enter at the very end of this phase and get trapped in the market. This is highlighted in an orange rectangle on the chart This cycle often repeats itself forming the basis of the Wyckoff Market Cycle. Since price is fractal in nature these phases occur on all time frames. For illustration purposes we have taken an example of a Nifty chart. I have manually plotted the phases of the market and illustrated how these phases play out however these phases can be coded using pine script as well. I have divided the swing high and the swing low in two parts. The lower section signifies" wholesale area" where the big players would be buyers and the upper section signifies retail prices where the big players would be sellers. Now if you watch the wholesale area carefully all the manipulations are taking place in the downward direction(highlighted in blue rectangle) which is signifying that prices are moving down first before moving up. The retail trader is getting trapped in the false breakout to the upside and the moment that happens he wants to "Buy" and keeps a stop loss below the consolidation only for the stop loss to get triggered first and then price moving in the intended direction. Similarly, in the "retail area", manipulations often occur in the upward direction (highlighted in the blue rectangle). This means prices initially move higher before reversing downward. Retail traders frequently fall into the trap of reacting to a **false breakdown**. When prices appear to break down, these traders rush to "sell" and place their stop-loss orders above the consolidation. Unfortunately, their stop-losses are often triggered first, only for the price to then move in the intended direction afterward. This pattern is a common occurrence in the market, happening almost daily. It underscores the importance of understanding these manipulative moves to strategically place stop-loss orders in safer locations. Relying solely on market phases to make trading decisions is not enough to ensure consistent success. Instead, combining this knowledge with an understanding of the **bigger picture**—the overall price structure and market context—is essential. Once this framework is established, traders can confidently apply any price action strategy for entry and exit points. With practice, identifying these phases on your charts becomes much easier. I hope you find this information valuable, and with some effort, you’ll be able to spot these patterns regularly. Good luck, and happy trading!
NSE:NIFTYEducation
by VishalSubandh
11