Teach a Man Fish Complete

Teach A Man To Fish………By Mr. Saint

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Many Many Thanks To Saint for His Great Work.

Introduction:

Saint 27th March 2006 10:11 PM

Teach A Man To Fish And......... Hello Friends,

As the famous Chinese Proverb goes,"Give a man a fish,you feed him for a day.Teach a

man to fish,and you feed him for a lifetime."

This thread is a result of multiple emails from fellow members with a desire to learn how to trade,rather than to just take the calls here and there.This thread may not catch the interest of many,as the "many" are always interested in the 'fish' rather than learning how to.But this thread is intended for the few........the few that want to learn,or at least make a beginning to learn how to trade,the few that do not wish to bow to any other individual or organiztion as authority when it comes to decision making but instead wish to come to these decisions by himself/herself. This thread will be of no help to those who make trading decisions based on the fundamentals.This thread will be of no help to the many that wish to know what this company did or wat was the news when a stock broke out.This thread will be of no use to a few members here,all brilliant traders,all great minds--Amit,Jaideep,Ajay,Vinay(JoyVerma),Joy_Mitali,Vince ,Karthik,Ivan among others for there is nothing new that this thread has to offer to them,that they do not already know and are implementing day after day,trade after trade. This thread is for the newcomer to charts and who has that desire to learn.It is for the student of the market by a student of the market.I am no master,no teacher,no expert,all words that I abhor........this thread is to my friends who want to learn,from a friend who is just sharing what little he knows. All the best! Saint


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Re: Teach A Man To Fish And......... 1 Attachment(s)

Hello friends, Thank you all for your many words of encouragement.Hadn't really expected that this thread would even get noticed at this stage. Before we get started,please have a back up in anything and everything related to trading.If you trade online,at least two computers,two internet access,cable and dsl,in India,think you guys better have an Inverter as well.All this of course for the Intraday traders.Of course,your broker's phone no. must be easily accessible as well if you have to take that route.Basically a back up in everything. Of course,your charts as well,the greatest weapon of the trader!! Okay,let's get started........... Just have a look at the attachment.....looks like a familiar story for many of us.The successful trader does exactly the opposite as stated below.......He has something that gives him an edge over the others.He has that something that tells him when to get in,when to stay out,and when to accept a mistake........He has his charts and the knowledge of how to use it. What are these charts?A chart of Reliance is not the chart of the company,but the chart of the investor and trader emotions in that company.A chart tells us about the whole play of fear and greed,again and again,all over again.The chart of a particular time frame is therefore a study of fear and greed in the particular company or market in that time frame. Various types of traders based on their time frame: Day Trader :He trades intraday.He buy and sells,shorts and covers within that day.He closes all positions by the end of the day.He takes no risks overnight.He basically uses the 5 and 10 min charts for his trading with the 15min and the 60 min charts as backdrop. Swing Trader :A trader who trades the daily charts,fine tuning his entry using the 60min charts.His trades last 2-5 days. Position Trader :Nearly equivalent to investing,but nearly can be an important distinction.He trades the weekly charts which means he holds trades from weeks to months.


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Saint


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Quote:

Most important thing that we all have to remember,Trading is very simple.Our minds being complicated is the reason why we try to over complicate a simple thing.So as in anything simple,we try to leave it as simple as we can. There are various types of charts : Line Charts, Bar Charts, Japanese Candlesticks Charts.......... Basically your preference,whatever you are most comfortable with.I personally use the Candlestick charts,because it makes it more visually obvious to me.I have to strain to see the same in a bar chart.But basically upto you.... Whether we take a bar chart or a candlestick chart,each bar/candle tells us of the Open,Close,High and Low of that particular time frame.Therefore,in a daily chart,the high is the high of the day.The close being the close of that day.But in a 15min chart,each bar represents the trade in a 15minute time frame,therefore the high of that bar is of course the 15minute high...so on so forth. We have three trends :

UPTREND,DOWNTREND,SIDEWAYS TREND UPTREND :An uptrend on a chart of any time frame is nothing but a series of higher highs and higher lows. DOWNTREND:A downtrend on a chart of any time frame is nothing but a series of lower highs and lower lows. SIDEWAYS TREND :A sideways trend is nothing but relatively equal highs and lows. TRENDLINES : An UPTRENDLINE is nothing but a line that connects two or more LOWS,in a chart in an uptrend.The more points that meet up to this line,the stronger this line is.This trendline acts as support,as prices blast off,then pullback to this line before taking off again.Therefore,in an UPTRENDLINE,the 2nd point is always higher than the 1st point,and the 3rd higher than the 2nd. A DOWNTRENDLINE is nothing but a line that connects two or more highs in a


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downtrend.Once again,the more number of points that connect,the stronger the line is.This downtrendline acts as resistance.Each down move is followed by a pullback rally to this trendline which acts as resistance only to be met with more selling and lower prices.In DOWNTRENDLINE,the 2nd point is always lower than the 1st,and the 3rd lower than the 2nd. A break in the UPTRENDLINE signals a possible change in trend.So too with the break in the DOWNTRENDLINE.

Just have a look at the attachments below.....nothing like a picture to make things look better.


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All the best! Saint


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Re: Teach A Man To Fish And......... Quote:

TRENDS(CONT.) We had discussed yesterday that trend has three directions,that is : Uptrend, Downtrend,Sideways Trend. An example I had given many times just has to be repeated here........Look at your right hand with the palm facing you.First we have the little finger.The Ring Finger takes out the high of the little finger and therefore makes a higher high and low as compared to the little finger.The middle finger makes a higher high and higher low as compared to the ring finger.We have therefore an uptrend.The index finger makes a lower high and a lower low as compared to the middle finger.The thumb makes a lower high and low as compared to the index finger.We have therefore a downtrend. Just as trend can be classified according to the direction,so too can we categorise trends into 3 categories MAJOR ,INTERMEDIATE and NEAR TERM TRENDS. Simply put,major trends last for greater than 6 months.Intermediate trends last between 3 weeks to 6 months.Near term trends last from a few days to 3weeks. From a charts perspective,the major trend is seen by looking at the monthly charts.The intermediate trend from the weekly charts,and the near term trend from the daily charts. What is seen as a downtrend on the daily charts may be nothing but a pullback on the weekly charts,and is not even evident on the monthly charts.What is seen as a downtrend on the weekly charts and a catatrophic crash on the daily may be nothing but a monthly pullback. It is important as traders to know these different time frames and trade accordingly.The practical aspects of profitting from this knowledge,we can come to later. For now,we don't know much......but a step at a time for now.We have our charts.All we know is that in any chart of any time frame,we can have only 3 possibilities in direction,and only 3 possibilities in categorisation.The eye can only see what the brain knows........these early days are to be spent in teaching the brain so that the eye sees the pattern from a mile.Pour over your charts and train yourself in detecting which trend the stock is in currently.It is a first step but an important first step. We can discuss Support and Resistance tomorrow.


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Re: Teach A Man To Fish And.........

Quote:

TREND :PIVOTS Okay,now that we know that a higher high is when the previous bar's high is crossed,and a higher low is when the low is higher than the previous bar's low,and that a series of higher highs and lows make an uptrend........we retrace a bit and change things around a bit. Just higher highs and lows alone do not make an uptrend.Yes we have an up-move but an up-move doesn't mean we are in an uptrend.Higher highs and lows form a rally.Lower highs and lows form a decline. We can have declines in an uptrend.We can have rallies in a downtrend.So now that we know that a series of higher highs is called a RALLY,how then do we define an Uptrend?An UPTREND on a particular time frame is a series of higher pivot highs and lows on that time frame.What then is a downtrend?Nothing but a series of lower pivot highs. So what then is a Pivot?Okay,we are back to the "Hand" example.Whisk out your right hand again,once again with your right palm facing you.We have our little finger.The ring finger makes a higher high and low as compared to the little finger.The middle finger is higher high and low as compared to the ring finger.We therefore have a RALLY.The index finger makes lower highs and lows as compared to the middle finger.The thumb makes lower highs and lows as compared to the index finger.We therefore have a DECLINE.The middle finger with two lower highs on both sides(ring and index)now forms a PIVOT. Imagine we have Area A.Rally starts from Area A which is followed by a decline to an area that is higher than Area A.We call this new area where the stock has declined to as Area B.So on so forth..Therefore Area B is higher than Area A,Area C is higher than Area B,so on so forth.We have therefore what is called an uptrend.These areas are pivotal areas where the stock stops its decline and rallies upwards.We refer to these turning points as pivots. Therefore,in the above example,as each pivot is after a decline,and the pivot is the low after which the stock takes off again,we call them PIVOT LOWS. Right the opposite in a downtrend.The stock declines from an area and then rallies to an area lower than the first,so on so forth.In this case every pivot is after a rally,and the pivot is that area after which the stock declines further to new lows. As this pivot tells us of that high after which things go back to its declining ways,we call that a PIVOT HIGH.


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So,in an uptrend,we have HIGHER PIVOT LOWS.How did we come to that?Each pivot low is higher than the previous pivot low.Therefore we call it higher pivot lows. In a downtrend,we have LOWER PIVOT HIGHS.How did we come to that?Each pivot high is lower than the previous pivot high.Therefore we call it lower pivot highs. In a sideways trend,we have nearly equal pivot highs and lows. Basically didn't want to introduce the word "Pivots" very early on.......but there really is no other way to tell what a trend is all about.Will take some chewing,and digesting.The only way is to look at the charts and start to make out all the pivot highs and lows.

Saint

Terahertz 1st April 2006 09:31 AM


Quote:

Imagine we have Area A.Rally starts from Area A which is followed by a decline to an area that is higher than Area A.We call this new area where the stock has declined to as Area B.So on so forth..Therefore Area B is higher than Area A,Area C is higher than Area B,so on so forth.We have therefore what is called an uptrend.These areas are pivotal areas where the stock stops its decline and rallies upwards.We refer to these turning points as pivots. Therefore,in the above example,as each pivot is after a decline,and the pivot is the low after which the stock takes off again,we call them PIVOT LOWS. Right the opposite in a downtrend.The stock declines from an area and then rallies to an area lower than the first,so on so forth.In this case every pivot is after a rally,and the pivot is that area after which the stock declines further to new lows.

hello saint, would u plz explain the above with the help of a chart.

Saint 2nd April 2006 08:55 PM

Re: Teach A Man To Fish And......... 1 Attachment(s) Hi TERAHERTZ, Yes,my friend,a picture is worth a million words.Shall try to put up charts as often as


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possible.But I have all kinds of problem with file size,etc. The below attachment is a stock of AMZN(Amazon)trading in the NASDAQ.The important thing is to know what we are talking about when we say pivot low and pivot high,etc. So let's go to the chart of AMZN.We have an uptrend on the daily charts of AMZN in November,followed by a SIDEWAYS TREND from late November to late Dec 2006.Why do we say that we are in a Sideways trend?As the eye says,so it is.We are in an obvious trading range between the 47.68 to 49.5 area. Then we have a break down on the last day of December followed by a weak rally back into the trading range and then we have a decline taking out the previous pivot low made in early Jan to new recent lows to the 43 area.We therefore say that we are in a lower pivot low as compared to the previous pivot low.Then we have another rally to the 45.93 area.This forms a pivot high that is lower than the previous pivot high.Thus we have lower pivot highs and lower pivot lows.This series of lower pivot highs and lows is called a DOWNTREND.

Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Let us take another example...........This is a weekly chart of MER(Merrill Lynch)trading on the NYSE. Take a look at the attachment given below. It made a pivot low in August 2004 of 47.5,then we had a rally and a mild decline to 50.We have just made a higher pivot low.Is this an uptrend?Maybe.But we get to confirm that this is a clear cut uptrend once the previous pivot high is taken out.The rally towards the 60 takes out the previous pivot high.What do we have now?We have a higher pivot high and a higher pivot low.We are in an UPTREND. And then once again,from May 2005 till date,we have been making higher pivot highs and higher pivot lows.


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Happy Trading! Saint



Quote:

SUPPORT AND RESISTANCE SUPPORT is that area where buying interest exceeds selling interest,and therefore a previous decline gets halted at this area and turns back up again.It is marked by drawing a horizontal line connecting two or more bottoms. RESISTANCE is that area where selling pressure exceeds buying interest.It is an area where previous rallies get halted and turn down again.It is marked by drawing a horizontal line connecting two or more tops. Support and Resistance are not absolute points.They are areas. When Support breaks to the downside,we call that a Down Side Breakout or Breakdown.When Resistance breaks to the upside,we call that a Breakout. When we get a breakdown below support,that area of support now becomes an area of resistance.Have a look at the JNPR charts below.That area of support broke down and that same area is now acting as Resistance. A breakout above Resistance,and that same area of resistance now becomes a new Support. These are important areas for every trader,either as an entry point or an area to take profits.


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There is more on Supports and Resistances.We 'll go over them slowly and with examples.........but slow and steady for now.

Saint

Saint 3rd April 2006 06:16 PM

Re: Teach A Man To Fish And......... 1 Attachment(s) The below is another example.CSCO trading in a tight range.Then we have a breakout above resistance.That area which was previously resistance now becomes Support,as prices use that floor for the next rally.

Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Yet another example :GOOG(Google )trading on the NASDAQ.Through November to early Januray,we have higher pivot lows and highs (UPTREND).Then we have that turn around in Mid-Jan.So long as GOOG did not break that previous pivot low of around 422,It was still in an uptrend.Then we have that ugly bar on the daily charts that broke


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previous pivot lows.Are we in a downtrend now?No. But as far as we are concerned,the uptrend is over.Then we have a rally back to the 450 area in the later part of Jan.This is making a lower pivot high as compared to the previous pivot high.Now are we in a dntrend?Looks more and more likely.But not confirmed as yet.Then that gap down and lower prices taking out the previous pivot low as well.Now we are in a confirmed Downtrend.

Saint



Quote:

SUPPORT/RESISTANCE CONT. We had discussed regarding trendlines in the beginning.Basically same principles applied here,the only difference being these are sloping lines as opposed to the horizontal lines discussed yesterday,but same principles. At that time we had discussed about Uptrendlines and Downtrendlines.The Uptrendline acts as Support each time prices decline and come towards it.So too the downtrendlines act as resistance as prices rally to the trendlines and fall from it.Example in the attachment below of DELL.Prices hit the downtrendline and resume its decline.Therefore the dntrendline acts as Resistance. So too with an uptrend.......... And as was discussed regarding the breakout over resistance and breakdown below support,the same applies here.We have an uptrendline,we have prices taking support at this trendline.And as the trendline breaks,we say that the uptrend is in question. A break in an Uptrendline is not a Downtrend.........it merely tells us that this uptrend that we have been trading and making profits from is now in question.So too with the Downtrendline.A breakout above the downtrendline does not mean that the stock is


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now in an uptrend,it merely means that the downtrend is now in question. To assess uptrends and downtrends,we are back to pivot highs and pivot lows as has been discussed.

Saint



Quote:

Okay,so far we ,as beginners in the market interested in trading trends,...we have taken that first step.So far,we know nothing much.We do not know of any complicated indicator,or any stylish chart pattern.We have no idea of Elliot's,or Gann,or Fibonacci.We know only that : =The market moves in trends.We have an uptrend,downtrend and sideways trend. =That there are different categories to Trends.We call it Major(when we are talking long term and of the monthly charts),Intermediate(off the weekly),and near term or short term(off the daily). =We know that a series of higher highs and lows is termed a rally.That a series of lower lows and highs is termed a decline,that a series of higher pivot lows and highs is called an Uptrend,and a series of lower pivot highs is called a downtrend. =And about Supports,Resistances and Trendlines. Now,before we go ahead with Gaps,and Chart patterns,etc.........let us take a breather.We are not doing this to learn something academically.We are not learning this so that we can regurgitate this knowledge to our neighbours and family,and feel good about ourselves.We are not learning this so that we can go to CNBC,wear a suit and a


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boot to match, and mouth off some technical jargon so that we can make our money selling some newsletter. We learn this so that we can directly use this knowledge to make profits off the market. So everything has to be applied and practical,and if it can't,and is of no use to profitting in the markets,then we have no use for it. And therefore the question is :With only this much of knowledge,can we apply this to Trading in the markets? The answer is YES..........we'll get into the practical aspects of Trends,Supports and Resistances tomorrow.

Saint

Saint 4th April 2006 09:22 PM


TRADING with TRENDS,PIVOTS and SUPP/RES BUYING DECLINES &SHORTING RALLIES : Let's make this as simple as we can.......We know what an uptrend is,a series of higher pivot highs and lows.Vice versa in a dntrend.Now,for some rules........we only BUY in an uptrend.So long the uptrend is held,we do NOT think of shorting.Yes,one could always do a sniper attack on an intraday basis or at max,on an overnight basis.That is one's decision to make. The most often repeated line "The trend is your Friend",means we never cross the trend.The trend is UP,therefore we buy declines.When the trend is DOWN,we short

rallies.If you can't short for whatever reason,then a downtrend is reason to stay out till we get a change in trend to the Upside. Therefore,it is very important to be able to detect the change in trends in the first place.Therefore,our minds must work like this..... ->All the analysts on TV,magazines are saying that the markets are way too over heated,overvalued,over.......etc,etc.Is this the time to buy some puts or short the NIFTY FUTS? ==Look at the charts.Take the weekly charts.Why,the weekly?Because we are looking at intermediate to long term.Are we making higher pivot highs and lows?If the answer is YES,then we are in an UPTREND.And in an UPTREND,we think "BUY


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DECLINES".That's it!!We let people play God ,but we stick to our plan. ==If the answer is NO,the previous pivot low just got cracked to the downside,we are thinking of getting out of our longs in that particular stock or index.Now we are thinking, "SHORT RALLIES" In a downtrend,every rally is a shorting opportunity.In an Uptrend,every decline is a buying opportunity. The market changes from Uptrends to Downtrends,again and again........we are not here to predict tops and bottoms.We are not here to anticipate anything.We are here to follow the trend.And as uptrends change to the down,we change from BUYING DECLINES to SHORTING RALLIES. Forgive me for repeating this many times.......but in trading,basics is everything and the rest just icing on the cake.The rest of what we will learn in future increase our odds.......but these basics are the Gospel Truth of Trading.

Saint



Quote:

Originally Posted by rahulg77 Hi Saint,

I have a few questions. When we talk about an uptrend we buy on small corrections.

but in a downtrend i did not understand when we say every rally is a shorting

opporunity. can u explain the process of shorting.

Another question is we see a uptrend on the weekly chart and we enter. now we see a

minor correction coming in and we think of buying at declines. But what if that

particular downtrend itself ends in a lower pivot low than the previous one. What

should our trading stratergy be. we will ofcourse have a S/L in place but then it could

again go up.

Hope I am clear.

Rgds

Rahul


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Hi Rahul, Every rally in a downtrend is a shorting opportunity,meaning we sell first and buy back later.The reverse of buying.When we get a downtrend,we look to short or we stay out of the fall.Of course,there's all those restrictions of not being able to short except in futures,etc..........the whole idea is that we do NOT buy in a downtrend.We look to either short or stay out.Only when the trend has given a move to the UP,do we think of buying. It is a rule that you do NOT break.......therefore the importance of first being able to detect the trends and the chnage from one trend to another.And then following the discipline.However juicy a stock is,and whoever tells you,that a stock is undervalued,fundamentally great,and the CEO is the brother-in-law of.....you,being a trend tech trader,will listen to all he's got to say,then pull out your charts,realise that maybe he is right,maybe he is wrong,but your charts tell you that this stock is not yet in an uptrend,and that is that.You DO NOT BUY,as you do not buy in a downtrend. As for the 2nd part of your question.........yes,a risk that all traders take and may not exactly work out.Therefore the stop.However great the probability of success in any trade,we still have stops at important pivotal areas.We are only too happy with success,but if that is not to be,we do not mind the small losses either. Another clarification,a stock put in lower pivot highs and lows.It is clearly in a downtrend.Then it put in an impressive rally from the bottom.Are we in an uptrend?NO,not yet at least.Then the stock retreats and puts in a higher pivot low as compared to the previous pivot.Now,looks more and more like a change in trend.Then it confirms the trend change by making a higher pivot high as well.The stock is now clearly in an uptrend.Now your brain says,BUY DECLINES.And true enough you get that decline.You bought in ......and horrors of horrors,the stock went on declining to lower pivot low than the previous low.Your stop at the level of the previous pivot is triggerred.You are out,and looking elsewhere for another trade. The answer to your last ques:You take your stops and get out of that trade.As far as this stk is concerned,it continues its downtrend.And ,as always,in a downtrend,WE DO NOT BUY.We keep it on our watchlist.We track it,we stalk it,but we do not buy.Till we get a trend change that is.

Saint


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rahulg77 5th April 2006 04:35 PM

Re: Teach A Man To Fish And......... yes i think I am clear about it. So when we stalk a stock that is moving up from a down trend we do not take position. We wait for it to rise, retreat and then we buy if it takes a turn around higher than the previous pivot low. Am I following it so far. Another question- when a trend is rising and it turns around for a very very minor correction will it still be called a pivot or how much fall is required. Sorry for asking too many questions but i like to be very clear in the learning process. Let me know when i start bugging you :). Rgds Rahul



Quote:

TRADING using TRENDS,PIVOTS,SUPP/RES THE BUY SET-UP Okay,now that we know what an Uptrend is,and that come what may,we will stick to our rules,which is:First detect the change in trend which requires a higher pivot high and low,then once we are in an uptrend,we BUY DECLINES. Now comes our next point of worry........yes we got our uptrend,and now the declines.But when do we buy?Do we buy on the first day?Is there anything else we are looking for before we come to that decision? Have a look at the chart of EDUCOMP below.We have a decline after that big bar.Bearish candle No 1,we do nothing.We wait.Bearish candle No 2,we do nothing.Bearish candle no 3,things looking more and more juicy.Then we get that bullish candle.That first bullish candle is still making lower highs and lows,but is giving us an indication that bulls are gaining in strength.Now we are ready to strike,and yet,we do not move.We now look to buy,we do not buy as yet.We buy when the next candle takes out the previous candle's highs. We are in the trade.Our stop is the low of that pivot ie 254-2(to give it some room)=252 In EDUCOMP,we are getting our next buy set up as of now.We have three bearish


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candles and then that bullish candle so far reflecting a change in sentiment and therefore a possible change in direction.And like before,a buy set up means we look to buy,we do not buy as yet.When the next candle takes out this week's high,then the trade is triggerred.



Re: Teach A Man To Fish And......... 2 Attachment(s) Just a few charts.......... Below is the chart of POLYPLEX CORP just denoting how the trendlines are drawn. The Uptrendlines therefore act as Support,once cracked to the downside,notice how the Downtrendlines act as resistance. In what way does this knowledge help us in our trading?We detect a change in downtrend,and we enter the stock,once again using all that we have learnt so far.The trendlines allow us to stay in that trade as long as the trendlines hold. The moment we get a close below the Uptrendline,we are out.If you are looking to short,wait for a feeble rally towards the former uptrendline.That's an area to short. Vice versa for the downtrendlines.......Have a look at the 2nd chart of POLYPLEX,self explanatory.


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Re: Teach A Man To Fish And......... 1 Attachment(s) Another thing that one has to keep watch for is the gradient of the pullback.Take a look at the chart of BEML.All are pullbacks before the stock moved on to new highs.But look at the angle of the present pullback.Not saying that BEML will not see new highs,but that BEML will take more doing unlike before to see new highs again. All the other pullbacks,BUY the declines.But pullbacks like these,best to stay away until it does something that will make us interested again.


tanewbie 5th April 2006 10:04 PM

Re: Teach A Man To Fish And......... Positive Divergence of Price wrt MACD A positive divergence occurs when MACD begins to advance and the security is still in a downtrend and makes a lower reaction low. MACD can either form as a series of higher lows or a second low that is higher than the previous low. Positive divergences are probably the


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least common of the three signals, but are usually the most reliable and lead to the biggest moves. see attached charts of arvind mills in weekly and daily mode.



Quote:

Hello Mr. Saint, i have been following this thread since the beginning and as a beginner i have a learnt a lot. but i have difficulties in recognizing the trend. some charts are so messy i cannot get any clear pattern. For eg. plz have a look at the chart of Bank of India which is attached. ( i got it from fi-advisor.com) In the chart the stock makes higher lows which might be an uptrend but again it makes lower highs which can be a downtrend. What kind of trend is this? i think as long as it will not break the support its in an uptrend. Am i correct? Anyway is it advisable for an investor to enter that stock which is forming lower and lower highs. Next query is on Andhra Bank. Plz see the chart (collected from icharts.in) . It was in a downtrend since late july and recently there is a small rally but it did not still cross the downtrendline no. 1 ( the one in red which is drawn from the high of july to the high of January), but if we consider another downtrendline no. 2( the one in black from the high of Jan to the high of late Feb) then there is a breakout above the downtrendline. Now which trendline should an investor consider. Or should the investor take into consideration another trendline (in red) which is below trendline no. 2 considering the fact that 'more the points which connect a trendline the more stronger the trendline' as u said in a previous post.


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plz help me Mr. Saint.

Hi TeraHertz, Let's drop the Mr, just Saint would do. As for BANK OF INDIA,you are right.There really is no clearly discernable trend on the daily charts.In sideways trend.For a clearer perspective,open up your weekly charts of BOI.We are still in an uptrend,still higher pivot highs and lows.The week ending Feb 10th,we got a pivot low there at 118.So far that is our previous pivot low.That would be where our stop would be if you are in this trade.(Always,give it some room,so the stop is at 118-1=117).A break of 117,and this uptrend is in question.So long as this area holds,BOI is still in an uptrend.Now,as for new entries into BOI is another matter.Watch for a pullback or more sideways pattern to enter.Look out for that trendline.If that trendline holds,good area to buy.Cracking that trebdline to the down,and again,this uptrend on the weekly charts is in question.


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Saint



Quote:

Originally Posted by Terahertz Hello Mr. Saint,

i have been following this thread since the beginning and as a beginner i have a learnt a

lot.

Next query is on Andhra Bank. Plz see the chart (collected from icharts.in) .

It was in a downtrend since late july and recently there is a small rally but it did not still

cross the downtrendline no. 1 ( the one in red which is drawn from the high of july to the

high of January), but if we consider another downtrendline no. 2( the one in black from the

high of Jan to the high of late Feb) then there is a breakout above the downtrendline. Now

which trendline should an investor consider. Or should the investor take into

consideration another trendline (in red) which is below trendline no. 2 considering the fact

that 'more the points which connect a trendline the more stronger the trendline' as u said

in a previous post.

plz help me Mr. Saint.

Being an investor,you are looking at medium to long time frame.For a clearer perspective,always look at your weekly charts.We have lower pivot highs and lows ,basically still a downtrend on the weekly.Trendline 1 as drawn by yourself is more or less correct.Not Trendline 2............the more points,meaning the more pivot highs that it connects in a downtrendline the stronger that trendline becomes.Trendline 2 is connecting all the highs,not the pivot highs,so inaccurate from a daily/weekly chart perspective.But for an


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intraday to few days perspective,not wrong.That trendline can be traded......a break above that trendline is a buy.But that doesn't mean we are in an uptrend.Just good for 1-2 days sniper attack on the intradays. We basically need a breakout over 106 to say that we are headed back into an uptrend.For now,it's downtrend on the daily/weekly And Bank. Great going,my friend.A questioning mind is a mind that is learning.Feel free to ask your doubts.Shall answer to the best of my capacity.

Saint



Thank u saint, thank u very much. feels really great with such encouraging words.:)

Anyway, in the case of Andhra Bank, u said it should cross 106, how could u calculate

that figure? is it a figure which the trendline meets when extended towards the price

axis. i thought it should break atleast 110 which is the previous pivot high. please

correct me if i am wrong.

Yep, basically whenever that trendline breaks to the Up.If we are going to remain in this downtrend for more time,then that figure will keep coming downwards. 106 is the break over the trendline which gives us an indication that things are moving to the up.Yes,right you are,the previous pivot high is 110 and over that is confirmation that we are in an uptrend. All the best! Saint




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Quote:

Originally Posted by Terahertz yes, got it!! That means, if it goes above 106 then the uptrend is in question and ,it will be

in our watchlist and we wait for it to cross 110 , which is when we will be sure of the

uptrend and we are in trade.

thnx

Yep,you got it......but just a correction of language so that we are both on the same page. A break above 106 and we have a possible uptrend,the previous downtrend is in question.A break over 110 is confirmation. Great going! Saint

shan2611 8th April 2006 09:40 PM

Re: Teach A Man To Fish And......... Hello Saint, I am new to trading and this wonderful thread gives junior members like me, very good idea about how to trade with technical inputs.I really thank you for your efforts at imparting knowledge to others.Your style of explaining is very simple and attractive. Please clarify my following query.Please excuse me if my query appears very primitive. As you have explained in your earlier posts, we should follow the trendline.We will be able to spot the change of direction in trendline after market hours.While one is buying a stock which is in uptrend, even when we buy it after delaying it by a day, we will still be able to ride the trend and be able to make some money(our ultimate aim).But how to judge the downtrend of the stock during market hours?Why I am asking this is when we analyse the charts after market hours and come to the conclusion that the particular stock is in downtrend, we will not be able to sell it.By next day, it may have fallen further and we may have lost some more money.Please explain the methods one can adopt during market hours to judge downtrend so that we can limit our loss or sell it while we have considerable profit? Thanks. Shan P.S. While I find it uneasy to address you in the way I have addressed you in this post, while going through this thread, I have noticed that you prefer in this way.So please excuse me if I sound rude.


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Terahertz 8th April 2006 10:22 PM


Quote:

As you have explained in your earlier posts, we should follow the trendline.We will be able to spot the change of direction in trendline after market hours.While one is buying a stock which is in uptrend, even when we buy it after delaying it by a day, we will still be able to ride the trend and be able to make some money(our ultimate aim).But how to judge the downtrend of the stock during market hours?Why I am asking this is when we analyse the charts after market hours and come to the conclusion that the particular stock is in downtrend, we will not be able to sell it.By next day, it may have fallen further and we may have lost some more money.Please explain the methods one can adopt during market hours to judge downtrend so that we can limit our loss or sell it while we have considerable profit?

If the stock goes below the previous pivot low in any day then we should be out of the stock. We can always buy again when we see an uptrend. Am i right saint. Plz correct me if i am wrong. and please excuse me for answering in this post. i was just seeing whether i am right or wrong.:)



Quote:

Originally Posted by Terahertz If the stock goes below the previous pivot low in any day then we should be out of the

stock. We can always buy again when we see an uptrend.

Am i right saint. Plz correct me if i am wrong.

and please excuse me for answering in this post. i was just seeing whether i am right or

wrong.:)

Hi Terahertz, According to me if a stock goes below the previos pivot low in any day then it will not be an immediate sell signal. It will come on our watch radar but we would not sell it. A down trend would only be confirmed when it makes another pivot low. According to me confirmation of down trend is important. Ofcourse if the S/L is triggered before hand it


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would be a different issue. Again just like you even I am relatively new and hence saint would be best suited to answer this question. But I would suggest that these interactions and application of mind is important as it will clear more doubts and teach us more. If again Saint agrees Looking forward to your view Saint. Rgds Rahul

Terahertz 9th April 2006 10:49 PM


Quote:

Hi Terahertz, According to me if a stock goes below the previos pivot low in any day then it will not be an immediate sell signal. It will come on our watch radar but we would not sell it. A down trend would only be confirmed when it makes another pivot low. According to me confirmation of down trend is important. Ofcourse if the S/L is triggered before hand it would be a different issue. Rgds Rahul

Yes, Rahul u are right but i thought the previous pivot low will be our stop loss. if thats not the case is there any other method to calculate stop loss.

Quote:

Again just like you even I am relatively new and hence saint would be best suited to answer this question. But I would suggest that these interactions and application of mind is important as it will clear more doubts and teach us more. If again Saint agrees Looking forward to your view Saint.

u are right. Such interactions would help us learn even more.

rahulg77 10th April 2006 01:02 AM



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[QUOTE=Terahertz]Yes, Rahul u are right but i thought the previous pivot low will be our stop loss. if thats not the case is there any other method to calculate stop loss. Hi Terahertz, U are right too. In an uptrend the trend line itself will act as support and to make a lower pivot low it will have to break the trend line and hence it will be a sell signal. But also what i understood is that to confirm a downtrend we should have another pivot low. So what do we do. Saint could you please explain or am i wrong that to confirm a downtrend we should have another pivot low. Rgds Rahul

Terahertz 10th April 2006 09:22 AM


Quote:

U are right too. In an uptrend the trend line itself will act as support and to make a lower pivot low it will have to break the trend line and hence it will be a sell signal. But also what i understood is that to confirm a downtrend we should have another pivot low. So what do we do. Saint could you please explain or am i wrong that to confirm a downtrend we should have another pivot low.

Mr. Rahul it is true that when any stock breaks down below its uptrendline We cannot say surely whether this downtrend would continue or it will bounce back again. But one thing is sure is it is out of trend. Is it right to stay in such stock when we dont know the trend even if we know the downtrend is not confirmed.


Re: Teach A Man To Fish And......... Please clarify my following query.Please excuse me if my query appears very primitive.

Quote:

As you have explained in your earlier posts, we should follow the trendline.We will be able to spot the change of direction in trendline after market hours.While one is buying a stock which is in uptrend, even when we buy it after delaying it by a day, we will still be able to ride the trend and be able to make some money(our ultimate aim).But how to


www.traderji.com 29

judge the downtrend of the stock during market hours?Why I am asking this is when we analyse the charts after market hours and come to the conclusion that the particular stock is in downtrend, we will not be able to sell it.By next day, it may have fallen further and we may have lost some more money.Please explain the methods one can adopt during market hours to judge downtrend so that we can limit our loss or sell it while we have considerable profit? Thanks. Shan

Hi Shan, If you have been playing that trendline,let us say,you've been buying each time the stock pulls back to the trendline and your idea was to stay in that stock so long that uptrendline holds.So far so good as long as the uptrendline holds. A crack in the intradays to the downside does not qualify as a break in that trendline till we get a close below that trendline...........but I agree with you,what would you do,while watching that stock intraday,it cracked to the down.It may or may not close below the trendline,but what would you do in such a case?Stick with the plan.......your idea is to get out on a break of trendline.Get out if it breaks.If by the end of day,the stock does not close below the trendline,no problem,that means the trendlines are still valid and you look to reenter. Happy Trading! Saint

Quote:

P.S. While I find it uneasy to address you in the way I have addressed you in this post, while going through this thread, I have noticed that you prefer in this way.So please excuse me if I sound rude.

Not rude at all,my friend,and don't be uneasy,just friends helping one another out.



Quote:

Originally Posted by rahulg77 Hi Terahertz,


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According to me if a stock goes below the previos pivot low in any day then it will not

be an immediate sell signal. It will come on our watch radar but we would not sell it. A

down trend would only be confirmed when it makes another pivot low. According to me

confirmation of down trend is important. Ofcourse if the S/L is triggered before hand it

would be a different issue.

Again just like you even I am relatively new and hence saint would be best suited to

answer this question. But I would suggest that these interactions and application of

mind is important as it will clear more doubts and teach us more. If again Saint agrees

Looking forward to your view Saint.

Rgds

Rahul

Hi Rahul, We get a downtrend once the previous pivot low is taken out and then we get a confirmation with a lower pivot high,and yes,as you mentioned goes on to take out that previous pivot low yet again. But the trade that we are in currently is because of its uptrend.So long we make higher pivot lows and highs we are looking good.A question on its uptrend and we are out...........do not wait for a confirmation of downtrend.If the stock makes new highs,and then goes sideways,and that all important previous pivot low is not taken out,we are still in the trade.But that previous pivot low being taken out is an indication of a change in the present uptrend,and although we do not have confirmation of downtrend yet,we are out and looking elsewhere for more uptrends to capitalise on. Happy Trading! Saint



Quote:

Hi Saint, Please clear something for me. We are in a uptrend and i am in the trade. Do I get out once the up trend line is broken or if it makes a lower pivot low. does this depend on our trading strategy. Cause if we wait it to make a lower pivot low or even go down as


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far the previos pivot we have lost our profits if we had entered the trade when it started moving up from the previos pivot low.Or is this the trade off we have to take in the market

Hi Rahul, As you rightly pointed out,depends on your strategy.If you've been playing the uptrendline all along,you are not about to tolerate any break in the uptrendlines.One crack and you are out........on the other hand,if you are willing to give it some room,wait for the break of the previous pivot low as that gives you a clearer idea of a change in trend. Which one do you do?I personally would get out half my position on a trendline break,leaving my stops for the back half a bit below the previous pivot low.If taken out,I am out. Just have a look at Satyam below.....I had been playing the trendlines all along.Had been in it from late Sept till date.That ugly move last Friday took out half my position,but still in back half as the previous pivot lows were not cracked yet.If you got out full on Friday,you would not have been wrong either.




Quote:

Also if we are in a down trend and it breaks above the trend line and moves up. Do we enter now and we let it make a higher pivot low. cause the higher pivot low might be very high and we loose out on profits. Also how much of a correction would u call a pivot. Could you please attach a file of the smallest correction you would consider a pivot


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Hi Rahul, All great questions......... Same as above.Buy the break above the dntrendline,but buy half.Why?Quite a lot of false breakouts.So buy half and then add the other half when we get a pullback forming a higher pivot low.




Quote:

For me i have seen that many times i have entered when a share has made a higher pivot low and then it moves up a bit and then makes a lower pivot low. is this common or am i not entering right.this could also be because at this time i am not using any indicator and only using trend line and once we use 1-2 indicators along with trend lines entries are more confirmed. Sorry everyday i see a chart and a new question pops up. I hope i am not slowing down the entire thread. U could continue if you want. Regards Rahul

Yes,Rahul,a higher pivot low doesn't mean we are going to see new highs.It could just turn around and continue its downtrend.Therefore the importance of stops.


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And yes,as we put trendlines+support/res to moving averages,and patterns,and afew indicators and volume,.........then we get to drop a few of those that you might have taken now. But whatever you do,however much you learn,it's important to keep things as simple as possible. Saint ps:And keep the questions coming,it is an indication of a learning mind,and your questions are an indication of a mind that wishes to learn for application,and not just for academics.Great going,Rahul!



Quote:

Originally Posted by mgirotra Dear Saint

Quick question on identifying a pivot. To identify a pivot high, should both the below

statements be true or only the 1st one needs to be true

1. high should be higher than the highs of the bars on either side

2. Low should be higher than the lows of the bars on either side

Same for Pivot low

Also does the extent of diff between the high/lows of the pivot bar and the adjoining

bars have any significance

Also If pivot highs and lows are repeating quite often, does this mean that the script is

not in a significant trend

Phew. that was a long list.. Hope its not a huge bother

thanks

Mohit

Hi Mohit, A pivot is not exactly a point,and therefore it need not be one single bar with lower high bars on either side to qualify it as a pivot high.It could be 2-3 bars .Basically,whether


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pivot high or pivot low,don't go in for an exact academic definition.Go with the eye. Taking that above chart of Piramyd Retail,we have pivot lows on Jan27th,Feb28th, and Mar24th.Notice that each pivot low is lower than the previous one.We call that a downtrend.So too with the uptrend. Importantly,go with the eye.And what is not obvious to the eye is not worth it to put your money into. Saint


Re: Teach A Man To Fish And......... Okay,we have now a rough idea on trends,pivots,trendlines,supports and resistances...........these are our basics from which all our trading takes place.And yet,it can only be to our advantage to know of chart patterns,volumes,indicators,etc.They help to increase the odds before entering and exitting a stock. But although we are going into all of the above,it is imperative that we keep things as simple as possible.The problem with keeping things simple is that you may not get to boast to your neighbour or relative your superior intelligence,but huge profits await the simple mind.So,since we are learning all of this only so that it can be applied practically,we keep things very very simple. Let us get into CHART PATTERNS next.



Quote:

Chart Patterns Again and again,certain patterns seem to develop on our charts.And we realise that the probability of reversal or continuation is greater with certain patterns.Not saying that the reverse cannot take place.Anything is possible and therefore we have our stops...........but these patterns usually either reverse or continue trends.Knowing abt chart patterns is one more weapon in our arsenal. Two types: a)Reversal Patterns:These patterns reverse trends.Eg.Double Top,Double


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Bottom,Head and Shoulders,Cup n Handle. b)Continuation patterns:These indicate a possble contination in trends. Eg.Triangles,Bull flag,Bear flag,Pennant

REVERSAL PATTERNS 1.Double Top :This pattern can happen on any time frame.........this halts the uptrend and starts a downtrend in that stock or index. -Also called as M Top,coz it resembles an "M". -If double tops are bearish,triple tops are even more so. -Volume is higher on the first peak,and lesser inthe 2nd peak,and starts picking up on breakdown from the 2nd peak. -There has to be a distance between one top and the other to qualify as a Double Top.Needs at least 3 month difference if you are looking athe daily charts. -Now take the trough between the two peaks.......breaking that level is confirmation of a change in trend to the downside. ==So,summarising,let us say we are looking at the daily charts of any stock.We need to have a top put in,let us say January,and then another top at the same area,let us say in April.The rally to the first top came in good volumes,and then a pullback on low volumes.The rally to the second top came in relatively low volumes and then the declines coming in relatively stronger volume.It may be a double top,but you cannot call it one till the trough between the two tops is taken out.Then we can call it a double top.Also called as M-TOP. -How does knowing this help us in our trading? We have a great uptrend on good volume and a pullback on lesser volumes.....so far so good.Now the 2nd peak formation starts to form with much lesser volume as compared to the 1st peak,and then a breakdown on high volume........this gives us an indication to exit our longs if we are short term players as trendlines get broken to the downside.But without confirmation,we are officially in nothing more than a sideways trend with possible fall downwards.Now the trough gets broken and usually the stock retraces back........We are now officially in a downtrend.The time to short has arrived.Short a half at the retracement,and short the other half below the low of the bar that closed below the trough line. Target :The distance between the peak of the "M" to the trough of the "M"......add that to the low of the bar that broke the trough line.That's our target point. 2.Double Bottom:Same as above,it halts a downtrend,and starts an uptrend in that stock or index. -also called as "W"bottom. Trading strategy and measuring techniques are just the opposite to the above.


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All the best! Saint



Quote:

Originally Posted by rahulg77 Hello Saint,

What would be the time duration be for a weekly chart. Is 3 months a minimum

requirement or can it vary to lesser time period.

Rgds

Rahul

Hi Rahul, Actually no hard and fast rule......some books tell you that a month apart still qualifies.Yes ,on a weekly or monthly charts that would be maybe years apart.Also,you get these patterns on an intraday basis as well. Importantly,one can only say that a pattern is a Double Top for sure once the trough gets taken out.Till then you would say that we are in a pullback or sideways pattern. Another fact,forgot to mention yesterday.....The longer the period between the peaks

and the greater the height,expect the reversal to be greater. But you know that high that you see in the daily charts and then a pullback and then back to former highs in the next few days.........that is what is NOT a double top.There must be considerable period between the peaks.If you are looking at the hourly,then you must have at least more than 30 bars bet the 2 peaks. All the best! Saint



Quote:

Originally Posted by rahulg77


www.traderji.com 37

Hello Saint,

A great fall today :). i needed some information not regarding this thread and was not

sure where to ask u. Sorry to bring it up here. I am right now using www.bseindia.com

for my chart requirments of diff stocks. Now the problem i am facing is I draw a

trendline and after a few days there is a new pivot point( higher or lower). now what

happens is since everytime i go to the site i have to draw a trendline i end up drawing a

new trendline because of a new pivot that forms. because of this i cannot follow the

breaking the trendline rule.

If i get my own software..does it save the trendline i draw for a stock so the same

trendline can stay and i will know when it is breached. I hope u get my point.

Rgds

Rahul

Hi Rahul, I use Metastock,and yes,it saves the trendlines drawn. Saint



Quote:

Originally Posted by Dhanya Saint,

For drawing the trendlines,these are drawn on the arithmetic scale,right..or do you use

the logarithmic?I have Metastk,and I noticed the two.So just wondering which you use.

Thanks in adv,

Regards

Dhanya

Thanks Dhanya,had forgotten to mention that.

Quote:

There are two types of scales :a)arithmetic b)semi-logarithmic An arithmetic scale displays the price levels evenly in rupee terms as they move up. So


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therefore,a Rs10 move from 10-20,or from 100-110,or from 500-510 will look the same as they are all a difference of Rs10. A semi-log scale displays price levels in percentage terms as they move up. A move from Rs10 to Rs20 is a 100% gain will look larger than a move from Rs 100-110 is a 10% gain,or a move from Rs500-510 which is only a 2% gain. I use the semi-log scale......try it out,the rise looks smoother and the trendlines fit all the way.Which also means that a break in trendline is cause for some action. On Metastock,go to the Y-AXIS of your charts.Right click it.Go to Y AXIS Properties.Tick the Semi-Log scale.Click apply.That's it.

All the best! Saint

Alleppian 14th April 2006 07:45 AM

Re: Teach A Man To Fish And......... 1 Attachment(s) Dear Saint Eventhough I am trading for 2 years now I used to skip all charts thinking it's not my cup of tea.and thought it is so complex that i could never learn the ABCD of it. But I think you really made confidence in me(may be a lot like me!) in reading the charts and some fundamentals about it. Thank you With my limited knowledge got from you I analised the following stock of Morarka finace and find it in an up trend mood and gaining momentum. Am i correct? Please verify with the attached pic and reply


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srisara 14th April 2006 03:37 PM


Quote:

Originally Posted by Alleppian Dear Saint

Eventhough I am trading for 2 years now I used to skip all charts thinking it's not my

cup of tea.and thought it is so complex that i could never learn the ABCD of it. But I

think you really made confidence in me(may be a lot like me!) in reading the charts and

some fundamentals about it. Thank you

With my limited knowledge got from you I analised the following stock of Morarka

finace and find it in an up trend mood and gaining momentum. Am i correct? Please

verify with the attached pic and reply

Alleppian, the first Trendline is not correct. Trendlines are drawn quote n quote where "Price Action" takes places. One should not draw a Trendline way away from the Prices, at it defeats the purpose. Saint, I would like you to draw the correct Trendlines for this Chart and teach us a little more bit, as i have seen most of the people make mistakes in drawing Trendlines. Note: Trendlines give the actual action taking place in the scrip, if it is drawn wrongly,


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the whole meaning changes and it can cause lossess to one's account. So, One is not comfortable with Trendlines dont put them to use, until gained Experience. Hope this helps... everyone... Satya


Re: Teach A Man To Fish And......... 1 Attachment(s) Thanks for your remarks Srisara, I understand that you have to draw the line close to the daily bottoms. Hope to see a proper drawing from Saint in the same chart. Also I am attaching another pic of malabar building met which i thought showed a double bottom pattern before the trend change during the period of January to July 2005. Please excuse me seniors if i am making blunders or being bit over enthusiastic

Thanks in advance

Vaishu 17th April 2006 12:14 PM

Re: Teach A Man To Fish And......... Hi Saint, Being a new investor, I find your articles very informative. It is indeed guiding me in proper direction. I have invested previously without any thought process, just got caught


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up in the booming market. All this time I was wondering about so many questions I have, about trading and no one to ask. Thankful to this forum and all you senior guys out there. Now I believe as other things in life(not comparing to anything :), trading also can be learned. Pardon me if I am wrong. I have few(actually so many) questions. - To do day trading, is the trading software a must or we can do without it? - What are the sources which we get live data from? - Do we have any freeware/priced chart/trading software which actually helps? - How do you actually short list the stocks(out of so many) for trading? what criteria is used? If my questions are not in order with your thread, you can answer them with ur preference. Once again, thank you very much for starting this thread. -Vaishali



Quote:

Originally Posted by Alleppian Dear Saint

Eventhough I am trading for 2 years now I used to skip all charts thinking it's not my

cup of tea.and thought it is so complex that i could never learn the ABCD of it. But I

think you really made confidence in me(may be a lot like me!) in reading the charts and

some fundamentals about it. Thank you

With my limited knowledge got from you I analised the following stock of Morarka

finace and find it in an up trend mood and gaining momentum. Am i correct? Please

verify with the attached pic and reply

Hi Allepian, Most welcome,my friend.......good to know that you have taken that all important first step.The rest will come in due time.Most importantly,pour through thousands of charts.A day comes when patterns jump out of charts and grab your attention. On MORARKA FINANCE,First look at the weekly charts so as to get a proper perspective.Attached below the weekly charts.Basically in sideways trend.Don't try to draw trendlines in a sideways trend-up or down.So far we are having equal pivot highs and lows from March 2005 till date.It tried to put in a breakout in Sept 2005 only to be


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brought back to the sideways range. Once it puts in an uptrend again,then you are back to drawing trendlines again.




Quote:

Originally Posted by Alleppian Thanks for your remarks Srisara,

I understand that you have to draw the line close to the daily bottoms. Hope to see a

proper drawing from Saint in the same chart. Also I am attaching another pic of

malabar building met which i thought showed a double bottom pattern before the trend

change during the period of January to July 2005. Please excuse me seniors if i am

making blunders or being bit over enthusiastic

Thanks in advance

Hi Allepian, Nope,not over enthusiastic at all.........had said previously that a thinking mind will have questions.So it's great that you have doubts and want clarification.Feel free to ask......may not answer you immediately,but you will get your answer over few days. Yes on MALABAR BUILDING......not very clean though,as low volume stock.But yes,that W pattern started a run that made its highs in AUG 2005. Happy Trading! Saint


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Quote:

REVERSAL PATTERNS (CONT.)

3. Head and Shoulders Pattern ---Bearish,reversal pattern signalling the end of the current uptrend. ---Basically looks like the silhouette of a human left shoulder,head and the right shoulder. ---Like the Double Top,strong volume push prices upwards forming the "left shoulder".The pullback is on lesser volume,then another strong rally on good volume,forming the "head"......but this time,the volume causing this rally although forming higher prices,is now on relatively lower volume as compared to the vol. in the rally causing the left shoulder.....as the stock pulls back to the neckline,and starts rallying again to form the rt.shoulder,now volume is very noticeably lighter. ---The break of the neckline confirms the H & S pattern(Neckline is the line connecting the two troughs on either side of the head).Volume expansion is noticed as the pattern confirmation takes place.......and the stock or index is now in adown trend.(Reverse happens now......vol. expands on the down fall and decreases on a return move up). Trading-Wise:ENTRY:The first down day below the neckline confirms the pattern.......short as the neckline breaks or enter short on a weak rally back to the area of the neckline.This line that was formerly strong support now acts as a stiff resistance.Short half on that return move,and the other half below the low of the confirmatory bar. TARGET:First target would be.......calculate the difference from the head to neckline.Add that to the low of the bar that confirmed the pattern. STOP:The high of the right shoulder. One Important Condition:Once the neckline gets broken,expect a return move......but at all costs the price should not re-break the neckline upwards.If this happens,it is called a FAILED H&S PATTERN.Like a failed breakdown,this acts as a bear trap.....and is bullish.So get out if that neckline gets broken back upwards...

4. INVERSE H&S PATTERN -Reverse of the above. -reversal pattern that ends a downtrend. -Tradewise,all reverse of above.


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Saint


Re: Teach A Man To Fish And......... hi Saint, All so beautifully explained. It took me so long to read and understand from the magee book. But you explained it in so simple words. If you do not mind I would like to add something in the inverse H&S pattern if you do not mind. Everything would be reverse of the above except the volume on the right shoulder would show increase instead of descrease as in H&S. PLs correct me if I wrong. What I read is volume is very imp to confirm a H&S too so I thought it woould be nice if we bring this diff out. Sorry for adding in your thread. Rgds Rahul


Re: Teach A Man To Fish And......... Hi Saint, I have been trying to find a H&S pattern in Indian stocks. COuld you pls attach some if you have any. Also waht would be the time period for daily and weekly pattern formation. Rgds Rahul

rahulg77 18th April 2006 12:21 AM

Re: Teach A Man To Fish And......... Hi Saint, Sorry am moving ahead of the thread but I think I found a C&H pattern in formation. Its completed the cup now waiting for the handle. Could you pls see Riddhi Siddhi and see if you think it is one and what should i look in it for confirmation if the handle does form. Rgds Rahul


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Re: Teach A Man To Fish And......... Hi Saint, Thanks for the explanation and picture.So in a sideways movement the trend line can be drawn only in a day to day or hourly basis close to where the action takes place(ups and downs) and since there isn't any long term trend change- don't draw it.Am i correct ? I just want to make sure about the basics. H & S pattern explanation is very good. Hope to see a sample pic with all the target calculation trading strategy (are we asking too much?) Thanks again

Saint 18th April 2006 10:08 AM


Quote:

VOLUME and the H & S Volume plays an important role in us calling a particular pattern a H&S.Let us go through the Volume bit. When the left shoulder is made,in both the h&s and inverted h&s,expect strong volumes.When the head is made,it is on (usually) decreased volumes as compared to the left shoulder.But as Rahul pointed out a key difference,the rt shoulder on a h&s is on usually lower volumes.Volumes increase wnen necklines break,and patterns get confirmed.And as all breakdown patterns,a break below support is accompanied by strong vols.,and then the return rally to what is now resistance is on low volumes,followed by strong vols again,bringing the stk to newer lows. But,in the Inverted H & S,once again,we have strong volumes in the forming of the lt shoulder.Again,we have decreased volumes in the forming of the Head.But,here,we have increased volumes taking prices back to the neckline,then a dip in volume as the stk tries to make the rt shoulder,and then a burst in volume taking it through the neckline. Summarising,H&S=Lt shoulder-Strong vols Head-Lighter volumes Rt shoulder-Same as or lighter than the head. *Increase in volumes as neckline breaks to the downside. Inverted H&S=Lt shoulder-Strong vols Head-Lighter vols *Increase in volumes,sometimes higher than before the formation of lt shdr Rt shoulder-Dip in vols from the rally


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*Once again,an increase in volumes breaking the stk out over the neckline. An important thing to remember is that markets or stocks do not need strong volumes for the breakdown from the h&s as it basically falls with its own weight,but you need strong volumes for a breakout from an Inverted h&s.

Thanks Rahul Saint



Quote:

REVERSAL PATTERNS(CONT.)

5.CUP WITH HANDLE FORMATION -also a reversal pattern,but more obvious at the bottom rather than at the top. -basically looks like a coffee cup with a handle. -There is a basing stage,accumulation phase(cup),then a breakout,followed by a pullback,forming what looks like a handle. -Breaking out of the top of the cup is confirmation of a change in trend. -Few criteria:The cup should be more rounded than a "V". The handle should be in the top part of the cup,not too deep. Cup pattern should take at least 7weeks to form. Volumes should contract in the handle and expand on b/out. -From a trade perspective,the buy is at the area where the top of the cup is taken out.Stop:At the low of the handle.Target:Measure the distance to the low of the cup.Add that to the breakout area.

6.REVERSE CUP N HANDLE -Occurs at the top,rest all reverse of the above.

7.BROADENING FORMATION -When the trendlines,from left to right,converge.....it's called a triangle.When the trendlines start from a point and diverge as we go from left to right of the chart,that's called a Broadening Formation. -One more interesting feature:In a triangle,volume decreases within the pattern.In a Broadening Formation,volume expands along with wider price swings.


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-This is a BEARISH pattern. -Due to its divergence,the stock makes a high and a low,then high2 will take out previous pivot high,then prices fall to low2,which takes out the previous pivot low.Then prices move upwards to form high3,which is higher than high2 or high1(not necessary,can even be same height at times). -Three successive higher peaks,and two declining lower troughs complete this pattern.Confirmation is when the low 2 is taken out as prices start making new lows.

Shall keep throwing out examples of reversal patterns the next few days as and when I come across. All the best! Saint

SGM 19th April 2006 08:18 AM


Quote:

Originally Posted by Vaishu If my questions are not in order with your thread, you can answer them with ur

preference.

Hello, You have good valid questions. But as you have stated, they can be asked/answered in other threads. Let me try to point you to relevent threads. http://www.traderji.com/data-feeds/ http://www.traderji.com/software/

Quote:

Originally Posted by Vaishu 1. To do day trading, is the trading software a must or we can do without it?

2. What are the sources which we get live data from?

3. Do we have any freeware/priced chart/trading software which actually helps?

If you want to do day trading based on buy/sell signals from technical analysis you will need a software and live data feed. plz refer to the above mentioned threads in the forum,


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As for the next one, I would also like to be enlightened :)

Quote:

Originally Posted by Vaishu 4. How do you actually short list the stocks(out of so many) for trading? what criteria is

used?

Regards Sanjay


Re: Teach A Man To Fish And......... 1 Attachment(s) An example of a Double Top in Punjab Tractors in 1999. Once that trough breaks to new lows,an important area of support has given way.Once we get a break-down,this pattern that was so far a suspected DT,a probable DT,is now a confirmed DT. Notice that pullback rally not able to take out that line of previous support.Now that line ,or rather area becomes an area of resistance.This pullback rally to this area becomes a place where you could add to your positions.

All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Below is an example of another H&S pattern,this one in RANBAXY Monthly charts.Self


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explanatory. Have a look at the Volumes in the Left shoulder ,then the Head ,and Rt shoulder,all in decreasing fashion.Then the increase in volumes in the breakdown from the neckline. At present we are shooting past the neckline,but you have to wait and see how this month pans out,if we close this month end at 440-450 area or below,we might see a continuation in downtrend.


Saint 21st April 2006 09:52 AM


Quote:

Originally Posted by mgirotra Dear Saint

Am in a bit of a confusion. I am going with the assumption, that TA can identify

patterns and trends and hence can try to optimize entry and exit points but not predict

prices. If that is correct, I dont understand how a target price is predicted at the time of

a entry recommendation. What am I missing??

best regds

Mohit

Ah,Mohit,my friend........like Tera Hz,and Rahul,ever ahead of the pack.Your understanding is correct.Shall come to it over the nexr few posts. All the best! Saint


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Saint 21st April 2006 12:32 PM


Quote:

We have so far,as beginners to charts,looked into what a trend is.Are we in an Uptrend,Downtrend or Sideways Trend?We have looked into some terminologies..........lower highs and lows are called Declines.Lower highs and lows by themselves do not constitute a downtrend.Lower pivot highs and lows.we call it a downtrend.Higher highs and lows make up a rally.Higher pivot highs and lows make up an Uptrend. We have seen some basics on Trendlines,Supports and Resistance.We realise that a break in an Uptrendline does not mean we are in a downtrend.A break in that Uptrendline merely means that the ongoing uptrend is in question.Breaking a previous pivot low,and then we say we are in a downtrend. We have seen the basic Buy Setup,which is nothing so far.There are a few things to add to that as we go ahead. Now we have started Chart Patterns............now the question that may arise is : Do we really need to know this at all?Can't we make beautiful profits even without knowing zilch on Chart Patterns?Well,the answer is a Yes and a No on both. Our motive as traders trading the trend is to make profits as long as that trend is on,and to detect a change in trend and exit when that is seen.We therefore need not have the art of prediction.We identify a change in trend,latch on to that stk with a good entry,and hold till that trend changes.We therefore follow trends,and not predict them. So,although you have many books that will tell you on what a first target is(no harm in getting out as prescribed),but the trader trading trends stays in as long as the trend is up unless something else is the bother. Most importantly abt knowing Chart Patterns,it gives one an idea as to what the general population of tech guys are thinking.We have an ascending triangle.So everyone is expecting a breakout.Well,so are we.But if we get a breakdown,we take our stops and reverse strategy fast leaving those who don't do it in a Pray-Wish-Hope Mode and finally selling off at much lower prices fuelling the move down further putting a huge smile on our faces. So know the patterns,so that we can all see what everyone is looking at.So that we can trade along with everyone else,or against them.But your basics are the most important.Trade the Trend and out when previous Pivots crack

All the Best! Saint


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mgirotra 22nd April 2006 12:27 AM

Re: Teach A Man To Fish And......... Dear All Saw this wonderful essay on applying Sun Tzu's Art of War commandments to trading and thought what better place to share it than this enlightning thread. Here goes

"According as circumstances are favorable, one should modify one's plans.

We should only add to winning positions and never average down on a loser. Profits are carried by momentum, and if you are on the right side of momentum, you can make a lot of money. When losing, stick to the plan and exercise stop losses. When winning, increase position size as new entry signals are confirmed.

"When you engage in actual fighting, if victory is long in coming, then men's

weapons will grow dull and their ardor will be damped. If you lay siege to a town,

you will exhaust your strength."

If the expectation of your trade is not working out in a timely fashion, then you have read the market wrong and it is best to exit the position.

"It is only one who is thoroughly acquainted with the evils of war that can

thoroughly understand the profitable way of carrying it on."

If you think the stock market is fair, quit trading immediately.

"Hence the saying: If you know the enemy and know yourself, you need not fear the

result of a hundred battles. If you know yourself but not the enemy, for every

victory gained you will also suffer a defeat. If you know neither the enemy nor

yourself, you will succumb to every battle."

If you know the market and know yourself, you will consistently profit. If you know the market but not yourself, your success will be random. If you do not know the market or yourself, you will consistently lose money. Success in the stock market is not just about the market, it is also about knowing how you react to fear and greed.

"The onset of troops is like the rush of a torrent which will even roll stones along in

its course."

The trend is your friend.

"The good fighters of old first put themselves beyond the possibility of defeat, and

then waited for an opportunity of defeating the enemy."


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Good traders know that they can consistently make money, and that confidence fuels them to consistently make good decisions.

"To lift an autumn hair is no sign of great strength; to see the sun and moon is no

sign of sharp sight; to hear the noise of thunder is no sign of a quick ear."

Great traders see more than the obvious.

"There are not more than five primary colors (blue, yellow, red, white, and black),

yet in combination they produce more hues than can ever been seen."

Keep stock trading simple. You need only understand support, resistance, optimism, pessimism, price volatility and abnormal behavior. I loved the short piece. Hope all of you find it interesting as well. Saint I hope you dont mind my posting this here.. best regds Mohit

SGM 22nd April 2006 06:14 AM

Re: Teach A Man To Fish And......... Hello Mohit Nice post.

Quote:

Originally Posted by mgirotra

"The good fighters of old first put themselves beyond the possibility of defeat, and

then waited for an opportunity of defeating the enemy."

Good traders know that they can consistently make money, and that confidence fuels

them to consistently make good decisions.

Mohit

I don't know how the "the good fighters of old first put themselves beyond the

possibility of defeat,... but we all can with the use of Stop Loss and sticking with our

Position Sizing based on good Money Management A good one ... Protect your self first and then wait for an opportunity of defeating the enemy! Regards


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Sanjay

rajesh.sadhanala 22nd April 2006 09:06 PM


Quote:

Originally Posted by Terahertz yes, got it!! That means, if it goes above 106 then the uptrend is in question and ,it will

be in our watchlist and we wait for it to cross 110 , which is when we will be sure of the

uptrend and we are in trade.

thnx

Sorry for replying to late. My aplogies. If its crosses 110 then it is confirmation of the uptrend but to be on the trade it is better to buy declines rather on the rally. Here the rally would be the pivot low higher than previous pivot. Regards Raj

rajesh.sadhanala 23rd April 2006 12:36 AM


Quote:

Originally Posted by Saint Hi Rahul,

As you rightly pointed out,depends on your strategy.If you've been playing the

uptrendline all along,you are not about to tolerate any break in the uptrendlines.One

crack and you are out........on the other hand,if you are willing to give it some

room,wait for the break of the previous pivot low as that gives you a clearer idea of a

change in trend.

Which one do you do?I personally would get out half my position on a trendline

break,leaving my stops for the back half a bit below the previous pivot low.If taken out,I

am out.

Just have a look at Satyam below.....I had been playing the trendlines all along.Had

been in it from late Sept till date.That ugly move last Friday took out half my

position,but still in back half as the previous pivot lows were not cracked yet.If you got


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out full on Friday,you would not have been wrong either.

Happy Trading!

Saint

Sorry Saint to come on with questions so late, Everything seems ok to me but trendline break and previous pivot low are two things we used intermittently. I assume that both are one and same. Whenever the previous pivot low is broken then Uptrend is in question So we get out of the trade. Here in this context what is trendline break, is it small crack in the uptrend move, I mean is it a decline or anything else. When I looked at the weekly charts on Satyam (7th Apr) it is small decline. Saint, pls add If I am missing out anything. Thanks a Lot Saint



Quote:

Originally Posted by rajesh.sadhanala Sorry Saint to come on with questions so late, Everything seems ok to me but trendline

break and previous pivot low are two things we used intermittently. I assume that both

are one and same.

Whenever the previous pivot low is broken then Uptrend is in question So we get out of

the trade.

Here in this context what is trendline break, is it small crack in the uptrend move, I

mean is it a decline or anything else. When I looked at the weekly charts on Satyam

(7th Apr) it is small decline. Saint, pls add If I am missing out anything.

Thanks a Lot

Saint

Hi Rajesh, lol:D :D .......you signed off as Saint.


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When you get out of a trade is entirely up to you.......the fact that this stock put in an accelerated up move,take out your trendlines and draw it.Why?Because we don't want to give back too much when the pullback starts. We therefore already have a bearish divergences on the RSI and TRIX.What do we do?We get cautious,we get our hands ready on the trigger,but we DO NOT do anything.We wait,and wait.....till we get a break in trendline.Then,we are out.We are always READY to pull the trigger,the Bearish divergences tellus GET SET,and the trendline break tells us GO!! Now,if your mindset is very long term,and these pullbacks mean nothing to you,then take some profits off the table in a trendline break.But hold the rest till we get a break in the previous pivot low on the weekly charts ie 720.If it does not break 720,the uptrend is still on and you will see higher highs and lows. So,that decision depends on the type of trader that you are. But you must understand this,Raj.......a break in the uptrendline is not a downtrend.It puts that run up in question. Any more questions,feel free to ask.......took some time to answer as been travelling a lot last2 weeks.


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Apologies,and regards. Saint



Quote:

Originally Posted by Terahertz Hello Saint,

How are u?

Some questions:

1) Everything u said about trends, support, resistance etc. was excellent and beautifully

explained. u said that we only identify the trends and get into a stock. We dont

determine trends or direction of a stock, just ride the trend- that's all. Everything

looked perfectly logical to me until u started patterns.

if we take the example of a double top pattern, u said that if some criteria given there is

fulfilled then the stock will dip down again. How can we determine the direction of any

stock??? :confused:the stock may go up or down or sideways or whatever. i just wanted

to know why a stock will behave that particular way when certain patterns build up.

2) Normally we take the weekly charts if we want to trade for the medium term(3-6

months). but if i want to trade only for very short term i.e 1 week or max 10 days then

can we take the daily charts? if we take daily charts then, how many days of data

should we consider. is three months of data enough?

thanx

satish...

Hi Satish, Let us go to the 2nd question first..........even for short term trading,a weekly chart is important.Let us say you intend to get in to a position as a swing trade,maybe 5-7 days.First look at theweekly charts,it MUST be in an uptrend.Now that we have a weekly that is in an uptrend,we now intend to buy.A weekly in a downtrend,we DO NOT buy however great looking the daily chart is,however great the news is,we DO NOT buy. Have a look at the chart of IND SWIFT below.We have a weekly in a dntrend,making lower pivot highs and lows,DO NOT BUY.Buy only when the weekly gives you a clear cut change in trend,and then buy declines using the daily charts.


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Shall answer the other query a bit later..... Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Just another chart.......


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Basically,in a nutshell,for starters,keep away from trades where the daily is setting up,and the weekly is still in a dntrend.The desire to predict and get in at lower prices will cost you dear.Get into another stock where we have a weekly in an uptrend,and then buy declines. Saint



Quote:


How are u?

Some questions:

1) Everything u said about trends, support, resistance etc. was excellent and beautifully

explained. u said that we only identify the trends and get into a stock. We dont


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determine trends or direction of a stock, just ride the trend- that's all. Everything

looked perfectly logical to me until u started patterns.

if we take the example of a double top pattern, u said that if some criteria given there is

fulfilled then the stock will dip down again. How can we determine the direction of any

stock??? :confused:the stock may go up or down or sideways or whatever. i just wanted

to know why a stock will behave that particular way when certain patterns build up.

thanx

satish...

Quote:

Hi Satish, Great going on your understanding on the basics........as you go along,you will realise that unlike in school,these basics are enough to give you sweet profits. But learn the patterns as well.......learn them because everyone else is looking at them,and to know the strengths and weaknesses of your rivals is going to be important for you. Now let us say that you do not want to have anything to do with patterns.......no problems with that as well.Example,we have a pullback that is overdone and comes to support and then rallies off to the same previous high and then back to the same level of support.The conventional tech analyst calls it a Double Top,but you are least concerned.You instead draw your resistance and support lines........and wait.A breakout over resistance and you will be in it LONG,a breakdown below support and you will be looking to SHORT. So,are you really bothered about a Double Top or Bottom?Not required if you are a trend trader. Another chart pattern,we have a huge move up on high volumes and then a pullback to an area of support,and then a rally on decreasing volumes to a new high,and then back to the support area,and another rally of lesser vols and then back to that area of support again. What would you do?You would draw your lines of support,a breakdown from there,and you are in SHORT.Do you need to know that this was actually a HEAD AND SHOULDERS pattern?Obviously not.You,being a trend trader,if you were in long would have been unhappy that new highs were coming in decreasing vols and then the 2nd pullback to support would have already put the entire uptrend in question,and will be looking to exit......So therefore,can you as a trend trader manage to make huge profits in the markets,without knowing abt the Head and Shoulders pattern?Surely.........Just drawing trendlines,Supports and Resistances would do the trick.


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That is as far as ReversalPatterns go.........but you may need to know something abt the continuation patterns though.Why?It gives you an idea that the trend that you are in so far is doing great........You got a nice move up,and then sideways pattern.If you didn't know that it was an ascending triangle in progress,you could still draw a resistance line and buy the breakout.But knowing that an ascending triangle USUALLY is a continuation pattern before a strong move up,gives one the courage to hold on to that trade. In summary,is learning chart patterns vital for the survival of a trend trader?No,not at all.........can come in useful,but not vital.........if you feel you can manage without it in your style of trading,by all means do so.No compromises on the Basics we learnt in the beginning.But on Chart Patterns,your call.Skip it if you don't need it.

All the best! Saint

Saint 4th May 2006 05:12 PM


Quote:


Just want to recap something we ahve learnt so far. We see charts on the weekly we see

a uptrend...a higher pivot high and low and we can enter other indicators also

permiting or we may just follow the trend.

Now what happens if we see a chart which is in uptrend and in which the chart keeps

going up. Is there any method to enter or we wait for a pull back. I was seeing the

charts of Seamrin. 526807. On the weekly its on a uptrend but the entire week on the

daily it was on uppercircuit. Now it may do that on the 2nd week too.

So we wont enter now. We will wait for a pull back preferably to 135 levels where it

made a window and also started moving up from a sideways trend.

Now another part would be if after moving up for another week it again moves

sideways and then moves up. Would u buy or leave this counter if no pull back.

Rgds

Rahul

P.S I am not into this counter. Just studing it for my knowledge.


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As always,great question,Rahul........ SEA MARINE -We got a breakout on the daily charts on the 21st of April.Textbook entry,wait for a pullback or buy over the previous day's high.In this case ,buy on the 24th of April over the previous day's high.What I would have done:I would have bought over the previous day's high(half) and would have liked to add the other half in a pullback.In this case the pullback never happened,and I suppose I would be sitting with half a position. And as for the second question,if this pulls back on the daily charts,it's a buying opportunity.If it goes sideways,it is a buying opportunity.Of course if it makes a mild pullback on the weekly,it's a buying opportunity. Happy Trading! Saint



Quote:

Originally Posted by rahulg77 Dear Saint,

How are you? pls tell me something to draw trendlines at times we see a tick the price

action is or real body is very small but the fluctuation is very large. so we draw the

trendline near the opening closing or at the bottom of the tick. I was seeing riddhi

siddhi. The price opened close above 230 but the tick is till 210. so where should the

trend line be for such fluctuaions.

Rgds

Rahul

Sorry for all these delays in answering........Yes,Rahul,connect two or more lows,then extend that line,you will notice many times the price trying to break through the trendline but forming a tail and still having its body within that trendline. Go with the eye......... Saint



www.traderji.com 62


Quote:

Originally Posted by sanefellow_213 hello.. saint

As a beginner i'm a great admirer of your thread n your efforts to share the knowledge

of wealth with other.. as with the likes of many i also have a few questions.. hope u

wont mind clearing them out.. for me and others who r new to this field..

I have been using some of the indicators.. as you have mentioned but one thing comes

worth noting is that if we are trading daily charts then.. we have to keep a trac of

what's the stock doing on the weekly charts(the higher time frame model) and suppose

the daily chart is in uptrend(in respect to higher peaks and troughs).. and then crosses

below.. its recent pivot low.. and makes a lower pivot high.. it can be said the stock has

turned its trend(on the daily time frame).. now at the same time.. the weekly indicator..

does not show the same weekness.. coz any change in trend.. will first b visible on daily

charts.. as in this case n then on weekly charts.. now my question is how can we

distinguish whether it is just a temperory pulldown.. on weekly charts or start of a trend

reversal on a weekly chart..(from bullish to brearish).. as the first signs of weakness

can only b visible on the smaller time frame then go on to the bigger ones..and is there

any way we can find out that this.. reversal on smaller time frame is indeed a trend

reversal on the bigger one.. hope i'm not bothering you.. saint..

Thanking.. you,

Sanefellow_213

Hi Sanefellow, Great question......once again,apologies for the delay in answering your question. As for an answer to your question,simply,we don't........we really cannot say for sure that this correction is going to be that one that will see a correction in the weekly charts as well. But we have some ways to anticipate it.........few reasons to get nervous on the NIFTY over the last few weeks.We have a way overbought Stochastics ,the last time we saw Oversold was in October last year.We have a negative divergence on the TRIX and the RSI.We know that an important correction is coming,but as trend followers should,we do NOT predict a move.......opening the weekly charts,we have a way overbought Stochs and negative divergence on the RSI.Again,we know that a correction is in the offing,but we ride the trend till we see a break in it.So far,no break,we are fine.......


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Now,we get this important break and a finish at the end of the day (monday)below our all important trendline.This intermediate uptrend that we have been playing from October till now is over.Nothing to do with long time frames,they are still very bullish. As far as we are concerned,we are out of all longs,and now look to short every rally till once again things change to the up.The rally yesterday means nothing,except some intraday gains,and then today another big fall of 826pts.Looking at the weekly charts,nothing but a pullback.....but trendlines and a few indicators and a topping tail on the weekly gets the intermediate frame trader to get out early. And as trend followers,we are not concerned to get out at an absolute top or bottom.We just want to get as much meat as possible in the middle. Basically,important to integrate both the time frames.........it will all come as you pour over thousands of charts.


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All the best! Saint

Terahertz 27th May 2006 10:57 PM

Re: Teach A Man To Fish And......... 1 Attachment(s) Hello Saint, How are you. This great crash has triggered all my stop losses and i am out of most of my stocks and i am now sitting on cash. Feeling great that i have had minimal losses. I have some questions. Hope you will answer them 1) Is it necessary that any breakout above or below a trendline should be accompanied with good volumes. I am looking into charts of various companies but i am unable to find any charts which show an uptrend. But today i found one "Sanghvi Movers". this stock has broken its uptrendline and is again trying to reenter the uptrendline. Please see the chart. If this stock rises above the trendline, should this be accompanied by heavy volumes. What if it doesnt??Should that be regarded as a false breakout. Is there any way by which i can tell whether a breakout is false or not.


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Quote:


How are you. This great crash has triggered all my stop losses and i am out of most of

my stocks and i am now sitting on cash. Feeling great that i have had minimal losses.

Great going,my friend.Same boat as you.That is the whole idea of trend trading..........when trends reverse,we get stopped out,and then we wait for the next uptrend to emerge(unless you have the skills to exploit the dntrend as well.)

Quote:

I have some questions. Hope you will answer them 1) Is it necessary that any breakout above or below a trendline should be accompanied with good volumes. I am looking into charts of various companies but i am unable to find any charts which


www.traderji.com 66

show an uptrend. But today i found one "Sanghvi Movers". this stock has broken its uptrendline and is again trying to reenter the uptrendline. Please see the chart. If this stock rises above the trendline, should this be accompanied by heavy volumes. What if it doesnt??Should that be regarded as a false breakout. Is there any way by which i can tell whether a breakout is false or not.

Yes,a breakout needs high volumes to sustain it,else as you correctly pointed out,it will end up as a false b/o.But a breakdown can happen without good volumes as markets fall with their own weights. SANGHVI MOVERS :Not really a good example to study on due to its very low volumes.But in general,yes,that trendline(up) once cracked,that very trendline that was previously support now becomes resistance.And like all resistance we need the breakout over resistance accompanied by good vols. Saint

Saint 1st June 2006 12:11 PM

Re: Teach A Man To Fish And......... Hi Friends, I have not had time to concentrate on this thread due to a variety of reasons,and my deepest apologies to the sincere earnest student who had wanted to learn and feel let down.......once again,my sincere apologies. As we had discussed,we have realised the great importance of the very basics.To assess the trend is sometimes easier than it looks,and to act on it more difficult than it seems.But dealing with the mind is another different topic in itself and we shall come to it in due time. We have so far done trends,pivots,trendlines,supports and resistances among others,and a few important patterns..........Due to the variety of time constraints,please go to http://www.stockcharts.com/education...ternsNode.html To be a trader pulling profits from the markets on a regular basis,one has to keep things simple.......I believe the above website puts it down to its simplest.Very easily understood,and as far as patterns are concerned,all that is required.There are some amongst us,from an older school of thought, who would still like to hold a book in our hands as we pour through the facts.Probably then you may have to go hunting for the book........Else these facts are enough. After reading,we can always discuss charts and the doubts before proceeding to other things.....


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Quote:

Originally Posted by rahulg77 Hi saint,

How are u? another question regarding the trend line. like all books say the trendline

helps being a support and thats what we see on many charts also. I was seeing the

charts of JP associates and that is true there too.

Now my question is

- Why? is there a reason a trend line acts as a support( what is the underlying logic

behind it) or cause we see it in so many charts we take the number of repitations as a

proof and follow it.

- Another thing i noticed was that the price was always bouncing back on intermediate

trend line( acting as support) and the short trend line went above the price pattern and

number of time acted as the resistance level. Is this also common to see.

Rgds

Rahul

Hi Rahul, My mind does not work in the "why something happens" mode,and therefore I may not be the best to answer it........but I wonder if these patterns and lines develop because we are all looking at the same thing and drawing the same lines:) It could be as simple as fear and greed.Countries may be different,the year may be different,but human emotions don't change much,I guess.And it gets reflected on our charts. A chart is never the mapping of what that particular company is about,but of the emotions of hope and expectations ,fear and greed,of the investors in that company.The chart tells us of human emotions,and therefore,as astute traders,we buy into fear and sell into greed,and enjoy the profits made in the difference. And therefore trendlines,patterns and all the paraphrenalia is learnt to come to that very


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important point.......to assess when fear has truly set in,and is time to buy once we get a signal,or when greed has got a bit out of whack,and is probably time to exit. And ,Yes,to the second doubt,my friend.... All the best! Saint



Quote:

Originally Posted by [email protected] dear saint

greetings

after a long time i was serious enough to read postings on this forum. my beginning is

with this posting "teach a man to fish...." and while reading it i absorbed myself so

much that i forgot to attend an important function and had to bear the ire of my host.

i had seen many other forums where the members are given reccommendations about

certain stocks by the administrators/moderators etc. and where questioning them is

tabboo. they have to remain dependent on others. but this is the only forum where they

are taught to cope with the intricacies of the stock markets and are groomed/motivated

to stand on their own feet.

i am a naive trader/invester and do not participate much in the stock markets for want

of knowledge. but know i am confident of learning the tricks of the trade by remaining

in touch with the topics here. so saint thanks for opening my eyes to all thenew

world(for me) of the stock markets.

wit regards.

Hi Spark, First of all,thank you for those very warm remarks.... Secondly,great attitude,my friend...........It is great to hear that one doesn't take part in the markets theses days for want of knowledge.With the markets going in a vertical direction,every friend and relative had seemingly turned into professional analysts and traders.What with tips and calls flying about right,left and centre,it is indeed wonderful to know of one such as yourself who did not take part for the want of knowledge.You may not realize it right now,but that was an important STEP 1 in the right direction. And as for the other point,there are instituitions(I refrain from naming them here),not just in the business of the stock market,but in other avenues as well,that thrive on the ignorance of the common man.To tell you the tricks of the trade is robbing them of their


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importance and their ability to make money off you.The strangest thing is that these very analysts,be they through their websites,or newsletters,giving trades on a daily basis,advising you on this company or that,......do not trade!!!Their money is made off you,and not from the markets,and that is what makes the whole thing nauseous and revolting. It is not just in this thread but in many other threads in the Traderji forum,that you will find great traders,making their living out of the markets,or having a regular job and adding to their income by trading the markets.......if you are not confident of stock trading,educate yourself on all the nuances of investing.If you are not into direct involvement in the markets,and are more interested in the Mutual Fund Industry,then again,you take that informed decision.Same for any other form of invstments.For that a certain basic education in that field is a must. I sincerely hope that this forum would be a start to your Education,and let not the high priests of trading stand between you and Education..........always remember that there is more money to be made from the markets.May not be as easy money as the "other way",but believe me it is much,much more rewarding. Wishing you all the very best in all endeavours,be it in the markets or in Life. Saint

Saint 8th June 2006 09:53 PM


Quote:

Originally Posted by pranayd Hi Saint (as per your instruction, would not add any title though I sincerely would like

to address you with utmost respect),

I have been visiting this site for about three weeks now. As any novice to the stock

market, I straightaway hit the threads giving tips, recommendations with the hope (and

greed) that I will get some free tips/ calls and I would be able to make a quick buck in

my spare time. However, over this period (and thanks to the turmoil in the market), I

could not lay my hands on anything concrete.

Reading the various threads where seniors frequently mention all the technical jargon,

I decided to learn the meanings of a few technical myself. As a result, two days back, I

clicked on the technical section of this website and happened to look at this thread.

Since then, I have gone through this thread "word by word" three times!! I have also

made a copy of the entire thread for reference. Cos' I realised I do not want to make (or

lose) money at the mercy of others and I will take it onto myself to learn the nitty-

gritties of trading and do it myself. I know it is a long journey, but its said that the first

step taken is job half done.


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I would like to thank you for providing this vital information on trading and teaching us

how to fish.

I will now read this entire thread twice over the weekend, look at a few charts myself,

and take the plunge in deep waters next week and catch the fish with my bare hands

(like the Anand Rathi ad!!).

I will definitely keep you posted on the progress (successful or otherwise).

Thanks and ton again,

Pranay

Great going,Pranay......and feel free to ask if you have any doubts.Shall help as much as possible. Like I have said before,one needs education before trading,and one needs a burning desire to learn and succeed to succeed. I feel you have them both...........wishing you all the very best on your path to Trading Mastery. Saint

Saint 13th June 2006 10:55 AM


Quote:

Originally Posted by Trader123 hey saint,

Sorry for posting a question so many days after u posted this..... Had no other choice

coz i joined tradeji a week back and noticed this amazing thread only today.

Now onto my doubt..ehh question! In the above graph for cisco shouldnt the support be

at 16.93 and not the 17.68 like u have shown there.Or is it 16.93 for the wave which

started a lil before nov and extended till dec..??

Hi Trader, Both levels of support.........that chart was posted to indicate that an area of resistance,once broken to the up,later became an area of support.If the correction from the up broke through the 17.68 area,yes the next support would have been that 16.93 levels.


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Every present support is a potential future resistance and vice versa......that was the only indication of that aforementioned chart. All the best! Happy Trading! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Okay,now that we have gone through trendlines,etc,and I do hope that those interested went through the education on Chart Patterns at Stockcharts.com. As said before we are in this business to make profits.We are not in this business to become "experts" so that we can stop trading and start some newsletter service,etc.We learn this so that it can help us trade the markets.........we learn so that we can pull profits out of the markets whatever the market is doing. So,therefore,let us go straight to trading these patterns,with the assumption that those interested have gone through the theory at stockcharts.com or whichever TA book that you have.

TRADING THE RISING WEDGE: The RISING WEDGE is a reversal pattern,as always the word "usually" comes into play. Nice one that took place in ARVIND MILLS......see the chart below.Self explanatory.We got higher pivot lows as ARV MILLS made new highs through 2003 and 2004.But newer highs in November 2004 and later was accompanied by lower volumes.This rising wedge took nearly a year in the making......The week ending Oct 14th ,and we got our breakdown bar(indicated in the chart with a red arrow). Look to short below the breakdown bar with your stops at where the green arrow is placed.Once it cracks,keep moving the stop down to the previous pivot high,so on so forth.


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http://www.stockcharts.com/education...singWedge.html Happy Trading! Saint

Trader123 13th June 2006 09:06 PM


Quote:

Originally Posted by Saint All the best!

Saint

wow...!! Must say u r awesome..!! have a question though.. lets say we are in a trade at Rs.500.. the stock rallies and then reaches 550.All this while creating higher tops higher lows.On the daily chart however we see that there is a small black candle..lets say this is because it closed at 550 yesterday and today has closed at 540.What do we do now..?Weekly charts our pivot is at 500 and the stop is obviously at lower levels .. how do we confirm or in other words verify that this is not the start of a downtrend. I am sorry to bother u with this question.. please take your time in answering this


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question i am in no hurry.I know i have time specially with markets having found a liking towards the south..!!hope i sound funny..hehe;)

Trader123 15th June 2006 04:25 PM

Re: Teach A Man To Fish And......... Hey saint, Would like your view on this. Was going through the weekly charts of tata steel.And to my untrained eye.. it seems like the the long term trend in tatasteel is still intact.. the reason : the trend line drawn from 05/21/04 still holds and it looks like this line is a strong support..!It tried to breach this line on 08/27/04..and again on 11/04/05..and also a few days back and it looks this line is a strong support..! However, it is not in an uptrend.. lower pivots lower lows.. since the top 700+.. so ideally what should i do now.My logic says buy 50% because i am not sure this trend line will hold..and also because it is not in an upward trend..!! Again saint please take your time..also please excuse me if you find this question too easy or lame to be answered.I could not attach the graph coz i am not sure how to attach a graph from adget n metastock..! Happy trading



Quote:

Originally Posted by rahulg77 Hi sorry to answer this as u had posted it to Saint. First of all black candle is not

formed cause the day close is below the previous day close. A black candle forms if the

close is below todays open itself.

Now booking profit is up to u. If u are a trend follower you would book part profits

when trend line is violated. then u would exit the rest when the previous pivot low is

also taken as that would mean uptrend is in question. Remember trend is valid till the

proof of evidence proves otherwise(as Martin pring says)

your stop loss should not be below as once the price moves so much above you should

have had trailing stop losses. and in any case if it was below then also if u are a trend

follower you should exit by now.

Now candlestick would be a different understanding. it depends where the small black

candle has formed. Has it formed within the body of the previous white candle. Above

it. Below it. If it has formed within the body then it could be a Harami pattern. above

would be a evening star. all these need confirmation the next day.


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Also, a confirmation just shows that current trend has ended. It does not tell us if it will

reverse, it could move sideways. It might be a small correction a large one. Magnitude

cannot be judged. Hence, candlesticks are more beneficial if used with other indicators.

A confirmation with trend line being violated, or any other indicator turning negative is

more useful. Though u can use it individually too but a confirmation is a must.

Hope this answer your query. Saint please add whatever I have missed out on.

Rgds

Rahul

Great stuff,Rahul.........:) Saint

munchikana 16th June 2006 05:55 PM


Quote:

Originally Posted by Anupama Singh Hello Saint!

At what stage in a intermediate downtrend do we say that we are in a bear

market?How do we make out the difference between a major trend move and an

intermediate trend move?

Please take your time in answering,maybe over the weekend.

Thanks!

Regards!

Anu

With due apologies to Saint, I interfer here. Question No. 1:- At what stage in a intermediate downtrend do we say that we are in a bear market? To the best of my knowledge, major trend develops over a longer period of time. What should be the length of time so as to qualify it to the term "major trend"? There is no clear cut answer. Answering it in another way round, it cannot be a "major trend" if it has developed over a few days or a few weeks. Longer the period, better it will be. Again,


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whether it is a correction or a bear market, depends upon the length of the period and the severity of the fall. Of course a prior bullish trend should be there to have intermediate correction. Usually corrections are not called "bear market". From my personal observation, corrections up to 50% can happen in any bull run. Another point to be noted here is that in a bull market corrections are always swift and strong. Question No. 2:- How do we make out the difference between a major trend move and an intermediate trend move? Major trend move pulls the market in one direction for a greater period of time with some conter trends in between for a brief period of time. For example, in major bullish trend stock A moves from Rs. 100/- to say Rs. 300/- over a period of one year, with some intermediate corrections pulling it down a little bit. Hope I have not added my confusion to your doubts. :D :D As always, better answers are always welcome.



Quote:

Originally Posted by gobatman2001 Hi! Saint,

You have mentioned that we must look at the weekly charts to see if the stock is in the

uptrend & then look at the daily charts.

In the example that for "Educomp", there are 3 bearish candles & then 2 bullish

candles. According to you, we should buy the share when the 2nd bullish candle takes

out the previous candle's highs.

Isn't this too early to buy since there is no confirmation of the weekly uptrend.

Would be grateful if you could you please clarify this doubt.

Thanks & regards,

Hi Gobatman2001, In an intermediate uptrend,one looks at weekly charts stalking for an entry into the particular stock.We have that pullback to support and a higher pivot low on the daily.We move to enter with a stop below the pivot low made on April 26th. And we would get stopped out on May 22nd as in most of the counters held on that day.


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As in any trend,a trend is not broken with a pullback.And as in all intermediate uptrends,we buy that pullback.Now that it went on to make a lower pivot high and confirming it with a lower pivot low,We would say that we are in an intermediate dntrend. In hindsight,in retrospect,that trade was too early.......but hindsight and retrospect being key words.As we wouldn't have had that information then,we buy thinking that we're headed to new highs,with our stops in place. EDUCOMP is now in an intermed downtrend,but the gradient of its downtrend makes it attractive when things go up again.So,it's one for your watchlist,my friend. All the best! Saint



Quote:

Originally Posted by Trader123 Hey saint,

Would like your view on this. Was going through the weekly charts of tata steel.And to

my untrained eye.. it seems like the the long term trend in tatasteel is still intact.. the

reason : the trend line drawn from 05/21/04 still holds and it looks like this line is a

strong support..!It tried to breach this line on 08/27/04..and again on 11/04/05..and

also a few days back and it looks this line is a strong support..! However, it is not in an

uptrend.. lower pivots lower lows.. since the top 700+.. so ideally what should i do

now.My logic says buy 50% because i am not sure this trend line will hold..and also

because it is not in an upward trend..!! Again saint please take your time..also please

excuse me if you find this question too easy or lame to be answered.I could not attach

the graph coz i am not sure how to attach a graph from adget n metastock..!

Happy trading

Hi Trader123, I am sorry,my friend,but I wish I could see what you are looking at in the TISCO charts.As it is difficult to post what you see,have a look at the attachment below.Hope it answers a few doubts... TISCO is still in a long term uptrend,but still in an intermed dntrend......more has to happen before we get truly bullish again.Once again,we are talking abt traders,not investors.


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This retracement puts a doubt in the head if this truly can be classified as an intermediate dntrend......we will know in due course of time.A rally is in the offing,but I truly doubt if TISCO is going to take out highs and form new highs in the upcoming rally. So therefore,if you are planning an intermed trade long,stay clear now.Short term is another matter.

All the best! Saint



Quote:


Thanks for your reply.

I am sorry if I am bugging you, but I want to understand this clearly as this is the most


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important part.

If you look at the charts of Bombay Dyeing & Bajaj Hindustan, on the daily charts,

both are showing an uptrend. But, if you look at the weekly charts, then the previous

pivots have not been taken out.

So, as a "Short term" trader, what should one do. Buy now or wait for the weekly trend

to get confirmed. I am very confused!

Thanks! Saint

Hi Gobatman2001, Always better to have both the weekly and daily in line before attempting to go long.No problems actually if you are an adept hand at this........else,stay clear of this rally till the intermediate trends give you a signal to go long. Just posting BOM DYE chart....

All the best! Saint


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Trader123 19th June 2006 11:25 AM


Quote:

Originally Posted by Saint Hi Trader123,

I am sorry,my friend,but I wish I could see what you are looking at in the TISCO

charts.As it is difficult to post what you see,have a look at the attachment below.Hope it

answers a few doubts...

TISCO is still in a long term uptrend,but still in an intermed dntrend......more has to

happen before we get truly bullish again.Once again,we are talking abt traders,not

investors.

This retracement puts a doubt in the head if this truly can be classified as an

intermediate dntrend......we will know in due course of time.A rally is in the offing,but I

truly doubt if TISCO is going to take out highs and form new highs in the upcoming

rally.

So therefore,if you are planning an intermed trade long,stay clear now.Short term is

another matter.

All the best!

Saint

Thanka a million for answering my query Saint. Am postin the weekly charts for tisco.Well u can see the blue line in this graph which accordin to me was a support it looks like it has bounced from here... however Saint(its tough addresing u as saint, Sir would be much more appropriate) like i said earlier it has not yet made a higher low or anything.. it looks like it is holding this trend line.Has never broken it since mid of 2004.So buying near the trend line with a stop loss below it might be profitable.Well yes in the short term!!.Can i trade on the short term looking at the weekly charts.??This example it looks like the trade is in the money.! .Please guide me if i am wrong..! (edited) Thanks n happy trading

rahulg77 19th June 2006 04:46 PM

Re: Teach A Man To Fish And......... HI SAINT AND TRADER 123,


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There is a difference in your weekly charts. The difference is around july 2004. In saints chart there is no major fall but trader in your chart there is a long black candle. The fall could be cause of a split or x bonus. I do not know. Maybe that would also make a difference in drawing the trendline. I am not sure. I have not seen if the fall has made us shift the trendline a bit lower. I saw on the charts of BSEINDIA.com and the long black candle was there. So it might be cause of a split or bonus. Rgds Rahul

gobatman2001 19th June 2006 10:29 PM


Quote:

Originally Posted by Saint Hi Gobatman2001,

Always better to have both the weekly and daily in line before attempting to go long.No

problems actually if you are an adept hand at this........else,stay clear of this rally till

the intermediate trends give you a signal to go long.

Just posting BOM DYE chart....

All the best!

Saint

Hi! Saint, Many thanks for your reply. I am not getting into any trades at this point of time. Thanks to your "brilliant" thread, I have been going through a lot of charts. My query was totally from an educational point of view. The reason why I am confused is that many a times, if you keep referring to the daily charts, you tend to miss the big rallies. And many a times, if you refer to the weekly charts, you lose a lot of your profits (if there is a downtrend in the daily charts). This is what is bothering me. :confused: :confused: :confused: Thanks a million for everything!

Agilent 21st June 2006 11:40 PM


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Quote:


At what stage in a intermediate downtrend do we say that we are in a bear market?

How do we make out the difference between a major trend move and an intermediate

trend move?


Thanks!

Regards!

Anu

Anu Good question ... If you read carefully thru Saint’s posts http://www.traderji.com/38797-post21.html and http://www.traderji.com/38972-post36.html you may get your answer Anyway, pending Saint’s response to your query, and adding to Munchikana's clarification of 16th, here is my take : (Re your query 1) I doubt if any one can say for sure before the completion of the subsequent pullback (rally), and maybe even the subsequent down leg If in that rally, the previous high gets crossed, then the downtrend was an intermediate downturn, and we are still in a bull market (thus if u look at real life, sensex needs to gain another 2500 points b4 we can say for sure we remain in a bull market. see chart, updated till y'day, for ready reference http://finance.yahoo.com/q/bc?s=%5EB...=on&z=l&q=l&c=) If, on the other hand, the previous high does not get crossed, AND the next downtrend breaches the previous low, we are in a bear market (thus if the June 12th ? low of around 9000 gets breached again ... if and when a downtrend resumes... we can say we have been in a bear market since early May) Re your second query : Major trend moves last typically some years, whereas intermediates get over in weeks or a couple of mths. Hope this helps


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AGILENT:) PS If you have the time and the interest, pl read some standard TA book, e.g. 'TA of stock trends' by Edwards & Magee

satish_goteti 22nd June 2006 01:40 AM


Quote:

Originally Posted by Saint So,in an uptrend,we have HIGHER PIVOT LOWS.How did we come to that?Each

pivot low is higher than the previous pivot low.Therefore we call it higher pivot lows.

In a downtrend,we have LOWER PIVOT HIGHS.How did we come to that?Each pivot

high is lower than the previous pivot high.Therefore we call it lower pivot highs.

Hi Saint, I have two questions reading through your posts multiple times... Question 1. In the above quote you say that a uptrend is caused by a series of higher pivot lows. Is it correct to say that in an uptrend we also have a series of higher pivot highs ? The same in converse for a downtrend? Question 2. For a given time period, is it a rule that you have only one trendline? Basically what are the rules of drawing a trend lines? Is there any rule on how to draw a trendline or we look in the charts and connect multiple highs/lows to form the trendlines? Thanks a ton for your answers and once again appreciate your efforts to enlighten folks like me with your brilliant teaching. PS : Between 7th June and 13th June I was in a frenzy of buying stocks and I stopped buying the day I started reading your thread:confused: Now it makes sense to me why I am not making any profits but am sure I will learn a lot from your efforts. Regards Satish

satish_goteti 22nd June 2006 10:58 AM


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Re: Teach A Man To Fish And......... 2 Attachment(s) Hello Saint, I have another question. I am tearing my hair apart to understand this chart. Please have a look at the attached weekly chart of ITD Cementation. Clearly in the last three days there is a Pivot Low on 16th June. The daily charts show this is in a rally for the past four days. The downtrend is in question but we do not have a confirmation of the uptrend. How long do we wait till we make our move? As far as I understand from your previous posts, we only flag this stock onto our watch list. We wait till it makes a higher pivot low and higher pivot high. Lets say in the daily charts it makes a pivot low in the area above the current pivot low 522.70. Things are better and better. But the previous pivot high is in the range of 900. Do we have to wait until this pivot high is taken out? What if the rally does'nt stop? Don't we loose out if we do not buy it early? Sorry for so many questions but hope you get my point.

Regards Satish


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rahulg77 22nd June 2006 07:44 PM


Quote:

Originally Posted by satish_goteti Hello Saint,

I have another question. I am tearing my hair apart to understand this chart. Please

have a look at the attached weekly chart of ITD Cementation. Clearly in the last three

days there is a Pivot Low on 16th June. The daily charts show this is in a rally for the

past four days. The downtrend is in question but we do not have a confirmation of the

uptrend. How long do we wait till we make our move? As far as I understand from your

previous posts, we only flag this stock onto our watch list. We wait till it makes a higher

pivot low and higher pivot high. Lets say in the daily charts it makes a pivot low in the

area above the current pivot low 522.70. Things are better and better. But the previous

pivot high is in the range of 900. Do we have to wait until this pivot high is taken out?

What if the rally does'nt stop? Don't we loose out if we do not buy it early? Sorry for so

many questions but hope you get my point.

Regards

Satish

Hi Saint, I had a question related to his query. Will be take the 900 mark as a pivot high as what I have learned so far and read in dow theory and by martin pring is that a pivot is made if a it retraces 33%, 50% or 66%. Now if we take other theories as well 12.5% is minimum retracement levels we take. In this case if take the high of 19th april, the move around 24th may was a mere sidway movement and not a retracement to qualify as a new pivot point. Pls comment on the same and corrrect me if i have misunderstood the concept of a pivot. Rgds Rahul P.S and yes it would be nice to see an answer to his question to as when would u enter this trade.

Saint 1st July 2006 12:42 AM


www.traderji.com 85


Quote:

Originally Posted by satish_goteti Hi Saint,

I have two questions reading through your posts multiple times...

Question 1.

In the above quote you say that a uptrend is caused by a series of higher pivot lows. Is

it correct to say that in an uptrend we also have a series of higher pivot highs ? The

same in converse for a downtrend?

Question 2.

For a given time period, is it a rule that you have only one trendline? Basically what

are the rules of drawing a trend lines? Is there any rule on how to draw a trendline or

we look in the charts and connect multiple highs/lows to form the trendlines?

Thanks a ton for your answers and once again appreciate your efforts to enlighten folks

like me with your brilliant teaching.

PS : Between 7th June and 13th June I was in a frenzy of buying stocks and I stopped

buying the day I started reading your thread:confused: Now it makes sense to me why I

am not making any profits but am sure I will learn a lot from your efforts.

Regards

Satish

Hi Satish, Thank you for your kind words,Satish...... Question 1:Yep,Satish....every uptrend would be characterised by higher pivot lows and higher pivot highs,and vice versa for the dntrends characterised by lower pivot highs and lows........to know that is important in detecting the trend.BUT,in an uptrend,focus on the higher pivot lows and vice versa on lower pivot highs in the dntrend.....Why?More to do with where to place your stops and to know when this current trend is over.So,basically every pivot low goes on to make a higher pivot high and then a higher pivot low followed by a higher pivot high.As said before,this stock is in an uptrend.When do we say that this particular up move is over.......When a previous pivot low is taken out. Therefore,in an uptrend,train your eye to focus on the higher pivot lows.....So too in a dntrend,train your eye to focus on the lower pivot highs.A crack of a previous pivot low on a weekly chart indicates that this up move is over.Vice versa in a dntrend.....


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All the best! Saint



Quote:

Question 2. For a given time period, is it a rule that you have only one trendline? Basically what are the rules of drawing a trend lines? Is there any rule on how to draw a trendline or we look in the charts and connect multiple highs/lows to form the trendlines?

Hi Satish, Think the below chart explains itself.......feel free to ask though if something is not clear.

Saint




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1 Attachment(s)

Quote:

Originally Posted by satish_goteti Hello Saint,

I have another question. I am tearing my hair apart to understand this chart. Please

have a look at the attached weekly chart of ITD Cementation. Clearly in the last three

days there is a Pivot Low on 16th June. The daily charts show this is in a rally for the

past four days. The downtrend is in question but we do not have a confirmation of the

uptrend. How long do we wait till we make our move? As far as I understand from your

previous posts, we only flag this stock onto our watch list. We wait till it makes a higher

pivot low and higher pivot high. Lets say in the daily charts it makes a pivot low in the

area above the current pivot low 522.70. Things are better and better. But the previous

pivot high is in the range of 900. Do we have to wait until this pivot high is taken out?

What if the rally does'nt stop? Don't we loose out if we do not buy it early? Sorry for so

many questions but hope you get my point.

Regards

Satish

Hi Satish, Few things before we get to answering doubts.......NEVER TEAR YOUR HAIR OUT,whatever happens in the market or in Life.As the years progress,and hairlines recede and a bald pate awaits you......you gonna regret tearing out your hair once upon a time.:) Second point :If you are an investor into ITD,another issue,but if you are trading it ona short to medium time frame,I'd skip this one looking at the low volumes. But let us take ITD as an example for learning purposes....Yes we have a downtrend in ITD on the weekly charts.Why do we say that?We have taken out the previous pivot low on the weekly charts and we are definitely on the down in the intermed time frames,and threatening to do the same on the longer time frames as well.As it stands now,we are in a downtrend........once we get to that point when we clearly state that we are no more in an uptrend and quite obviously in a downtrend,we think of shorting every rally,and in this case as we cannot short,we merely step aside and wait.......Yes we got that pivot low on the week ending on 16th of June ,and then we got that rally.What do we do here?Nothing.Stand aside and wait for an uptrend. How do we know that the pivot low made on the above mentioned week is not the bottom after which we are moving up?Simple answer.......we don't.And when we don't know something,or there just is not enough data to tell us that the trend has changed,we do not put our funds into that trade,we just stand aside.


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So far,every rally is a selling opportunity.......we haven't come to that point when trends have changed and every dip is a buying opportunity. Now,at what point do we buy?Let us say that we are going to turn up from here and move upwards,do we buy.We have a higher pivot low on the daily,so why not?The answer to that one is: Depends on the time frame that you are trading.If you are in a trade for few days,then maybe.But there just is nothing like trading with the weekly charts supporting you as well.So do nothing........wait for the weekly charts to give you that higher pivot low before committing funds.At present,this rally is only just that......a rally in a downtrend. Now let us presume that we get that higher pivot low on the weekly charts,do we wait for the higher pivot highs to be taken out before entering.....Definitely not.Get to get ready mode once you get a higher pivot low(you could also buy here if we get a neat long basal pattern with a higher pivot low).If ITD forms a sideways base and a higher pivot low from here,you could buy here and addover 760 which is the prev lower pivot high.

All the best! Saint


www.traderji.com 89

satish_goteti 1st July 2006 02:44 AM


Quote:

Originally Posted by Saint Just a few charts..........

Below is the chart of POLYPLEX CORP just denoting how the trendlines are drawn.

The Uptrendlines therefore act as Support,once cracked to the downside,notice how the

Downtrendlines act as resistance.

In what way does this knowledge help us in our trading?We detect a change in

uptrend,and we enter the stock,once again using all that we have learnt so far.The

trendlines allow us to stay in that trade as long as the trendlines hold.

The moment we get a close below the Uptrendline,we are out.If you are looking to

short,wait for a feeble rally towards the former uptrendline.That's an area to short.

Vice versa for the downtrendlines.......Have a look at the 2nd chart of POLYPLEX,self

explanatory.

Happy Trading!

Saint

Saint, One more question from me again. In the above did you mean "We detect a change in downtrend,and we enter the stock,once again using all that we have learnt so far.The trendlines allow us to stay in that trade as long as the trendlines hold". If what you wrote was correct, why do we enter a stock if we detect a change in uptrend? Did you mean a decline? Sorry if this sounds stupid but I wanted to be absolutely sure. Regards Satish PS : I always thought reading your posts twice I got what you were saying, but when I read the charts I want to buy, I am back to zero.:D This question popped up in my 6th iteration of your threads.:confused:

Saint 1st July 2006 03:17 PM


www.traderji.com 90


Quote:

Originally Posted by satish_goteti Saint,

One more question from me again. In the above did you mean "We detect a change in

downtrend,and we enter the stock,once again using all that we have learnt so far.The

trendlines allow us to stay in that trade as long as the trendlines hold".

If what you wrote was correct, why do we enter a stock if we detect a change in

uptrend? Did you mean a decline?

Sorry if this sounds stupid but I wanted to be absolutely sure.

Regards

Satish

Hi Satish, Great going..........my mistake.Shall correct it......Thank you for bringing it to light.:) Saint



Quote:


I had a question related to his query. Will be take the 900 mark as a pivot high as what

I have learned so far and read in dow theory and by martin pring is that a pivot is made

if a it retraces 33%, 50% or 66%. Now if we take other theories as well 12.5% is

minimum retracement levels we take. In this case if take the high of 19th april, the move

around 24th may was a mere sidway movement and not a retracement to qualify as a

new pivot point.

Pls comment on the same and corrrect me if i have misunderstood the concept of a

pivot.


www.traderji.com 91

Rgds

Rahul

Hi Rahul, Attached below is a simple chart of ITD,and where to buy and sell. Keep things simple and trade what is obvious to the eye.......Pivots are just that-turning points.The amount of retracement however tells us about the strength or weakness of the preexisting trend,which we can get into shortly. Think the chart explains itself........

Saint




www.traderji.com 92

Quote:


Many thanks for your reply. I am not getting into any trades at this point of time.

Thanks to your "brilliant" thread, I have been going through a lot of charts.

My query was totally from an educational point of view.

The reason why I am confused is that many a times, if you keep referring to the daily

charts, you tend to miss the big rallies. And many a times, if you refer to the weekly

charts, you lose a lot of your profits (if there is a downtrend in the daily charts). This is

what is bothering me. :confused: :confused: :confused:

Thanks a million for everything!

Hi Gobatman, Always best to let the weekly and daily confirm each other before an entry.Our objective is to grab the meat out of the trend.So,let the daily rally,stay out of it,then let it pullback,and then if we form a higher pivot low on the weekly,grab it.Yes,you would miss out on the first rally........you would also lose some profits at the top.But there is lots of money to be made from the meat in between....and lots of restful sleep at nights knowing that the charts do not conflict with one another. All the best! Saint



Quote:


At what stage in a intermediate downtrend do we say that we are in a bear

market?How do we make out the difference between a major trend move and an

intermediate trend move?


Thanks!


www.traderji.com 93

Regards!

Anu

Hi Anupama, To answer your query,we need to go into the basics of Trends.........Let us get into it from the beginning.Then let's address your doubt.

TRENDS As per time frames,we can classify Trends into: A.SECULAR TRENDS B.PRIMARY TREND C.INTERMEDIATE TREND D.SHORT TERM TRENDS A.SECULAR TRENDS Every short term trend has within it one to several intraday uptrends and downtrends.Every intermediate trend has within it one to several short term uptrends and downtrends.Every primary trend has within it one to several intermediate uptrends and downtrends.So too,every secular trend has within it one to several primary uptrends and downtrends. What we mean by Bull market is a market ina primary uptrend.What we mean by a Bear Market is a market in a primary dntrend. A SECULAR BULL MARKET has primary uptrends(Bull mkts)greater in magnitude and duration as compared to its primary dntrends(Bear mkts).Expect the bull markets to unfold longer than the bear markets in a secular bull move. Vice versa for the SECULAR BEAR MKT.A secular bear market has primary dntrends greater in magnitude and duration as compared to its primary uptrends.Expect the bear markets to take longer to unfold than the bull markets in a secular bear move. A Secular trend usually lasts about 10-25 years. Let us get into the others tomorrow.........maybe we can also have a look at some secular trends on charts. All the best! Saint

Saint 2nd July 2006 07:52 PM



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2 Attachment(s) Few examples of Secular Moves.......... SENSEX an example of a Secular Bull Market.NIKKEI a Secular Bear.Charts below.....


www.traderji.com 95

Saint

Saint 2nd July 2006 08:57 PM


Quote:

Originally Posted by pkjha30 Hi SAINT

From the chart I see that support is taken at a higher point from 1994-2003 before

sensex took off in 2003. The low of 1993 was never tested.

Is it possible to say that unless we test that low and breach with high volumes, we are

not yet in primary bear dntrend? You have put benchmark at the supportline in

accordance with the theory. But in practice sometimes indices may bounce back from

the lowest point formed after the first high of the consolidation period( in yellow

background)

Pankaj


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Hi Pankaj, These are long term charts and we are looking more at the secular trend of SENSEX.What we call as bear market in common parlance is a primary dntrend and not a secular dntrend. So,a break of 8799,and we classify this move as a primary dntrend.......and as for this Secular Bull to become a Bear,we are far from that scenario. As it stands now,we are in a SECULAR BULL MARKET,in a PRIMARY BULL MKT.Breaking 8799,we go into a PRIMARY BEAR MKT,but still very much in a SECULAR BULL MKT. And for a long term trader or investor,there can be nothing sweeter in a secular bull mkt than taking profits,watching the mkts get into a primary bear mkt,and buying more at the lows. Saint

srisara 4th July 2006 12:44 AM

Re: Teach A Man To Fish And......... 1 Attachment(s) Friends, just to share info. I am attaching the Chart of Nifty (Monthly) here. It looks very intersting but not sure how much relevant it is. The last but 1 Bar if considered as Kangaroo Tail (I am not sure of Kangaroo tail releavance in a monthly chart) then the next bar is almost at the Top of the Bar. So, we can see considerably upside in the NIFTY in the coming weeks or months. Please do add your comments...


www.traderji.com 97

Satya

Saint 4th July 2006 04:32 PM


TRENDS

PRIMARY TRENDS : The Primary Trends are what we in common parlance state as "Bull market" or "Bear Market".Just as a Secular Uptrend is made up of several primary uptrends and downtrends,the Primary Uptrend is made up of several intermediate uptrends and downtrends.Vice versa for the Primary Downtrend. As we had discussed before,a Primary Uptrend is of greater magnitude and duration if in the broader picture,we are also in a Secular Uptrend.A Primary Dntrend would be of shorter magnitude and duration if it happens in a Secular Uptrend. So too,in a Secular Downtrend,the Primary Dntrends are of greater magnitude and duration as compared to the Primary Uptrends. Just take a look at the two charts of the Nikkei and Sensex in the previous page to get things clear. A Primary Trend lasts anywhere between 9mths and 2 1/2 yrs.

INTERMEDIATE TRENDS : So too, an intermediate uptrend is made up of several short term trends.Again,if we are in a Primary Uptrend,the Intermediate Uptrends are of greater magnitude and duration as compared to the Intermediate Dntrends. Vice versa in a Primary Dntrend. An intermediate trend can last anywhere between 6weeks to 9mths. More for later,after some Caffeine!!


www.traderji.com 98

Saint

Saint 5th July 2006 12:16 AM


Quote:

Originally Posted by Anupama Singh Hello Saint! At what stage in a intermediate downtrend do we say that we are in a bear market? How do we make out the difference between a major trend move and an intermediate trend move? Please take your time in answering,maybe over the weekend. Thanks! Regards! Anu

Hi Anupama, Okay in continuation..........we now know what a secular,primary trends and intermed trends are.We know that each larger time frame has within it smaller time frames of trends.Now,to your question.........we have an intermed uptrend,followed by an intermed downtrend,followed by an intermed uptrend,so on so forth. Few rules: 1)After an intermediate uptrend,the correction should be only 33-66% of that cycle(One intermed cycle=one intermed uptrend and one intermed dntrend). --Greater the retracement,the increased likelihood that the primary trend has reversed to the down. 2)Substantial increase in volume during the price decline The above are the basics......if you are playing with indicators as well,then all the negative divergences,moving avg crossovers puts you on Caution Mode. Have a look at the chart below.......please do ask if anything is not clear. Gotta Run........World Cup Mode..


www.traderji.com 99

All the best! Saint



Quote:


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Originally Posted by karthikmarar Saint

Good to see you back. I do hope you are right about the intermediate dntrend. With all

the divergence in ROC and TRIX in the monthly charts of nifty, I hope we dont go into a

primary bear trend.. :) . Enclosing the monthly chart. Would like to know your views...

regards

Karthik

Hi Karthik, Just have a look at the chart above.....says everything. Basically,this correction from the May top is too deep to be wished away as yet another intermediate dntrend.Calling it a primary downtrend as markets plunged on May22 is being a bit premature.An intermediate dntrend is one till it isn't.But the next wave drop to June 14th lows takes it down to more than 80% correction of the previous intermed cycle. My personal opinion is that this no more looks like an intermediate dntrend in a primary uptrend.I feel we are starting off the first leg of a Primary Dntrend.We are still very much in a Secular Bull Market though.......... But as always,we can confirm that only once the market drops below 2595.We are at that spot of bother on the charts where the bullish orientated trader sees things going to new highs,and the bearish ones seeing new lows.It would be wrong to say that this IS a Primary Dntrend for sure till confirmation.To say that this is nothing but an intermed dntrend would be dangerous and wrong.........that statement in red should be modified to "This dntrend is nothing but an intermediate dntrend till we get a confirmation that this is a primary dntrend.But the depth of this retracement is giving rise to the possibility that it's looking more and more like the first leg of a Primary Dntrend" And yes agreed on the indicators bit as well. All the best! Saint



Quote:



Originally Posted by avinash Hello Saint!

The whole concept is much clearer now.......but just a suggestion,Saint.

Maybe you could indicate on this chart also of the primary trend,for clarity.

Thank you so very much for all the excellent articles.

Avinash

Ahh,thanks Avinash.......that was the very purpose of that chart.Shall do.....attached below.

Saint





Quote:

I am slowly trying and learning how to fish. I have bought myself a fishing rod now. Got metastock. Well friend loaded on my computer. But I promise to get an orignal one once I am more comfortable with it.

Great going,Rahul.......all the best!:)

Quote:

I had a few questions to help me put worms on my hook. :) 1) How do we change from arithmetic to logirmethic scale.

Take your cursor to the Y-AXIS on the Meta stk Charts.Right Click and go to Y-AXIS PROPERTIES.Check the box in front of SEMI-LOG SCALE.

Quote:

2) When I open a chart on the metastock it shows a stock from 2004 onwards. How can i change the period of the charts.

Period,meaning?You mean the no.of years that the X-Axis shows.......if that is what you meant,go to the Xaxis on your Charts.Right Click and go to X-AXIS PROPERTIES.And then put in from when you want on the box displayed The rest for later..... Saint



Quote:

3) How do we use histograms on MACD. I mean I want to plot The difference between the MACD and signal line. And also It gives me the option to change the time period for the signal line( which is 9). But i am not able to change the time period of the two moving averages used to plot MACD. 4) can you guide me what time periods should I use for the three simple indicators( RSI, MACD, Stochastics). Right now I am using 14 days for



RSI. Stochastics 5 and 3. Signal line 9 and I am not sure what period it is using for the plotting the MACD. And should we us different time periods for daily charts, for weekly charts and for monthly charts. Also do they change if market is volatile. If yes could pls briefly note them down for me. I know these are too many questions but would help to get a start with my software. Rgds Rahul

Hi Rahul, I basically use the RSI at 14,and the Stochs at 14,5,3.....but all this is more a personal preference.Play around with it till you attain comfort levels.And,no,I don't change the periods in different time frames. Please do have a look at the link below for more education.... http://stockcharts.com/education/Ind...scillator.html http://stockcharts.com/education/Ind...indic_RSI.html http://stockcharts.com/education/Ind...dic_MACD1.html All the best! Saint

rahulg77 8th July 2006 06:00 PM

Re: Teach A Man To Fish And......... 2 Attachment(s) Dear Saint, I am attaching two files of IVRCL. I have drawn trendline on both of them. In one I have drawn in which price low touches more often and in one I have drawn in which the first two lows are connected. Which would be more apt so I would be more sure about how to draw trendline. And if we draw for a period of more than 2-3 years. How should we draw. try and connect most number of bottoms. pls elaborate. O maybe if u have some time you could take 2-3 stocks and draw the primary trend lines so i can have an idea.



Rgds Rahul

Agilent 8th July 2006 06:27 PM


Quote:



Originally Posted by rahulg77 Dear Saint,

I am attaching two files of IVRCL. I have drawn trendline on both of them. In one I

have drawn in which price low touches more often and in one I have drawn in which

the first two lows are connected. Which would be more apt so I would be more sure

about how to draw trendline.

And if we draw for a period of more than 2-3 years. How should we draw. try and

connect most number of bottoms. pls elaborate. O maybe if u have some time you could

take 2-3 stocks and draw the primary trend lines so i can have an idea.

Rgds

Rahul

Rahul Trendlines formed in the pre May phase will not extend into the bear phase which the market (and most stocks) have been witnessing since then U will need to draw them (sloping downwards) afresh, and then again (up-slope) for the rally in June (which now seems to have got over ... sigh !) It may be easier to look for other patterns such as flags, pennants etc which typically extend a few weeks Am I right Saint ? AGILENT



Quote:



Originally Posted by amaren hello a great thread.

i am new to teading and am very interested in the techinical analysis. i have purchased

few books on techenical anylysis but i find oll of them dont actually tell you how to use

the different graphs may be moving avrage or pscilloters. Rather they duel on how to

construct it what actually is ie its defination. i couls not find in ay of my books how to

interprate and use it to take trading decission. could u suggest me some good boks

regarding interpration and how to use these charts..

Hi Amaren, Many threads here that teach a lot of TA.........Else have a look at www.stockcharts.com/education. For a trading decision off a chart,one must first be able to interpret a chart.To interpret a chart,one must be able to do the basics.Learn the basics now,first step first.............As for books,TECH ANALYSIS EXPLAINED by PRING,TECH ANALYSIS OF STK TRENDS by EDWARDS,MCGEE,and another TA book by Murphy(sorry,name not coming to mind right now). All the best! Saint



Quote:

Originally Posted by Agilent Rahul

Trendlines formed in the pre May phase will not extend into the bear phase which the

market (and most stocks) have been witnessing since then

U will need to draw them (sloping downwards) afresh, and then again (up-slope) for

the rally in June (which now seems to have got over ... sigh !)

Am I right Saint ?

AGILENT

Yep,Agilent...........Rahul,shall follow up with some charts of IVRCL tomorrow with



trendlines.Basically,just a visual of what Agilent had written above. Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Hi Rahul, IVRCL attached below.

Saint


Trading Mistakes .....by Proffitt Below,an article by Nick Proffitt,on trading mistakes......... http://www.decisionpoint.com/TAcours...eMistakes.html



Saint

Quote:

Just about everyone knows the grisly statistics about options trading: 90% of all naked option players (no, that doesn't mean they trade in the buff, only that they buy uncovered puts or calls) end up losing money. But hardly anyone knows the equally grisly statistics about equity trading: 80% of all stock investors end up losing money. But how can that be, you ask? Over time, the stock market is a sure thing, a guaranteed way to make money. It's so easy. All you have to do is buy good stocks and hold them. Everybody says this, pundits, brokers, financial advisors, the media, the historical record itself. No one who simply bought and held the Dow Jones Industrial Average or the S&P 500 has ever lost money over a 20-year time span. Right? Yes, right. Now go find me someone who bought and held for 20-years. You should be able to find a few, about 20% to be precise. The other 80% lose money. How does this happen? A couple of ways. Primarily, it happens because no matter how resolute people think they are about buying and holding, they usually fall into the same old emotional pattern of buying high and selling low. Investors are human beings. Human beings naturally want to be in the winning camp, and human beings naturally seek to avoid pain. When things are most euphoric in the investment world, at the top of a long bull market, these human beings are in there buying. And when things are most painful, at the end of bear market, these human beings are in there selling. In fact, it's usually the final capitulation of the last remaining "holders" that sets up the end of the bear market and the start of a new bull market. As Sy Harding says in his excellent book "Riding The Bear," while people may promise themselves at the top of bull markets that this time they'll behave differently, "no such creature as a buy and hold investor ever emerged from the other side of the subsequent bear market." Statistics compiled by Ned Davis Research back up Harding's assertion. Every time the market declines more than 10% (and "real" bear markets don't even officially begin until the decline is 20%), mutual funds experience net outflows of investor money. Fear is a stronger emotion than greed. Most bear markets last for months (the norm), or even years (both the 1929 and 1966 bear markets), and one can see how the torture of losing money week after week, month after month, would wear down even the most determined buy and holder. But the average investor's pain threshold is a lot lower than that. The research shows that It doesn't matter if the bear market lasts less than 3 months (like the 1990 bear) or less than 3 days (like the 1987 bear). People will still sell out, usually at the very bottom, and almost always at a loss. So THAT is how it happens. And the only way to avoid it is to avoid owning stocks during bear markets. If you try to ride them out, odds are you'll fail. And if you believe that we are in a New Era, and that bear markets are a thing of the past, your next of kin will have my sympathies. But people lose money in other ways, too, even during the strongest of bull markets. Let's look at some of the more common trading mistakes to which people are prone. Many of them are related, part and parcel of the same refusal to pay proper attention to



risk management. If you recognize your own actions in some of these, join the club. Over the years, I've committed every sin on the list at least once. Still do on occasion. -- Letting small losses turn into large losses. A whole myriad of mistakes accompany this one. Refusing to take a loss at all. Overbetting. Catching falling knives. Averaging down. Etc., etc.. At root, it's probably because the average investor pays little mind to risk management. In a way, it's understandable. The majority of those in the market today have only come into the market during the last 5 to 7 years. They have never really experienced a serious bear market. The only investing world they know is that of an ongoing bull market, where it's ALWAYS okay to buy the dips, where a stock that craters ALWAYS comes back. But SOMEBODY bought UBid at 121. And SOMEBODY bought eBay at 234. I hope it wasn't you. You should only be buying stocks that are in an ongoing uptrend (hopefully not TOO far along however), or those that are bottoming out following a stiff correction. In other words, when you buy a stock it should be with the expectation that it will go up (otherwise, why buy it?). If it goes down instead, you've made a mistake in your analysis. Either you're early, or just plain wrong. It amounts to the same thing. There is no shame in being wrong, only in STAYING wrong. If a stock does not quickly begin to move in the direction you envisioned when you purchased it, you should begin to question your reasons for owning it and you should immediately put it on a short leash. If it doesn't turn in relatively quick fashion, get rid of it. You can always go back in later, when it really turns. This goes to the heart of the familiar adage: let winners run, cut losers short. Nothing will eat into your performance more than carrying a bunch of dogs and their attendant fleas, both in terms of actual losses and in terms of dead, or underperforming, money. -- Refusing to take a loss at all. I simply don't understand the way some people think. From whence came the idiotic notion that a loss "on paper" isn't a "real" loss until you actually sell the stock? Or that a profit isn't a profit until the stock is sold and the money is in the bank? Nonsense. Your stock and your portfolio is worth whatever you can sell it for, at the market, right at this moment. No more. No less. People are reluctant to sell a loser for a variety of reasons. For some it's an ego/pride thing, an inability to admit they've made a mistake. That is false pride, and it's faulty thinking. Your refusal to acknowledge a loss doesn't make it any less real. Hoping and waiting for a loser to come back and save your fragile pride is dumb. Your loser may NOT come back. And even if it does, a stock that is down 50% has to put up a 100% gain just to get back to breakeven. Losses are a cost of doing business, a part of the game. If you never have losses, then you are not trading properly. Most pros have three losers for every winner. They make money by keeping the losses small and letting the profits build. You should be almost happy to take a loss. It means that you have jettisoned an underachiever stock and have freed up that dead money to put to better use elsewhere. Take your losses ruthlessly, put them out of mind and don't look back, and turn your attention to your next trade. -- Overbetting.



This gets into the realm of money management. Diversification, the process of spreading your investment capital around in different assets and sectors to feather the vagaries of the market, has gotten a bit of a bum rap lately. Some of the New Paradigm folks think the concept is "old fashioned." These tend to be the same people who have every last dime in a handful of internet stocks. That's not investing, or even trading. It's gambling. Preservation of capital is paramount. If you run out of chips, game over man. You may feel a bit envious the day your neighbor, who has put everything he owns into Zowie.com parks his new Mercedes in the driveway next door, but you'll feel a lot better the day the repo man comes with the tow truck to take it back. Most professionals will allocate no more than 2-5% of their total investment capital to any one position. Ten percent should be your absolute max. One more thing. I've checked the U.S. Constitution and the Bill of Rights, and nowhere in either of them does it say that you have to have ALL of your money in the stock market ALL of the time. Money management also pertains to your total investment posture. Even when your analysis is overwhelmingly bullish, it never hurts to have at least some cash on hand, earning its 5% in the money market. You'll need it when you see that next "can't miss" stock but don't want to sell any of your other "can't miss" stocks to raise the money to buy it. Your exposure should be consistent with your overall market analysis. As the market becomes more overbought, overextended, and overvalued, your cash level should rise accordingly. Then as the market gets more oversold and undervalued, you can raise your market exposure accordingly. Being ALL in the market or ALL out of the market sounds like a good idea, and it may work out wonderfully on paper, but it rarely plays out so smoothly in real life and real investing. But you should still employ a sliding scale of exposure, based on your market analysis.


Re: Trading Mistakes .....by Proffitt Below,the continuation...... Saint

Quote:

-- Bottom fishing/Catching falling knives. Many of the daily e-mails I get are of the following type: "Nick, Zowie.com is down 23 points today. Time to buy?!!!" My answer is almost always the same. "Put your pants on, Spartacus. No!" Don't ANTICIPATE bottoms. It's tempting to try to pinpoint an exact low, especially if you're working with indictors like Fibonacci fan and time lines, cycle studies, regression channels, even plain old lateral support points. But it's almost always better to let the stock find its bottom on it's own, and then start to nibble. Just because a stock is down big doesn't mean it can't go down even bigger. In fact, a major multipoint drop is often just the beginning of a larger decline. It's always satisfying to catch an exact low tick, but when it happens it's usually by accident. Let stocks and markets bottom and top on their own and limit your efforts to recognizing the fact "soon enough." Nobody, and I mean nobody, can consistently nail the bottom



tick or top tick. Those who try usually get burned. -- Averaging down. Don't do it. For one thing, you shouldn't even have the opportunity, because you should have sold that dog before it got to the level where averaging down is tempting. The pros average UP, not down; they got to be pros because they added to winners, not losers. And speaking of averaging UP, there's a right way to do it. And doubling your position is not it. Rather, you should add 1/2 your original stake. If other words, if you already own 100 shares and want to bolster your position, you buy 50 shares. If you later decide to add more, you add 25 shares, etc. Why you should do it this way is too long to go into here, but that's the way the math works out best for you. -- Shorting bulls and buying bears. Yes, there are stocks that will go up in bear markets and stocks that will go down in bull markets, but it's usually not worth the effort to hunt for them. The vast majority of stocks, some 80+%, will go with the market flow. And so should you. It doesn't make sense to counter trade the prevailing market trend. If you're worried about a short term pullback, simply cut back on your trading, take a few profits, and build up your stash of cash. Let that money earn its 5% in the money market until the squall has passed. -- Confusing the company with its stock. There are some fine companies with mediocre stocks, and some mediocre companies with fine stocks. Try not to confuse the two. This is, at heart, a fundamental analysis versus technical analysis issue. Some stocks simply have excellent trading characteristics while others don't. Maybe it's a matter of liquidity, or a fanatical message board following, or a daytrading clientele, or whatever. Take Amazon.com for example. Is the company a good one? Who knows? Not me. But the stock is. I wouldn't want to have to hold it for 20 years, but I sure don't mind trading it a few days at a time, the "right" days. That sucker moves. Baby Bells are at the other end of the spectrum. Fine companies for the most part. Wouldn't mind owning one for 20 years. But you have to pick your spots when you go to trade them, because a measly 3 point move in a single session is huge for a Baby Bell. Also remember this: even the stock of a great company can go through a bad patch. IBM is a great company today, with its stock selling at 124, and it was a great company five years ago, when its stock was selling at 13. -- Falling in love with a "story." This is related to confusing the company with its stock. There are a lot of intriguing "stories" out there, but they don't always translate into instant riches. Iomega was such a "story" stock. The story was that the company's Zip drive was going to replace the floppy in the world's computers. The stock ran straight up to the sky to wait for the story to come true. And for the most part, IOM's story DID come true (many stories don't, witness the Y2K stocks), but the stock gave back most of its gains anyway. Turns out it wasn't that much of a story after all. In other cases, the story comes true



but the stock you've bet on isn't the story teller. Witness the laser vision "story." A number of companies were hyped as the category killer, but only one, VISX, made its stockholders real money. And how about satellite communications? Great story, eh? Tell it to those who loaded up on Iridium's stock. -- Following the leader. Just as money tends to flow into last year's top mutual fund (sure to be next year's underachiever), people tend to chase the high flying momentum MO-MO stocks, succumbing to the buzz and getting in AFTER the stock has already jumped 80% and inevitably just before it drops 60% as the early buyers take their profits by selling their shares to the "greater fool," you. Yes, you can make a quick buck chasing momentum, but you can lose it even quicker. You can never be sure there's a greater fool coming in after you, and that could make you the "greatest fool." -- Buying IPOs. An astonishing number of people don't understand how IPOs work. YOU are not really buying an IPO when you buy the stock on the first day of public trading when it opens at $75. Those who REALLY bought the IPO were those who got their shares for $10, well before the public trading began. For the most part, only institutions or megamillionaire private investors have access to IPOs. There have been a few exceptions, but it's almost universally dumb to buy a hot IPO on its first day of public trading. As for those few times when the average investor IS offered shares in an IPO before public trading begins, my advice is to pass. My rule of thumb on IPOs is: If you want it, you can't get it, and if you can get it, you don't want it. -- Finding the Holy Grail. Technicians regularly fall into periods where they tend to favor one or two indicators over all others. No harm in that, so long as the favored indicators are working, and keep on working. But the analyst should always be aware of the fact that as market conditions change, so will the efficacy of their indicators. Indicators that work in one type of market may lead you badly astray in another. You have to be aware of what's working now and what's not, and be ready to shift when conditions shift. There is no Holy Grail indicator that works all the time and in all markets. If you think you've found it, get ready to lose money. Instead, take your trading signals from the "accumulation of evidence" among ALL of your indicators, not just one. -- Overtrading. The Picks Port commits this sin on a regular basis, but that's mostly because of the nature of the beast. I have to be more short term oriented than I'd prefer to be because you, my subscribers, tend to be more short term oriented than you probably should be. Daytrading, of course, is the epitome of overtrading. Most people just are not equipped, emotionally, intellectually, or mechanically, to day trade and statistics tell us that most are not successful at it. If you are not making money at daytrading but keep on doing it anyway, you should examine your motives. If it's the action you crave, take



up skydiving. It's safer and cheaper. -- Excessive tape watching. I get a kick out of people who insist that they're intermediate or long term investors, buy a stock, then anxiously ask whether they should bail the first time the stocks drops a point or two. Likely as not, the panic was induced by watching the tape, or hearing some talking head on CNBC. Watching the ticker can be fun. It can be mesmerizing. But it can also be dangerous. It leads to emotionalism and to hasty decisions. Try not to make trading decisions when the market is in session. Do your analysis and make your plan when the market is closed and the White Noise of the television and the ticker is absent, then calmly execute your plan the following day. You have your stop and your target. So go take a nap, or go to the movies, or mow the lawn. The only time you should be scrutinizing the tape is when you're looking for an immediate entry or exit point for a trade. Otherwise, do your blood pressure a favor and tune out. -- Being undercapitalized. If you have less than $50,000 to invest, you'd probably be better off in a mutual fund rather than trading individual stocks. To get proper diversification with a fully invested exposure you need at least 10 stocks. You do the math. -- Letting the tax tail wag the stock dog. Don't let tax considerations dictate your decision on whether to sell a stock. Pay capital gains tax willingly, even joyfully. The only way to avoid paying taxes on a stock trade is to not make any money on the trade.


Re: Trading Mistakes .....by Proffitt .......and the last part. All the best! Saint

Quote:

-- Relying on gurus. I'm spitting in my own rice bowl here, but you should not be letting some self-appointed market "gooroo" dictate or dominate your trading decisions. The most you should expect, or accept, from folks like me are a few trading ideas, a little technical analysis tutoring, and a bit of guidance in maintaining a solid trading discipline. You should not think of a market letter (ANY market letter) as a substitute for a personally



managed portfolio. No one knows or cares about your personal circumstances like you do; how much money you have to invest, your tolerance for pain, your goals, your most suitable and comfortable time frame, etc. And you should be doing everything in your power to make Nick's Picks unnecessary and irrelevant to your trading, to learn enough not to need the likes of me anymore. Read some books. Take some courses. Buy some decent charting software and arrange for a data feed. -- Thinking this market stuff is easy. Don't confuse genius with a bull market. It's not that hard make money in a roaring bull market. Keeping your gains when the bear comes prowling is the hard part. Don't get cocky, but don't grovel either. You're not as smart as you think you are when everything is going great. But you're not as dumb as you think you are when everything is going to hell either. The market whips all our butts now and then. The whipping usually comes just when we think we've got it all figured out. -- Thinking rather than looking. One thing you should be thankful for is that you don't HAVE to come up with a reason for WHY the market is doing what it's doing. The talking heads on CNBC do because that's their job. I do too, because I know you expect it of me. But you don't. Just follow your chart work and let someone else do the pontificating. After all, who REALLY knows why stock ABC goes up 5 points on Monday while stock XYZ, in the same business, goes down 5 points? That's the great thing about technical analysis. You don't have to know. The price action is THE TRUTH. It's all you really need to know. Price doesn't lie. Price doesn't alibi. Price never complains and never explains. It is what it is. When XYZ goes up $5 on heavy volume, let Joe Hairdo on CNBC jabber on about what it all means. We KNOW what it means. It means XYZ went up $5 on heavy volume. Pant...pant...pant. These are just some of the mistakes traders make. There are lots more, but this has to end somewhere. These have been mostly generic in nature, applicable to fundamental investors as well as technical traders. One of these days I'll do another diatribe along these same lines, but confine it strictly to TA do's and don'ts. Until then, trade smart.



Quote:

Originally Posted by rahulg77



Hi Saint,

Thank you. Would it also be possible to draw for daily charts also so I would be able to

compare it with my charts attached.

Rgds

Rahul

Hi Rahul, IVRCL daily below

Saint



Quote:




How are you?

I think the chart of India cements has formed an inverted Head and shoulders pattern with

an inclined neckline. I just wanted to know whether it is really an Inverted H&S pattern or

just my imagination.

The daily chart of India cement chart is attached.

Nope,not your imagination........correct observation.Now we have a bullish pattern on the daily,and longer term in every other stock being bearish.So even if you did get in at the neckline breakout,and are sitting with some profits,keep your stops at 155. Great going,my friend! Saint

marcus 21st July 2006 05:43 AM

Re: Teach A Man To Fish And......... Excuse me guys I've been following this thread right from the begining and its just great everyone is learning and a valiant effort by saint, but if I could just express my opinion we might be overloading him with too many questions in too little time although he's never said so and answers everytihng c'mon guys we mus'nt forget he has a life outside traderji if we ask him too many questions we should consider where will he find the time to answer all of them? Request everyone to ask questions where they cant find the answer any place else so the thread doesn't slow down.



Saint I hope you can continue with the thread and move on to other topics as you see fit. Thanks so much.

pkjha30 21st July 2006 09:06 AM

Re: Teach A Man To Fish And......... Hi SAINT I agree with marcus. It would be better if it remains a treatise rather than Q&A session.Perhaps we could open a seperate thread for Q&A based on what is learnt here and may be answered by others. Perhaps this thread would be better for such endevours http://www.traderji.com/49405-post1.html This was the last post where you discussed Trends http://www.traderji.com/trading-tech...n-fish-26.html Pankaj

Saint 23rd July 2006 07:42 PM


Quote:

Originally Posted by s_gujarat hi i m new in this thread, here is very good things about share market, one of these -

teaching fundamental rule is very apprieciated. i request to friends to learn to catch

fish in chines style.

friends just learn catch up

yours

sanjiv

Hi Sanjiv, From what I understand,I think you are referring to learning Fundamental Analysis...........there are many within the forum whom I respect for their knowledge of Fundamentals.Like Pankaj(pkjha).Suggest you get in touch with him to learn some



fundamental stuff. This thread is limited to the trader who believes in trading using charts,a trader who follows trends,a trader whose primary objective is to make as much profits as possible in the simplest method possible. Saint



Quote:

Originally Posted by moneypick Hi Saint,

If a Security in down trend, but Momentum indicatiors (like Stochastic, RSI) generate

buy signal in some interval of time due to oversold position. I want your guidance on

following points:

1) To determine the right time to buy.

2) To find out down trend is over or price may be reverse

3) Suggest an indicator to overcome this problem

Regards,

(moneypick)

Hi Moneypick, Depends on the timeframe of the downtrend...........if we are talking daily charts and the stock is in a downtrend,meaning it is making lower pivot highs and lows,and momentum indicators on that daily charts tell you oversold,it NEVER is the time to buy........The right time to buy would be if we make a higher pivot low and you get confirmation once a previous pivot high is taken out.So,the important thing is always PRICE,PRICE and PRICE. Question 2 is answered by the answer to question 1 above. An indicator to overcome this problem?None................stay with price,pivots and trends.An indicator may at best confirm to you what you should already be knowing.For eg.We have a strong uptrend,indicatorrs tell us that we are overbought,what do we do?Nothing .We hold..........The uptrend gets stronger and stronger.The indicators continue to be overbought.We Hold.Now we start breaking previous pivots,we sell,whatever the indicators tell us.



My suggestion:Learn Trends,Pivots and Patterns.........then go with the flow of the trend.But do learn abt the various indicators.Because they may come in handy in shorter time frames,and for the pure fun of it. Saint

munchikana 23rd July 2006 08:10 PM

Re: Teach A Man To Fish And......... I think some rules must be set by Saint with the help of Traderji for this thread. Sorry to say, now it has become very difficult to pick up those informative and educative posts posted by Saint in this thread. Because, this thread is full of praises and other non essential materials. I hope at least Saint does not require moral booster doses in the form of praises and congratulations. Guys keep the unnecessary postings to the minimum. If at all it is necessary, start a seperate thread where you can heap your congratulations on Saint. Start another thread where you can have questions and answers on the matters taught by Saint. Sorry Saint, I too wrote another inconsequential letter in your valuable thread. I hope and pray that I have not hurt any one's feelings through this post. Guys please understand the importance of this thread. Keep it as pure as possible. Do not adulterte it with unnecessary stuff.



Quote:

A SUMMARY: We have,at various times and places during this thread,done the below:

a.Trends-Secular,Primary,Intermediate,Short Term Trend

b.Pivots Knowing just these two tell us where we are on that particular chart.As we had discussed many a time before,first we need to know that a secular uptrend is made up of several primary uptrends and downtrends.Each primary uptrend is made up of several intermediate uptrends and downtrends.And each intermed uptrend is made up of several to many short term uptrends and downtrends.Of course,each short term uptrend is made up of several to many intraday uptrends and downtrends. An uptrend is made up of higher pivot highs and lows,each pullback within that uptrend is called a decline.A downtrend is made up of lower pivot highs and lows.A move up within a downtrend is called a rally.



Why do we know these things?As we had discussed before we need to know that a chart is in an uptrend,because then and only then are we interested in going long.We buy in an uptrend.We could buy the breakout from a sideways consolidation phase,we could buy the declines within an uptrend........but in an uptrend,in anticipation of a certain level,we NEVER NEVER SHORT.The mind must be educated to understand that one does not short in an uptrend. We short in a downtrend(plz,I know that certain things are not possible in the Indian mkts,obviously one can do only what one is allowed to do.One could short using derivatives,or stay out and wait for an uptrend).In a downtrend,we get a sideways consolidation phase,we short the breakdown.We could also short a rally within that downtrend.When we get a rally in a downtrend,we could capitalise on that move on a smaller time frame by going long.But in that larger time frame,we are looking to SHORT.We are not looking to guess bottoms,we are not looking to anticipate certain areas from where we are going to bounce upwards,we SHORT every rally ina downtrend till that downtrend no more is one and we get a Trend Reversal to the Upside.

c.Trendlines Do we only get out of a long position once pivots are broken and the downtrend is confirmed?Nope...........we draw trendlines using the semi-log.A trendline break and we are out half,and a pivot crack,and we are out totally.How to draw the various trendlines has been discussed in various posts in this thread,please do go over it.

d.Chart Patterns: Alright,we know about trendlines,pivots and trends,is that not enough to know?Isn't this knowledge enough to plunder profits from this markets?YES,and a vehement YES..............But learning some chart patterns can do no harm.In fact,a continuation pattern gives us a good place of entry,and gives us a potential target area.So too with a Reversal pattern,we get an entry and a potential target area.So,do we need to learn Chart Patterns?Well,many just follow pivots and trends,and do not require Chart Patterns,that's basically your call to make. Our objective as a trend trader is to latch on to a Trend Reversal,and use our knowledge to stay with the trend as much as possible.But the question that hits our head is:Right,we know all this stuff,and now we know that we will buy half on a higher pivot low,and add the other half over the previous pivot high.........but what about stops?Where do we take our profits?Do we take profits at all?Then,of course,how many shares do we buy?Etc,Etc.... Tomorrow,we can go through the Stops and Profits part.

All the best! Saint





Quote:

Stops : Whenever there is a trade that we get into,we put in a stop.The stop is that area where we say,"Enough is enough!"The stop is not put in after one has lost 80% of our portfolio and one has given up with life.I see it quite often here where one gets in on a tip because someone says so,and then take a huge loss and then say that the trade was stopped...........A stop is a predetermined level,put in BEFORE the trade is got into,the word BEFORE being an important word.I hope I do not sound lunatic when I say this: BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE the trade,BEFORE.............. That stop that one has determined BEFORE the trade can be a mental stop.A mental stop is one that is not exactly broadcasted to the broker,etc.........it's a technical level the break of which one does not stay in the trade any longer.Now,the irony of this mental stop is this:Please DO NOT keep the mental stop in the mind.WRITE DOWN the stop.........If one entered SATYAM at 650,with a stop at 620,and a potential target of 750,write it down. SATYAM,entry-650,stop-620,tgt-750,rew:risk=3.33:1,etc etc If SATYAM hits 620,that is it,one is out of that trade.One either looks elsewhere,or plans a reentry into Satyam,.........but what one never,ever,ever,ever,ever,ever,ever does is to let the stops get blown through,then hold it,pray to God,run to the nearest temple,church or mosque,pray even harder,and then try to strike a bargain with God if HE manages to pull the stock back up,beat the chest,shout at one's wife,have sleepless nights,all the while allowing it to slide,all because one wants the stock to get back to breakeven. Trading is a profession.It's a business.It is not a place where one hopes to strike lucky,you could ,maybe once,maybe twice.......but the person who does not have a strategy ,a plan ,will in the long run come to ruin.As the famous saying goes,"Plan your Trades and Trade your Plan." A predetermined written down stop is vital for long term success,it is vital for our mental balance,and only a disciplined trader adhering to his/her plan can see the multiplication of wealth,and a regular flow of profits. Once again,to re-stress......a stop is planned and written down BEFORE the trade!!!!!!! I apologise for sounding like a broken down tape recorder on this one.......but I do hope that as a beginner to trading,one does realise its importance.



All the best! Saint



Quote:

STOPS : There are many types of stops,.......the ones that come to mind. a.INITIAL STOP As described many times,this is the stop that we put in before we even put in that trade.This stop can be placed with your broker if in intradays,else,a written down exact point after which no more nonsense is going to be taken from this trade. b.TRAILING STOPS As the stock moves higher,we use trail stops.Again,there is software that does it,of which I have no idea.There are very many methods that does it using pivots,or moving averages,or two-three previous bars break method,etc Whatever the method used,the most important point is that once the trade moves in the direction required,the stop has to move up to breakeven first,and then upwards,till stopped. c.TIME STOP : When the trade does not go your direction in that specified time,and money could be deployed elsewhere,and the initial stop is also not taken out,one employs the time stop or boredom stop. So,that covers that.............the moment we get into a trade,and the trade never sees green,and hits our INITIAL stop,that's it.We are stopped out.The trade goes in our direction.We apply TRAIL stops.After getting into a trade,and nothing exactly happens,and that wasn't part of our strategy,then we could employ a TIME stop. Whether we take a TIME stop or not is our call to make...........but no compromises if the INITIAL stop is hit.We are out,and that's that.

All the best! Saint




Re: Teach A Man To Fish And......... A great post by Traderji on Trading the Plan.............do read and assimilate the wisdom in the article below.

Quote:

Fortunately, none of us serious trader types ever really gamble. We all take our trading very seriously, like a serious business person should. Many people have asked me over the years what it takes to be a successful trader. The answer is not clear but here are a few thoughts to ponder and apply. First, successful traders have a complete commitment to trading and do it full-time. If it is a hobby or a secondary pass-time, I know how the bottom line will be - a big minus. Trading must be addressed as a profession because if you do not treat it as such, let me assure you, those who do treat it this way will separate you from your money very quickly. Secondly, successful traders fit their trading habits to their individual personality. If you are an impulsive individual, your style will reflect more trading than a calculating individual who waits for all the indicators to fall into place. The personality factor more than any other factor I know of, will determine success or failure. If you are an emotional person, admit that you are and structure your trading habits to make emotions a positive influence, not a negative one. If you are either greedy or fearful, that will affect your decision making on a position and without recognizing the governing emotion, your decisions will tend to be wrong. Whenever I am the most fearful of the market, that emotion helps make me decide to go long and buy. I know that my emotions tend to make me fearful most of the time. Whenever my fears become overwhelming, my discipline tells me to buy and discipline must win out or you are doomed to failure. The work ethic can never be overstated. I watch the market all day long from the opening bell to the closing bell. I have kept diaries on every day in the market for the last seven years, sometimes having over 40 entries in my diary per day. If I do not do my work my profit suffers. There is no short cut in trading, the market will quickly find if you are lazy. Planning is the objective part of trading. Start with the worst case scenario and work from there. You will never be more objective than before you execute a trade. Once you are in a trade, emotions take over so the plan must be in place before the activity takes place. Determine a plan that tells you when you are wrong and admit it. Get out, retreat, live to fight another day; these are cowardly approaches but it will keep you from the trader’s obituary. Remember each rehabilitation takes a long time, but death is final. __________________ Best Wishes!



Traderji

All the best! Saint


Re: Teach A Man To Fish And......... Another gem from Traderji........

Quote:

How to exit a successful trade! Do you stay with your profitable trades as long as possible because the trend is likely to continue and make your profits even larger? This is easy to understand but not so easy to do when real money is involved. The difficulty is that although your profit may become much larger if you stay with a trade, it may also decrease and even disappear. Human nature is such that it values a sure profit much more highly than the probability of a much higher profit. Thus, traders are inclined to take their profits too soon. This can be fatal to long-term success because big profits are necessary to overcome the inevitable collection of small losses. There is a good way to let profits run while still guarding against the possibility that prices will turn around and take away much of your accumulated profits before the trend actually reverses. It is called a trailing stop. You include in your plan a method for moving an exit point along some distance behind your trade. As long as the trend keeps moving in your favor, you stay in the trade. If the market reverses direction by the amount of your trailing stop, you exit the trade at that point. You would also offset your trade and reverse position if the trend reversed. One way to set a trailing stop is to protect a certain percentage of the accumulated profit. That will always insure that you keep some profit on a good trade. __________________ Best Wishes! Traderji

All the best! Saint




Re: Teach A Man To Fish And......... And another great one by Traderji.....

Quote:

The key components of a successful trading plan are an edge, discipline, risk control, and money management. Controlling your risk Successful speculation is all about managing risk. A winning trader always knows how much they will lose, but rarely know how much they will make. The key is to never let a single trade or single event (that may impact on multiple positions) have a major negative impact on the trading account. "Never, ever, trade without a stop-loss order. If you don't know what a stop-loss is, you should not be trading." Money management A basic investment tenet states there is a direct relationship between risk and return. Trading is no different - the greater the account value risked on a single trade idea, the more volatile the total returns from the trading strategy will be. A simple strategy is to never risk more than 2% of your trading account on a trade. Most professional money managers will risk a fraction of 1% on a single trade. "There are many bold traders, but there are very few old, bold traders". The Difference between the professionals and the novices. The "Professionals" fit the following profile: they trade completely objectively using mathematical models to arrive at trading decisions, there is no emotion involved; their ideas are well researched to ensure their strategy has a definable edge; they follow trends in prices, by controlling their risk and allowing profits to accumulate; they realise the market is not predictable, so employ techniques that will profit by recognising trends, rather than anticipating them. The "novices" fit the following profile:



their trade strategies are usually based on esoteric analytical techniques that are highly subjective, making it difficult (if not impossible) to determine the provision of an edge; they have a pre-occupation with forecasting prices or dates on which trends in the markets will reverse (ie a belief that the markets are predictable); by design, their subjective strategies make a disciplined trading approach difficult as it is too easy to "bend the rules"; they pay little attention to risk control and money management. One final quote: "Winners hold their winning trades, losers hold their losing trades" __________________ Best Wishes! Traderji

All the best! Saint


Re: Teach A Man To Fish And......... Now,as discussed before,a stop is a predetermined point.Another issue,a fault by many and is a crime punishable by the guillotine................a stop once placed has to be respected,once that point is reached,one cannot push back that stop.Part of the trading discipline,part of the plan of attack,..... Below an article,by Traderji, where he talks abt Trailing Stops and the various methods.....I personally use the Chart Patterns and the Channel Breakout methods.Different people have their different choices,and therefore their different methods,but whatever the method,the stop is never pushed back,the stop is always adhered to,the stop is trailed upwards in systematic fashion....

Quote:

Exiting a trade How not to loose too much of your trading capital. Upon entering the trade, if you place a sell stop below the market if you're long (buy



stop if you're short), you know right away how much money you will lose in any given trade. You should never trade without employing stops. Thus, you should never be in a trade and have a losing position and not know where your exit point is going to be. How to lock in larger than normal PROFITS in a winning trade. You should always stay with your profitable trades as long as possible because the trend is likely to continue and make your profits even larger. This is easy to understand but not so easy to do when real money is involved. The difficulty is that although your profit may become much larger if you stay with a trade, it may also decrease and even disappear. Human nature is such that it values a sure profit much more highly than the probability of a much higher profit. Thus, traders are inclined to take their profits too soon which can be fatal to long-term success because big profits are necessary to overcome the inevitable collection of small losses. There is a good way to let profits run while still guarding against the possibility that prices will turn around and take away much of your accumulated profits before the trend actually reverses. It is called a trailing stop. You include in your plan a method for moving an exit point along some distance behind your trade. As long as the trend keeps moving in your favor, you stay in the trade. If the market reverses direction by the amount of your trailing stop, you exit the trade at that point. A trailing stop moves to lock in profits as the trade moves in the traders favour, it should never be moved backwards. There are many different ways to calculate a trailing stop: Volatility - the stop is calculated as a percentage of the average true range of x periods. Rupee Amount - A set amount determined before the trade is entered. Channel breakout - exit a long position at the low of the last x bars. Chart patterns - ie move the trailing stop behind each consolidation as it forms. __________________ Best Wishes! Traderji

All the best! Saint





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Fine,we now know the importance of having a stop,the types of stops,let us get into where we should place our stops...............as Traderji's post states,there are a few ways of going about it.I basically use the Chart patterns way and the Channel Breakout way. As said yesterday,it's up to your comfort levels........there are things that one can learn from books,and then there are things that can't.One can learn about the various methods,the type that you are most comfortable with,you got to choose....... Below is an example of a position trade .......basically Reliance Inds was in a sideways territory trading within an ascending triangle.We got a clean breakout around the end of June,and then a pullback to support in July.We therefore enter that trade with a stop loss at the previous pivot low.This becomes our INITIAL STOP.If Rel Inds had dumped the moment we bought it and hit our Initial Stop,that's it,we are out.We look elsewhere or if Rel Inds gives us a signal for a reentry. In this case,that entry was great.The resistance that the roof of the asc triangle provided became support...........Right,now we take out the previous pivot high of 520 as Rel Inds moves upwards.The moment we get a new high,raise the stop to the previous pivot low which was 469.That move up made a new high of 585 and then pulled back to 526.Where is our stop now through all this activity,same place of 469.Now we get another move up.The moment we make newer highs above 585,we get to do what we enjoy most........yep,now raise stops to 526. So on so forth.........the moment we take out a previous pivot high,raise the stops to its former pivot low.We therefore use pivots as our stop areas........especially in position trading,this also allows us to stay in the trade as long as possible.We are basically allowing the chart to do its thing,we stand aside and go with the flow of the uptrend. Now throughout RIL has been using that dark green trendline as its support......but around March2006,another development happens.We started going vertical,a new trendline is drawn ,the blue line,and then even more vertical,the orange line. That break of the orange line was an area to get out of half the position.Meanwhile through the entire move from March,we apply the Channel Breakout method(I usually apply the stop to the low of 2bars ago on the weekly,and 3 bars ago if I am trading the daily charts.)In this case,RIL first broke through the trendline,and we are out half,then followed by taking out the low of 2 weekly bars ago in the week with May 11th. That's it,we are out,this position trade is over..........in this case,RIL continued its fall,and we can all feel good about ourselves,but there are times,when we get out and RIL goes on to make new highs.Not a problem,part of trading. At this point a question would be asked,at what place would you take profits?I don't.I travel the whole distance at full position and keep raising stops till out.We would not get out at the top,but we would take an important chunk out the trend.........In this case



of RIL,merely playing the raising stops methods would have given you a run from 480 to 1100(that's abt 129% gain). So basically I use the pivot method of trailing stops,if things get vertical then I employ the Trendline break stop,and the low of the last 2 week bars method.......

Charts attached,shall post more examples the next few posts.

All the best! Happy Trading! Saint



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Right,let us take another chart.Attached below is a chart of ABB. Same here,ABB breaking out of a triangle on the weekly charts in Feb 2003,followed by a pullback in March 2003,to an area of support,giving us a great entry point for an intermediate trade.



Once again,we have our Initial Stop in place,the moment ABB takes off,and makes a new high over the previous pivot high,the stop is raised to the immediate previous pivot low.......so on so forth,the stops are trailed upwards.The beauty of the trail stop is that we know that our entry point to where our current trail stop is,...is money in our pocket.Every decline in an uptrend forming a higher pivot low is looked on with excitement instead of viewing it as money lost............excitement because we get to raise our stop losses,and that means more money in our pocket.We realise that there is no need to take out profits from the market at all.........the trail stops protect our profits. Aug 03-Apr 04 :Yet again,ABB starts to make steeper trendlines........we now start to raise our stop loss to the low of 2 bars ago,all the while keeping a close watch on the trendline.Our intention is to take out half on the break of the trendline and another half once the low of 2 bars ago is taken out. May 14th week in 2004:That bar breaks both the trendlines and the low of the bar of 2weeks ago........we are out of the trade. Oct 2004:We get a chance for a reentry after months of sideways movement,with ABB making a higher pivot low on the weekly.Again we get our initial stops in place.Once again,the same process as above.And stops are raised with each new high to a higher pivot low. Jan 06 :From here ABB starts making steeper trendlines again......once again we are looking at the trendline carefully.We are looking at the low of 2 bars ago. May 2006:We are stopped out of the trade,with both trendline break and the break below the low of 2 bars ago. Now we wait for an opportunity to reenter,and profit from yet another new intermediate uptrend.



All the best!! Saint


Re: Teach A Man To Fish And......... A great post by Ashish from another thread that anyone who didn't get a read need to have a look.........great wisdom in every word. Great stuff,Ashish! Saint

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It's said that successful trades done without a proper trading plan are more dangerous than the failed one. In the example given, no Stop Loss Level was inbuilt into the trade and holding was



based upon conviction only. At that time, nobody would have any idea if the drawdown would continue or would reverse. Luckily, the stock turned around and proved to be a multi-bagger. Now it installs a believe in the trader that such trades can be repeated again and that is where disaster starts to wait. Loosing 50% on a trade and still holding on represents an emotion called Hope and is very dangerous as traders have seen their entire capital being wiped out in thousands of stocks only due to this single emotion. A proper stop loss in case of any entry is better than letting oneself be prey of our own emotions. Best Regards, --Ashish

Saint 2nd August 2006 10:01 PM


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Right,so we more or less know the importance of stops,we realise that having predetermined stops is an absolute must.........just as in any battle,not only do we have our Entry strategies in place,we also have our Exit points in order.And all of this .....PREDETERMINED,and written down before the trade. For those who see no reason for having any stops,good luck to you,my friend,.........for yours is the path of extreme pain and total ruin.Please do not go down that path.If you already have been on that path to ruin once before,please do not repeat it.If never been there,learn from the mistakes of others. Some wise person once said(was it Einstein-tend to remember quotes and forget who said what??!!)......"A fool never learns from his mistakes,a smart person always learns from his mistakes,but a wise person learns from the mistakes of others." Get your trading strategies in placeand above all ........stop and money management techniques.Money management is so important,even more than entry and exit strategies........it is money management that separates the men from the boys,it is money management that is the Holy Grail in Trading.You have poor strategies but good money management skills.......you WILL survive,you may not become a great trader,but you will still be around in a few years.On the other hand,if you are great at entries,and exits,but know zilch about money management............you WILL come to your Doom sooner or later!! Not trying to go all lunatic all over again............but knowing money management is so



very important,so so important.So,let us get down to a bit of Money Management in the next few posts..... This part you MUST absorb,no two ways about it........those that have read Elder would feel like taking a yawn on the next few posts.Do yawn,no harm though in reading again........but to those who have never heard of this strange 2 words called "Money Management",the next few posts are for you...................and like I said before,there are no two ways about it. MONEY MANAGEMENT IS VITAL TO TRADING SURVIVAL,TRADING SUCCESS,AND TRADING PROFITS.......know them and open the treasures available.Know them not ,and that will be at your peril and doom.

All the best! Saint

Saint 3rd August 2006 06:09 PM

Re: Teach A Man To Fish And......... Before moving on about Money Management,here's another post about stop losses from our very wise Jaideep.........posted in Some Good Steals nearly a year ago.

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Originally posted by Jaideep Plenty has been said on this topic Usha, all very wise ones at that. Try & go through the earlier posts. They will educate you no end on your exit strategy etc. Meanwhile, I'll give you something to read on the topic & put you in the know of things. After all, I'm no expert TA myself.... A Stop-loss Order is an order placed with your broker to buy or sell once the stock reaches a certain price. A stop-loss is designed to limit an investor's loss on a security position. Setting a stop-loss order for 10% below the price at which you bought the stock will limit your loss to 10%. For example, let's say you just purchased SAIL at Rs.50 per share. Right after buying the stock you enter a stop-loss order for $45. This means that if the stock falls below Rs.45,your shares will then be sold at the prevailing market price. Positives and Negatives The advantage of a stop order is you don't have to monitor on a daily basis how a stock is performing. This is especially when some other commitments prevents you from monitoring your stocks for any period of time.



The disadvantage is that the stop price could be activated by a short-term fluctuation in a stock's price. The key is picking a stop-loss percentage that allows a stock to fluctuate day to day while preventing as much downside risk as possible. Setting a 5% stop loss on a stock that has a history of fluctuating 10% or more in a week is not the best strategy: you'll most likely just lose money on the brokerage you'll pay for execution of your orders. There are no hard and fast rules for the level at which stops should be placed. This totally depends on your individual investing style: an active trader might use 5% while a long-term investor might choose 15% or more. Another thing to keep in mind is that once your stop price is reached, your stop order becomes a market order and the price at which you sell may be much different from the stop price. This is especially true in a fast-moving market where stock prices can change rapidly. Not Just for Preventing Losses Stop-loss orders are traditionally thought of as a way to prevent losses, thus the name. Another use of this tool, though, is to lock in profits, in which case it is sometimes referred to as a "trailing stop". Here, the stop-loss order is set at a percentage level below not the price at which you bought it but the current market price. The price of the stop loss adjusts as the stock price fluctuates. Remember, if a stock goes up, what you have is an unrealized gain, which means you don't have the cash in hand until you sell. Using a trailing stop allows you to let profits run while at the same time guaranteeing at least some realized capital gain. Continuing with our SAIL example from above, say you set a trailing stop order for 10% below the current price, and the stock skyrockets to Rs.80 within a month. Your trailing-stop order would then lock in at Rs.72 per share (Rs.80 - (10% x Rs.80) = Rs.72). This is the worst price you would receive, so even if the stock takes an unexpected dip, you won't be in the red. Advantages of the Stop-Loss Order First of all, the beauty of the stop-loss order is that it costs nothing to implement. Your regular brokerage is charged only once the stop-loss price has been reached and the stock must be sold. It's like a free insurance policy! Secondly, but most importantly, a stop loss allows decision making to be free from any emotional influences. People tend to fall in love with stocks, believing that if they give a stock another chance, it will come around. This causes procrastination and delay, giving the stock yet another chance and then yet another. In the meantime, the losses mount.... No matter what type of investor you are, you should know why you own a stock. A value investor's criteria will be different from that of a growth investor, which will be different still from an active trader. Any one strategy may work, but only if you stick to



the strategy. This also means that if you are a hardcore buy-and-hold investor, your stop-loss orders are next to useless. The point here is to be confident in your strategy and carry through with your plan. Stop-loss orders can help you stay on track without clouding your judgment with emotion. Finally, it's important to realize that stop-loss orders do not guarantee you'll make money in the stock market; you still have to make intelligent investment decisions. If you don't, you'll lose just as much money as you would without a stop loss, only at a much slower rate. Conclusion A stop-loss order is such a simple little tool, yet so many investors fail to use it. Whether to prevent excessive losses or to lock in profits, nearly all investing styles can benefit from this trade. Think of a stop loss as an insurance policy: you hope you never have to use it, but it's good to know you have the protection should you need it. HAPPY TRADING & LOADS OF PATIENCE, you'll need all this to laugh all the way to the Bank (as Saint said). Best of Luck.

All the best! Saint



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MONEY MANAGEMENT : Basically,we use money management rules to restrict how much the market can take away from us.Certain rules that we follow with discipline.Rules that are written and implemented trade after trade,again and again.Rules that help us to stay with the trend and to let profits run as long as possible.Rules that trigger off small losses as compared to the big profits. Like a warrior,this is the Code that a trader swears by,and adheres to,come what may. If his stop is triggerred,he is out,he does not sit there reasoning that the economy is growing 15%,and the fundamentals of this company is great,and that it is expecting good earnings............If the stop is hit,that's it.He/She's out of that trade.All thought therefore goes into the trade BEFORE the trade.No more thoughts after the trade has



been set in motion. The mind is set into "NOW" mode,no more planning ,no more thinking.When the stop is hit,the trader is out,...........and that's that! But,there is more to money management other than stops........stops is an aspect of it.But there is more..... But before getting into it,just noticed that there always is this great amount of blabber about the number of wins a trader has had,etc etc...............So before getting into things,felt that we all should realise one thing.We are in this business to make profits,we are NOT in this business to win.......you can have a Batting Avg of 95% and lose out when you look at profits and losses.You can have a Batting Avg of 30% and come out with stupendous profits by the end of the month. How is that possible?Well,presume you make an average of Rs200 per trade for 19 trades,and lose Rs5000 in the 20th trade,well,you are sitting pretty with a 95%batting avg and a loss at the end of the month. Presuming that you have made losses in 14 trades,an average of Rs 400 per trade,and we made Rs10,000 in the other 6 trades,well,we are sitting with a profit at the end of the month although we have been wrong 70% of the time. So,it's not about about the number of wins that one makes,it's all about making profits............and that verily is the heart and core of money management!

All the best! Saint



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MONEY MANAGEMENT We look at a trade,yummy,yummy trade..........a beautiful clean sideways pattern just itching to breakout.Our plan is to buy the breakout and ride the trend ,trail stopping upwards at every pivot low.Cool.So far so good.We now need to ascertain how many shares we plan to buy.For example,the stop is Rs20 away from our entry point.Right,do we buy 10 shares(which means we lose Rs 200 if stopped),or do we buy a 100 shares(which means we lose Rs 2000 if stopped),or a 1000 shares(which means we lose Rs 20000 if stopped)?



The amount of money lost if stopped is the risk on this trade.Don't let it get past 2% of your equity.Which means,first calculation is:How much Capital do I have in my trading Account?(trad acct only,not the worth of your house and car and jewellery all put together). Let us say that I have 10 lakhs in my trading account,that means the maximum risk that I can take on any single trade is :2% of 10 lakhs=20,000. Which is to say that if I enter into a trade,and the trade goes against me,I will lose Rs20000. So whether you paid 2.5 lakhs for that stock or not,you are not risking 2.5 lakhs,but Rs20000,as that is where your stop is. Now must it definitely be 2% of the capital...........not necessarily.Can be anywhere between 0.5-2%,but no more than that.I personally use 0.75% of my capital as a stop loss,but that is something you have to tweak to your comfort levels.But,to stress again,no more than 2%! So,therefore,first I look at my trading capital at the end of the month.I then assess how much my risk would be the next month.For example,let us say I have 10 lakhs at the end of July.Let us say I take 1% loss in each trade.Therefore for the month of August,I would be risking Rs10,000 per trade(to reiterate,that means the amount lost if stopped out). Now I have my ups and downs in August,and landed up in August with an equity of 10.5 lakhs,now my risk in the month of September would be 1% of 10.5lakhs=10,500 per trade. So too,if my equity had dropped that month to 9.5lakhs,then my risk of 1% for the following month would be 9,500 per trade..............so on so forth!! Right,I now know my trading capital,the amount of percentage risk that I am willing to take,and the amount of money risked for the following month at the end of each month.........now how do I calculate share size: Share Size=(% risk xtrading capital) divided by (entry-predetermined stoploss) So,therefore,we look at our charts,we get our entry point let us say 200,and our stop loss is at 175.Now presuming our capital is 10lakhs,and our percentage risk per trade is 1%. Therefore,Share Size=(1% of 10lakhs)divided by (200-175) =10,000 divided by 25 =400



Therefore in the above example we would buy 400 shares with an entry at 200 with a predetermined stop loss at 175 .The max.we should lose in this trade if stopped would be Rs10,000/= The 2% rule for assessing position sizing is vital,but there is more to be done.We'll go through the rest...........maybe tomorrow!!

All the best! Saint

Saint 4th August 2006 08:00 PM


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Originally Posted by pranayd Thanks Saint,

Now you are back in full flow.

According to me, this is the most important part of the entire thread. In my opinion, this

section should have been taken upfront as elementary training for us novices, since we

it is so imperative for us to imbibe this discipline before we even peep into the markets.

Can't thank you enough, Saint.

Pranay

Hi Pranay, Cannot agree with you more.........this is the most important part for a trader,and should always be the first chapter.Strangely,it is always relegated to the last few pages in almost any book. As far as this thread is concerned,it is basically a bid to vomit out all that one knows,but vomitting in a proper sequence of order,I am finding some difficulty with. So,there will be lots of stuff all over the place(as messy as vomitus always is!!).......so,due apologies on that count. All the best! Saint





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Originally Posted by pranayd Just to reconfirm,

It is 1% per trade, right? Which means, if I am currently invested in 10 stocks, my total

risk would be Rs. 100,000, right?

Pranay

Ah,Pranay,my friend,you're always one step ahead............on your query above,my answer would be No..........hope you don't mind waiting for the next post,then all your doubts would be cleared. Saint



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Originally Posted by rahulg77 (Post 53623) Hi Saint,

Nice post going on. Missed out on it as am busy these days shifting my factory to a new

location so hell lot of work coordinating everything.

ok back to queries :-) Placing stop. do u exit on intra day fluctuation or if EOD is

below your stop. Cause in Intraday like u have mentioned it might just hit it the stop

loss for a couple of minutes and start moving up again and we miss the move. In EOD

the stock might go down much more than our stop loss price and our loss %age to our

capital will go wrong, So which is a better strategy or it depends to an individual.

It must be a common phenomenon that the stop gets hit and the stock starts running

again. In such a situation do we analyse the stock again or should we just let it go.

Rgds

Rahul



Hi Rahul, That's a common dilemma that we all face.............however accurate your stop is,and however much you give it room,it can still happen. Now comes the problem,..........let us say we entered a stock at 50.The previous pivot low was 45.You decided to give it some room to wiggle,your stop is at 44.5 or slightly lower.Great,so far so good,all systems go,everything in place. Now the stock corrects almost after you buy it(common phenomenon,my friend,happens to us all,can be rather irritating and frustraing,but that's part of the game!!)..........and it comes to 45,and falls through 44.5. Now the dilemma is this.......is this a false breakdown,or a shake-out bar,etc,or is it a genuine move down.Now many people have different ways to deal with it. Mine is simple......I exit!! Why?Because this move could go down to 40,35,etc and I would be left with a huge loss in my account,left with a feeling of regret,and the would've-should've-could've syndrome. So,I am very rigid about the stop loss,....... and am certainly out if it hits.Would be waiting on the sidelines though for an opportunity to reenter. All the best! Saint



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Dear Saint. I am very much pleased to read this thread. fantastic Explanation like a professor teaching his students. Regularly I am awaiting yr post.Thanks. Sorry for asking simple questions, but I hope u will not mind. 1. Trailing Stop - I like to know, shall I put at X% down of yesterdays close price. In this case though on one day the price will not come down X % & touch the stop point but in a week or so it will fall too much low but still will be above the X point as X is % of yesterday's close.

Hi Ger 06,



Thank you for your kind words,my friend...........another thing,no question is too simple not to be dealt with.Every doubt solved is yet another step on the path to Trading Mastery.So make sure you sort them all out before the mkt does it for you..:) As for your two doubts,shall certainly look into them once this whole topic is done,and shall give a few examples using charts...........think your doubts will auto-resolve after that.But if there are still queries,revert back to me and we'll get into them togetner. Saint



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MONEY MANAGEMENT: We have therefore gone about the importance of stops,and how vital it is for trading success.We have realised that we are going to be laughing our hearts out to the bank,so long as we take small losses,and let our profits ride.In short we look to make big gains,at the risk of many small losses. We have also discussed that there are many methods of placing stops....the important thing is to have stops and the discipline to adhere to them.So like we discussed,we place our stops just a bit below the previous pivot low,and trail stop upwards. We had discussed the other day that the maximum risk per trade is2%preferably lower.And yes Pranay,.......if you are comfortable with a risk of 1% as stated in the other example,yes,that would be 1% per trade.And to go over it again,presuming that my trading capital is 10 lakhs(yes Ger06,by that,we mean the money that you have set aside for your trading.If you do derivatives and equities,calculate them separately.By trading capital,we are not talking net worth....simply the money put aside for trading).................first we calculate how much we are willing to risk. Therefore,if we are willing to risk no more than 1% per trade,that would mean 1% of 10lakhs,ie Rs10,000/= per trade.And therefore if our stop loss is Rs 20 away from our entry price,we can therefore buy 10,000 divided by 20=500 shares. However juicy the charts look,if our stop is Rs20 away,and our risk is 1% on 10lakh portfolio,then that's that,500 shares......no more no less. Now coming to Pranay's valid doubt............for one trade,we plan to risk no more than 1%.Therefore,for 25 trades,we would be risking 25% of our portfolio,right? NO..........Therefore another condition that has to be met.Else,we would be right about placing our stops and right even about share sizing,but a huge market move taking all



stocks down would trigger all our stops. And with it,a sizeable chunk of our portfolio............

Shall continue in the next! All the best! Saint



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MONEY MANAGEMENT MAX RISK Now we come to another major part of money management that must be looked into...........just as how crucial having a predetermined stop is and proper share sizing,this part is vital for the survival of our trading account and therefore our survival as traders. If we were to risk 2% per trade and we get into 20 stocks,a move down would trigger all the 20 stops,........we have put proper stops,great.................we have taken small losses,great.....and yet,our account is down 40%.If our trading capital was 10lakhs,well 4 lakhs has vanished into thin air!!This is unacceptable........and unpardonable as far as the trader is concerned. We therefore have another set of percentages in place so that we are protected from market movements..........now what that percentage is basically comes back to the individual trader and his comfort levels.There are many absolute truths in the world of trading,but no absolute methods,all relative to what our psyche allows us. For example,I believe that a 2% risk is just too much to bear,I am on the other hand comfortable with a risk of 0.5-0.75%......so there are as many methods as there are traders.Basically tweak to your individual comfort levels. Now what are these percentage rules of max risk that I am speaking of? 1.In an intraday position,take no more total risk than 4% in that day.Which means that I would take no more than 4 trades at the same time.Why?Because I am risking 1% per trade,and if I take more than 4 trades,I would be risking more than 4% in that day.



Therefore,I enter into TISCO with my stop loss at the previous pivot low at a risk of 1%.Then,I see a great setup in RIL,same thing as above.Now I see a great trade in ITC ,I grabbed that as well.Then a beauty in ACC.Now I have 4 trades running simultaneously,and I risking 4% as of now.I then see a great play in SBI......But my rules prevent me from taking that 5th trade,however juicy that set up. Now I get a great move in TISCO and ACC,and that gives me the opportunity to raise my stops in the two to breakeven.Now I can take SBI if it still looks great........if it has already run off,well,nothing can be done about it.Missed money better than lost money!! Also make sure you have your max percent loss in a week after which you wouldn't trade any more,and your max percent loss in a month after which you are no more than a bystander.If I lose 10%,that 's it....I am out for the month.Many put that figure to 6%,or 8%.........once again,your comfort levels. 2.In a swing position that may last up to 4-5 days,once again similar rules come into play.I basically take a max risk of 6%.......now why these figures,well,basically no real reason except years of toying around and tweaking it to comfort levels.As said before you will have to do the same. So,here again,a risk of 1% per trade allows me to take 6 swings that week.Every time I am able to raise my stop to break even,I am allowed another trade.Else that's that....... 3.In a position trade,that can take up to weeks to months,I tend to take a max risk of 12%,meaning that if you are taking a 1%risk per trade,max number of stocks that can be got into is 12.And then,once you get to breakeven stop in a trade,you are allowed to get into a new position,or add to the previous position. If you are the type that can take on a bigger amount of risk,fine........but total portfolio risk no greater than 20%.Greater than that,think you would be fishing for trouble.So careful on that one. It is very important that these rules are in place...........very,very important!!The percentages you as the trader will have to work out.But you MUST have a stop,you MUST adhere to them,you MUST have a risk per trade and share size accordingly,and you MUST have a max risk that you are willing to take,after which you are going to pull the plugs.And you MUST have a point where a bad day or month is accepted as it is ........and all trading comes to an end.If you are out on the 15th day of the month,that does not mean that you sleep and watch TV for the rest of the month.......You come to work as in every other day,you paper trade,and you do it till the end of the month.Your first trade would be the first day of next month. Discipline is discipline,and rules are rules............These are like commandments in the Holy Scriptures of the Trader.Not observing them is sacrilege,a blasphemy.They,once drawn up,MUST be followed at all cost.



More in the next! All the best! Saint



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Is it a cash available for trading in trade account or total portfoilo amount i.e. Cash + including unrealised value of shares. Because if I bought 10 shares worth 1 lakh this month but not sold then the cash will drop. So please guide me. Thanks.

Hi Ger, Yes,that would be the cash in your trading account and the value of the shares at the end of that month. Saint


Re: Teach A Man To Fish And......... There's still more that one has to learn about Money management......I hope this is at least a start. And 2 posts that one has to go through,one from Credit Violet,and another from Swing Trader........ http://www.traderji.com/945-post1.html http://www.traderji.com/23951-post1.html All the best! Saint




Re: Teach A Man To Fish And......... I sincerely hope that one realises the importance of money management ....... all the above is nothing but a start.It is vital to position size properly,vital to have a max risk,vital to have a point after which one pulls the plugs......... Very,very important.........this is the Holy Grail of Trading,knowing which you have an edge over your rival,not knowing which,it's only a matter of time before the market swallows your account with glee.. All the best! Saint



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As we had discussed previously,a successful trader who trades the ongoing trend of the market is he who is able to stick with the present moment,the "now".........it really does not matter what our intellect tells us where the market is going or not going,the fact is that it really does not matter what we think about the market........The reality is the market move in itself. Our job as a trader trading the trends of the market is merely to latch on to a trend and stay out of the forecasting business.The problem with this latching on to the trend business is that we don't get to go to a party and show off all our stock knowledge,fundamental/technical skills........In this business,we practically shut our brains and follow the trend.So no glitz or glamour in this,.............nothing to really show off.But you do have banking personnel running after you with ideas on where you should put your money that is growing slowly and steadily in your account! We therefore use price as everything,now some will tell you of the importance of Price and Time,etc...........as maintained before,Trading Truth has as many paths to it as there are traders,and to each his own. Now using price,trendlines to give us warning signals,and pivots that tell us to jump ship when that trend of that time frame is over,and some traditional tech chart patterns,our job is nearly almost over.Coupled with a few indicators,and certain patterns to keep a look out for,we are about done.... Keep things as simple as possible.......I know that isn't a style statement these days especially amongst tech traders........do your experimentation,and once you have things figured out,keep things very simple.



All the best! Saint



Quote:

WIDE RANGE BAR : When you get a Wide Range Bar ,especially out of a basing consolidating sideways move,get ready for a big move in that direction.Don't expect it to pullback and give you an opportunity to cimb aboard.Sometimes it does,but in many times,it keeps exploding higher. What is a WRB?Don't complicate things by adding more critria than the simple fact,a bar that makes a wide move in that time frame and closing at or near the high of that bar/candle. The beauty of a WRB..........if you get one,buy the pullback,with a stop below the low of that very bar.Else,buy the high of that bar.If we get a WRB,and it reverses,a WRB failure is an ominous sign of a big move down. Another thing to look at:a WRB with accompanying increase in volume out of a sideways base. And look out for a WRB that can happen after a big rally........could signify a turnaround soon. So,look out for the WRB!



All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Another example :In this case,Dabur had a huge uptrend,and then we get a WRB.A WRB after a long run up should send alarm bells off as this could mean a possible turn around,an intermed top. Dabur Charts attached below!



All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Another example of a trade that we had taken a year back,based on the power of the WRB.



All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Another example of a WRB that sounded out a possible end to this move up......this time from Alstom Projects.



All the best! Saint


Re: Teach A Man To Fish And......... I personally prefer Candlesticks to Bar,but that's a personal choice...........if you have been trading bar charts all this while,and feel that you are more comfortable with it,no probs.But for those who are interested in Candlesticks,please go to the belowmentioned thread by Gobatman...basically all important patterns in one page. http://www.traderji.com/55095-post1.html Do go through them,we can briefly go through a few,but do remember one thing.............More important to identify the pattern,than to boast of each and every Japanese name memmorized.We are here to trade and make profits from it,not to be scholars...... These patterns are even more reliable on the weekly charts.......on the daily,not that much.But the knowledge of all that we had done so far and some basic Candlesticks Analysis makes the decision we take even more accurate,more precise. Thanks Gobatman for the list ....:)



All the best! Saint

bvpraveen 23rd August 2006 09:54 AM

Re: Teach A Man To Fish And......... 1 Attachment(s) Hi Saint, I'm a begineer and I'm learning the TA concepts very seriously for the past 1.5.months and following up this thread - "Teach a man a fish..." very slowly for the past 1month, so that I can understand all the basics well. Now I've some doubts regarding the buy/stoploss signal using the pivots, which you had taught in one of your earlier post. [I use the word theory to mean your words:"...buy after the second candlestick takes over

the high of the previous candlestick...."] Referring to the attached chart, can you please explain me the following queries?: I placed all those "black coloured" buy/stoploss according to your theory, which I hope are correct. I've doubts in those "Rose" coloured buy/stoploss. Question1: If you notice those rose coloured ones, a)they are placed according to your same "theory". b)they are only at pullbacks c)but as we can see they are placed somewhat in the middle of the "up trend", which leads to breaking out of the stop loss very very soon, although the uptrend is intact. d)so both rose and black coloured ones are from the same theory, buy rose is wrong(I guess) and blacks are correct. WHY IS IT SO? (or) How should one behave in those

"rose" coloured pullbacks? Question2:In case of "stoploss3" where should be the stoploss exactly: a) below the low of red bar or b) below the low of green bar? Please reply me when you are free, Waiting for your answers,



Thanks a lot, Praveen.


Re: Teach A Man To Fish And......... For those who are not in the habit of reading each and every post out there,do keep a lookout for some nice ones by RVLV. An example .... http://www.traderji.com/56164-post1.html Saint





Quote:

Originally Posted by bvpraveen (Post 55862) Hi Saint,

I'm a begineer and I'm learning the TA concepts very seriously for the past 1.5.months

and following up this thread - "Teach a man a fish..."

very slowly for the past 1month, so that I can understand all the basics well.

Now I've some doubts regarding the buy/stoploss signal using the pivots, which you had

taught in one of your earlier post.

[I use the word theory to mean your words:"...buy after the second candlestick takes

over the high of the previous candlestick...."]

Referring to the attached chart, can you please explain me the following queries?:

I placed all those "black coloured" buy/stoploss according to your theory, which I hope

are correct. I've doubts in those "Rose" coloured buy/stoploss.

Question1: If you notice those rose coloured ones,

a)they are placed according to your same "theory".

b)they are only at pullbacks

c)but as we can see they are placed somewhat in the middle of the "up trend", which

leads to breaking out of the stop loss very very soon, although the uptrend is intact.

d)so both rose and black coloured ones are from the same theory, buy rose is wrong(I

guess) and blacks are correct. WHY IS IT SO? (or) How should one behave in those

"rose" coloured pullbacks?

Question2:In case of "stoploss3" where should be the stoploss exactly:

a) below the low of red bar or

b) below the low of green bar?

Please reply me when you are free,

Waiting for your answers,

Thanks a lot,

Praveen.

Hi Praveen, Apologies for this extremely belated response from my end...... Great question,and thanks for attaching the chart as well........nothing like being able to see what you see. Question 1:Great question once again..........the chart that you had posted is that of the



your answer is :Short term,then,you are out at Rose Coloured Buy 5,once SL5 is taken out,so on so forth.Now if your answer is :Intermediate term,then the black coloured Buys and SL's are correct. Only thing is the one marked as SL 6 in rose colour,instead that could also be a black coloured SL(intermediate). Now once you get the move on a weekly chart,every pullback is a buying opportunity(black ones).Every time we take out the previous pivot high,keep raising stop losses to the immediate previous pivot low.So on so forth........If you are playing the weekly charts,and the intermed time frame,forget the rose coloured ones.What you are looking out for ,licking your lips,are those black coloured ones. Ques 2:Below the low of the green bar. Great ones.......looking fwd to more from you,Praveen. All the best! Saint



Quote:

Originally Posted by amaren (Post 56212) hi

am i seeing the formation of pennant in "i-Flex" (from 17/8/2006 on-wards) correctely.

Please guide.

yes,amaren,correct. To know more on pennants, http://www.stockcharts.com/education...agPennant.html All the best! Saint

Saint 5th September 2006 10:03 AM


Quote:




Thanks a lot for your explanation.

I've got many doubts. Here I will ask three more:

1. Refer to "chart 1". With reference to your comments above : "Every time we take out

the previous pivot high,keep raising stop losses to the immediate previous pivot low"....

Why do we need to wait for the pivot high to be taken out? Is it not enough if we find a

"valid pivot"(which ofcourse is according to your pivot theory)? Because we might be

missing "great" profits, if downtrend begins.

Praveen,trailing stops are always in an uptrend that pulls back and resumes in its journey......therefore the line above,every time we take out the previous pivot high,keep raising stop losses to that immed prev pivot low.In your chart 1,you have drawn two possibilities,the reversal and the resumption.As all trailing stops are,they are meant for only in a resumption of an uptrend. Once again,we have the start of an uptrend and it gives us a decline ,an entry point.We enter with a stop below the previous pivot low.The moment we take out the prev pivot high,raise it to the immed pivot low,and so on so forth. Shall clarify more with charts...

Quote:

2. Refer to "chart 2". As you had told, the pivots formed should be used for stop loss depending upon our time frame. But how to find out whether the pivot formed is valid for "our time frame" and should we move the SL or not? My view is that, we need to come to the conclusion depending upon the pullback of the uptrend The minimum criteria would be : "pullback be 1/3rd of the uptrend". Hence, with reference to the attached chart, for medium time frame traders, the stop loss should be "black coloured" stop losses, and not red coloured stop losses, as the stoplosses at red coloured pivots are at lower pullbacks. What is your comments, Saint?.

Right,and a few indicators can help us with that as well.And some retracement concepts.We'll be going through them later.....but right about the above depending on the time frame.

Quote:



3. Disadvantage of being a short term trader: Again refer to the Chart 2. Consider a short term trader, who has entered into the trade after the first black coloured SL1 according to your theory[at the beginning of the red coloured line]. Hence his stoploss will be red coloured SL1....then SL2. He is out at SL2 when its taken out. If you see his net profit, its a small amount, compared to the up trendline between black coloured stoplosses SL1 and SL2[actually it will be more clear in some live chart]. Do you think its a limitation of being a short term trader? Waiting for your kind reply, Thanks, Praveen.

No,my friend......when you trade a weekly chart,an intermediate trend,you would be entering with a bigger stop(because that's where the previous pivot low is),which means that you would be buying lesser no.of shares.In a short term play,you would be buying more shares as your previous pivot low and therefore your stop is relatively near. Position sizing is therefore of paramount importance. Shorter the time frame,maybe more the noise.......but small move,large move is taken care of by position sizing. Saint

Saint 5th September 2006 02:48 PM

Re: Queries From students of Saint 1 Attachment(s)

Quote:

Originally Posted by gobatman2001 (Post 57348) Hi! Saint,

I would be grateful if you could please guide on drawing support & resistance lines on

charts where there is a lot of noise. A few examples would be much appreciated.

Am attaching a chart of Alok Textiles (NSE Symbol = ALOKTEXT). I would be grateful

if you could please draw the resistance lines & upload the same for me.

Also, does one draw the lines on the daily charts or weekly charts?

The reason why I am asking is because on some of the daily charts, it takes some doing

to identify support & resistance levels.



Please do advise ...

Thanks & regards,

Gobatman

Hi Amit, Don't force the lines if they are not clear cut......agreed in this case ,they are all over the place. Same with the weekly charts,don't try to force the lines. Below the chart of Alok with a few trendlines.. Saint

ps:alok mthly should have read as alok weekly


Re: Teach A Man To Fish And......... 1 Attachment(s) Hi Praveen, Many are ways to trail stop,the one below is using pivots.Trail stops are after we have



made an entry,and the trend moves in our favour.We use trail stops to take as much of the move as possible.

Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Looking at some patterns other than the traditional h&s ,double top,triangles,etc......we had a brief look in at Wide Range Bars.A wide range bar could be the start of a big move up or down.After a long uptrend or downtrend,a WRB could be the signal of the end of the move as well. This goes in hourly charts,or smaller time frames than that as well......



Saint

bvpraveen 5th September 2006 10:37 PM

Re: Teach A Man To Fish And......... Hi Saint, Thanks for your detailed explanation with charts.

Quote:

Praveen,trailing stops are always in an uptrend that pulls back and resumes in its journey......therefore the line above,every time we take out the previous pivot high,keep raising stop losses to that immed prev pivot low.In your chart 1,you have drawn two possibilities,the reversal and the resumption.As all trailing stops are,they are meant for only in a resumption of an uptrend.

Saint, I've learned this concept in this thread itself. My actual question is : "Can't we move up the stop loss to the immediate stop loss(which is just forming now, say 75%

complete, which has not taken out the previous pivot high yet) which is about to take out the previous pivot high?" Why do we need to wait for the previous pivot high to be taken out? I remember your words in this thread, while explaining when to enter the trade:"...after three bearish candle, we had one bullish candle and we need to enter that trade once the previous candles high is taken out and the previous low will be our stop loss....".



Haven't we found out pivot low here? [Please leave out this question, if I'm digging into it] Praveen.



Quote:


Thanks for your detailed explanation with charts.

Saint, I've learned this concept in this thread itself. My actual question is : "Can't we

move up the stop loss to the immediate stop loss(which is just forming now, say 75%

complete, which has not taken out the previous pivot high yet) which is about to take

out the previous pivot high?" Why do we need to wait for the previous pivot high to be

taken out?

I remember your words in this thread, while explaining when to enter the trade:"...after

three bearish candle, we had one bullish candle and we need to enter that trade once

the previous candles high is taken out and the previous low will be our stop loss....".

Haven't we found out pivot low here?

[Please leave out this question, if I'm digging into it]

Praveen.

The whole idea of waiting for the previous pivot high to be taken out is to allow the charts to tell us what to do.We would not want our intellect and mind to participate in this exercise.We want our eyes to see the very obvious resumption in trend,we want our eyes to see the previous pivot highs being taken out,and we want it to get as automatic as possible. When we raise the stop loss on getting a bullish candle after many multiple bearish candles,prematurely thinking the pivot has been formed,only to see more bearish candles the next few days and taking us out of the trade,that wouldn't be too smart on our part,would it...............as said before anticipating a pivot can be detrimental for that trade. What we want is to get in and stay in for as long as we possibly can.........allow therefore the previous pivot high to be taken out and then only raise stops.



Been there,done that,my friend.......therefore this friendly piece of advice. As for the question on the Entry,shall clarify it later with some charts. All the best! Happy Trading! Saint


Re: Teach A Man To Fish And......... We'll be going over money management,few things,at a later date.......for Gaps related stuff,have a look at http://www.stockcharts.com/education...pAnalysis.html All there.... Saint



Quote:

FAILURE PATTERNS : Simply put,it is a pattern that heads in the reverse direction than what is expected.We expect a neckline of a H&S breakdown to be a bearish sign.We expect a trough break from a Double Top to head south.We expect a Rising Wedge after an uptrend to break down.We expect an Ascending Triangle breakout to head north.We expect a WRB breaking out of a consolidation to initiate a move to the up.We expect a WRB bearish candle in an established downtrend to resume its downtrend and make newer lows. A failure pattern is something that acts opposite to that which is expected. An ascending triangle breaks down,that is a pattern failure.An ascending triangle breaks out,and then the next bar negates the breakout bar.That is pattern failure.A wrb breakout from a consolidation that gets negated(negation meaning the low of the breakout bar is taken out),that is pattern failure.A neckline breakdown in a h&s pattern reverts and goes back into the neckline,and takes out the high of the rt shoulder......that is pattern failure.So on so forth. These are beauties to trade especially if one could go both ways in a trade............beauties because when everybody is looking for a breakout after a



consolidation,so are we all.But a negation of the bar sends everyone into the hope,pray mode.Negation of the breakout bar sends us into caution mode.We are out of that trade if the low of the breakout bar is taken out.But as the majority hope and pray for something to happen,convincing themselves on how great this company is,etc etc and the super fundamentals,and growing economy,etc,etc........we reverse positions and benefit from the move down. Failure patterns break the expected move..........they SHOCK the trader trading the preceeding move. Learn to identify them,and get out of a trade when you see them in action......and reverse the trade to great profits.



Re: Teach A Man To Fish And......... 1 Attachment(s) In the example below,we have BOM DYEING giving us a sideways consolidation on the daily charts,before we get a WRB gap-up breakout that initiated a move upwards.With every newer pivot high,we have been trail stopping upwards.Then we get a nice breakout bar to new highs,and an immediate slap down negation the very next bar. We have a Breakout Bar Failure......If you were in this trade,get out the moment the low of the previous breakout bar is taken out.If you weren't in the trade but looked on at this mouth watering prospect of neat move down(all this if you could go short).........short the low of the breakout bar failure,and enjoy the ride!





Re: Teach A Man To Fish And......... If you are not into looking through each and every thread in this forum,and accidentally chanced upon this one.........do have a look at the belowmentioned thread by Ivan.Read it,absorb it,assimilate it..... http://www.traderji.com/equities/810...s-masters.html All the best! Saint


Re: Queries From students of Saint 1 Attachment(s)

Quote:

Originally Posted by gobatman2001 (Post 57825) Hi! Saint,

Many many thanks for your reply. One last query on Resistance levels (I hope) :o



Attached is a chart of APIL on which I have drawn the resistance levels for a short

term point of view.

I have used the line chart since it's easier to the eye to identify the levels.

I would be grateful if you could please have a look at the same and please let me know

if I have drawn the resistance levels correctly.

Also, if you could please reply to the questions that are on the chart.

I can't thank you enough for all the help, Saint.

Warmest regards,

Amit

Hi Amit, Just a chart to add to Praveen's answer..... Self explanatory.Any queries,do ask.

Saint




Re: Teach A Man To Fish And......... Another pattern that does the trick,more so in the Indian mkts ,again and again is the pattern described below.Trading failure patterns was oh!so sweet in the US markets,trading trends is the key to the markets here.But as all speculation is,and gets,......sometimes things get a bit overdone. Have a look at the pattern given here...........very useful for the markets here! http://www.stockcharts.com/education...ysis/barr.html All the best! Saint


Re: Teach A Man To Fish And......... Assessing the trend using pivots is everything,but an indicator or two can be of great help.I was first introduced by Karthik(karthikmarar) to TRIX,and the divergences that it has thrown up gives me that confirmation as an added signal. Also have a look at ADX,+DI,-DI .........again a great help for a Trend follower. And of course the Moving Average ,RSI and the Stochastics..........all this info is there on stockcharts.com/education,and all over the web.Added info on TRIX,go to TRIX Tricks by Karthik. And of course,this forum is full of individuals who seem to know every nuance of every indicator. But do remember:Price is important,pivots tell us everything,indicators are more of an add-on(good to have some around that tell us that we are on the right path!) All the best! Happy Trading! Saint


Re: Teach A Man To Fish And......... This thread was started with a view to expose a beginner to few things that become what is day to day bread and butter for a position trader. We sometimes tend to over complicate our lives,and we tend to complicate our trading as well.We get into severe question mode and then we get into an "analysis



paralysis",.......we seem to be more interested in getting ourselves the latest indicator and the latest software than we are in trading them.Not that they are not required,but they are meant as a means to an end.That end being,trading the markets and making profits from the trading. This thread ends here.......abruptly I must say,but has to end here.For the beginner having a look at the markets,I hope that this thread has exposed to what trendlines,trends,pivots,chart patterns,etc are all about.I sincerely hope that you have a look at www.stockcharts.com/education .......practically all that is needed for profitting from just eyeballing charts is there. But the secret of massive profits lies in great entries,great exits and Money Management...........in our search for the Holy Grail to Trading,we sometimes fail to realise that there actually is none.That verily is the Holy Grail,I guess........but getting thorough in Risk management concepts is the nearest one gets to it!! This thread has been all about trend following,and as said before,not predicting them..........our job is to just go with the flow,our learning just to assess the direction of the flow.You'll be surprised at the massive profits that one can make in just going with the flow of the markets. So,my friends,do keep things simple,get your trends right,put your money management stuff in place,......and allow the market to do the rest! As said many times before,Ride the Trend and Enjoy the Ride! Wishing you all the very best in your path to Trading Mastery and Trading Brilliance.May you all always be students of the market,hope you continue your learning,and hope you all rake in the moolah!! Wishing you all the health,happiness,peace and prosperity in your lives! Happy Trading! Saint ps:I apologise for the garbled nature of thought flow.......neither a teacher or an author!And another thing,if anyone would like to keep in touch with me,contact Karthik for means to get to me.And do bother him with your queries and doubts as well..........the answer he would give is the answer that I would have given.:)

Saint 14th December 2006 09:50 PM


Quote:

Originally Posted by winstonn (Post 69521)



hi saint ,

how are you ? felt good at your response,:)

well, all the things you have been teaching here are gems and i would like to ask you

whether the chart patterns are reliable in forex markets? little out on my track, but

really curious????:D

i have demo A/c, i see your fav. pivot highs and low work really good on forex, but

chart patterns here are really less reliable.

wht do u say??

;)

thanxs

winston

Hi Winston, A chart pattern merely tells us where we might possibly go from here......if we get an ascending triangle after an uptrend,we accept the sideways movement as nothing but a pause in its uptrend.We are therefore expecting a move out of this triangle to the up,and resume its uptrend.Can an ascending triangle break down?Surely........well,this we call a failed pattern.So either way,it qualifies as a chart pattern :) The beauty of any sideways movement,be it just some sideways consolidation,or a symm triangle or any of the triangles,is that we get to enter into the stock at minimal risk with a stop just below the base formed. So,use the chart patterns as a low risk entry point,instead of its predictive value in the future direction that it is headed........a breakout and a pullback gives a great entry as we latch on to a stock threatening to take off.A failed breakout,.....no probs,we reverse directions,and short it to glory.Either way,chart patterns come in handy,although knowing it is not an absolute necessity. As for forex mkts,you will have to assess what really works there.....I used to trade failure patterns day in and day out in the US markets.In the Indian mkts,classical patterns seem to work.......so depends,you have to check it out yourself. All the best! Happy Trading! Saint



Quote:



Originally Posted by uma_k (Post 70044) Hi Saint,

I need some help from you. Under the thread Experiments in Technical Analysis started

by Karthik, there is a post No. 351 in which Anant has explained the lag in Moving

Average with respect to price movement. The explanation is oversimplified according

to him. I would like to know your views on the explanation and whether the lag can be

explained in actual conditions where the simplified price movement does not hold. After

Anant's post no body reacted in that forum so I am asking you as you have vast

knowledge on technicals.

Thanks

***Uma***

Hi Uma, Can't beat that one from Anant,......frankly no idea how to make it simpler than that. Excellent Stuff from Anant........his post below.

Quote:

Dear Uma, Thank you for your appreciative words and I am glad to see your interest in learning. I am giving the proof of moving average delay below: For the sake of easy explanation I am oversimplifying the example. However, the steps explained here are equally applicable to real situation also. Let us assume a share being traded at Rs. 100 and the price goes on increasing by Re. 1 every day (You can take any value you like, eg price = 300 and increase = 1.7 etc. But the values I have taken make the calculation easy). Also assume that the price increases from 100 to 110 and then starts falling by Re. 1 each day till it reaches Rs 95. Thereafter it again increases Re. 1 everyday to again reach Rs 110. This up and down continues. Let us take the first 50 days' data for our example. Let us say we want to calculate 5-day and 15-day simple moving averages and their cross over. The price data, the moving averages and their difference along with the chart are attached as a PDF file with this post. You can download the file, take a print out and follow along with the explanation here. The 5-day moving average is simply the average of previous 5 day prices starting today. So, in our example the first four days have no moving average, 5th day onwards the values are calculated and entered against the day number. So, the first MA value is



against 5th day, second value against 6th day etc. Similar is the case with 15-day moving average, the first value is against 15th day and so on. The moving average difference column starts with 15th day. You can see from the table of values in the attached file that the price has reached the maximum value of 110 on 11th day and thereafter it is falling. But the 5-day moving average reached maximum value of 108.80 on 13th day and the 15-day MA reached its maximum value of 106.27 on 18th day. This extra time is the moving average lag. Why it happens? When you take 5-day MA the first time you add values of day 1 to day 5. On the second occasion you add values of day 2 to day 6. In effect, you are removing the first day value and adding 6th day value. As the 6th day value is higher than 5th day value the MA increases. On 11th day you add the maximum price for the first time. On 12th day you add a value which is smaller than the maximum, but the value being removed is still smaller than this 12 th day value. So, MA continues to increase even after the Peak in price is reached. This continues till the latest value added is smaller than the value removed. This happens when the Maximum Price is in the center. As we are taking 5-days prices, the Maximum price is in the centre after half of this period i.e. 2.5 days. This makes it 11+2.5=13.5. So we see the peak in MA on 13th day. Similarly, the peak of 15-day MA appears on 11+(15/2)=11+7.5=18.5 days which is rounded to 18th day. Therefore, the MA peak lags the price peak by half of the averaging period. Similarly, the lowest value of MA lags the lowest price by the same number of days. We have taken regularly increasing/decreasing prices in this example. In real situation this is not true. So, the actual lag will be a little different from the 'half of the veraging period'. Depending on which side of the price peak (or valley) is changing faster, the MA peak is displaced a little to the left or right. But on an average we can take this lag to be half of averaging period. Coming to the cross-over of the two MAs we can explain it as follows. Now I have to introduce a little maths here. But it is very simple. Let us say p1 is short term, p2 is long term. As we have seen above, the short term MA reaches peak (p1)/2 days after the price peak and the long MA reaches its peak (p2)/2 days after price peak. So the time difference between the two MA peaks is (p2)/2 - (p1)/2 which is same as (p2-p1)/2. That means Half of the difference between the two averaging periods. The cross over will occur midway between this difference. So it will be hallf of (p2-p1)/2 or equal to (p2-p1)/4. That is one-fourth of the difference between the averaging periods. In our case the MA period difference is 15-5=10 and 10/4=2.5. So the cross over is 2.5 days (or 2 to 3 days) after short MA peak. We can see from the data and graphs that this is indeed the case. If you have understood this, then you can try to prove why the histogram peaks appear much before the cross over. I will leave it as an excercise. As the Histogram peak appears much before the cross over, I tried to use it in my MABIUTS-H strategy. Regards



-Anant

Best way is to test the various systems and latch on to something that you are comfortable with,and which gives you regular profits.More importantly,once you are trading a system is to stick by it,day in day out. My simpleton of a mind has never really asked why this indicator does this,or why that indicator does not do that.......am more interested in checking out whether anything makes consistent profits for me. Quite sure this answer would not suffice,....suggest asking Anant himself.Or probably Karthik,Murthy or Sanjay.Am quite sure that they will only be too pleased to help. All the best! Saint



Quote:

Originally Posted by P.SUHAS T&I (Post 70382) dear saint

just completed this thread reading

while reading i make all copy paste, remarks and charts in word file and taken notes as

well. you have provided TMI, thanks. this thread help me a lot in polishing all my

trading skills.

we all are actually exprementing the probabilities in techanical analysis.

i think TA is a social science and it changes with fear and greed i e human behavior

and rightly u said "just ride the trend is the only thing in our hand".

i am not using any heavy weight words for thanks.

just second the above all encouragements, apprecations and thanks Quote for you.;)

TYVM for all your elderly knowlege and love for all new members like me.

i am not a member to any such forum and i am new to this

so ill thanks you and amarnathji for suggesting me, the meaning of capital letters in

forum and i expect suggestions like this in future on my mistakes i.e. CMIIW. :) i know

it is not the forum for suggestion on how to write so i am taking almost care for it and i

start it as well & i surf google for this and find some information.



i am hoping for LLR with this group.:cool:

cu

BFN

P.suhas

Trader & Investor

Hi Suhas, Figured that TVYM is Thank u very much.......plz help me decode LLR,CMIIW,BFN and TMI though :) Thank you for all your kind words.....and looking fwd to your posts in the forum.Once again,a warm welcome to you. All the Best Saint

Saint 8th February 2007 11:43 PM


Quote:

Originally Posted by bvpraveen (Post 76893) Hello Saint and others,

Long time since I've read posts in this thread. This thread had been my first source for

basics of TA. I will keep track of this thread now-on-wards.

I've got some questions. Please try to answer them when you find time.

1.How to deal with a sudden long bar with huge volume? This becomes important when

the stock is not "popular", etc. For eg. please look at the attached charts.

2. What I'm thinking is we can exit when it reaches one pre-determined target, say 5%.

This 5% I think is getting achieved very easily in such kind of charts. For eg. the scripts

in the charts achieved 5% the next day. I've noticed some stocks which behaves as

explained above.

3. Does that 5% look like gambling? After all money making is the motto of a trader,

right? I agree that this is possible only if we trade in low volumes.

This can be helpful for small traders, say who trades with Rs.1 lakh., etc



I'm posting these questions and charts only for learning purpose. Any views are

welcome.

Thanks,

Praveen.

Hi Praveen, Trading the trend is a different kettle of fish.........one tries to get in on trend reversal,and if not at least on some sort of a pullback,and then hopes to ride the trend as long as possible till the trend in that time frame reverses.Easier said than done,but it can be done,and to great profits. In the case of BLUE BIRD,we have a downtrend followed by a high volume Wide range bar that looks like the start of a new uptrend.What we now look for is a pullback to form higher pivot lows,and then to new highs.Your entry point would be half or a third,in the pullback,and the rest once it makes new highs with a stop at this pivot low. Playing 5% and 10% can sometimes get tricky......one then tends to limit one's profits and when the fall comes,one ends up holding on to the losses.So careful on that one,my friend. Best to let the profits run,and trail stop it.....for example,Praj Inds,in its breakout from the sideways consolidation is now a 100% up.Let it run ,go with the trend till the trend takes you out.Have some trail stop in place,that's it. And,no,making profits having a definite entry,exit,money management systems in place is never gambling........Gambling is anticipating a dntrend and going short in a strong uptrend.Gambling is going long a Sugar Stock that is in a clear cut dntrend quite sure that the price that one gets in is the absolute bottom of that stock.Gambling is not knowing whether to buy 1000 shares or 500 shares,and buying a 1000 shares without knowing why..........gambling is basically doing anything without a set method to the madness.The repeated,methodical and systematic onslaught of the markets .....nah,that's never gambling.Pure Trading. Do revert if there are any doubts. All the best! Happy Trading! Saint ps:shall write up on WRB's, a few things, over the next few days.

bvpraveen 9th February 2007 12:33 PM




2 Attachment(s) Hello Saint, Thanks for your information.

Quote:

Trading the trend is a different kettle of fish.........one tries to get in on trend reversal,and if not at least on some sort of a pullback,and then hopes to ride the trend as long as possible till the trend in that time frame reverses.Easier said than done,but it can be done,and to great profits.

Yes, I've read them through out your posts in this thread.

Quote:

In the case of BLUE BIRD,we have a downtrend followed by a high volume Wide range bar that looks like the start of a new uptrend.What we now look for is a pullback to form higher pivot lows,and then to new highs.Your entry point would be half or a third,in the pullback,and the rest once it makes new highs with a stop at this pivot low.

One doubt here. Please refer to the attached charts. You'd told in the beginning of this thread during the discussion on pivots, that one can buy a half(or what ever), once the previous pivot high is taken and not before. But here you are referring that we can buy in the pullback, where actually the higher pivot low formation is still in progress. Aren't we run in to problem if the pivot low formation doesn't happen and the downtrend continues? Can you please clarify it?

Quote:

Best to let the profits run,and trail stop it.....for example,Praj Inds,in its breakout from the sideways consolidation is now a 100% up.Let it run ,go with the trend till the trend takes you out.Have some trail stop in place,that's it.

Yes, I too agree with this. We have many kinds of SL like pivots(which you are using), three days low, some % below close/high, etc. Although choosing SL is subjective and ones personal choice, can you please tell us each SL's advantage and disadvantage.

Quote:

ps:shall write up on WRB's, a few things, over the next few days.



You'd previously explained about WRB's in this thread during the initial days. You can refer them and if you have more points, we would be glad to know them, so that your dont do the rework.

Thanks once again for your explanation, Praveen.



Quote:

One doubt here. Please refer to the attached charts. You'd told in the beginning of this thread during the discussion on pivots, that one can buy a half(or what ever), once the previous pivot high is taken and not before. But here you are referring that we can buy in the pullback, where actually the higher pivot low formation is still in progress. Aren't



we run in to problem if the pivot low formation doesn't happen and the downtrend continues? Can you please clarify it?

Nothing to clarify,my friend.........correct in your understanding.Best to let the market show the way before an entry.I tend to take a small quantity in the pullback though,and pile on in the breakout,but keep all that for later. For now,allow the stock to breakout and pullback,buy once previous pivot highs are taken out with a stop at the recent pivot low.Calculate the share size and that's that.Breakout trading can have a higher win/loss ration,but whiplashes are frequent,and ouch!,can be painful......but all part of the game! Saint

maverick123 7th March 2007 01:03 PM

Re: Teach A Man To Fish And......... 1 Attachment(s) Hey Saint, Many thanks to you for ur posts. All of us are really gaining a lot from it. I have a doubt regarding reading a graph. It may be a silly question. It goes like this: On the moneycontrol.com website, on requesting any stock quote, a line graph is displayed in the lower bottom of the page. The same i is attached with this reply. I am unable to relate the graph depicting the SENSEX(pink coloured line graph). What is the significance of this line graph? The blue line depicts the behaviour of the jet airways stock but I am not able to relate this to the line for the SENSEX. Please help me.

http://www.babypips.com/school/fibon...tracement.html



Also, go through the Section "Trading Resources"


Re: Teach A Man To Fish And......... This thread is,as always,for the beginner.......and to anyone who appreciates the importance of keeping trading as simple as possible.From here,this thread will be "all over the place" as I sometimes am,in real life.......so do forgive me. They could be thoughts,maybe something I read from a great book,maybe something from today's trades,maybe a viewpoint,and some additions to what was written previously. We'll start on something about Short term trading over the next few days.........I feel that those amongst you who would be looking for something spectacular are going to be verrrry disappointed.There are certain rules and disciplines that one follows,and then one does it day after day,every day.One keeps things as simple as possible.....so simple that one gets lulled into boredom.So simple that one cannot even boast of something bombastic to one's friend. For the majority that are looking forward to all the indicators,and a trading system.......this is not the place to be.There are some fantastic threads by Karthikmarar,and go to "search" and look for posts by CreditViolet.Suggest you go through and ask them for their advice. This thread ,as always,is for the beginner and the simpleton........somebody who believes that so long as one knows addition,subtraction,multiplication and division,one can trade the markets to great success.My nine year old daughter has started trading the markets when she is having her holidays.I feel she does a better job than many of us because hers is a simple mind.(Seriously thinking of catching my driver as well.......) So for those few who do not mind making profits the simple way.....let's continue this journey. Saint ps:I may not be able to answer doubts and clarify each and every point discussed d/t certain time constraints.........so sincere apologies!

Saint 24th May 2007 04:55 AM


Multiple Time Frames in Trading



One can learn about trends,one learns to correctly identify when a sideways trend breaks out into an uptrend.One learns about all the pivots and all that is required to correctly diagnose a change in trend........and yet one needs to resolve the confusion that multiple time frames offer to our mind. As always there are few rules that beginners ought to follow: I am not going to use words like position,swing,intraday here for the simple reason that there are so many time frames and that many traders who trade that timeframe,so not abt to go abt classifying and categorising them. The Trader who trades the Daily charts:Meaning one who capitalises on the trend as displayed by the Daily charts.Right,.............Look at the Weekly Charts.If the weekly charts are making higher pivot highs and lows,we are in an uptrend.As we had learnt,we look for buy signals in the daily chart.Now what are these buy signals?That depends on your strategy.Here we had discussed about a stock making a higher pivot low and then taking out a previous pivot high as a buy point...........But the point being:Look at the weekly.Analyse the trend.If we are in an uptrend,entry on a buy signal on the daily chart.Exit once we get the sell signal on the daily chart.The sell signal we had discussed here:A break of a previous pivot low in an uptrend,or trailing stop,or some other method that you may have........Once again,the point being:The trade is off the daily charts,the weekly is a guide that tells us the direction that we should follow.We buy the daily,we sell the daily,we position size the daily We do not have a sell signal on the daily,and then pacify ourselves that we have a strong weekly and it's only a pullback,and the fundamentals are good and CNBC says we are doing great.We get a sell signal,and we have the discipline to cut the trade........Why?Coz we are daily charts traders,that trade does not suddenly shift to some other time frame. The trader who trades the 15min charts:This trader looks at the 60min charts for a trend analysis and direction.No trend,no trade.Uptrend in the 60,the trader waits for a Buy Signal on the 15.Position sizing on the 15min charts.Trail stops on the 15.Exits as per the 15.One does not look at the 60min and say that it's so bullish and therefore one does not mind the pullback...........coz' simply one is a 15min chart trader.One catches the uptrend on the 15 and one exits when sell signals demand so.One therefore looks to go long on the 15,if the 60 is in an uptrend.One looks to short,if the 60 is in a dntrend.And one sits on hands if the 60min is doing neither. And so on so forth for all the various time frames...............Never short the 15 when the 60 is in an uptrend.You could make a profitable trade here and there,but the 60 will make you pay dearly at some point.Never enter on the 15,and then get carried away by the uptrend on the 60 and then shift timeframes.For an intraday trader,never disobey the 60min charts. This,for now.......more later!! Saint




Re: Teach A Man To Fish And......... Something that most of us already know,but for the beginner who hasn't traded these patterns,have a look at .. http://daytradingcoach.com/daytradin...s-course.htm#1 As said before,one must develop the ability to identify certain patterns.Call them by the names given,.......or not bother about the academics.Important thing being:Certain patterns have a predictability around them.We as speculators capitalise on that predictability and make profits.These very predictable patterns when they go in reverse gear become another great money making opportunity as we go in reverse gear ourselves. One sees a Bull Trap and capitalises on the trade.Stops in place.Position sizing done.Trail stop till out.............what one should NOT be doing is:A bull trap is supposed to be the opening at the previous day's lows or below,but Nifty opened up Rs1 above the previous day's low,so it's not called a Bull Trap,etc etc.Don't forget,while you are busy theorisng,rationalising,logicalising ..........somebody else,probably the simpleton,is busy shorting the markets to glory and laughing all the way to the bank. Let the intellectual,brilliant market analysts analyse..........we are traders,and we are here to put in one perfect trade after another,to make consistent profits. And candlesticks and chart patterns can be great weapons in our arsenal. Happy Trading! Saint


Re: Teach A Man To Fish And......... The Bump and Run Formation http://stockcharts.com/school/doku.p...nd_run_reversa This happens so very often......wise to know about it.Once again,learn to identify it.......again,not to theorise but to identify.Can come in handy as a point to exit all longs. Saint



Behavioral Patterns That Sabotage Traders –Performance Anxiety



By Brett N. Steenbarger, Ph.D. Consider the following psychological scenarios: 1.A student needs to pass an anatomy course final exam in order to successfully complete his first year in medical school. Because his first several exams were on the borderline between passing and failing, the course grade entirely rides on the final. As the time approaches for the big test, the student finds himself increasingly worried about the test—particularly when he misses questions from his practice exams. The worry interferes with his sleep, which in turn makes him even more concerned that fatigue will prevent him from doing well. By the time he takes the exam, he is tired and nervous and misses many questions, often by second-guessing right answers. 2.A young woman has never been particularly uncomfortable in public speaking situations, but now is asked to give the most important presentation of her career. The result of this presentation could spell the difference between landing a major client for her firm vs. losing the client to a competitor. During the talk, she notices that the audience members from the firm she is wooing don’t seem especially attentive. This suddenly raises her anxiety, and she desperately tries to spice up the presentation. When she loses her place in the talk, she becomes flustered, and finishes the presentation on a hesitant note. 3.A basketball player has been the team’s leading scorer, but starts out a game missing his first five shots. The opposing team is double-teaming him, and he is having difficulty breaking free for open looks at the basket. Determined to take matters into his own hands, he decides to penetrate the opposing defense and draw fouls. Instead, he picks up two quick charging calls. Now fearful of being taken out of the game for his fouls, he searches for his shot by moving a little further out on the perimeter. When these shots don’t fall, he stops looking for his shot and throws two errant passes. 4.A trader has several winning trades in a row and, feeling confident, increases his size to take advantage of his hot streak. The position initially goes in his favor, but quickly reverses when large orders push the market lower. Forced to puke his position, he realizes he has lost all of the profit from his previous, winning trades. He is driven to regain the money and reenters the market, only to get slammed by a second wave of selling. He now feels like he has entered a cold streak and begins trading hesitantly, with reduced size. By the time the market closes, he is down on the day and the week. He feels like a jerk for becoming overconfident after his gains. No doubt you can detect a pattern in each of these situations. The individual is in a performance situation where he/she experiences pressure to succeed. The situation has taken on a distinct importance in the person’s eyes, and now he/she is focused on the results of the performance—not just the performing itself. This dual focus—worrying or focusing on the outcome of performance while trying to stay immersed in the performance—is the common element behind all performance anxiety. Such anxiety is the single most common trading problem I have encountered in my interviews with traders.



How can traders reduce their level of performance anxiety? Here are a few

strategies that I have found to be effective: 1. Focus on process goals when thinking about trading, rather than profits/losses – Traders like to set goals for themselves, yet often as not, monetary goals end up creating unnecessary pressures. More effective goals are ones that focus on the process of trading, such as limiting losses to two ticks if you’re a scalper or holding trades until a trailing stop is hit. A nice mindset is, “If I just trade the right way, the profits will come.” This takes much of the pressure off the performance. 2. Tackle risk incrementally. Risk places a psychological magnifying glass on situations and greatly increases the opportunities for performance pressure. A foul shot in the first minutes of a basketball game is the same foul shot in the final seconds of a tied contest, but there is a huge psychological difference. Traders who try to radically increase their size quickly find that the trade that worked out with 1 contract may not work with 10, because of pressures to (too) quickly limit losses or take profits. A gradual ramping up of size is far more effective than an impulsive leap for which one is emotionally unprepared. 3. Step away from the screen. The self-talk during periods of performance anxiety actually interferes with the accurate processing of market data, because the part of the brain responsible for perceiving and acting upon market patterns is not being activated. It is far better to step away from the screen and refocus on what the market is giving you than to act blindly on one’s fears and compound an already-difficult situation. 4. Use mental rehearsals to make threatening situations familiar. This is perhaps the single most effective technique I have found for reducing and eliminating performance fears. By using guided imagery to repeatedly face threatening situations and mentally rehearse how one would like to respond, one can eliminate much of the stress when those situations actually occur. The goal is to so often face the performance fears in your mind that the coping response becomes automatic, like a habit pattern. 5. Anchor mental rehearsals to distinctive mind states. This is one of the best strategies covered in my book. By learning to place oneself in a state of unusual calm and focus, and then by repeatedly rehearsing coping strategies for threatening situations, a trader can create a link between the mental state and the coping response. When there is a stressful performance situation, all the trader needs to do is invoke the rehearsed mental state and the coping behaviors that have been overlearned will come to the fore. For instance, if you continually mentally rehearse a strategy for holding onto winning trades while sustaining a calm focus, recreating the calm focus during the next winning trade will make it easier to summon the self-talk and behavior associated with holding the position. 6. Perform a mental checklist before trading. Eliminating perfectionistic expectations at the start of the trading day can go a long way toward reducing performance pressures. Any time the word “should” enters one’s thinking about trading, it’s time to step back. “Shoulds” include internal demands to make a certain amount of money, to trade with a particular frequency, to make back money that has been lost, to not leave money on the table, etc. Because performance anxiety is often fueled by excessive self-demands, setting and affirming reasonable trading goals through the trading day can go a long way toward



reducing performance pressures. 7. Get a life. When something becomes all-important, the pressures that accompany performance increase exponentially. Traders who trade for a living and who have little else going on in their lives are especially vulnerable to performance anxiety. If trading is your whole world and trading isn’t working, it’s going to feel like your world is collapsing. By placing one’s self-esteem eggs in many baskets, traders can ensure that the inevitable drawdowns and cold periods will not disrupt their self-confidence. I cannot emphasize strongly enough: Most traders who are convinced that they have deeply-rooted psychological problems or addictive trading patterns are actually caught in a vicious cycle of perfectionistic self-demands, increasing performance pressure, mounting anxiety, disrupted performance, and renewed self-demands to compensate for the failure. After a while, traders caught in such a cycle begin to doubt whether they will ever succeed. By addressing their problems at the source—the expectations that generate performance pressure—traders can often turn themselves around in a surprisingly short period of time.


Re: Teach A Man To Fish And......... There are some nice ones from Brett Steenbarger..........if you haven't read the below,do so.Another piece of trading wisdom......... Saint

The Most Dangerous Word in the Trader's Vocabulary I'm convinced the most dangerous word in the trader's vocabulary is "should". Should can turn a winning day into a psychological loser, when a trader focuses on that move he or she should have traded. Should can make us miserable when we don't live up to our personal or financial expectations. Sometimes we focus so much on how we should trade or on how others tell us we should trade that we drift away from our own talents and interests. But those sabotages are nothing compared to getting locked into views of how the market should be trading: * The dollar is plunging, so we should get inflation and the market should drop! * The market is in an uptrend, so we should rally today! * We're in a growing deficit as a country; we're mired in Iraq; oil prices are skyrocketing, so we should have a bear market! I can tell you this: I became a better trader when I started focusing on what the majority of stocks were doing rather than on what I thought the market should do.



On Monday, I thought we should get a higher market on Tuesday. When I saw that fewer stocks were making new highs in the morning even as the ES was moving to new price highs, however, I dropped the should and sold the open. And, yes, I--like so many participants in the financial markets--lament the high debt, weak dollar, and rising commodity prices. But we have recovered from a steep decline, dollar flows into stocks are above average, and--as of Monday--well over 2000 stocks had made fresh 20-day highs. No matter how much I think the market should go down, it's not what the market data have been telling us. "Should" puts my judgment ahead of the market's objective reality. And that's why it's the most dangerous word in the trader's vocabulary.

Saint 31st May 2007 08:02 PM


Quote:

Originally Posted by gupta.deep (Post 93116) Hi Saint,

I am posting my first chart analysis here. I would be greatful if you and other learned

members may have a look and let me know if I am on the right path.

I have copied the daily and weekly charts of Reliance from icharts and drawn some

trend lines. I have marked my observations along the charts to make them easy to read.

Basically, what my observations are that both daily and weekly are in uptrend, but

daily has just started going up from a pull back while weekly is near its uptrend

resistance line.

What does it all mean, can we go long in short term based on daily? To go long in

Intermediate term, should we wait for weekly to pull back or we can do so now since

daily is just recovering from pullback.

Little bit confused, I am.:confused:

Would appreciate if any of you can take some time out for me. Do it at your own

leisure, though.

SKG

Hi SKG,



Let us just analyse these charts a bit....... Weekly Charts:Reliance Inds is in an uptrend,short term ,intermediate and primary uptrend.Higher pivot highs and lows.But take a look at the gradient of the trendlines......reminds of the Bump and Run reversal soon.Therefore if you are planning an entry into RelInds for the long term or the medium term,now definitely is NOT the time.Why not?This latest trendline(the steep one) will not hold,this run-up may get steeper from here,but will not last a few weeks.Now with that info in hand,one does not get in if the long and medium term is the target.Instead,one allows the pullback to happen(a pullback that will hurt a lot of people) and enter when fear is maximum.If that pullback never takes place(sincerely doubt that!),then wait for a long sideways consolidation pattern before seeking an entry for the longer term. Yes,there are negative divergences on the TRIX and possibly many other indicators........but following divergences blindly,and we might have lost this present run-up from 1300 to 1700. Daily Charts:We are presently in a short term uptrend in RelInds....this move up may not last,but if you are a person who plays the 60min or daily charts,there is money to be made.

Summary : 1)Weekly uptrend and Daily is in a downtrend,buy on confirmation of the daily getting into an uptrend. 2)Weekly uptrend and the Daily in pullback territory to the trendline,you could buy the dips .....but beware of the gradient getting steeper.Once that happens,think short term. [There is a difference between a stock making lower highs and lows .......a pullback to the trendline(as in your example) and a stock making lower pivot highs and lows on the daily but weekly still in an uptrend.]



All the best! Saint


Re: Teach A Man To Fish And......... More on Steenbarger and why traders knowing fully well the importance of discipline in trading tend to lose it............... All the best! Saint

Why traders lose their discipline By Brett Steenbarger When traders lose money, they often attribute the problem to a lapse of discipline. Such a lack of consistency, however, is actually the result of many different problems--not the cause. Traders lose discipline with trading for the same reasons that dieters lose discipline with dieting or people getting in shape lose discipline with exercise. Quite simply, our moods, needs, and mind states of the moment tend to overwhelm our longer-range intentions. We pursue short-term pleasures (and avoid short-term discomfort) at the expense of longer-term rewards. Here are some common reasons why traders (and most other human beings!) fall short of being fully intentional:



Environmental distractions and boredom cause a lack of focus - All of us have limits to our attention span and these are easily taxed during quiet times in the market; Fatigue and mental overload create a loss of concentration - The demands of watching the screen hour after hour make it difficult to be sharp, creating fatigue effects that are well-known to pilots, car drivers, and soldiers; Overconfidence follows a string of successes - It is common for traders to attribute success to skill and failure to situational, external factors. As a result, a string of even random wins can lead traders to become overconfident and veer from trading plans--especially by trading too frequently and/or trading excessive size; Unwillingness to accept losses - This leads traders to alter their trade plans after trades have gone into the red, turning what were meant to be short-term trades into longer-term holds and transforming trades with small size into large trades by adding to losers;

Loss of confidence in one's trading plan/strategy because it has not been adequately

tested and battle-tested - It is difficult to tolerate even normal drawdowns unless you have confidence in your methods. This confidence does not come from mere positive self-talk. Rather, it is a function of testing your methods (historically and in real-time) and seeing in your own experience that they truly work;

Personality traits that lead to impulsivity and low frustration tolerance in stressful

situations - Psychological research suggests that some individuals are more impulsive than others and less conscientious about adhering to plans and intentions. These personality traits often are accompanied by stimulation-seeking and a high degree of risk tolerance: a deadly combination. Situational performance pressures - These include trading slumps and increased personal expenses that change how traders trade and lead them to place P/L ahead of making good trades. By worrying too much about how much money they make, traders can no longer follow markets with a clear head; Trading positions that are excessive for the account size - This is much more common than is usually acknowledged. It creates exaggerated P/L swings and emotional reactions that interfere with cool, calm planned behavior; Not having a clearly defined trading plan/strategy in the first place - Interestingly, many traders do not consider themselves to be discretionary traders, but in fact do not have a firm, explicit set of trading rules that they follow. It is difficult to be consistent with a plan (and to evaluate your consistency), if you don't have the plan clearly laid out; Trading a time frame, style, or market that does not match your talents, skills, risk tolerance, and personality - All too often, traders veer from their plans because those plans are ones that they feel they *should* follow, but that don't truly come naturally to them. These departures from discipline are actually unconscious attempts to trade in a style that is more in tune with the trader's skills and talents. As you can see, not all discipline problems have their origins in the trader's psychology.



Many times, the loss of discipline reflects problems with trading itself. Discipline in trading is not so different from "discipline" in a romantic relationship: if you're doing the right things, there's little need or desire to stray. But if your trading is not meeting your needs, it's all to easy to break your trading vows.



What’s So Hard About Simplicity? I often marvel at unnecessary complication. Invariably new traders look for the secrets to success as though they are looking for something that is rare and difficult to find. They believe that by adding additional rules and filters to their trading systems they will improve those systems. Or perhaps a new multi-dimensional quantum oscillator will be much better than the moving average they had been using. The truth is that life’s hardest questions often have simple answers, but we don’t want to believe those simple answers. You will find this theme several places in my book, Way of the Turtle, because it was one of the reasons for the great disparity in results between the various Turtles. The unsuccessful Turtles could not embrace the simplicity of the rules required to make money as a trend follower. In the chapter “Mastering Your Demons”, I wrote: The success of the Turtle experiment has proven that Richard had a set of teachable principles that if followed consistently would result in profitable trading. The funny thing is that most of the principles that Richard Dennis taught us were not new. Some were basic principles that had been espoused by other famous traders since before Richard was born. Yet the very simplicity of the principles we were taught in some respects was a hindrance for those of us who tried to follow them in those initial months. People have a tendency to believe that complicated ideas are better than simple ones. Many find it hard to comprehend that Richard Dennis could have made several hundred million dollars by using a handful of simple rules. It is natural to think that he must have had some secret. Many of the Turtles fought that demon during our first few months of trading. Some of us thought that trading successfully couldn’t possibly be that simple; that there must be something else to it. This type of thinking obstructed some of the Turtles’ trading so much that they never were able to follow the straightforward rules Richard had outlined. My theory is that that belief and the need for complication come from insecurity and the resulting need to find some reason to feel special in some way. Having secret knowledge makes us feel special; possessing simple truths does not. Therefore, our egos drive us to believe that we possess some kind of special knowledge to prove to ourselves that we are somehow superior to others. Our egos don’t want us to limit ourselves to commonly



known truths. The ego wants secrets. One of the major benefits of getting older is that many of us find that we have less and less to prove. We become comfortable in our own skin and stop seeking to try to be someone that we are not. This in turn makes it easier to embrace simplicity. My advice for those who aspire to be great traders: “Seek simplicty!” Happy Trading! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Right,let's get back to learning and sharing............As said before,this thread was always for those who are new and to those who are relatively new.......the very fact that there are some who find this helpful for their first steps means that this thread will continue. This thread has always been a service to the newcomer by a person who was once upon a time a newcomer as well. Let us just look at a chart of NIFTY DAILY and WEEKLY.(Attached) We have a downtrend from February coming into March.As we all know,a downtrend is nothing but lower pivot highs and lows.We then get a mini-rally in the first 2 weeks of March.Is this the time to BUY?BUY here and you are doing nothing but anticipating a move,predicting something and then hoping.......We are traders,we trade the uptrend,and we trade the downtrend.We therefore need to know when that downtrend is no more and we are sitting in an uptrend. So,we do nothing in the first fortnight of March but wait........here again,we are talking of position trading......we wait,and wait for that opportune moment to strike as a tiger would ,waiting and watching his prey-to-be.As expected,a further decline from there,but it does not make new lows.Hmmmm........what's this all about?Are we going to buy now?Well,no again......then,a nice rally taking out previous pivot highs.Surely,this must be the time to go long,better now or never,better long here than miss the whole move?Time to buy?Nope,not yet!But why,we have higher pivot lows and highs.....it's a screaming uptrend.Why wouldn't we go long here? Take a look at the weekly charts now........we have a 5 bar decline and then a big bar up.As far as the weekly charts are concerned,one bar up means we have a rally in a dntrend.Means,the daily charts may look like it's ready to fly,but the weekly charts say "not yet!".So we do what most of us hate doing......we wait!



And then comes yet another decline............hmmmm,yet again,it does not make new lows,and instead we have a rally into the close of that week.Now,look at the weekly......We now have something like a bottoming tail,and a probable higher pivot low.Now,we get that feel that our day is coming.......the high on that weekly bar is 3820.If this is taken out,most likely,we have a higher pivot low on the weekly and a possible new uptrend on the weekly charts.Possible,because we get to say that for sure once the previous pivot high of 3902 is taken out.......and that it does,by the end of that week.Over 3902 would be the place to add. Where there is conflict between the daily and the weekly charts,.........wait!It's sometimes painful to wait and wait ,while our trader friends shout from roof tops.........but as position traders,our opportune moment is when the weekly and the daily is in line and is ready to fly.That point when they both scream that this is no more a downtrend,and a new uptrend has started,that is the point where we pounce,that is the point of entry.........we then hold,and again,wait for Sell Mode to kick in. Till date,we are in an uptrend.........We have had swing downs and ups,but as a longer term player,we do nothing but hold till a pivot low on the weekly is taken out.So far that has yet too happen..........we are therefore LONG till the time comes to go SHORT.

Happy Trading! All the best! Saint





LV, Various ways of getting out of something,finally right and wrong and what is best is as per your comfort levels.You could use an indicator for an entry and an exit.........maybe a combination of indicators all woven into a system........well,there also is the good ol' way,the very boring simple way,using only price and pivots to dictate an entry and an exit. As you go along,you will,I am sure,find whatever suits your comfort levels......but for now,let us just have a look at things the simple way. We once again have the NIFTY,we once again have the daily and weekly charts.Have a look at the attached chart below. That green arrow is our Entry Point........why there?Once again,we have a downtrend on the weekly charts ,remaining so till June 2006.Then we have a rally,and then a decline.....but instead of the decline taking price to new lows,what do we have here?We have a bearish bar on the weekly charts immediately negated by a Bullish bar............now that's a show of force,a sign of strength,and therefore our point of Entry.We enter therefore above 3168. Now have a look at the daily chart.......What do we have here?We have a higher pivot low,then to new highs,and then an even higher pivot low,and then a newer pivot high......so on so forth.We have 10 pivots of higher pivot lows and highs.Which means,once a newer high is made,we bring up our stops to the previous pivot low,and this we do again and again till we are stopped.Do we have a target?No.........We let the trends and price dictate terms instead of our mind.We merely keep raising stops till we are out.We remove ourselves from the decision making and let the pivots do it for us. Now have a look at pivot low 10.........instead of making a new high,price now reverses and breaks below the pivot low 10 at 3911.......That is our Exit point,clear and simple.We do not hope,we do not panic,we remove ourselves from this fiasco of fear and greed.We bought when there was fear and disbelief in the markets.We sold when greed had reached a peak,and disbelief that a fall could happen reigned supreme........Our job as traders :We Buy Fear,and Sell Greed.We did not catch the very bottom,nor did we catch the absolute top,but we plucked the meat out of the move,......and we are happy with it,as we look to the next trade,to do it all over again!



Happy Trading! All the best! Saint



Quote:

Originally Posted by lvgandhi (Post 101126) Thanks for the explanation even after midnight. However I have one more question. On

11th dec 2006, previous pivot low was broken. Either here we sell all on 12 th dec. or

put SL on 11th. To put a stop loss we have to have a trigger point and stoploss point if

we are not monitoring continuously. But some times after triggering, price goes so fast

down, it crosses sl. Hence SL order is not executed. Is there any way to decide trigger

to get stop loss executed?

Hi LV, We have that last pivot low(no 10) on the 28th Nov 2006.....once it breaks to new highs,raise the stop loss to 3911 which is the pivot low made on the 28th Nov......and then we have the move down on the 11th Dec.Our stop is at 3911,that bar down takes you out



of the trade.In short,you are out on the 11th Dec.Do not wait for the low and wait for the next day,etc... The reason that you are in this trade is no more there........your higher pivot lows and highs just got cracked.You are out on 3911. There are times when the market would take out 3911,and dump to 3860 and then close above 3960..........got faked out of the trade.But better to take the stop there and then,and get out!If faked out,look to reenter,but DO NOT Hold it past 3911 and look to see how the bar closes. You are therefore basically out on the 11th Dec at 3911. All the best! Saint

lvgandhi 13th July 2007 02:26 AM


Quote:

Originally Posted by Saint (Post 101131) Hi LV,

We have that last pivot low(no 10) on the 28th Nov 2006.....once it breaks to new

highs,raise the stop loss to 3911 which is the pivot low made on the 28th Nov......and

then we have the move down on the 11th Dec.Our stop is at 3911,that bar down takes

you out of the trade.In short,you are out on the 11th Dec.Do not wait for the low and

wait for the next day,etc...

The reason that you are in this trade is no more there........your higher pivot lows and

highs just got cracked.You are out on 3911.

There are times when the market would take out 3911,and dump to 3860 and then close

above 3960..........got faked out of the trade.But better to take the stop there and

then,and get out!If faked out,look to reenter,but DO NOT Hold it past 3911 and look to

see how the bar closes.

You are therefore basically out on the 11th Dec at 3911.

All the best!

Saint

Sorry for the trouble.I think it is narrowing down. Now to put a Sl of 3911, we have to have a trigger price if we are not monitoring continuosly. During these heavy falls, say if I put trigger point as 3920 and stop loss as 3911, the time order reaches exchange, already



many orders are there at that price and buyers are not there that much or order reaches after 3911 is reached, order at 3911 is not executed. This I have seen during heavy fall or opening itself with big gap down. Is there any way to calculate and fix triggger based on SL.

lvgandhi 13th July 2007 08:29 AM


Quote:

Originally Posted by SimpleStuff (Post 101147) Hello LV

I am just giving my views, not trying to answer for saint.

From what I have understood the trigger itself would be 3911, the price at which the

sell stop order will be executed will naturally be lower than 3911, maybe 3910 or

maybe even around 3900.

Now if there is a gapdown and we find ourself at 3850, what do we do? We get out at

first chance, whatever the price once below 3911. We do not anticipate, we just react

and accept that the new higher piovt will not be made.

There are other implementation issues you should consider here, like the discount or

premium on spot prices. Roll over of NF contract (maybe 5 time, as position in above

case is hold for about 4 months), etc.

In this kind of positional trade having to give back 20-30 extra points has to be

accepted as part of the game.

If i have confused the issue, i am sure, Saint will clear it up for both of us

Best Wishes

Simple

Dear Simple Thanks for the answer. I understand regarding gap down. But regarding sl trigger 3911 and sl 3911, I fail to understand. When price goes dn, trigger say 3911, the sl also 3911, chances are near zero as market goes dn sale order remains at 3911, price goes dn than that.

ratan jain 13th July 2007 10:34 AM




Stick With The Plan This may seem like a common sense statement, but the reality of market timing is that the majority of timers "think" they can stick to a timing strategy, however when the market moves against them, as it always does as some point, they are swayed by financial news stories, the desire to be "with" the crowd, and their own emotions, often exiting the strategy at exactly the wrong time. Think about it. Let's use a fictional market timer named Mark for this example. Mark has a strategy he knows has, over many years, outperformed the stock market. Mark knows going in there will be times when the strategy will lose. He sees this in the historical trades. He accepts this or at least he thinks he does. But then, the market turns against Mark's first buy or sell signal and he is down 2%, then 4%. Mark is counting the dollars. He wakes up during the night with feelings of dread. Maybe "this" time it is different. The next day, Mark exits the strategy and immediately feels better. He starts searching the internet for a better timing service. They are easy to find. We have personally seen some that "guarantee" 800% and 1000% returns. Much better than that 4% loss. Of course the day after Mark exits the strategy, the market reverses and within a few more days, the strategy is now back in positive territory. Mark cannot enter, because he has lost 4% and knows it is not wise to enter mid-trade. Mark is now feeling upset again. The initial feelings of relief when he exited the trade are gone. Mark is starting to feel he is missing out all over again. After watching the market continue to advance, Mark finally makes a decision and re-enters the position after it has a nice 10% gain. Mark is feeling good again as the market has obviously turned and he is back on board. Immediately the market takes back 4-5% of those gains and Mark now has a loss, that never should have occurred, of 8% to 9%. Those who stayed with the strategy from the initial buy or sell signal are in positive territory and have a nice gain. Mark, however, exits again, with double his original loss, and quits market timing for good. None of this need happen. When you start following a strategy, plan to stick with it for several years. That is how the smart money makes profits. They do not let emotions rule their marketing decisions. They stick with the plan! The Trend Is Your Friend - Trade With The Trend Personally, all of my strategies are based on trend trading. I know that the financial markets are usually in a trend, either up or down. So i enter the markets "after" I've identified a trend.



It is great to catch a reversal. It is also very difficult. Let me rephrase that.... it is almost impossible. I read stories of those who have perfectly caught a reversal, but they are news stories "because" it is so uncommon. It is much easier to wait for a trend to begin, and then jump on board. If the trend fails, and some do, a well managed timing strategy will exit to cash, or reverse position, with only a small loss (or even a small gain). When the trend keeps going, that same well managed timing strategy rides the trend as far as the trend goes. This is where the power of trend trading is seen. By never missing a trend, and staying with the trend, trend following market timers make huge profits over time. gFT UK Finally, one of the most dangerous trading methods is to take a contrary position and pray for a reversal. Such trades rarely work out. But many, many traders try them. And... many, many traders lose a lot of money. Let Your Profits Run - Cut Your Losses Short The second part of this rule (cut your losses short) is the toughest one. It involves admitting that you were wrong. But in market timing, as in "all" trading, it is a rare moment indeed where you will eventually be proven right after first being proven wrong. All strategies should be designed with strict risk management right from the start. NEVER let losses grow. If your strategy gives a buy or sell signal, and the indicators then go into reverse: reverse your position (or go to cash) immediately. If you look at our various strategy trade histories you will see that we rarely take a loss of more than a few percent. Never be afraid to change from a bull to a bear, or vice versa. There is a reason for this. It is easy to make back a small loss. But large losses are not only hard to make up, but the psychological pain you experience from them could cause you to quite the strategy. And quitting with a loss not only guarantees that you will lock in the loss, but it is likely to have a detrimental effect on your buy and sell decisions for a long time. The opposite of course is "letting your profits run." I never set a profit target. As far as I'm concerned, when we have a profitable trend going, the sky is the limit. We will stay with that trend as long as it is profitable. 20%, 50% 100%. We "never" limit profits. This is why small losses do not concern us. We know that when we have our next profitable trend, we will ride it to the end. Never Make Timing Decisions Based On Tips A tip is rarely more than opinion, and frequently a bad one at that. Even if the tip comes from a friend, don't take it. If you have a hard time with this, go back to "The Trend Is Your Friend." Burn this into your head! Unfortunately, in market timing, a "friend" is not always a



friend. Remember this: - There is "always" a reason to doubt a trade. There is always someone who knows, absolutely, that the trade is wrong. In fact, they are often willing to go into great detail why you are making a bad trade. Why would they do this? Simple, it is to prove to themselves that their trade is the more correct one. Again, this is all emotions. And allowing emotions to have any say in your market timing (or any trading) decisions, guarantees that you you will have even more emotions to deal with. The emotions caused by losses. Stick to the trading plan. Trade with the trend, cut your losses short and let your profits ride, and never, but never, listen to others. Successfully following and profiting from a trading strategy can be accomplished only by you, and you alone. Hope I didnt anger Saint by posting here :)


Re: Teach A Man To Fish And......... Another interesting read from Linda Raschke..... https://lbrgroup.com/images///raschke0204.pdf Saint


Re: Teach A Man To Fish And......... .....and more from Linda Raschke.... https://www.lbrgroup.com/images/Omega.pdf Saint

Traderji 16th July 2007 07:12 AM

Re: Teach A Man To Fish And......... As a trader it is always important to remember that trading in the markets is an odds game, it does not matter if you use complex algorithms, chaos theory or basic technical analysis - the object is always keep the odds in your favor.



So the next question is how does one get that edge to be a profitable trader? It is a simple three step process:

• The first is finding a trading method/system that actually has a statistical edge.

• Second is following it with consistency.

• Third is consistently following the method long enough for the edge to manifest itself on the bottom line.


Re: Teach A Man To Fish And......... An old-ish post from Traderji........

Quote:

Originally Posted by Traderji (Post 421) The key components of a successful trading plan are an edge, discipline, risk control,

and money management.

Controlling your risk

Successful speculation is all about managing risk. A winning trader always knows how

much they will lose, but rarely know how much they will make. The key is to never let a

single trade or single event (that may impact on multiple positions) have a major

negative impact on the trading account.

"Never, ever, trade without a stop-loss order. If you don't know what a stop-loss is,

you should not be trading."

Money management

A basic investment tenet states there is a direct relationship between risk and return.

Trading is no different - the greater the account value risked on a single trade idea, the

more volatile the total returns from the trading strategy will be.

A simple strategy is to never risk more than 2% of your trading account on a trade.

Most professional money managers will risk a fraction of 1% on a single trade.

"There are many bold traders, but there are very few old, bold traders".

The Difference between the professionals and the novices.



The "Professionals" fit the following profile:

they trade completely objectively using mathematical models to arrive at trading

decisions, there is no emotion involved;

their ideas are well researched to ensure their strategy has a definable edge;

they follow trends in prices, by controlling their risk and allowing profits to

accumulate;

they realise the market is not predictable, so employ techniques that will profit by

recognising trends, rather than anticipating them.

The "novices" fit the following profile:

their trade strategies are usually based on esoteric analytical techniques that are

highly subjective, making it difficult (if not impossible) to determine the provision of an

edge;

they have a pre-occupation with forecasting prices or dates on which trends in the

markets will reverse (ie a belief that the markets are predictable);

by design, their subjective strategies make a disciplined trading approach difficult as it

is too easy to "bend the rules";

they pay little attention to risk control and money management.

One final quote:

"Winners hold their winning trades, losers hold their losing trades"

All the best! Saint


Re: Teach A Man To Fish And......... Now before there is a melee here about the importance of the EDGE over MM and stop losses,..........totally agreed!And yet,these are important..... Another great post from Traderji......

Quote:



Originally Posted by Traderji (Post 18232) In order to be a successful full time trader, you must understand the true realities of the

markets. You must learn how the professionals make money and what is possible. Most

traders enter the markets, lose a substantial portion of their capital and then leave

trading without ever having a correct perception of what good trading is all about.

If you think that the way to make money is to learn how to predict where market prices

are going next then you are mistaken. Though is may be difficult to believe and

understand, the truth is that the markets are not predictable except in the most general

way.

How do professionals make money? As a professional I believe that the trend is your edge. If you follow trends with proper

risk management methods and good market selection, you will make money in the long

run. Good market selection refers to trading in good trending markets generally rather

than selecting a particular situation likely to result in an immediate trend.

Hurdles that you have to overcome in order to be successful! To be successful in trading you have to overcome these three hurdles:

The first is finding a trading method that actually has a statistical edge.

Second is following it with consistency.

Third is consistently following the method long enough for the edge to manifest itself on

the bottom line.

If you can conquer these hurdles you are on the way to untold riches.

All the best! Saint

Saint 3rd August 2007 01:07 AM

Re: Teach A Man To Fish And......... For a revision of sorts about Candlestick Charting........ They are not absolute.......but they can prove to be some sort of a guide.Will be a helpful add in the beginning..... Just go here... http://stockcharts.com/school/doku.p...o_candlesticks Saint



Saint 3rd August 2007 02:11 AM


Quote:

KICKER SIGNAL ( Keri Ashi ) --from the Candlesticks Forum---

Description The Kicker signal is the most powerful signal of all. It works equally well in both directions. Its relevance is magnified when occurring in the overbought or oversold area. It is formed by two candles. The first candle opens and moves in the direction of the current trend. The second candle opens at the same open of the previous day, a gap open, and heads in the opposite direction of the previous day’s candle. The bodies of the candles are opposite colors. This formation is indicative of a dramatic change in investor sentiment. The candlesticks visually depict the magnitude of the change.

Criteria --The first day’s open and the second day’s open are the same. The price movement is in opposite directions from the opening price. --The trend has no relevance in a Kicker situation. --The signal is usually formed by surprise news before or after market hours. --The price never retraces into the previous day's trading range.

Signal Enhancements The longer the candles, the more dramatic the price reversal. Opening from yesterday’s close to yesterday’s open already is a gap. However, gapping away from the previous day’s open further enhances the reversal.

Pattern Psychology The Kicker signal demonstrates a dramatic change in the investor sentiment. Something has occurred to violently change the direction of the price. Usually a surprise news item



is the cause of this type of move. The signal illustrates such a change in the current direction that the new direction will persist with strength for a good while. There is one caveat to this signal. If the next day prices gap back the other way, liquidate the trade immediately. This does not happen very often, but when it does, get out immediately.

Now have a look at the Sensex the two days (Tuesday and Wednesday).......these are powerful patterns.Whether you took part in the move,or sufferred from it,either way commit it to memory .......and take advantage of it the next time it happens. And as powerful as the Bearish Kicker is the Bullish kicker....

All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) The Sensex charts with the Kicker Signal! How to trade it? Basically a neat pattern to trade and if it works,probably to get out that same day,or at least most of your position. Simple logic......basically,we got a bullish bar the previous day.Everyone is looking to new highs,but here comes the shocker of a gap the following day back to the previous day's open.Shock turns to disbelief and then panic.........and as the bearish bar forms,the trader shorts and makes profits. From a trader perspective,short the low of the first 5min bar with a stop at the high of that bar.......and you could add to your positions once the previous day's low was taken out as well........And then trail stop downwards as per your strategy. From a swing perspective,would this lead to a further fall in coming days?Depends,maybe,probably.......but take off two thirds or three fourths at least on that



bearish day,and then bring stop down on the remaining to the high of that bearish bar. All the best!

Saint



Quote:

Originally Posted by par2232 (Post 110948) good work SAINT,Expecting some fishing strategies for short term investing. What

about Balrampur Chini? it's formed a piercing line on weekly chart.

Hi Par, Thank you for your kind words..... A word of advice from my end:Look for stocks that are already in a weekly uptrend(making higher pivot lows and highs),and then try to angle in on a daily pullback ......don't look for stocks that are in a downtrend on the weekly and monthly charts,and then get all excited abt a tiny move on the daily.Try to get the weekly and monthly charts



behind you......and then hold on for a big move. There are bullish divergences forming on Balrampur Chini on the weekly charts on the MACD........but let's not anticipate bottoms and get bruised and battered in the process.Our job is to make as much as possible in minimum time,not in getting the absolute bottom and then sitting around at the same oh-so-boring-yawn levels........We do not want to be applauded as being the first buyer in Balrampur Chini.We would like to be the most profitable one..........we want to be there when the momentum is there,we want the big move,and we want to hold on to the coat tails of the big movers.We are in it for the meat of the move,that's it. So,even if it's a short term trade,try to get the weekly and monthly behind you............ All the best! Saint

Saint 10th October 2007 02:11 AM


Quote:

Inverted Head and Shoulders Pattern The head and shoulders pattern can sometimes be inverted. The inverted head and shoulders is typically seen in downtrends. (What's noteworthy about the inverted head and shoulders is the volume aspect. The inverted left shoulder should be accompanied by an increase in volume. The inverted head should be made on lighter volume. The rally from the head however, should show greater volume than the rally from the left shoulder. Ultimately, the inverted right shoulder should register the lightest volume of all. When the market then rallies through the neckline, a big increase in volume should be seen.)

NoBoundaries, Not classical,but will do.......stop loss would be below 305,tgt would be around 400(using what's given in the books),or trail stop using whatever methodology you follow till out. Saint


Re: Teach A Man To Fish And......... Hope each and everyone has a definite trading plan written down.As the famous saying goes,"Plan your trades,and trade your plan."



"Fail to plan and you plan to fail." A trading plan template from Tim Wilcox below....... http://www.trade2win.com/media/knowl...plate_2005.pdf Forget about trading if you have no plan............most important,......although gut feel tells me that the majority would never even bother going to the link above. Hmmm,why again is it that the majority fail at the markets......Coz they fail to plan,and therefore plan to fail!!

Saint



Quote:



Originally Posted by munde_77 (Post 121146) U r really great and doing great service here..........

I need coaching and trainining for day trading............where can I get. How can I

improve my skill for day trading.........

Thanks Munde for the kind words........... Can only speak for myself,basically learnt everything from books,and what I didn't get from books,I got it from getting kicks in the market. In trading,there is a big catch-22.........most teachers make their money from teaching.Most traders make their money from trading,and they are just too busy to teach anyone anything.There are some who are great traders but who want to give back something to the trading world......but very rare.And even those very few rather write a book and then get back into doing what they do best. So a bit of a problem there........careful of the many who tell you that they are big authorities.......Remember they'd rather teach trading coz they just cannot make that income from trading.So learning from these guys is sort of an irony.Their knowledge is bookish,academic,these guys have no idea what trading entails(another clue,if you meet a guy who claims to know everything abt trading,shun him.He's full of crap.Markets usually teach these types a cruel lesson).........if these guys are orally diarrhoeating on you facts that they learnt up yesterday night,you might as well pick them up yourself from that very same book! But if you do come across that super trader who is also a great teacher,and willing to teach,do keep me informed.:) All the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) We have a higher pivot low,we wait for a higher pivot high.....we assess if we are in an uptrend.We have an uptrend on the 5min,and a limp rally within a dntrend on the 60min........we stay out(unless you are adept at a quick sniper attack in and out).Or if everything is in line,we jump in.Therefore,it's our Plan not to anticipate a move,we wait for signs to tell us that we are in an uptrend.It's our Plan to also look at other time frames and see if they are all in line for an entry. We could be wrong..........but if all our various criteria all line up for a full systems-



go,then we are in that trade.It is imperative to follow our Plan to the hilt.There is no such thing as "But I don't feel it'll move up"or " I think the govt is gonna do this or that",or "All my criteria says Short,but Udayan M. says that it's not the rt time to short." Point being,we have our plan of attack,but it is important that when we are given our green signal,we execute it each and every time.....not sometimes,not most of the times,but each and every time.If our criteria or reasons to get in the trade are all in line,we get in.We have our stops.We do not mind getting stopped out.We are ever ready to flip ,accept our mistake and go the reverse direction. Importantly,however discretionary our trading style may be,we have to mechanical-ise(not necessarily mechanise) our trading........... fixed entry ,exit,stops, position sizes,adds,where 2 take profits,etc.Where we would stay out,where you jump in frothing at your lips.......And one of the very important things to do is to take that entry signal each and every time..........sometimes at the risk of getting stopped out.Then there are no conflicting thoughts,no dilemmas,no decisions to be made.Trading then becomes associated with fun,and ceases to be a chore. Therefore,for the beginner,first the Trading Plan....

All the best! Saint





1 Attachment(s)

Quote:

Originally Posted by newbee (Post 123618) Hello

A gap up opening, and then 3 breakouts on upside for 3 rallies. To add drama, 3 false breaks on

down side, but negated on very next candle, should not wait for SL in these cases (Marked by

circle).

Blue vertical line is long, red short. Not the actual trades, marked after the event.

Thanks

nb

Well done..... Just something from my end...



All the best! Saint

Saint 2nd November 2007 11:09 PM


Quote:

Originally Posted by newbee (Post 124058) Hello Saint

I will be completing 3 weeks of paper trading tomorrow. Maybe it’s too early, but i

have planned to review the trading experience by analyzing all the trades taken. Would

be around 75+ signals

I am also planning to update my Trading Plan, based on this review. I would have

many queries, but I need to ask you 2 now.

Hope you get some time this weekend to answer them.

Think I should reduce the number of trades; the obvious solution would be to change

the timeframe setting of the chart from 1 minute to 2/3/5 minutes. I am reluctant to do



so as I have developed a comfort level with taking entries on these current settings, it’s

the exits I am having issues with.

The solution I can try out is stay with the 1 minute (or 2 minutes) for entries but use 5

min candles for defining exit. May be the whole idea is too stupid and you could save

my 2 weeks by pointing it out. I plan to implement whatever fine tuning I can think of

and continue the mock trading / forward testing for 2 more weeks.

Time frame discipline is vital in trading.......If you play the 60min charts,your stops are as per the 60min charts.You could look at the daily thereby making a clear assessment of the ongoing trend......but the trade is off the 60min charts.You could however fine tune your entry as per the 15min charts,etc. I presume from the above paragraph that you basically like to trade the 5min charts,fine tuning your entry as per the 2min charts.No problem,go ahead........but do not,DO NOT,switch your time frames if you are losing.Meaning your entry is at 5820,your stop is at 5800......don't let price blow right past 5800,pull out the 15min or the 60min and comfort yourself.So be very clear abt the time frame of that particular trade......So too,you have wisely raised stop losses to the previous pivot low and adhered to your discipline.Now that trade is up nearly 70pts......and then cracks that pivot.Don't go pulling out your long term intradays and then say that I will sit through this pullback for huger gains.Follow the plan.Get out as planned.Reenter if need to.....Don't worry abt your broker friend making a tiny bit more.Important to ALWAYS follow the PLAN. The beauty in having a plan and following it to the tee is that the mind plays no role ..........it is not given the opportunity to panic,to get upset etc All the best! Saint

Saint 2nd November 2007 11:27 PM


Quote:

My second query is regarding the way we define swing highs and lows Suppose we are having a nice uptrend with Pivot Highs and Pivots Lows showing a nice uptrend, at some point after a Higher High is established we get a Lower Low, which is very deep and cuts below the previous 2/3 Higher Lows. The SL would be executed and we will be out of the trade, my question is should we not reverse on this kind of move? What I am trying to understand is should we also be looking at the amplitude / range of



the swing (pivot points) rather than only the relationship in terms of greater than or less than. Sorry for the poor language, I know by now my query has itself become a query :) Will try to illustrate it

Code:

HH

|

| |

HH | |

HH | | |

| | | | |

| | | | |

| | | HL |

HH | | | | | | | __________________|____Stopped Out

HH | | | HL | LH | | | | |

| | | HL | | | Trend Sideways | | | | or Down?? | HL LL

Thanks nb

Hi Nb, As you are a 1-5min chart trader,yes,by all means do so.......Play the 5min uptrend.Pivots crack.Reverse short the dntrend.Out when pivots crack.Go long the uptrend again.So on so forth.Adhere to your stops.....Some days,fake outs are gonna mess with your head.But all part of the game.Get out by the end of the day even if all going to plan......... And yes,there are other things other than just pivot levels before making a clear cut decision...will be clear as you go along. Just for clarification........the stop in your diagram above would be the pivot low above where you drew the line.Breaking that,you are short the stock/index. All the best! Saint

Saint 3rd November 2007 12:14 AM




1 Attachment(s)

Quote:

Originally Posted by newbee (Post 124346) Hello SAINT

Thanks for the chart, have downloaded and archived it. A complete trading lesson in

itself.

Trying to understand the difference between the 2 Gap Ups,

1. The first one you have identified as Yummy, Look for Longs.

2. The second one you have identified as Amateur Look for Shorts.

You have mentioned the reason for the first gap up, being bullish is that it gaps

out/above a congetion area, so kinddof a powerful BO over strong resistance. Couldn't

get the reasoning for the classification of the second one, could it be because it comes

after a big white on daily, or previous days price action. I guess, this is also something

that comes with experiance.

We wouldn't call you Distinguished for Nothing, its just because you can make such

distinctions.

Its such a pleasure to go through your posts, always get those ahha movements, just

wish can get more of you here :)

Thanks a Ton

nb

Hi NB, Good query as always.........



Chart enclosed. Saint



Quote:

Originally Posted by rajaram.dilipkumar (Post 126405) so true , i made all my money through swing trading ( yes i do entar my trades based on

intra-day charts) but i never made an attempt to day-trade.

Probably iam good at this and i will continue doing what works for me rather than

wondering about the amount of money my neighbour is making through day-trades...

Yep,everyone has their individual likes and dislikes,their comfort zones.....play to your strengths always,as in everything in life.

Quote:

Also,about nerves taking over discipline ..... it has happened to me several times when i



was too fast to book my profits(even today) . This could have been a severe problem for me had i ventured in to day-trading but in trading swings i dont have that problem as trade opens gap-up or gap-down.Though iam beginning to overcome this lack of patience, it is still a major problem. Advice taken and thanks..... Regards, Rajaram

Wishing you great success,my friend......and all the best! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) More on Gaps....

Saint As always in Trading,nothing is absolute........so when things don't go as per plan,be



prepared to accept it,reverse and profit.

Saint 7th November 2007 02:04 AM

Re: Teach A Man To Fish And......... 1 Attachment(s) Chart with last few days of activity.......

Saint


Saint 1 Attachment(s) A few candlestick patterns...



Saint

Saint 21st November 2007 05:48 PM


Quote:

Originally Posted by sudoku1 (Post 129789) sorry for iteruption.....but i would advicce to wait before entering longs for the sensex to close abv

20025 ( read my posts...bulls ,reenter abv sensex close of 20025 ).....u may miss the opport to make

50-100 nifty points if sensex closes abv it ....but.....opports will come everday in ur life...but capital

once gone is hard to come by......

regards ;

sudoku1.:)

Quote:

friend ,who says one cant predit the mkts with just the help of TA.....?? GO THROUGH MY POST 'bulls reenter abv 20025 close'.....



Ah,well done,my friend....Haven't had the time to frequent the abovementioned thread though,but shall do as and when time permits. Strategy wise,if you were an intraday trader,well,then all those levels are not of any concern......one merely tries to follow the trends on a very short time frame. If you are a long term trader,well,then you would have been long from really long back......this is so far nothing but a blip in the huge uptrend. If you play the intermediate uptrend,and you picked off the top,well done,Sudoku......but am not too sure about waiting for it to close back above the levels before going long again.Well,if the strategy works for you,........then that's that,I guess. Predicting the market?Hmm.......great if you are able to do it.I basically do not believe markets can be predicted,therefore I follow trends......but since we are at predicting markets,do tell us where this correction will end.Yikes,one more doubt.......If you could predict where this fall would end,then why would you wait for 20025 to get back long?(Asked out of boyish curiosity and a willingness to learn,plz do not take it any other way.) All the best! Saint



The biggest mistake I made was having a specific target of what I wanted out of the trade. I

think there are a lot of people in this business who just enjoy watching others lose money. I

don't believe anyone ever gets wiped out in the market because of bad luck; there is always

some other reason for it. Either you were off when you did the trade, or you didn't have the

experience. There is always a mistake involved. I have found that the greatest traders are the

ones who are most afraid of the markets. Don't get too complacent once you have made profits.

The toughest thing in the world is holding on to profits. You have to learn how to lose; it is

more important than learning how to win. Limit losses quickly. Most traders hold on to their

losses too long because they hope the loss will not get larger. They take profits too soon,

because they fear the profit will diminish. Instead, traders should fear a larger loss and hope

for a larger profit. ....Mark Weinstein ......from Marcus' thread,for those who haven't read it yet. Saint





1 Attachment(s)

Quote:

With regard to current trend, we had gone long on Nifty after Nifty started an upmove in Weekly

chart from higher Pivot High, we continued to be long and kept on moving the stoploss higher & higher, based on the higher pivot lows in daily chart. If we see the current daily and weekly charts, we would have been stopped out of the markets (though with good profits) because Nifty has broken the previous daily pivot low. However, if we see the weekly charts, it seems that pivot low is not yet reached, and also, it may be a higer pivot low on weekly charts, and a continuation of trend. So my query is, is it OK to get out of trade based on daily charts pivot low being taken out, or should we wait for weekly pivot low break down.

There are many longer term traders who would hold only till a weekly pivot cracks..........but then again there are people like us intent on catching the direction of the move and then staying out when it does the corrections. Chart attached.....

Quote:

I feel that following daily chart for getting out has its own advantages and disadvantages, and likewise following weekly charts for exits has its own. Following weekly charts for exits might actually give far greater returns and longer duration of trades, but drawdown periods and amounts will also be larger, having a psychological effect.

Yes,and therefore the importance of position sizing et al......finally it's all about the time frame that you are most comfortable with.

Quote:

I, being a novice, don't know if what I have written above makes sense or not. But I hope that you would understand what I want to say, since I think I have not been fully able to express my thoughts in words. Thanks in Advance Gupta

Definitely........always clarify your doubts.In fact,a question that I would not expect from a novice.



All the best! Saint



Quote:

Originally Posted by newbee (Post 131957) Hello GD

I am not qualified to answer your query. Just adding my 2 cents . .

Your question reflects similar dilema I was facing, perhaps all of us newbies will have to face, till

such time we have not finally setteled down with a choice of time frame for our trades.

In this method given out by SAINT for trend following, we are refering to 2 time frames. A higher

TF for the broader picture and a smaller one for entries and exits.

In your case if you are trading on the Daily Time Frame using EoD charts, your exit will be on a

break of Pivot Low on that time frame, weekly TF is for trend guidance, so you will be looking

again for a Long entry if weekly is still in an uptrend.



I trade this method for Intraday. In my case was struggling with 1 minute / 5 minute choice with a

similar thought process, finally seclected the 5 minutes with 30 mins for an anchor chart for trend

guidance.

It makes perfect sense to me, or maybe I am also equally confused :)

Do keep posting regularly, maybe with your charts, it will helps us all to exchange views and get

feedback from SAINT

Thanks

nb

Ouch.....after all that effort and attaching a chart,etc,query been answered already......Great Going,NB! Nah,you're not confused at all.......great clarity,in fact. All the best! Saint



Quote:

Originally Posted by newbee (Post 131959) Hello SAINT

Made a mistake of trying to predict, made another mistake of trading based on it, to top it the

market rewarded this behaviour with substantial gains.

Honestly, feel on top of the world, for the prediction and successful trade but am aware that this is

wrong so can say have mixed feelings about it.

Have read somewhere that Markets are the worst place to learn intutively. Learning becomes easy

if we get positive reinforcments for right action and negative for wrong ones, something like carrot

and a stick.

I just hope am able to kick this urge to predict, before it becomes a habbit.



Thanks

nb Trade what you See, not what you Think

Kick that urge,and fast!Can destroy you one day.....so careful. In your daily journal,etc......break each trade into a good trade and a bad trade.A good trade is that trade where you followed your trading plan to the hilt ,took profits as planned and exitted as planned.A good trade is also that trade where you followed your trading plan,adhered to your stops and exitted as per the plan. A bad trade is that trade where you did not adhere to your stops and watched helplessly as the stock dumped and dumped,and the only action from your end is to run helter skelter,sweat profusely,pray hope and then finally exit anyway with a huge loss.A bad trade is also that trade where the trading plan was not followed but profits came in anyway. Believe me when I tell you that the 2nd type of bad trade is the worst.......the market rewards you for your mistakes,you get complacent,overconfident,suckers you into more such trades and then WHAM!comes that trade that takes it all away.......Very careful,my friend. So however good you feel.........write it down as a Bad trade,forget about it,and then proceed to make the good trades. Saint

Saint 5th December 2007 02:05 AM

Re: Teach A Man To Fish And......... Something on Money Management,if not read before.......was posted way back by TATrader,now sitting buried like many great threads. http://www.traders.com/Reprints/PDF_...ts/TC_FINE.PDF All the best! Saint



Quote:

Originally Posted by anoopkumar (Post 133257)



Dear Sir,

I request you to spare some time from ur busy schedule to explain the criteria used for re-entry on

around 23/24 OCT and around 12 th NOV in reference to Nifty daily chart dt 29th NOV attached

by you.

Right.........we are trying to latch on to the trend as per the daily charts.We therefore use the weekly charts as reference.Looking at the weekly chart,what do we have?Higher pivot highs and lows signifying that the particular chart is in an uptrend.So what do we do then?We look to buy dips,pullbacks.......in short,we look at the weekly and we see the weekly in an uptrend,higher pivot highs and lows and all that.Then flip over to the daily chart,we see the daily chart in a downtrend but grinding its way out of it.As far as we are concerned,we remain passive.We do not jump in,anticipate,predict......we wait for some pivot to get taken out or form a new pivot low.Go back to that chart.The first time where you see Higher pivot low,that's the Buy point.......and then it's a Hold all the way till exit.The reentry points are places to add.......if we missed the initial buy,then these areas would be the places to get in.But do not forget......there is a point where the daily charts signified a change in direction.Here we are looking at pivot highs and lows.Once a previous pivot high is taken out,and preferably a higher pivot low as well,we are now angling for an entry to buy into this uptrend.Whether we got in or not,that's the BUY point of that chart........if we missed that point, we look for any dip to get in and ride the remaining trend.Here we are looking at each candle's high and low,merely taking the high out is enough for us. So ,in summary, when we get a daily uptrend within a weekly uptrend,do not look for pivots to get in.If the chart gives you a pullback,the pullback hasn't violated any pivots,and we are still in a daily uptrend within a weekly uptrend,do a candle by candle analysis.As in the two examples cited by yourself,every candle has a lower high and lower low,.......the moment we get a candle that takes out the previous day's high,that's all we need.We jump in,wait and ride the trend once it takes off again. Rest later,after the market.......hope I have not added to the confusion.If problems persist,get back to me.Important to clear the cobwebs....what is stated is just how I go about things,As you go along you'll find what works for you,as in an entry or exit point.But trend analysis,candle by candle analysis,pattern analysis,etc.....esp trend analysis whatever type of trader you are. All the best! Saint



Quote:

Also, the stop loss for both the re-entry trade is not a conventional one ie cracking of previous pivot low. In first case, it seems to be low of 5 bars back and for second its low of 2 bar back.



Also, there is a reference of crack of major pivot. what is the criteria for designating it as major pivot.

Now pull that chart out again,there are 3 places where we exitted.....one was marked as STOPPED,and the other two as OUT,basically means the same thing .......we trail stopped upwards and allowed the market to take us out.(Got a bit lazy by the latter part...) Okay,back to topic...........there are two ways I get out of a trade.If you bring each and every indicator,that would be a million ways.Now,what is the rationale behind the 2 different types of exits? Scenario A :We have a strong daily uptrend within a weekly uptrend,we have prices running far away from the moving averages,the gradient getting progressively steeper.........Basically,I put my stop at the low of 2 candles back so long as the next candle forms new highs.Therefore Day 1,2,3 we have higher highs and lows,therefore at the start of Day 4,stop would be slightly below the low of Day2.So if we have sideways move on Day 4,stop stays where it is.Day 5,another sideways day,so stop remains where it is.Now Day 6 we get a breakout to new highs......raise the stop to below Day 3.Day 7 we get higher highs and lows.Raise the stop to the lower of the lows of Day4 and 5,and then so on so forth. Scenario B:Gradual gradient,mild pullbacks to the mov avg,and then off to new highs,keep raising stops to just below the previous pivot low. The first two is Scenario A in action,the third is Scenario B. All the best! Saint



Quote:

The crieria for re-entry assumes significance because following daily chart has necessaited a couple of in and out trade whereas those following weekly may still be sitting tight with their trade because no weekly pivot seems to have been cracked for the similar duration in weekly chart. Thanx and regards! -Anoop Kumar



Sorry about this answer coming in doses.... Yep,correct on the observation above.........if you were a longer time frame trader,you would still be holding through this sideways movement.Longer term charts are still very strongly bullish.The weekly chart pivot is some ways back......Your job is to sit tight during the pullbacks,and enjoy the ride when blast off occurs. Which time frame you prefer to trade depends entirely upon the type of personality you are,..........or you could have them all,but make sure you stick to the rules of each type of trade.For example,you could be holding mutual funds and trading the longer term charts.You could be trading stocks on the daily stock time frame,and could be trading intradays with futures..........Importantly,set up a game plan for each time frame,and stick by it.If initially you find it difficult to manage many time frames,stick to one and only move on to more once you get the hang of multi-managing multiple time frame trades. All the best! Saint



Quote:

Originally Posted by gupta.deep (Post 133576) Hi Saint,

Your words always fill in the confidence. Therefore, your reply does matter. And the way you

presented it thru the chart was great.

Thanks indeed for that.

Now, one clarification I have is, when is going to be the reentry point? Since the market this time

made a lower pivot high, may be a downtrend is in the offing. However, which of the following is

the best reentry point:

1. Market breaks on the upside from the recent lower pivot high.

2. Market breaks on the upside from the previous major pivot low.

3. Market breaks on the upside from the previous major pivot high.

Just to be clear, I have attached the chart also.

Offcourse, only if weekly chart still is bullish.



What are the other possibilities.

Regards,

SKG

Hi SKG, Option 3: Definite no........Your ongoing trade just confirmed that you were right.Probably could add,depending on how charts shape up at that time.But no way are we going to wait till then to put in that initial buy. Option 2:Looks like a short below this area where you marked.........yes,so long as the particular stock stays above this point,we are in sideways mode.Staying above this point,but below the arrow mentioned as Option 1 means we do not put in a trade.We wait and watch. Option 1:This is where I would look to reenter long provide it can take out that previous pivot high as mentioned in the chart.We got our low(where the Option 2 arrow is pointing),we now have a higher pivot low.But we don't know we have one till the stock/index goes above that previous pivot high as pointed by the Option 1 arrow. So where we stand as per the chart attached by yourself is:If the index/stock dumps to below the Option 2 arrow,short with your stop loss at the pivot pointed by the Option 1 arrow. If the index/stk goes above the pivot marked as Option 1,Buy with your stop at recent pivot lows. If the index/stk does neither,sit on hands time.Sidelines.Wait and Watch.Entry only once the direction of the flow is clear cut...Our job is to assess the direction of the flow,and then to Go with the Flow. All the best! Saint



Quote:

Originally Posted by lvgandhi (Post 133748) Dear Saint



I attaching daily and weekly charts of Nifty. I feel Nifty daily chart has made a higher pivot low on

28th nov and on 30th nov it has gone above the previous pivot high on 26th nov. Further Nifty

weekly has a higher pivot low on 23rd nov compared to 26th Oct and thus continuing uptrend.

with this can we say a new uptrend in nifty started or should we wait until next pivot high is made

in weekly nifty compared to pivot high made on 2nd nov ie 6012?

Hi LVG, Answer same as the previous post to SKG....Weekly uptrend,Daily breaking previous pivot lows and no further falls from there,now breaking above a previous pivot high on the daily(26th high).....we buy once it goes above that high.Above the high of 5981 and so on so forth would be adds to the initial trade that you are in already. All the best! Saint



Quote:

Originally Posted by anoopkumar (Post 136211) Dear Sir,

This is with reference to above ie re-entry criteria as explained by you for NIFTY daily chart Dt.

29 NOV. Initial trade was stopped on 18th Oct because of last pivot low of 5403 having been taken

out. Then the re-entry was made on 23rd Oct once the high of previous candle was taken out.

My question is normally when any trend is broken after a sustained long run, sometimes it leads to

formation of bull/bear trap midway. In this case, it might have led to formation of bull trap

begining 23rd Oct. How does one preclude this possibility. Else as you say there is really no way

to find out on 23rd Oct, whether intial uptrend will resume or downslide shall continue after

formation of bull trap. Is observing a tight stop loss the only way to rule out that possibility of bull

trap or is there any other clue?

I request you to pl. clarify above and clear the part of cobweb still remaining. Thanx and highest

regards!

-Anoop Kumar

Great question as always,Anoop!



Am not sure abt your age,you could be 17,or 71......but call me Saint,throw the Sir out of the window. Right........we have a chart,we have an uptrend on the weekly charts,therefore we buy the pullbacks on the daily chart.After we have an up bar or two,what is to say that the chart is not going to turn and go down?How do we know?We don't........That is what happened in that reentry,few bars up,and then down it came.Part and parcel of trading. We merely take our stops,we wait and watch for another entry.......what is presumed is that the reentry will keep making new highs and newer highs,so we buy the pullbacks on the daily within a weekly uptrend. So we get a pullback on the daily on October 8th,we buy once the previous candle high is taken out.....we get a pullback on Oct 22nd,and the high over that candle would be our next reentry point. Next we get a similar pullback and we get a reentry point over the high of Nov 12th.But this time,no new highs,instead it pulls back and takes out previous pivot lows.Oct 22nd candle is similar to the Oct 12th candle,why didn't we just buy over that high?Because this pullback has created a bigger fall.......There is now discomfort,there is suspicion,there is caution.....so we do what we do best,We wait!What are we waiting for?We are now waiting for the chart to tell us something that gets us away from discomfort,away from suspicion,away from caution...we are waiting for something to turn up that makes us excited,makes us want to jump in at any cost.And till that point,we wait and watch. Nov 23rd:Nah,could very well be a mini rally within a decline. Nov 26th:Hmm,same as above. Nov 27-29th:Interesting,a yummy sideways pattern.....Hmmm,wonder if this can go up.Let it confirm.Let us wait. Nov 30th:Yep,we are off.....Buy here,we now have our higher pivot low,taking out recent pivot highs.We are sure that we are right only once we get to 6000.Till then we assume that we would.And if we are wrong,well then we are wrong.So we have stops. Nov 11th :We are still holding... The point of all this:If it's a simple pullback after a neat move,buy the pullback once the pattern takes out the previous day's high....Once pivot lows are lower than the previous pivot low,are we in a dntrend?Or sideways trend?Since we do not know,we again wait for a higher pivot low and high,latch on to it,and ride the trend. Hope that clears at least a few things... All the best! Happy Trading! Saint

Saint 22nd January 2008 04:13 AM




Quote:

Originally Posted by nick721156 (Post 139625) Dear Saint,

This is my first letter to you. I must thank you for helping people like us. Great job done.

Thank you for your kind words....

Quote:

For last one week I have been reading and trying to understand your "teachings" about fishing a fish and happy that I have learnt a lot though many things are to be cleared as yet. Because of my location, job nature and knowledge in share trading, i don't go for daytrading or swingtrading but in position trading only. Normally I use "limit" option facility of ICICIDIRECT.com wherein I can put my BUY/SELL signal the previous night. In the present chart, I would request you to clarify some points. When you say, " If the index/stk goes above the pivot marked as Option 1,Buy with your stop at recent pivot lows". My queries are, 1) When you say index goes above the pivot, is it the intra day movement above the pivot (i.e.shadow ) at which we have to buy the stock or closing high (i.e. bar) above the pivot? Because the stock may go above the previous pivot high (marked by pink arrow) momentarily during the day and settle lower (Closing) than that.

Depends on the time frame that you are trading......so if you were a position trader,you did your analysis the previous night,and you are looking to an entry over the previous pivot high,you do exactly that.....You enter over the previous pivot high.Yep,likelihood of breaking over intraday and then falling back and heading south.....But all that is part of trading.Can be frustrating at times,but stick to plan,and you will see more profits than otherwise.

Quote:

2) Shall we consider pivots or highs/lows for drawing trendlines?

Your call......whatever works for that particular chart.Rule book wise,you connect only the highs and lows,but don't get too rigid on that.



Quote:

3) I have observed that whenever we consider longer time frame (say 2 yrs) on a weekly or daily chart, the trendlines appear to be steeper (on the screen) than that with shorter time frame , say 6 months or 3 months, for same pivot highs or lows. Would you please tell me which time frame is the best for weekly and daily charts to draw trendlines?

Don't get you on this one......do clarify.

Quote:

I shall be glad if you clarify these doubts. Thanks in advance. Regards, Raju

Sincerely apologetic for this extremely late reply.....:( Saint



Quote:

Originally Posted by djsinha (Post 141580) If I try to give answers to questions posed towards Saint, I hope Saint wouldn't mind provided that

I have become so nice a fan of his after reading his post "Teach a man to...".

Guys, I must admit that it's a piece of jewell that Mr Saint has created. I've read it some 5-6 times

from first to last till now and believe me every time I read it afresh, I discover some 2-3 vital points

that I left out in the previous reading.

Thanks for all the kind words,DJ.......feel free to share answers or questions.If there is something which can be added on or slightly modified,I hope you don't mind.Feel free to call me Saint.....as said before,one friend helping another.So drop all formalities.:)



Quote:

Ans to Q 1) Since u don't do intraday trading, by principle, u shudn't make trades based on 2 mins or 5 mins or 15 mins data. Never ever mix two timeframes. Whatever decision u have to take, say buy/sell (because of pivot crack on the upside/downside) take it based on EOD charts and not on intraday movements. But once u r into trade, put ur stoploss daily using the "limit option" as u mentioned and that will be based on ur previous to previous bar's low. That means, if your previous 2 bar's low is cracked on the downside even on intraday movement and even if momentarily, never hold on to that trade. Immediately get out.

Couldn't have explained it better,DJ....great stuff,my friend!

Quote:

Ans to Q2)U shud draw trandlines connecting pivots only.

That's what I do most of the time,although not bang on as far as tech analysis books are concerned.

Quote:

Ans to Q3)That's obvious, because, over the long term any share price always trends up. Which timeframe u will use for drawing trendlines will depend on what is the timespan for ur trading. If u r planning to maintain ur holdings for 6-12 months, u shud draw trandlines on 2-3 yrs chart and if u r planning to trade for 1-2 week u shud draw trandlines on 1-2 months data.

Ah,that's what Nick meant......sorry about that Nick.Answer to your query,refer to DJ's reply.Great going,DJ!

Quote:

Saint, pls point out if I've committed any error in answering the qs. Ur valuable addition to these will definitely add to our knowledge base. Cheers d j sinha



Saint



Quote:

Originally Posted by takingstocks (Post 142042) Dear Saint. I have just started learning abt stock market this year 2007. I feel really fortunate to

visit this site . For the past 20 days i am going through your posts and always felt really happy abt

the way you were helping out forum members.Infact i am bit embarrased because even though i

could not understand it so cleary unlike other board members who seems to have got a hunch of

it..

I could not understand how to find the trend because it seems complex coz of following..once if you

clarify these points i think i can understand a bit more

1. first of all where do we get to see weekly charts ? (i am sorry if this is a insane question but i

really dont know ...moneycontrol has some charts but its not easy to analyse)

2. suppose i want to invest in some XYZ scrip ..is there any time frame for this scrip after which

this becomes tradable..for eg a newly listed scrip will not give us much idea due to unavailabilty of

data

3.how many weeks should i consider?

extremely sorry for these kind of doubts

but this is where i am

really a novice..could nt even ask better doubts

Nothing wrong in being a novice,we were all there once,and most of us haven't forgotten how lost we were,too.And never,ever feel sorry about asking a doubt.Look to clear the cobwebs,and many here would be only too happy to help. A request from my end,could you have a look at this entire thread,and then we could probably discuss your doubts......Once done,feel free to ask your questions. All the best! Saint





Quote:

Originally Posted by sudoku1 (Post 148281) but friend , u were the one who was uncomfortable with our level of 18975....!!! ystrday.....!!!!

any way , wellcome to the amazing world of technicals........:D

yes , go with the flood......!!!!!always.

Have been in that world for more than a decade now.....but thanks for the welcome. Never uncomfortable with any levels,quite happy that you were having stop areas to get out.Only thing I was pointing out was the holding till close........people who did not hold from your famed 14425 levels which you may have entered pre-Traderji,and was entering at 20000 levels,to ask them to wait for 17605 to get out.......dangerous game in the long run. Ah,go with the flow always.....Flood or Trickle! Thank you for your comments Saint



Quote:

Originally Posted by digest (Post 146436) hello Saint, nice to see you again.

very first thing thanks for wonderful tutorials u have provided, i am tring to learn technicals

slowly.

Most welcome,Digest........slow and steady wins the race,my friend.As your name suggests,Digest the information slowly but surely.Paper trade,small lots.......baby steps for now,my friend.Important now is educating oneself on the nitty-gritties of trading.

Quote:



i have two questions to ask from you if you can guide me it will be very helpful. 1) intraday, trading(short-longterm both), futures, nifty which is the best thing to master to maximise profits and minimise risk/loss. presently i am not inclined for intraday. i do not buy with intraday tading in my mind.

Trade the time frame that you are most comfortable with.We all have different personalities,different temperaments......so do what suits you best,but stick to the rules and disciplines of each time frame.

Quote:

2) as we can see market declin these days when do you accept market to gain momentum again? and which stocks shuld i track? thnaks once again for all your help.

As a trend follower,we go with the flow......at present we have a daily downtrend,an intermediate correction.....means we wait.Don't try catching bottoms for now.Let the market give us a clear signal first.When will this end?It ends when it does.......either you are benefitting from the short side,or you are standing aside for now.Either way,don't predict the where and when to enter. Which stocks?Once this correction is over and done,look at the charts again and decide.......For now,stay out.Go for a holiday.Spend time with your family.Get the cash ready.....For the next blast off. All the best! Saint

Saint 23rd January 2008 06:50 PM


Quote:

Originally Posted by digest (Post 148386) thanks saint,

well basically i have been investor and not a trader

but recently i have entered market as a trader.

so you recommend that even investors should stay away?I want o invest 10% of my investment

amount in this phase is it recomended? i mean this week.



Hi Digest, Wrong person to ask an "investor" question actually......I trade long term charts as well,holding some for months to years,but they are not the buy-hold-forget about it variety.When previous pivots crack,and this bull market from 2003 is over,I am out.No real idea about company news,fundamentals,pe ratio,etc.........you ought to ask others here for some info on that matter.

Quote:

I am not into impulsive buysell thing.if i make loss i can hold it for long (1-2 years.

Once again,have no idea about how the investor guru's advice would be........but frankly,common sense wise,the line above is fraught with danger. We are in a trade for profits,investor or trader......We reach our target,or we have an area where we say enough is enough.Why would you enter into a counter at Rs100 looking to make profits and exit at RS120,and then on not achieving that.......why would you allow this counter go down to Rs50,and then wait 2 years,hoping and praying that you will get your money back??!!:confused: Not saying that you buy and sell crazily......but saying that you must have that point after which you refuse to take any more nonsense from that stock.Waiting 2 years,you lose money,time,energy,confidence,gastric lining,sleep.....and if it keeps sinking and you are invested heavily,then probably,your account,marriage and house as well!!

Quote:

i understand no one can predict anything about market anytime and this stage is again riskiest one. after Fm speech do you think market will improve and LIC, UTI and other mutual funds will do the buying now ina day or two? they have lots of cash reserves? or should we buy mutual funds?

Markets fluctuate,they go up and down.......at present we are still very much in a primary uptrend,undergoing an intermediate downtrend.Is the Bull Market still on?Very much......Is it time to buy into Mutual Funds?Why not.....As in all uptrends,we buy declines,which is what we are experiencing right now. All the best! Saint



Saint 24th January 2008 04:07 AM


Quote:

Originally Posted by Zee (Post 149177) Dear Mr. Saint,

I am a devoted fan of yours and am truly amazed the way you are sharing your knowledge with

every one without distinction. You truly are a saint…..

One question, what is the minimum amount I should have in my account in order to trade in F&O?

( or what is the minimum investment required for trading in F&O) Thanks in advance for your

advice ……

Quote:

Dear Saint, Guess my question was too foolish since u didn’t answer it, but I was told one should have at least 3 lakhs in trading account for trading in F&O. Is it true. :confused:

Ouch.....sorry about that.Was trying to catch up with all the queries,don't know how yours slipped through.:( I cannot say exactly what a minimum would be.......but 3 is probably something to play with in the initial days as you start developing the process.Your intention is NOT to make money,instead yours should be to train yourself and focus on the strategies .....and put up that perfect trade. For really making a living off trading,3 is far from what is required.

Quote:

Just started trading online since last week Dec and bought ISPAT 600 shares at 82.20 and watched it go down..down..down till it reached 28 yesterday…. today once again I bought ISPAT - 1750 shares @ 34 and at the close of trading when it reached 43, I was so thrilled… my first good profit….(though I am in loss over my first 600 that I am still holding on to).

Zee,I hope you don't mind me giving you an online,virtual rap on the knuckles.....



profits out of the market.We are here to capitalise on a move.As a trader who follows trends,nothing wrong in your decision to buy Ispat at 82.20.As a trend trader,we first assess: ISPAT INDS:a)Is ISPAT in an uptrend?Yes. b)Did it give us a pullback?Yes. --->We therefore buy into ISPAT at 82-ish. c)Next Step(the one you did not do):We place our stop at the previous pivot low of 72. ----->We DO NOT hold till kingdom come,we DO NOT hold hoping to average down......we like to go with the flow,with the trend,when we are wrong,we just readjust and then go with the flow..........We DO NOT go against the flow,hoping against fate,that the river(mkt) would change direction because we are going the wrong direction.We are either with the flow and enjoying the ride,or we are going the wrong direction,we make a quick turnaround,and then we are back on course.........We do not hope that the flow will change direction.We DO NOT hold ISPAT from 82 to 28.....we would be getting out at 72 and then plotting to go short. That point where you say "Enough is Enough" is vital......never mess with that area.If 72 is hit,you are out of the trade....Making profits is part of trading,taking small losses is part of trading.......classify them both as win trades,trades where you stuck to plan. d)Is that it then?We have an entry point,a trail stop exit point,a stop loss area........Is that it?Nope.....we need to know how many shares we are going to be buying? Presuming 3lakhs is your capital,you plan to enter Ispat at 82.Stop's at 72.Risk in that trade=10.Let us say you don't want to risk more than 2% of your capital,that means Rs6000.Meaning if you get stopped,you lose Rs6000.....therefore you buy 6000 divided by 10(risk)=600 shares(which is exactly what you did). So great going on that........Great going on the 2nd trade as well,....But,Zee,take my word for it,however good you are at eyeballing charts,however good you are at that gut feel when you look at a chart,however good you are in reading patterns and indicators........losses must be small,and profits must be huge.Not taking stops will bring you to that one highly disastrous trade that will ruin you..........

Quote:

Thanks to this thread “Teach a man to fish……….” am learning so much from it… with kind-hearted people like you sharing your knowledge, people like me will not be floundering in the dark for long…. Thanks a ton Saint … just wanted to share my happiness with you ...Zee



(It's 4am,yawnnn...)Please post more often.Keep a Journal of all the great trades and the sick ones,your thoughts,your mistakes,strategies,etc..........If you like,feel free to post a chart of your daily trade everyday,and shall try to give some input from my end. All the best! Happy Trading! Saint



Quote:

Originally Posted by sanx (Post 150209) Saint ,its an excellent thread .Appreciate the sharing of knowledge of what you know to others .

Will be looking forward to learning and contributing to thread (if I can ) .:)

my first analysis :) ,having a look at RPL , it has consolidated from past 3 days and we can expect

a breakout(uptrend) any time soon ?

Even after consolidation for 3 days ,we were expecting a breakout and start of uptrend ?; But it

can break that and go downtrend also?

And therefore,Sanx,what exactly do we do?Do we buy,do we sell,or do we wait on the sidelines?The question once again is not if you are looking to daytrade........more for the 60min trader,swing



trader,etc Going in now is a gamble,isn't it?That qualifies us as guessers,gamblers, predictors,.........not traders. If trading is what we want to do,we neither buy as that would mean anticipating,guessing.....Neither do we sell for the same reasons. We wait on the sidelines.......we stalk silently as a predator would a prey,and wait.Breaking either pivot,either pivot lows of 154(in futs) or pivot highs of 181 ...and we strike. Let RPL decide where it wants to go,and then and then only do we think of entering. The game of anticipation,guessing,thinking that one is smarter than the market................fraught with danger.Been there,done that,my friend. All the Best! Happy Trading! Saint



Quote:

Originally Posted by rangarajan (Post 150426) Dear Saint,

In the weekly chart of sail,the pivot high of 280 was formed on 2/11.The stock closed twice above

that.However,the uptrend was short lived & the stock came down.According to pivot theory,one

should enter once the stock closed above.

Kindly explain where it went wrong.

So also the case with Praj & Lic.

Hi Rangarajan, Presuming you are a position trader from the question above. Here we are looking at long term charts,weekly and daily. Have a look at SAIL weekly charts.Now look for a pullback that is evident on the weekly charts,which means a downtrend on the daily charts.That is lower pivot highs and lows on the daily.Once we get a break(ie higher pivot lows and highs),enter.



Now what was wrong with that pivot high of 280 in Nov?Why can't we wait for another pullback,and then angle in using the daily charts?And then enter over the highs. Answer:GRADIENT of the slope. It gives us some clues as position traders........they tell us,"Alright,let's get ready to sell what we have,coz' we're gonna get it much lower than this in the fall that is to come." Not the time to buy.........Time to lighten up on what you have,or stand aside waiting for an opportunity to get in if you are not in it already. Have a look at the daily chart of SAIL.

Saint

djsinha 30th January 2008 07:13 AM


Quote:

Originally Posted by Saint (Post 150790) Hi Rangarajan,

Presuming you are a position trader from the question above.



Here we are looking at long term charts,weekly and daily.

Have a look at SAIL weekly charts.Now look for a pullback that is evident on the weekly

charts,which means a downtrend on the daily charts.That is lower pivot highs and lows on the

daily.Once we get a break(ie higher pivot lows and highs),enter.

Now what was wrong with that pivot high of 280 in Nov?Why can't we wait for another

pullback,and then angle in using the daily charts?And then enter over the highs.

Answer:GRADIENT of the slope.

It gives us some clues as position traders........they tell us,"Alright,let's get ready to sell what we

have,coz' we're gonna get it much lower than this in the fall that is to come."

Not the time to buy.........Time to lighten up on what you have,or stand aside waiting for an

opportunity to get in if you are not in it already.

Have a look at the daily chart of SAIL.

Saint

Wonderful Saint. The trendline-trading this counter for nearly 1 yr and exiting on the ascending wedge breakdown towards the right side of the chart is just superb. Hats off to you. I want to just add something. Prices are seen to rise parabolically here. By parabolic rise, I mean, if you look at the treandlines you'll find that:

slope of trendline 3 > slope of trendline 2 > slope of trendline 1 (I've marked trendlines 1,2 and 3 in the attached pic for your easy reference.) Now the rule here is that, in case of parabolic price rises over a period of time, once your steepest trendline gets broken on the downside, exit fully. Here our steepest trendline is trendline-3. So Rangarajan, even if you have entered at 280 levels on 2/11, you have a signal to exit on mid-November, when that long black bar (encircled one in the pic) breaks trendline-3 on the downside. May be you could have exited half or one-third on this signal and the other half or two-thirds on the asc wedge breakdown as was nicely pointed out by Saint. Cheers D. J. Sinha

djsinha 30th January 2008 10:17 AM


Quote:



Originally Posted by sanx (Post 150209) Saint ,its an excellent thread .Appreciate the sharing of knowledge of what you know to others .

Will be looking forward to learning and contributing to thread (if I can ) .:)

my first analysis :) ,having a look at RPL , it has consolidated from past 3 days and we can expect

a breakout(uptrend) any time soon ?

Even after consolidation for 3 days ,we were expecting a breakout and start of uptrend ?; But it

can break that and go downtrend also?

Dear Sanx, I would advise you to see candlestick chart and decide on breakout/ breakdowns. U'll get precise signals there. A simple line graph doesn't give much signals and can often misguide you. I've attached the candlestick chart for RPL. I'll not say it's a consolidation because consolidations typically occur after a huge rally. But, here it has occured after a decline. And I personally wouldn't go long on this for the simple reason that it has shown a gap up which is not supported much by volumes. So chances are there that the gap will get filled up on the downside. Cheers djsinha

Saint 8th February 2008 01:40 AM

Re: Teach A Man To Fish And......... 1 Attachment(s) Below the chart of the DOW from early 1990's..........break in previous pivot low on monthly charts as of Jan 2008.Whether this is going to be a deep cut,or a grinding consolidation or a bit of both,the attitude now is to Sell the Rally. As far as Dow is concerned,it has loitered into Bear terrain......unless huge volumes negate the last few bars,more downside is expected.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) FTSE Charts as attached.....Same here.FTSE in Bear Terrain as well.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Same story with the DAX......Bear Terrain,and Sell the Rally Mode!



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Hang Seng in Iffy territory.....not in Bear Terrain as yet,but the next rally must take out new highs.Lower pivot highs formed will see lower lows.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) BRAZIL is still in Bull Territory........it's still Buy the Declines mode in the Bovespa.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) SENSEX still in Bull Territory......an intermediate downtrend in progress.Like Brazil,however it looks right now,the time just has not come for Selling the Rallies......instead,it is still Buy the Declines Mode as far as the Sensex is concerned.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) NIFTY same as above......Primary Bull intact going through an intermed dntrend.



Saint



Quote:

Originally Posted by marcus (Post 153449) Saint good analysis but can you analyze the nifty on weekly charts instead of monthly? If we look

at monthly chart although it is very clear by the time we get confirmation of an intermediate bear

market the nifty would have already lost a lot of ground.

Hi Marcus, We are very much in an intermediate downtrend,as is evident on one look at the weekly charts.A bear market or bull is as per the primary trends,so far we are still in a Bull market with an intermed downtrend in progress. There are some who play the primary trends,they pile on in 2003,and if we get a bear crack in 2008,they are out.........mistakenly referred to as investors,but they are very much traders,they are not



looking to buy and hold,and average downwards,etc. Yep,when they really get a crack and they exit,it would not be at the top......but that's the name of the game.Don't forget,they would have got in when SENSEX was at 3758! So,as of today :Short term Downtrend Intermediate Downtrend Primary Uptrend Secular Uptrend For those of us who would like to play the weekly charts,the intermediate uptrend ended with the charts cracking 18930,crack of that and we are out of the markets,or we are short the markets. So,all kinds of time frames,all kinds of strategies.........but perspective is important.So far,the Bull market is on.........And India is strong because unlike the others,it's a Bull market in a Secular Bull.A day will come,when India gets into a Bear Mkt within a Secular Bull,but that day is not yet upon us.Whether this top would end up as THE top,only time will tell. More later!! Saint



Quote:

Originally Posted by trader31339 (Post 154769) Dear Saint ,

Re:Nifty spoton 01/11/2008.

The trend on weekly charts was UP, when the week ended on 01/11/2008. The weekly ascending

trend line was also intact as on 01/11/2008. So, the signal was to go long on pullback on daily

charts. There was pullback on daily charts, and longs were also triggered by 01/14-01/15.

However, instead of NS moving up it tanked down.

1)Please let me know did you people got exit long/ go short signal by 01/11/2008?

2)Did I made any mistake in my study/ analysis , please let me know?

Date format mm/dd/yyyy

01/11 means 1st Jan, 2008



Nothing wrong Trader,......the curse of every trend is the last bend. That rising wedge was our hint that a fall is imminent,that it was clearly evident on the weekly charts is more worrying,that week that ended on 11th ended as a doji,at the upper resistance line and to compound matters was the third touch of the resistance line.That was your cue.....to get out.......breaking 6113,you are out.If not then,at least 5950-ish,the point where the rising wedge cracked. So,exit long should have been the 2 areas mentioned above.Shorting below 5950......... As said,even if you went long above 6223,your stop should have been 6113...after which you are out. Do get back to me with doubts if not clear...... Take care,and all the best! Saint



Quote:

Originally Posted by citrus (Post 153853) Respected Saint,

I am very new to trading, though I have been investor from last 10 years. Now I would like to know

from your wast experience the following few questions:

1. How many stocks should I regularly mointor as a EOD trader?

2. Should I base my trading decisions on stocks short listed by computer in exploration, or should I

visually scan all the charts before taking decision.

With Regards.

Citrus

Ah,Citrus,..........no absolutely right answer to that one. I am an "eyeball" sort of person,meaning I gotta visually scan before taking a decision........I basically go through the whole lot in the weekends,from where I choose the juicy ones for the week.And those,I visually scan everyday and get the entry points,exit points,stops,position size,etc.......then I am ready for battle for the next day.Ready to use my eyes and shut my thinking....



How many stocks?As much or as little as you can.....basically your call. You really ought to ask this question to our wizards in this forum.....they would give you a high tech answer,they'd probably simplify your life a great deal......but this is how I go about.A bit too stuck in my ways,I guess!! All the best! Saint



Quote:

Originally Posted by rangarajan (Post 153375) So, Saint, what is yr recomm for investors,whether to remain intact till Pivot high is formed &

pivot low is taken out?The problem is that by the time both the above are confirmed,there would

be a lot of erosion of money.Is there any other better strategy?

The very aim of a longer term trader is that he/she wishes to catch a primary trend in motion...........meaning he leaves a lot on the table and is proven right as new highs are made.It was all worth the pain.And this happens again and again,until that absolute top is finally made.This time,no new highs are made.........he loses what is left on the table. Part of systematic trading.....one stays in,till confirmation happens that it's time to be out.And yes,a lot is left behind on the table..... Not many have the stomach for it though,therefore the existence of traders in multiple time frames.......that which suits you best is what you employ. And of course,there are a truckload of strategies out there......whatever you do,do it in systematic fashion.A set modus operandi,a definite method to the madness. Saint





Quote:

Originally Posted by rangarajan (Post 155112) T/U Saint,U have thrown the ball back in our court.I was waiting for an answer with chart

explanation which u had mentioned for future guidence.

When u find time ,pl explain when to EXIT from a trade & the correct Stop loss.Yr previous

articles explain well the Entry strategies.

Had given a chart on SAIL and where the entry and exit ought to have been........similar here.But shall post the chart nevertheless. The strategy for Entry is verily the same as the strategy to Exit.......have been saying it all these last many months. Probably,time for some revision ...... for those who are interested! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Chart attached.......to answer a few of Rangarajan's and Trader's Doubts.



Saint



Quote:

Originally Posted by rangarajan (Post 155112) T/U Saint,U have thrown the ball back in our court.I was waiting for an answer with chart

explanation which u had mentioned for future guidence.

When u find time ,pl explain when to EXIT from a trade & the correct Stop loss.Yr previous

articles explain well the Entry strategies.

Hi Rangarajan,



Daily chart with exits using trail stops........no targets as we are trying to catch the chunk of the trend.We are trying to go with the flow,and let the markets make money for us.

Saint



Quote:

Originally Posted by djsinha (Post 158399) Hi Saint

can you outline some strategies for trading the sideways moving market as we are seeing

nowadays in most of the scrips. Your strategy of following the trend is sound, but, when there is no

predominant trend, what should I do? Should I sit with cash? Or, are there some other strategies

to trade?

I guess this might be an old question and answer to this might have been given on some other

thread in some other forum. But given that I've made you my guruji and that I follow the same

strategy as you tech ('coz there is transparency in what you teach and after reading your "Teach a

man to fish..." I've seriously learnt trading), I want to learn from you.

Cheers

djsinha



DJ, There are many strategies for sideways market trading,drawing support and res lines,and then buying support and selling resistance........probably some other techniques using indicators et al. Now there is a problem here..........If I were to trade a trend,and then the pivots crack,I would be stopped out.Presuming we get a 60min uptrend,we are long and after some time,we get a break in pivots..........we take our raised stops,and say thank you.We then wait for the 60min dntrend to be over and once we get a higher pivot low and high........we would enter.We think that the 60min is done with its down move,and the time has come back for the up move.........Or has it?Could it not go sideways,for many days?Yep,sure...........Entering at support begs the question ,Which support?Shorting the resistance begs the question:Which resistance?In doing so,we change our battle plans.We are back to that all important dreaded word:Guessing! The problem with a sideways trend is the numerous fake outs in both directions......Not entering on a breakout,anticipating a fake out,can be a real pain when the true breakout does occur.Entering on every fake out and getting faked out can be trying on our patience,......very frustrating! And yet,to shift strategy,thinking the uptrend is over,the sideways has started,etc.......it just means that we are no more Going With The Flow......we are no more adjusting the Sail as per the direction of the Wind........we have started thinking,predicting,we have started guessing,and in the long run that decision will come back to haunt us. So then what do we do?How do we know for certain that the uptrend is over(that we can know,so we can get out!)and a sideways trend has started??We don't........and so,therefore,we do not leave the decision to prediction and anticipation.We therefore formulate certain rules and regulations that keep us out of certain trades as per the longer time frames.......and then,after all of this,we still have an Entry Signal,we take it,we put our stops,it could be a fake out,we are out if taken out.We reenter again when we get a signal again,we follow our system of attack come what may........ Sideways trends can be irritating,frustrating,and great amounts can get lost by getting stopped out.And therefore very crucial,very vital to squeeze out every last drop of a trend that does occur,when it does occur.........And when that trend comes back,we are piling on our positions,raising stop losses,and piling on...........We want every last bit because we know that when this trend is over,back comes that cursed sideways move,that will take some of our profits away!! Saint ps:lol on the guruji bit :D





1 Attachment(s)

Quote:

Originally Posted by djsinha (Post 158742) Hi Saint

As promised I've gien below some of my trades......Comments are added on these as to how I

traded these counters.

One thing I must admit is that.....after these disasters....I'm waiting with cash now at hand......and

waiting for a trend to emerge......as soon as trend catches my eye...I'll put up the sail and float in

the raft.....going where the wind takes me.

Also I learnt that I should not trade whatever comes my way. When I'm 200% sure, should I put my

money. And I need to do lots of paper trading....which will definitely add to my experience....and

failure to make profit will make me investigate and enlighten me further.

Your comments and analysis on these are heartily welcome.

Cheers

djsinha

Hi DJ, Few points..........they can't have been disasters.If you had position sized well,shouldn't have been irked by two stopped out trades......so something not right somewhere as per position sizing. Let's go chart by chart.............in Rallis,that first trade was on,you were trying to buy a decline in an uptrend.Nope to the 2nd trade.........no pivot breaks there......The dntrend was and is still in progress......meaning no longs.....If trade RALLIS you must,then wait and watch till an uptrend is formed.....and then back to buying declines,etc



All the best! Saint



Quote:

Originally Posted by djsinha (Post 158794) Saint, I have some doubts regarding the exit you suggested in Rallis daily chart. I've attached the

daily chart and my question is written in the chart itself.

Cheers

djsinha

Hi DJ, An obvious gap down,on top of that made back the whole distance,and fell back to the point of open...........forming a topping tail.To top it all,a visual lower pivot high.........meaning you are worried!Raise stop loss to the bar that you entered........too many bearish signals,best to stay out if stops hit and reassess again the next day.



Saint


Re: Teach A Man To Fish And......... DJ, Are those real trades on 3iINFO......if they are,all part of trading,look for charts that don't behave in that manner.Quite a few out there that don't behave in that same erratic manner as 3i.. Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) DJ, Chart attached!

Saint





Quote:

Originally Posted by djsinha (Post 159526) Now I learnt something totally new from this post of yours. Very interesting...

First, after getting a higher pivot low in an uptrend, I should not wait for the higher pivot high to

form......Infact to max profits I shud enter when the scrip trades few rupee above the prev pivot

high......But Saint, doesn't it violate the fact that we should buy as close to the support as

possible.....Esp I'm asking b'coz it may so happen that I bought as soon as the prev pivot high is

overtaken and after sometime the price retraces back and hits my stoploss.

DJ,it's like this............lower pivot high,lower pivot lows,lower pivot highs,lower pivot lows(aka dntrend),then a higher pivot low(hmmm....are we going up from here?No trade yet.....just a thought!!),now it goes past that previous pivot high(BUY!!).......We have our uptrend,we enter long,we put our stops below the pivot low,and then spent next few days to weeks raising stops till stopped. Trading trends......we try to get in once we get a break above the previous pivot highs........no talking supports and resistances.Basically that previous pivot high is resistance,thereby the pullback to form a higher pivot low,and then a breakout over that resistance........Focus your attention to the Pivots,rest will take care by itself. And yes,my friend,in trading,we buy the breakout over prev pivot highs,putting that stop loss at prev pivot lows and we get taken out sometimes........and when we don't,we earn big.......all part of the game!

Quote:

Second, the exit strategy you suggested was really very good. That of consulting daily charts while trading the weekly and take a call when pivot breakdown happens in the daily. Cheers djsinha

Ah,great........but have this feeling you need a few more charts.Have been wanting to do this for some time.........a revision on trends and pivots,etc.....soon when I can find the time. Saint



Saint 4th March 2008 12:39 AM


Quote:

Originally Posted by manikwadhwa (Post 159812) Sir,

I m posting the chart of ALMUNIUM WEEKLY MCX,I went through your very thread.

Your valuable comments are needed ,so that,I can be sure of my analysis for the chart.

1.At bar "A" one can add 50% of the quantity.Because trendline "BLUE" has been broken.

2.At bar "B" one can add another 50%,but ,it is iffy so one should wait.

3.At bar "C" one has stopped out of the trade taken at bar "A" and even one has taken trade at bar

"B"

4.At bar "D" one can buy 50% as the trendline "GREEN" has been taken out.

5.At bar "E" one can add another 50% as the previous pivot high has been taken out.

Sir ,is this the right way to catch the change of trend?

with regards,

manik

Hi Manik, Let us take a look at the chart you posted........Forget trendlines for now.Just have a look at the chart and go with what is obvious to your eye. Look at the pivots.........If no idea what they are,or at least what I mean,do go back to the initial posts and take a look. What do we see?A whole lot of lower pivot highs and lows.......no buys at A.Why?Coz we are in a downtrend.....buying would be committing the heinous crime of Anticipation,Guessing,Predicting,:eek: No buys at B either......Same as above.No change in pivot,no buys.



entered at A and B. Where do you enter?We have been tracking and tracking,waiting and watching..........we have thus far refused to get into the trade,simply because we don't buy downtrends,we buy declines in uptrends,and we buy when pivots change and signal a possible change in trend. Have a look at D.........That area,we finally get that higher pivot low that we have been waiting for........Do we buy?Nope,but we are now in "get set" mode,waiting to pounce.Where do we enter?Over the high of D Then trail stop upwards........once you got the breakout,you could add over the high of that candle and so on..... All the best! Saint



Quote:

Originally Posted by manikwadhwa (Post 159956) Sir Saint,

Is it right to take LONG CALL IN BHEL

Here I have posted 2 charts of Bhel:-

Chart 1 is the weekly chart of Bhel,in this chart:-

Bar "B" has made higher Pivot Low and Bar "C" has taken out high of Bar "B"

Chart 2 is tha daily chart of Bhel,in this chart:-

Bar "C" has taken out the High Pivot made by Bar "A",so,whether,one can take a long position at

Bar "C" with the stop loss of low Bar "B".

Sir,kindly do comment on my observation.

Thanks,

Manik



Hi Manik, I know I am 89 years old and all that,or am I.........but let's drop the Sir Saint,just call me Saint.:) I am just looking at the charts that you have posted.......not at all the latest developments of today,etc. We have a weekly that has started a move up......a daily that has formed a higher pivot low as described by yourself(great going!!) and now threatening to go to newer highs............Great going! Only one problem........we got a breakaway gap,another day up,a few sideways days,then a pullback.........Now,ideally would have preferred a pullback not taking out the length of the entire breakout candle,as in this case.Now we have a problem.......C is too far away from B,Any breakout over A is after 4 bullish days,basically our stop is just too far away from our entry for comfort levels...........So,what we would like is a sideways to a mild pullback over the next few days,then buy the breakout over the sideways consolidation or pullback with stop below the low of that consolidation/pullback. All the best! Saint ps:Great going,Manik!



Quote:

Originally Posted by satya_pinku2003 (Post 161369) Hi

Saint as in hourly chart nifty in consolidation mode i want to buy after uper trend line broken on

hourly bar and close above it

But as i was asking you about volatility should we consider pure pivot cracks or give it some room

if so then how much point sould we consider above that trend line so that we consider break out is

confirmed

Waiting your reply

Regards

Satya



Hi Satya, A break over previous pivot highs is confirmation enough for an entry.......A few rupees over the pivot high break and we are in........ Two scenarios as always;either we are going to get a breakout or we're going to get a failed breakout.......If it closes over that resistance,then all's well and fine......If it dips back and closes below resistance,forming a topping tail....then not happy,most likely an exit and see how things pan out before entering again. By the time we wait for confirmation whether this is a real breakout or a false breakout.......probably the time to sell!!So a definite buy once previous pivot highs crack to the up... Happy Trading! Saint



Quote:

Originally Posted by skarpio I am one more fan of your technicals course I had posted this in some other thread. I have two questions: [1] Is my analysis in error? [2] Where should the stop have been? Note: this post was on 28th Feb 08 -- so if you keep the candles from 29th onwards out, and then dissect, it will probably be easier for me to grasp. Regards, skarpio

Hi Skarpio, No error.....except for one thing.That huge fall forming a big tail on 22nd Jan......now usually that's not how inverted h&s looks like if you factor that tail in.......but you have done no wrong in ignoring the tail,and looking at the candle bodies,and correctly stating that it looks like an inv h&s.Volume analysis also tallies.......The classical trade in an inv H&s goes like this:Buy the high volume breakout over the neckline on 27th of Feb.Your stop would be the low of the right shoulder i.e 98.05.....Give it some breathing space.Put the SL at 97.50.



If you had taken this trade,you would still be in it......your SL at the same place as before.Once Power Grid goes to new recent highs over 113,move SL to the low of present pivot... Well done,Skarpio! Saint



Quote:

Originally Posted by anilsingh1977 (Post 161987) Hello Saint,

I read ur posts with great interest just because they are so informative for a novice like me. I have

fw questions on the market scenario. I would be greatly benefitted if I can get ur replies to these:

1)are we in a bear market based upon yesterds fall?

2)if yes, should I try to exit out of all my positions (in cash market)?

Thanks,

Anil

Hi Anil, Lots of questions.....Are you an intermediate term trader,a swing trader,a short termtrader......If so,you were out a long while ago! If you were trading the long term charts,then you would still be holding on after taking profits,waiting to get back in....... So far we are still in Bull Terrain,but only just....A break below the major trendline(see chart attached) and a close below that puts the Bull Market that started in 2003 in question......A break of pivots and we have a Primary Downtrend(Bear Market). Is this the first move that is going to signify the start of a Bear Market?Maybe.Is this still a decline in an uptrend,and therefore a buyable opportunity?Maybe. So should you be selling everything and sitting in cash.....Well,a good policy in long term trading was always to take off profits(I mean most!)from the table when a long term trend gets into an



intermediate decline.And then to take off the last chunk once pivot analysis confirms a Bear Market.If trendlines don't crack,and charts signal the start of an intermediate uptrend,to go long big time. If you don't have a clue as to what I am going on about........do take a look at the initial posts in this thread.

All the best! Saint



Quote:

Originally Posted by nick721156 (Post 162782) Dear Saint,

When the uptrend line is broken, we say UPTREND is in qusetion. Then again, we say, "A break

below the previous PIVOT LOW, we are in a confirmed DOWNTREND".

My simple question is, "Which previous PIVOT LOW do we consider - is it the last one above the



uptrendline or the one formed immediately below the uprendline once the trendline is broken?".

Hope you won't mind answering my question!

Regards,

Nick

Hi Nick, Always the first pivot low that got cracked to the down.....meaning the last pivot low that got formed in the previous uptrend.Breaking that pivot low is the first time a pivot low got cracked ever since the uptrend began......That break is signal to either get out of longs or go short. Saint


Re: Teach A Man To Fish And......... Picking and choosing the Laws........as always addressed to the beginner.

Quote:

SECOND LAW: Trends that run counter to the next larger timeframe tend to be abortive.

Simple Law basically........we have all types of time frames.And all types of traders trading all types of time frames.For an intraday trader who trades the smaller time frames,keeping an eye on the 30,60min is vital.Why?Simply because of the above law.A trend that runs counter to the next larger time frame tend to be abortive......Important word:Next.Presuming you are trading the 5min charts,who cares for the weekly,or for that matter the daily.......Don't bother!Focus on the biggies in the intradays like the 30,60min.Presuming you are a trader who trades the daily charts,then the weekly assumes importance. Therefore,simply put,if you have a 60min trend that is in a downtrend,and as always,a downtrend is noticed by its lower pivot highs and lows,.......and you are looking to go long on the 15min chart as it gives you a buy signal,remember the above Law!It can get aborted and then the downtrend can resume..........That does not mean you cannot trade long on the 15min charts in a 60min dntrend,if you are fast and not taking a whole 5mins to come to decisions,go ahead,trade long,but remember that this is after all a 15min uptrend within a 60min dntrend,and it can abort anytime!So make your quick buck ...and run!Do NOT buy and then hold it with the hope it 's going to the skies! On the other hand,if you'd rather stay out........you are not wrong either.In the long run,you could be more right than the former(once again,no abolutes,the word could is important).Here,you look to



short the 15min charts in a 60min dntrend,and then when the 15min goes into an uptrend,you stay out.....And then short the pivot break again,until the 60min breaks pivots to the high.Then,it's go long,stay out,go long,stay out till 60min pivots break again to the down. Very important Law to remember....... Happy Trading! Saint



Quote:

NINTH LAW: Trading ranges that follow new trend changes are likely to terminate in the direction of that new trend.

We have gone through this one before.........We get a new trend,let's say an uptrend,followed by a sideways move,a trading range .......expect it to end in a breakout and continuation of the prior uptrend. Also remember this.....There is nothing Absolute in Trading......If a trading range does not breakout,then most traders expecting the Law above to work are in for a rude shock. Either way,trading ranges are sweet........most probably they are going to breakout.Profit from it.If they don't,and they breakdown,Profit from it.If they do,and then fall........you'd be long,stopped,and then short.Profit from it. Happy Trading! Saint



Quote:



TENTH LAW: A dominating trend will generally run until the next larger timeframe can provide offsetting support or resistance.

Presuming we are trading the 15min charts again,taking the previous example,higher pivot lows,higher pivot highs.Strong Uptrend.Taking out many resistance levels as Price forces its way upwards. And then we notice that the 60min comes into an area of supply and starts to stall,this time it does not blast through the resistance,it stalls.At the end of that hour,that 60min bar closes at that area of resistance or below it.Expect the next bar to go down in the 60min charts. It's our cue to take some off the table.....a 60min correction is nothing but a 15min downtrend.Don't let your mind wander off into thoughts like "Anyway,we are in a 60min uptrend,why can't we just wait out the correction?"We are trading the 15,not the 60.......we have the 60 stopping at resistance.Take off some,and then all once pivots crack. Never fight the larger time frame.....if it gives indication that a move is over,it has come to its resistance,it's tired,it's going to correct......forget fighting it.Run!! Not too sure if got way out of point......babbling away at 2:30am has its disadvantages!:eek: Happy Trading! Saint



Quote:

Originally Posted by lvgandhi (Post 163610) Dear Saint, should we go short as soon as previous pivot low is broken or wait to get lower pivot

high than previous pivot high?

Once a previous pivot low is broken,you are looking to sell off your longs and stand aside.....and if within your plan,short the reverse. Presuming you get a break in pivot lows and you are short,and price goes on to make a lower pivot high as described by yourself,then you could add to your shorts once the current pivot lows are taken out as Price heads even lower.And move your SL to current pivot high. Saint





Quote:

Originally Posted by Raju (Post 163972) Hi Saint,

I have a query regards trading method. What exactly should I do? Please guide.

I am in this market for at least one year.

What I have learned is I am able to pick a scrip, let's say today I will pick a particular scrip Buy

100@100 /- .which many a times will go up in 1-2 days (max).

My observations are it usually moves up at least 5-20 rupees in 1-2 days.

With my brokerage if I buy 100@100 and sell tomorrow let’s say 100@110, I will get at least

876/- excluding brokerage.(Cash Market)

My problem is I am with Share khan and have tried BTST in Cash market with different scrips.

My trade almost every time goes for Auction. So I have stopped BTST in Cash.

I want to continue with buy today sell tomorrow or day after tomorrow..Please guide me as what

type of trading I should do…..

Do I have to try for Future or Options anything else..

Or should I change my broker to other which manages BTST calls..

I tried in 3 scrips..PSTL/CAIRN/RNRL..

Kindly guide…

Raju

Raju,best to post at the Brokers Subforum........you would probably get better help on the nitty-gritties over there. When I go delivery,I tend to hold for much longer periods.......daytrades or very short term trades,I use futures.....so cannot help you on this one!Apologies! Saint




Re: Thanks SGM.

Quote:

Originally Posted by jamit_05 (Post 166266) Thank you SGM, for pointing me towards this thread.

This thread has solid ideas, more so cuz they are simple and clear.

My concern right now is: Now that stocks are in a confirmed downtrend, what do

Traders do? Will these concepts readily apply to other markets like commodities or

forex?

Kindly advice.

Amit.

Hi Amit, Trends apply to all markets and al time frames.......but some are just too scratchy to observe any trend,and therefore we are given the free will to keep away from trading such charts(if you are a trend follower,that is.) Now that we are in a confirmed downtrend,our mission is to short any rally and cover off during the declines.......if you are an intermediate uptrend trader and do not do Futures,then your aim is to capture and squueze the trend out of an intermed uptrend,and once that trend cracks and charts put up an intermed dntrend(like now),then sit it out.......Have a good time with your family,enjoy,go for a vacation........but get your cash ready,and once charts signal a resumption of an uptrend,then you are back in business. All the best! Saint



Quote:

Originally Posted by prabhjeetrana (Post 166959) Hello Saint,

I was watching the Educomp chart where you had taught the buy set up on weekly charts. I have



observed same kind of set up on ONMOBILE charts, but my poor mind has some doubts:-

1. The Pivot high of 655 has not been cleared though we have a higher pivot high, so do we take

the trade or wait for 655 to be taken out.

2. Secondly if i wait for 655 to be taken out the stop would be at pivot low of 455, so the

risk/reward ratio may be highly scewed and the target would have to be atleast 1255 for

risk/reward of 1/3, is it advisable to take such high risk or can i take a position at clearing of last

week top at 515 and stoploss at 455 pivot

Regards

Hi Prabhjeet, So far on ONMOBILE,we have a rally the last few days,we have a weekly set up taking out the previous week's high. Previous Pivot high on the daily=588.90 Now,do NOT wait for previous highs of the weekly to get taken out.......you have the first criteria already,weekly taking out previous high in an uptrend,now wait for the pivot to form on the daily.....you got that pivot as of yesterday and today. The buy would be the high of today's bar,with the stop a bit below today's bar. Saint


Re: Teach A Man To Fish And......... Few other scenarios: The charts in ONMOBILE just went vertical and no pivot low was formed,a straight up V-shaped recovery vertical move........then the entry would be over the previous pivot high of 588.90(I would get in partially for the simple reason my stop is too far away). Saint



Quote:



Originally Posted by djsinha (Post 167045) Prabhjeetrana, we have a higher pivot low only. We'll acc to our system, wait for the pivot high of

652 to be overtaken. We place our trade above 652 with stoploss of 455. Don't enter now. Let it

take out it's prev pivot high of 652.....only then can we confirm that it's in a uptrend.

Nope,DJ.......No need for that......this whole game is about probability,assessing risks and taking rewards....Even though we are trading the intermediate uptrend,we are still trying to fine tune our entry as per the daily charts. Weekly Charts:Higher pivot lows signifying uptrend,took out previous week's high.......right,that's it.Nice....but an entry fine tune as per daily charts. Daily Charts:Nice rally....If this takes out 588.90,in above that previous pivot high.Else,once a pivot is formed,enter above the high of that pivot formed(in this case tomorrow if that happens)....... You want the daily pivot low to confirm ....and therefore we wait for that pivot to get taken out.......But weekly,so long as an uptrend persists,you are buying declines,and the moment you get an inkling from the daily,you are in....Waiting for the uptrend to confirm is too high risk.....Hope you understand,do get back to me if doubts persist.

Quote:

Comming to your 2nd question, When we enter at 652, 455 will be our stoploss. Acc to MM rules, total amt u buy will be (x% of total money u want to trade)/(buy price - stoploss). where, x = allowable risk percentage u want to bear. That's it. We don't consider target while trading. We only try to manage risk. And let our profits fly.

Nothing wrong with all this.......except entry not at 652,and stop loss not at 455

Quote:

Saint will be in a position to give u better view. (I've attached chart of onmobile). Cheers djsinha

All the best,DJ Saint




Re: Teach A Man To Fish And......... 1 Attachment(s) ONMOBILE daily chart attached!

Saint



Quote:

Originally Posted by prabhjeetrana (Post 167222) Thanks a million Saint, you have cleared all my doubts very well. It seems that you agree that

taking out last week's high was a signal enough that the uptrend on weekly is present. So we can

take an entry on the basis of Daily charts, that allows us to have a entry before masses will agree

with the trend and will have to pay high premium for late entry. It is ok with me to anticipate a

move and if that does not develop then i am ready to be stopped at 455 stoploss.



I think Saint has made it very clear that we can anticiapte the trade and positions should be taken

accordingly.

BTW, i am sorry that I didnt make it clear which time frame i am trading. Well, I am looking to

trade daily charts based on weekly charts.

Regards

You are not anticipating a move...........you are letting it happen before you slide in.Anticipating is when you have a weekly downtrend,a daily downtrend and you think "Yep,we have had this one up day,this is the bottom,the numbers say so,my broker and my astrologer concur on that one...." In this case,you have a criteria for an entry.......you will enter only in an uptrend,and therefore once pivots are in line,you are in.You are buying over a pivot high with the stop in a previous pivot low on the daily charts.....you are therefore staying clear of thegreat evil of anticipation,and trying to go with the flow. In this case,the weekly may go on to new highs,may be not,is this an uptrend or a dntrend,once again,not enough data.......what you are doing is you are trading this off the daily charts and getting out if pivots break,or if initial stops are taken out. And as traders,we play probabilities.......So,we buy the high of yesterday,stop below the low of yesterday,and if stopped out,well,all part of trading,we move on........Just like the tiger that stalked and stalked and pounced at an opportune moment,and yet the deer managed to escape......well,he comes back,and gets ready to pounce on another one. If we had enough data,and the weekly was in a dntrend,would we have taken this trade?Yes,but not as a position trade... Saint



Quote:

Originally Posted by nick721156 (Post 167655) dear saint,

in case of weekly chart, a higher pivot low indicates an uptrend, took out previous week's high.

1.0 i want to know if we wait for the week to close before considering "higher" than the previous

week's high; or, in the middle of the week, if the candle takes out the "high" of previous week, still



it is a valid set up. Because, at the closure of the week, closing price may be lower than the "high"

of last week. Secondly, whether in the middle or at the end of a week, shall we consider the closing

price as "high" or top of the shadow as "high" ?

Yep,weekly putting up higher pivot lows and highs.......the weekly is in an uptrend. Nope.......once you are clear that the weekly is very much in an uptrend,then drop down to the daily charts......once the daily puts in a higher pivot low and high,you are in. Also,I buy the breakout,and then on it's all adds .......no waiting till the weekly close confirms the breakout.What happens if it was a fake out......dragged you in to the trade and then dumped?Happens,my friend......take your stops,wait and watch,and stalk,......and pounce back in at the next opportunity.

Quote:

2.0 once we enter using the daily chart, which chart shall we follow for exit-daily chart or weekly chart? hope won't mind clearing my doubts! regards, nick

The daily charts...... Saint ps:Will pump in a few charts today .....hope it helps!


Re: Teach A Man To Fish And......... 1 Attachment(s) Have a look at the chart below of Reliance Inds...... There was an ascending triangle put up in the 2004-2005 area.......we then get a breakout.We have no idea as to whether this breakout is going to hold.We then have a pullback at the first blue arrow .......the weekly just signalled a higher pivot low.Once that pivot high is taken out,we are long either



way,whether this trend holds up or not........simply because that's what we do.We are traders,we look to make profits,we get our signal,we go long,put our stops and wait. Every blue arrow shows that higher pivot lows are being formed.......first break of the pivots is at the red arrow. Above every pivot low once it takes out the previous pivot high is your add point. Once a previous pivot low is cracked,this trend is over......means it's not removing the profits time,it's getting out in toto time. This trade is for the traders who trade the longer term charts........bigger risks,more left on the table,more profits......traders nevertheless because we don't care to hold it another minute once the trade goes against the rules that we have set for it.

Saint


Re: Teach A Man To Fish And......... Simplistically put..... UPTREND is made up of a series of higher pivot highs and lows.



DOWNTREND is made up of a series of lower pivot highs and lows. What your eyes are looking at in an uptrend is the pivot lows,.......decisions are based in an uptrend as per the pivot lows. What your eyes are looking at in a downtrend is the pivot highs....decisons are based in a dntrend as per the pivot highs. The first crack of a previous pivot low is the end of that uptrend. The first crack of the previous pivot high is the end of that downtrend. Saint


Re: Teach A Man To Fish And......... We have a trend,presume it's a downtrend,and then we get a move up.......that move up is a rally within a downtrend. Every 2-3 bar move up is not called an uptrend. Proper perspective as to where we stand is vital........A rally in a dntrend is a rally in a dntrend. Can we profit from it?Sure,in a lower time frame.........A rally in a weekly downtrend would show up as an uptrend on the 60min or daily charts. But then that trade is as per that particular time frame. Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) As said in the previous post,a rally within a downtrend is not yet an uptrend........A decline within an uptrend is not a downtrend.



Examples of Rally within a Dntrend and a Decline within an Uptrend in charts below.

Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) Have a look at Tech Mahindra charts below.....or any for that matter as of now. Tech Mahindra was in a Downtrend,lower pivot highs and lows......then a week back,a break above that previous pivot high,and then sideways consolidation.........and then a breakout.The Daily is now in an Uptrend. Have a look at the Weekly Charts......still very much in a strong downtrend,all lower pivot highs and lows. Do we trade or do we keep away? Intraday Trader :There's always a trade 60min trader:Nice trade,you are going to be long until you get a pivot break in the 60min charts. Swing trader: Daily chart breakout,you are in long.You are nervous as you know that longer term charts are going to kick in sometime......but hey,why not make hay while the sun shines?Any



previous pivot low crack,and you are out.......... Position trader:No trade....Still on vacation.



Re: Teach A Man To Fish And......... Look at the WEEKLY for perspective if you are trying to trade the daily charts.........Entry is off the daily charts,exits are off the daily charts. Taking the TECH MAHINDRA as an example,you bought the breakout from the consolidation,you are thrilled with yourself,it goes up even more.....and more.You are now convincing yourself that the bottom is in place,the numbers are good,the FM said something about the economy to your liking......In your mind,you have shifted from daily charts to super long charts.....You are thrilled with your buy,but you failed to realise that the weekly is still in a downtrend,and for it to get into an uptrend,it needs to do some grinding here and there.......When pivots crack on the daily ,you refuse to come out of the trade,......till a weekly chart declines takes your profits away....and then some more!! So what did you do wrong?You entered a swing trade and then made it a position



trade.............Cardinal Sin,you never change your time frame.....never,ever....ah,yes,one exception:You bought once previous pivot highs on the daily are taken out to the up........it was a swing trade.It then blasted off.....and you kept trailing stops....and then the previous pivot highs on the weekly get taken out as well,.......I'd still take profits off,but then and only then can you say that this trade which was meant as a swing trade has just become a position trade. Other than that scenario...........respect that time frame that you are trading. All the best! Happy Trading! Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) It's not that we buy so long as weekly and daily are in line...........We want to buy that point when the weekly is in a decline in an uptrend and the daily is in a downtrend,and when pivots signal a change in that downtrend to an uptrend........we want to get in there. Have a look at the chart of RelPetro........Please,please don't get in there!!! Had a mail sometime back asking whether he could enter long or not as the Weekly and the Daily are in line.....just as Saint said so......Sigh!! Knowledge is Power,my friends,but half knowledge can lead to great destruction....so careful!



Saint


Re: Teach A Man To Fish And......... Okay,one more popular doubt... "Do I bring the stop loss to breakeven once I am in profits,and if so how much?" Ans:Our job is to Go with the Flow,Ride the Trend..........so either trail stop to the low of 2 bars ago,or 3 as per your rules,or to the previous pivot low,or some other startegy that you have........there will come a time when the Stop Loss would reach Breakeven,or higher. The trail stop is as per the charts.......not as per where we entered.Bringing stops to breakeven just because we are in some profits is not going with the trend,not going with the flow of the trade.....and cutting a trade short before it was allowed to reach its full potential. Trade the Charts,..........Have a Plan and follow it! All the best! Happy Trading! Saint




Re: Teach A Man To Fish And......... Prabhjeet, Arrow no 1 and 3 are downtrends,they are forming lower pivot highs and lows as all dntrends should...........it's the violation of a previous pivot high in both cases that give us a trade. Arrow no 2 ,not sure if that is just a freak trade,or prices sank to those lows and then blasted back up........if it's the latter,the stop loss is at the pivot low and we are rigid about it.If it did hit,we are out.....we might probably look to reenter once we get a setup,but we take our stops if hit. Saint



Quote:

Originally Posted by prabhjeetrana (Post 168309) Saint can there be an alternate strategy where we can use two time frames and consider the larger

time frame to be the one that decides the trend and keep on attempting reentries even if the pivot

low cracks on the chart with smaller time frame.

Attaching weekly and monthly charts of nifty to illustrate the strategy

Ah,Prabhjeet,hope you meant this post as a joke......What you posted,that's what I have been screaming through this whole thread,the last many years!!!!!!!!!!!!!!:eek::eek: This is the strategy ........if this is the alternate strategy,curious to know THE strategy!!:) Saint

Saint 2nd April 2008 01:36 AM




1 Attachment(s)

Quote:

Originally Posted by jamit_05 (Post 168628) To make sure that I am in line with this example I have picked TECHM's uptrend in Daily and

shown trades in the hourly chart. Please refer to the charts in the attachment and let your

comments flow.

Amit.

Nope,Amit.......have a look at the charts again.

Saint

Saint 2nd April 2008 01:42 AM


Quote:

Originally Posted by sanx (Post 168761) I need to ask , we have many indicators and charts .



1.What are first and essential things you guys looks out for ?

2.What is the first chart to look out for ? , like volume chart , RSI , MACD ? .. do you have any

thing like priority . Like first look are RSI ,then confirm this with volume , then with some other

chart and then with sochastic ...some thing like that in an order ?

3.How to identify and eliminate false triggers ?

4.Can you guys list out few of the trading stocks ? and how to look out for a trading stock ,like

should there be huge volume with less price movement or less volume with high price movement ?

Hi Sanx, 1.Price,volume,pivots,patterns 2.No priority.....to get a whole picture by anyway possible! 3.I don't... 4.Preferably,huge volumes and price movements. Saint



Quote:

Originally Posted by shekharinvest (Post 169912) Saint,

I have been going through this thread quitely for months now and done it couple of times was still

unable to digest fully but one joke ??? (was that a joke or the gist of the thread as elaborated by

you) from Prabhjeet has cleared the cobwebs of using twin time frames.

Thanks to Prabhjeet and many many thanks to you for this wonderful thread

Shekhar

Yep,Shekhar.........basically I do not advocate you trading off the weekly charts.Simply because I am not sure if you can manage the risk involved.Therefore,always sticking to the formula:Look at the Weekly for Perspective,Trade the Daily charts,meaning the entry,exit,stop losses are all in the daily



charts.You are out on a pivot break on the daily charts. Can't the weekly be traded?Sure,it can.......used to trade the weekly charts in the thread "New Intermed Uptrend",with the monthly as perspective......can you hold the declines,the simple pullbacks,I don't think so,need a bit of stomach there..... The basics:Look at the larger time frame for perspective,trade the smaller time frame. Saint



Quote:

Originally Posted by djsinha (Post 170113) REIAGRO may be a good pick nowadayz. The weekly is in an uptrend. The daily is also in

uptrend. Posting the charts for both weekly and daily.

Bearish Divergence in RSI in the daily is an area of concern, however.

Cheers

djsinha

I would stay away from it,DJ......looking more and more like a Rising Wedge to me.....which is bearish. Of course,bearish divs on many indicators,if you do look at them.... Entry was in Dec last week.......this looks like a rally that is now huffing and puffing and seemingly running out of steam. Saint



Quote:



Originally Posted by nick721156 (Post 170162) dear djsinha,

you are right. both daily & weekly are in uptrend. yet, going by the teaching of saint's, i personally

feel that position traders should take wait & watch policy for the time being as daily charts of both

the broader indices are in downtrend (although weekly charts are, so far, in uptrend).

i may be wrong, please correct me.

regards,

nick

I don't usually look at broader indices to trade a particular stock.....and if I were trading REI AGRO,I would still have bought breakouts in Jan and Feb when mkts were tanking.............but now looking toppy. I am looking at the gradient,the patterns......I personally would stay away from it. All the best! Saint



Quote:

Originally Posted by jamit_05 (Post 170536) Hi shrineha,

Recently I had the good fortune to learn from Saint in person. (Thank you Kol members for

providing such an oppurtunity; forever indebted. I now have a new found respect for Ashishda's

sincerity and intellect.)

Saint started off saying that:

1. Higher highs and Higher lows of consecutive bars is a rally

2. Lower highs and lower lows of consecutive bars is a decline. (There is no trend yet!)

3. The top of the area in between the two, i.e Rally and decline, is the pivot.

Consider the above as a guideline not a definition.



Amit.

PS: Thanks to my roomate SGM, who told me to look at a 1000 charts before asking any further

questions (and now I think my eyes are sore). Tks for putting things into perspective SGM. Indeed,

it was a pilgrimage of faith!

It was indeed a great pleasure to have met up with you.....and totally agree with SGM,a 1000 charts,maybe more....and everything just springs out of the charts.....yep,occupational hazard is sore eyes:),but worth it!! Just to clarify that one point........what does the word"guideline" or "definition" mean? Either way,what I mean is :Pivot high is at 100,meaning my entry IS at 101 as per my filter given. It's rigid,it has to be like that every time,again and again.......there is no compromise,the entry is there always,stop loss always below the previous pivot lows........Everything is a hard and fast rule,will not budge from it!... All the best! Saint



Quote:

Originally Posted by prabhjeetrana (Post 169932) Too much has been said without understanding too little. Let me take some time to explain whats

the essential difference b/w how I would and Saint would be different.

Accoding to Saint whenever a Pivot low would be cracked on shorter term chart ,we will look at

longer term time frame and if the trend is up we will just get out of long trade and wait for pivot

high to be taken out before going long again, but according to my strategy we dont wait for pivot

high on shorter time frame to be taken out again instead we take the position on long side as soon

as previous bar high is taken out on short term chart. Low of the last bar is taken as stoploss.

No harm in that provided you are trading the intermediate uptrend........that is the weekly charts.There is a difference in the way weekly behaves and the daily behaves.......Let's get to it.In a monthly uptrend,weekly goes into declines and on to newer highs,only every now and then a



No harm though if you don't mind losing quite a bit in brokerages and overtrading to get that absolute bottom.......but can get very painful after some time. To reiterate: TRADING THE WEEKLY-----LOOK AT MONTHLY UPTREND------YOU ARE LOOKING AT WEEKLY DECLINES TO ENTER,MEANING THE MOMENT THE PREVIOUS BAR'S HIGH IS TAKEN OUT,WE ARE IN. TRADING THE DAILY-----LOOK AT WEEKLY UPTREND-----YOU ARE LOOKING AT DAILY DECLINES,BUT HERE YOU ARE NOT ADDING THE MOMENT THE PREVIOUS BAR'S HIGH IS TAKEN OUT,YOU ARE INSTEAD WAITING FOR PREVIOUS PIVOT HIGHS TO GET TAKEN OUT TO ENTER. WHY?That's the way longer time frames behave.....and this is the way shorter time frames behave. I have not been advocating too much about weekly trades purely because I don't think the risk can be managed by the readers of this thread who are usually the beginner..........There really is no harm in doing so if you can manage it.

Quote:

This strategy has an advantage of taking much less riskier entries but the disadvantage is that we will get caught in many false moves.

Actually if you are talking about trading the weekly charts,more or less correct........but very wrong if you are trading the daily charts.....You are putting money at great risk by anticipating an entry in a dntrend,and of course the very many false moves.

Quote:

For anyone thinking that I have just jumped the gun without understanding what Saint has taught, plz. be assured that I have read Saint's all the teachings atleast 5 times and was trying to just put few of my modifications to work. Though I will like to add that my modification is not as good as original and everone should follow Saint's strategy only

No harm in adding,modifying,changing and finally making it yours..........

Quote:

There was another question asked somewhere by JAMIT that why I have taken 10% filter for pivot



cracks, well the reason is that there are many bull and bear traps for smaller traders and I have tested it myself tht 10% filter has allowed me to stay in many times during false moves, will illustrate it using charts given by Saint

I would never use the 10% filter simply because I want to get out if pivots crack.......As said before,I do not want to second guess the market.Pivots crack,I'm out......If fake-out,will look to reenter....so no question of filters,etc.But no harm in trying out new things though..... All the best! Saint ps:Sorry for the caps above.......they are meant to emphasise the point.


Re: Teach A Man To Fish And......... 1 Attachment(s) Presuming I am a Weekly Chart Trader.....and I want to look to enter ABAN OFFSHORE.....I look at the Monthly Charts,I see a breakout,.........now I look at the Weekly charts,and I try to buy the moment the weekly decline is arrested and starts to rally.....I am not waiting for new pivot highs. All the blue arrows are pivot lows and declines and will try to enter once price starts to shoot off,usually signified by taking previous bar's high,or above the high of a sideways consolidation.



Saint ps:This chart is only telling pivot lows and possible entry areas.


Re: Teach A Man To Fish And......... 1 Attachment(s) Entries and Exits on an ABAN WEEKLY .....stop losses not indicated,as always the pevious pivot lows.



Saint


Re: Teach A Man To Fish And......... 1 Attachment(s) A few definitions using DIVIS LABS regd Uptrend,Downtrend,Declines,and Rallies...... As always,we look to buy declines in an uptrend on the weekly charts,but we never,never buy in a downtrend. We look to short rallies in a downtrend,but we never look to short an uptrend.



Saint



Quote:

Originally Posted by prabhjeetrana (Post 170856) Thanx Saint, will try to grab whet you teach in your further posts and may be try to clear my mind.

Just one question Saint that has been bothering me. As you have told that we look at larger time

chart for perspective and trade shorter term chart. Suppose both weekly and daily is in uptrend

and suddenly daily breaks the pivot low. My question is :-

1. Where should we reenter, at the start of a new rally (higher lows and highs on daily bars) or do

we wait for pivot high to be taken out again for entry

2. When do we pyramid

Hi Prabhjeet,



"The answer to prabhjeetrana's first question is that we enter at the break of a pivot high in daily. We cannot enter merely at the next rally, since it is not proof enough of the change of daily trend. But a break of a pivot high is." Same as said by Amit above to your first question......only above pivot high confirmation on the daily,different story though if you are trading only the weekly charts and not looking at the daily charts(as described in last few posts in previous page). Where to add?Every time we get a pivot low,and then goes on to break that prev pivot high,add there and raise stop loss to that very pivot low......Once again,same as above,the add entries like the initial one is a break above previous pivot high. All the best! Saint



Quote:

Originally Posted by jamit_05 (Post 170878) Hello Saint,

Now my question:

Pivot highs are broken in two ways.

Case 1: by making a previous higher pivot low.

Case 2: by making a previous double bottom or a lower pivot low.

Therefore, do I enter at the break of a pivot high irrespective of the above two cases?

My argument really is, Case 1 sounds more solid but then again we want to cathc trends. So there

is chance that due to addition of such a filter we might lose out on few such trends. As a result we

might be in a situation where we'll end up with a comparatively longer streak of losses.

Please comment.

Amit.

Hi Amit, If we get a higher pivot low and then a break above previous pivot highs,much yummier..........But either way,we are waiting for that pivot high to crack before entry.....even if we get a lower pivot



low and then a blast off move above previous pivot highs. There is,basically,no change in that downtrend till that previous pivot high is taken out. So,as far as pivot method is concerned,we wait till pivot highs are taken out........but do have a look whether a breakout from a falling wedge or a descending triangle failure gets you into the trade even before pivots crack. Saint


Re: Teach A Man To Fish And......... Have a look at this post by Sanjay(SGM) in another thread.... Some good stuff regarding Trading Plans,Business Plans.....very important!Do have a look if not already done so.......Definitely have a written Trading Plan if not already done. http://www.traderji.com/technical-an...tml#post166325 Saint



Quote:

Originally Posted by Tapaswi.S (Post 171074) Dear Saint,

This is SENSEX Daily chart. does this qualify a falling wedge?

regards,

Tapaswi.S

Nope Tapaswi.......running in a channel to the down.As far as patterns are concerned,I'd like it that the pattern just jumps out of the charts........in this case,you could draw triangles,or wedges,cups and handles,h&s.......looks like a pattern there for each one of us.



Not clear cut,and therefore would not call it a falling wedge..... Keep em coming,Tapaswi....some good stuff from you last few days! All the best! Saint


Re: Teach A Man To Fish And......... Wishing the Punjabi,Bengali,Assamese,Tamilian and Malayali brothers and sisters who celebrate their New Year,......yesterday,today and tomorrow.....a very Happy New Year. May this year bring you great happiness,health and prosperity!!! May this year be that year where you a resolve to have a Trading Plan and abide by your rules strictly.May this year be that year where you stop blaming external factors for your losses and wins,and take them all on your own shoulders.May this year be that year where you realise that what you can achieve in markets or in Life depends on the limitations and shackles as put forward by your own mind..............May this be that year where you take your accounts to new levels,and then on doing so,give some away to the people around you who need it more than you. All the best! Saint



Quote:




in weekly chart, balrampur chini had come out of downtrend sometime back and now, in my

opinion, is in sideway move. shall i take position now itself as this week has taken out the high of

previous week or once pivot high (PH1) is taken out?

clarify when you find time.

regards,

Nick

Nick, As you are talking weekly,for a perspective,take a look at the monthly....Have a look at January,one bar down after that these three months have been sideways........So far,is this a higher pivot low,getting ready to take out pivot highs?Or is this some sort of a bear flag,ready to go down? No answer to that one..........therefore if trading the intermed trend,stay clear of anticipating on this one.React to a move in either direction......Enter long over 127,short below 69,stay out of the rest.... Saint



Quote:


which one is pivot low " A ' or ' B ' in the chart ? Have i drawn the trendlines correctly?

regards,

nick

Both are pivot lows.........but the one that's important to you as a trader is the first pivot low at the rising wedge top.Short the break of that pivot low.



But yes,theories wise,both are pivot lows. Great job on the trendlines,my friend.......well done!! Saint



Quote:


i am posting a picture of weekly chart alongwith a question. Would be glad to have your valuable

answer.

regards,

Nick

Some interesting questions from you,Nick.....all practical trading related. Perfect scenario:Weekly decline,buy the pivot high break on the daily Presuming by the time you realised the existence of this stock,that first week denoted by A in your charts is over......Buy on daily when the previous high of Week A is taken out,follow pivot lows as per daily charts. If even this was missed,look at daily pullback and once prev pivot highs are taken out,get in with a stop at prev pivot lows. Presuming you have missed the whole run-up,some 5-6 possible entries........look for another opportunity elsewhere! All the best! Happy Trading! Saint


Re: Daily higher Pivot Lows (DHPL)



Quote:

Originally Posted by jamit_05 (Post 172942) Hi Saint,

This twist is an interesting one. We are now learning to work with probablities. I mean, we are

buying @ DHPLs . Even though we know that over 50% DHPL tend to fail.

:confused::confused:........entering at higher pivot lows only on certain cases,certain patterns that give us a higher probability of success....as said before,like entering within an asc triangle(small position)......please don't buy at every higher pivot low with a tight stop loss.....that's not what was indicated.

Quote:

So, thus far I have learned that in such precarious situations it is wise to enter only with tight stops and exit a good chunk when the hourly starts to deccelerate. It is very likely that this 1-2-3 setup might not fall through as desired so we put some cash into our pockets.

:confused:..........nothing like that!Buy because you are anticipating a breakout in certain instances with tight stops below pivot lows on the daily.

Quote:

But, once the daily trend is in place you'd follow the Pivot-Trend method.

Yep!

Quote:

(Question) The most important part of this ruse is that we enter with tight stops. Is there a by-the-book way to do that? Amit

Entry is simple......enter with stops below pivot lows........the question should be which are the instances when this should be done?Do we anticipate in every instance?Answer to that one is no......React as always to pivot highs getting taken out.Anticipate in only a few cases.......Now,which ones is the question.



Saint



Quote:

Originally Posted by lvgandhi (Post 172818) Dear Saint

CNXIT has broken previous pivot high on 16/10/08 on weekly. But it has not formed higher pivot

low still on weekly thought on daily it has borken previous pivot high on 25/03/08 and formed

pivot low on 01/04/08. Can we say that weekly of CNXIT is in uptrend only now or earlier sothat

we can trade/go long in daily? When we should have gone long in daily?

I would have caught that breakout over 3945 although weekly gave no confirmation,more as a short term trade.........From here,there are only 2 things that it can do......go on to make higher highs,or it stalls here,and makes a mild pullback. I'd look to go partial long if next week's candle can take out the high of this week......and then add later once weekly gets into pullback mode and makes higher pivot lows. Saint



Quote:


posting an image of cipla daily chart. it is gradually forming rising wedge- bearish indication. so

we need to be careful! am i correct?

regards,

nick



Yep,some sort of a rising wedge..........more clear on the monthly charts......not looking good at all....Keeping it on a 'short' watchlist,...........CIPLA is in a Primary Downtrend,not Intermed but Primary...aka Bear Market.....meaning this rally is a relief rally of sorts within a bigger decline. If you like to trade short as much as you like to go long,keep this on your watchlist for a short when it dumps. Saint



Quote:

Originally Posted by Sharestar (Post 173491) Hi Saint,

First of all a big thanks for your pivot trading technique. I have been practicing it since last two

three months with my online trading account with a quantity of just 1 share and was reversing my

position with 2 shares when I am stopped out - so i was always in trade whether up or down with

open position of 1 share. Since I was trying it out with a minuscle quantity it did not matter

whether i was wrong or right as i wanted to learn why i am right and why i am wrong.

This system works wonderfully in trending market but gives whiplashes when I am trading shorter

time frame . I tried to time my trade with few other indicators and it is working at its best.

My Query :

Set up is -

A stock is in weekly uptrend and I have entered a long trade when it has broken a pivot high on

daily time frame.

I have set my stop loss on break of immediate pivot low on daily time frame.

Now -

Once I am in trade at break of pivot high - stock just inches up and retraces back the whole up

move back to pivot low and just inches down and my trade stops out - at a deep loss. Some scrips

have a range of 30-40 rs between pivot highs and lows and when they are forming expanding

traingles - you get stopped out at both the ends. How can you avoid such a trade ?

You can't........one enters as planned,stops put in as planned,and if stops are hit,exits as planned.Position sizing is vital though.Position sized properly,one shouldn't feel any pain if



stopped.Some stocks have a stop a Rs 100 away,that's not the problem.Question is:If I bought 100 shares of a stock,and it has a stop a 100Rupees away,then the risk I am putting myself through is Rs10000/=...........If I find losing 10k tough and painful,then position sizing is not done properly.Probably I should have bought lesser amount of shares.......Calculation of position sizing is somewhere in this thread,it's very basic,nothing fancy,just go through it.....

Quote:

I tried to follow my trade daily - and since was getting stopped out , i tried putting my stops on smaller time frame so that I can save on my losses - but that didnt help. It did reduce my losses , but logically i was not correct and was not knowing why should i change to shorter time frame.

If you are trading the daily charts,that means,you are looking at pivots on the daily.......stops are as per the daily.If trading the hourly,then stops are as per the hourly.You could fine tune an entry usng the 60min chart.But stops are as per the daily charts.

Quote:

Also while stock is perfectly exibiting a trend , sometimes the false opening prices use to distort my charts and even indicators and they were giving me false moves. I tried to rectify this by ignoring this price or the movement for first half hour. But than it was not helping always. Does this false opening prices signify something? Is it some kind of a signal that says - the stock should go in that direction and near that price. ( my assumption )

Sharestar,give me a chart,an example......we could go through better when I can see what you see.

Quote:

Also sometimes , stock remain in sideways for long time and you get stopped out at the both the points leaving nothing on table. My understanding :confused: we can avoid this loss only by knowing that the scrip is a avoid / it is making expanding traingles ( but that I will know only after few loosing trades ) / scrip is in sideways ( that will take atleast two loosing trades ) But then how u can know this ? How to know when not to trade ? Your help will be appreciated as always. Thanks for everything. - Regards

One sets up entry points,and stops,and all that......one also sets up rules that prevent us from trading



a few moves,like "If 60 is in a dntrend,and 5 gives me a buy signal,I am not taking it,except if the fall in the 60 is too strong to the down,and a bottoming tail on the 60 indicates a change in trend." The rules keep me out of many bad trades,and sometimes some good ones.....but that's trading.And a clear cut signal for an entry,.......I take them all.Some fail,some don't. Importantly,change the mindset from....."This has gotta win,because of the fundamentals,technicals,economy,neighbour who is an investment banker said so...it must win" to "Every trade has a possibility to move either way,one enters when the probability of a move in that direction looks greater.One also realises that it could very well change and go the other direction.Therefore one has safety nets to get out and probably reverse." Take the "I do..." out of the trade,and go with the Flow. All the very best! Saint

Saint 22nd May 2008 03:13 AM

Re: Queries From students of Saint

Quote:

Originally Posted by sachin_jain3 (Post 179994) Hello Everybody,

I am a long term investor, but i want to keep track of important long term trend reversals to ensure

that i exit at the right time. I have invested in the indian stock market using some good mutual

funds. I have been tracking the sensex's long term chart based on the saint's thread to ensure that

the sensex continues to be in a long term untrend while i am invested. Also I had done a trendline

on the sensex chart to ensure timely exit in case the trendline is broken.

Have a look at the chart attached. Clearly the long term trendline that i was following is broken.

So i have booked some profits in my MF portfolio aleardy. But the last pivot low PL1 is still

greater then the one before it (PL2) i.e. PL1 > PL2. So the uptrend is still not broken? There is no

new pivot high that has been formed after PH1 according to me, so we wil need to wait and see if

the new pivot high is lower then PH1 to confirm if the uptread is broken.

My dilemma is how do I confirm that a new pivot high is formed? I want to exit my remaining

position if the pivot high is lower then PH1. Is there a way to know how much time it may take to

form a new pivot high and how do we confirm that a pivot high is formed.

I have marked other Pivot High and Pivot Lows based on my understanding of the chart. You are

welcome to correct the same.

All comments welcome.



Sachin

Hi Sachin, First it's important to analyse if you are trading the weekly charts......which means we honour previous pivot lows and highs on the weekly charts......If it's the weekly pivot low that you are looking at,the last pivot low before the dntrend was on the week ending 20/12/07 at 5676.70.....If and when this pivot breaks,the uptrend is over......No such thing as making lower pivot highs to confirm the end of an uptrend......Break of prev pivot lows and you are out of that trade. On the other hand,if you are a long term trader,benefitting from the Primary Uptrend,your entry was in July 2003 and still in the trade.........If lower pivot highs are made and then previous pivot lows are broken at 4468,your trade that started at 1140 would have come to an end as the Bear takes over. And if you were trading the weekly chart uptrend using the monthly as backdrop,then again you would have exitted in the third week of Dec and probably reentering soon once 5300 is taken out. Any of the ways,the break of previous pivot lows is the end of that uptrend on that time frame........no more confirmation is required. And remember,in an uptrend we are looking at previous pivot lows.......in a dntrend we are looking prev pivot highs........Break of pivot lows is what we are looking for to exit. Hope this helps to clear some doubts........do get back if doubts persist. All the best! Saint



Quote:

Originally Posted by babidash@************ (Post 181196) Hello SAINT,

I am quite new to stock market and the forum too...yesterday fast_rizwaan told me about (Teach a

man Fish). Till now I read up to 15 pages and I am a fan of yours. In one sentence I can say "YOU

ARE ROCKING MAN:cool:"

I think you are the most Unselfish and knowledgeous person. The way you are explaining with



example is really amazing. Thanks again for all the help and support you have been giving to

newbie’s like me.

Regards,

bABIDASH

Thank you for your kind words,Abidash Saint



Quote:

Originally Posted by anilsingh1977 (Post 181340) Hi Saint,

I am new to technical analysis and I am trying to learn it reading this great thread of yours. I an

looking for your insight into the script that I bought few days back.

If I read the charts correctly both weekly and daily charts were in uptrend on 20th May. I took my

position aftert the previous pivot high (309) was taken out on daily charts. I bought at 320 thought

it was late. I calculated Stop-loss as 267.1-1.1= 266.

It started to move downwards since 21st.

I would really be thankful if you can answer my following queries:

1) rights and wrongs that I did in the process of buying this script and

2) how about entering immediately after a higher pivot low has formed instead of waiting for

previous pivot high to be taken out?

Thank-You,

Anil

Hi Anil, Welcome to Traderji!



The right entry point in CAIRN would have been Apr 10th and all the rest were adds..........let us presume,as is your case,that you were trying to get into Cairn,you would have to buy the rally once previous pivot highs on the daily was taken out,which happened on 20th......your stop would be the low of 15th ie 267.Since this move is getting vertical,your stop would be the low of the candle 2 bars from the high ie 287.........So far you are yet to be stopped....... Ques 1:Nothing wrong in the entry except that in an ideal situation,your entry would have actually been in April 2nd week........and one more indicator next time,don't buy when you notice the trendlines getting steeper,the gradient getting steeper,more volumes coming in after an uptrend.......buying at this point is a calculated risk,as is most of the time in trading......If it goes on to make new highs,great.Else,adhere to your stops if hit. About Ques 2........nope on buying at pivot lows......Buy once newer pivot highs are made......Simply because at higher pivot lows,you do not know if this is just a decline or the start of a downtrend.Guessing that this is nothing but a pullback and not a downtrend can be dangerous......... Saint



Quote:

Originally Posted by nick721156 (Post 182501) dear saint & other friends,

i have a little confusion about buy set up in Ranbaxy. in weekly chart, Ranbaxy is in uptrend. so,

we should buy over the previous pivot high in daily chart. today(30/05/08), ranbaxy has made new

high of 535 in daily chart. its previous pivot high was 517.90. in case, we want to buy on monday

in the coming week, shall we buy over the previous pivot high i.e. 517.90 or over today's high of

535 or wait for a decline. if we wait for a decline in daily, when to take position? or shall we wait

for a decline in weekly - which might not happen for some more time?

i am attaching both the charts.

regards,

nick

Hi Nick, RANBAXY is in an intermediate uptrend.....importantly,it was in a primary downtrend as well.Over the 462 area,it sets up a primary uptrend and an intermed uptrend.Personally got in abt the late 470-ish area(saw it a bit late!)



That was the entry point....all else add points,or entry points if not in already.....Nope,no need to wait for a weekly dntrend.Buy over the previous pivot high on the daily with stops at previous pivot lows.The buy should have been over 518 with stops at 491. Saint



Quote:


i am going to ask you a small thing clarified once again. you have told that many many times. yet

when today i was refering to your previous posts here, i got a bit confused regarding BUY SET

UP. in the EDUCOMP example(you attached the chart also-probably weekly one), you mentioned

that we plan to buy once previous bar's high is taken out.

i have attached 02 charts of Bharti Airtel and queries are put in the weekly chart body itself.

please clear my confusion whenever you find time.

regards,

nick

Hi Nick, Open up your Bharti Airtel weekly charts.......Till the Oct 12th week,2007,we have an uptrend on the weekly charts.........higher pivot highs and lows.Strategy on the weekly uptrend:Every time you get a decline,each candle making lower highs and lows,the first candle that breaks last week's high,BUY! From Oct 12th to March 19th week,2008,Bharti is putting in lower pivot highs and lows.......meaning Bharti is in an intermediate downtrend.Strategy:Either short the rally using the above strategy,or if only interested in longs as in position trading,you stay clear and wait for an intermediate uptrend to reemerge.In a downtrend,you can't buy over last week's high........you wait till weekly triggers an uptrend. March 19th till now,it's trying to get back into uptrend territory,there are some trades off the daily charts,but still not an intermed uptrend ..Strategy if you are a position trader:Nothing.You are looking for the magic number of 979 to cross that would trigger an intermed uptrend. So basically,decline within an uptrend,buy the previous bar high on the weekly chart.Downtrend,wait for a previous pivot high and then only dare to enter.These 2 statements are



with reference to the weekly chart only. Saint



Quote:

Originally Posted by nick721156 (Post 185395) dear friends,

shall we consider the attached chart one in uptrend or one in sideway trend?

if yes, why?

if no, why?

regards,

nick

Till PH2 of your chart,it's an uptrend,now it's a dntrend........more importantly,have a look at the chart.It is a perfectly untradable chart,at least with pivots............Amit,if you are around,that's what I mean by an ugly looking chart. Better piece of advice,Nick,from my end...............If you see such a chart,don't bother trying to decipher it.Chuck it,Move on to the next one. Saint


Re: Teach A Man To Fish And......... http://img125.imageshack.us/img125/9...6112526ig3.png Remember Raj,all the criteria must line up before putting in a trade.....We want an intermediate uptrend,not an intermediate rally.How do we know?Pull out the Monthly charts. Question no 1:Are we in a Primary Uptrend?If yes,turn to Weekly charts.If no,then why are we looking for longs and uptrends?Easier to look for shorts and dntrends unless you are trading an over extended move. Question no 2:If the answer is yes to the previous question,open up the Weekly charts.Is the weekly



in an uptrend?If yes turn to the Daily charts.If no,wait for a break of previous pivot highs on the weekly which signifies a change in trend. The moment the previous pivot high on the weekly is broken to the up,you have your entry long..........the Daily usually lines up giving you an entry point as well. Question no 3:Open up the Daily charts. a)Although the weekly has triggerred an uptrend,the Daily has been in an uptrend for some time.Hold off.Keep on a strong watchlist and wait for a downtrend or a decline or a sideways move to enter. b)Weekly and Daily triggers an entry at abt similar time.Buy with your stops in the Daily Charts.Trail Stops as per Daily Charts.Exit as per Daily charts.Look to reenter long again later. c)Weekly is in a downtrend within a Monthly Uptrend.But when you have a look at the Daily Charts,it has triggerred a BUY.If you are anticipating that the weekly is going to trigger an uptrend soon and put a Buy,very careful.Strict stop losses and run if hit.Why?Coz' the weekly is still not officially in an uptrend. Hundreds of other scenarios,I guess..........but the longer term charts have to line up,then only bother abt the Daily charts. In the case above with HEG,it has formed a Primary Downtrend.It is now in an Intermediate Rally within a Primary Downtrend.......Meaning no trade. So what do you do with HEG?Nothing much actually........just leave it alone and continue your search for that Intermed Uptrend and then latch on to the trade off the Daily charts. Saint



Quote:

Originally Posted by myvineet (Post 186615) hi Saint.....I have a question regarding relation between stoping out & reversing a trade ...means

is it necessary to reverse when we stoped? suppose we are long & in good profit position but we

feel that further there is resistance & it can move down ...what should we do

a)we may book our profit & out ..... or

b)we will wait to stoped & reverse...



question 2

saint ..i just want to know about entry in gmr ..the weekly is just sidewayes.this is first sideway bar

after four down bar in weekly..no hl/hh......i know there must be something in it if u enter there ...i

just want to see what my eyes are missing

thanx & regards

vineet

Vineet, There are trades where we look only at the weekly charts.......there are trades where we are angling in an entry using the daily charts with the weekly as background.There are 60min trades,etc The 60min Flow thread talks about the stop and reverse and always in the mkt type of play.GMR,JP,ABAN and SESA are trades taken there,going long and short. Can you go over a 60min pivot high and take Rs22.22 and be happy with it?Sure.......your call.Do you want to trail stop and then keep taking profits on the way up?Sure.....why not?Do you wish to never take profits?Sure......once again,why not. That was a play in that thread and got nothing to do with weekly charts or daily charts.......If you are a posn trader,and you don't like 60min and trade the weekly charts,then GMR is not a call. GMR has triggerred an uptrend on the 60,.....still dntrend on the larger time frames.Please don't get confused..........a trade in that thread is using the criteria as per THAT thread. Here,we are looking at intermediate uptrend and then buy the daily breaking out of a dntrend.........that basically is what we are looking at in THIS thread. And,in the 60min Flow,there is no looking at resistance and support......it basically is trying to be in the trade.........forever if possible. Please do not confuse strategies in different threads...........there are all types of strategies......for all types of time frames.....and for different mindsets. Please don't look at Thread A and then get confused out looking at the rules of Thread B.....:(:( Saint





Quote:

Originally Posted by djsinha (Post 187053) Dear Saint,

Suppose I buy a stock at Rs 100 for swing trading...means seeing the weekly. And furthur suppose

the SL is Rs 95. Now if on a particular day the stock opens gap down at Rs 90....What will I do?

Will I liquidate? That'll mean taking a loss beyond what my MM rule permits me.

Waiting for the reply.

Cheers

DJ Sinha

Hi DJ, Yep,and that happens.....all a part of trading,my friend. What I do is:I am in a stock at 100,with my stops at 95........it gaps down to 90,ouch,but well,all part of the game........watch the first 5min bar of the gap down day.If it doesn't get violtaed,it's still a HOLD.........stops a bit below that bar,if hit,you are out......no hope and pray,no boo-hoo,no what-if's......you are out,and you look to make your money elsewhere. Saint


Re: Teach A Man To Fish And......... Few things before this thread comes to an end..... This thread was and is dedicated to the newcomer beginner taking his first few steps in the Charts World.........it is not complete,it is not all that there is to know.There are lots of stuff still needed to learn and practice before you become a complete trader...........but it is a start.This thread is only the first step in a journey that is far from over. I hope you,the beginner,continue the journey and become Masters at what you do.......Learn from this thread,and many similar ones that get you started out,progress from it,don't forget to doubt every word in this thread,.......Don't accept anything as gospel truth.Question everything and find your answers.............and finally when you have mastered these basic concepts,don't stay within the confines of Grade 1.......move ahead,move higher......that day will come,and I hope so,very soon.....and when that day comes,don't forget to expand yourself to the next level. Wishing you all the very best!! Saint




Re: Teach A Man To Fish And......... On your path to success in anything,you will come across numerous obstacles.........your trading plan or the lack of it,your strategy,your self inflicted hurdles stemming from the mind.........many things to deal with. But a very irritating obstacle that you will face are the many well wishers around you who tell you how many different ways you CANNOT succeed........great feats are not attempted and overcome if you are going to look at factual statistics that it has not been done before and therefore cannot be done. Dare to dream.......and then realise that dream.It can be done........remove the word Impossible from your trading dictionary......Aim for great heights,so high that it leaves you giddy,achieve it and soar even higher......It can be done!! All the best! Saint


Re: Teach A Man To Fish And......... When you are a beginner,what you tend to do ,even after reading this entire thread and memmorising every word of it, is to not trust yourself and your method,your modus operandii. You look at past years' data and apply your strategy that you are comfortable with,and it all just works fantastically.....you are thrilled,excited,you want a bite off the market......You come the next day with renewed vigour and enthusiasm ....you bought some stock at 105,stops at 98,and yep,all systems go.....and then to your horror and disbelief,the stock tanks almost immediately as if it knew that you were getting into it.98 goes by,you don't take it.......95,93,89....ouch,the pain is unbearable.....85....that's it,you take no more.You exit at 85,cursing the market,your brother-in-law,and the guy who gave you the call or tip. And voila,the stock turns around at 83 and blasts off .......you now have learnt a valuable lesson........never take a loss,always rupee cost average(!!!),your mind says that if you were holding at 105 and added at 85,your average would have been 95 and sitting on profits. Next time,you rupee cost avg.........you buy at 105,95,85,75,and get out at 70!!!Ouch,more pain than before........and voila,stock blasts off to 100 again. Now you are sure that the entire world is at cohoots with each other to grab your money............your capital,now halved,you decide to do it the way traders trade.......You buy at 105,with stop loss at 98,and guess what,the stock returns to 102,but the pain is already too huge,your mind is in a state of paranoia,your wife is sitting on your head to quit this cursed profession,you run for cover at 102..........only to see the stock charge off to 150.



You now come to the grand realisation that the market is for gamblers,you will lose either way,everyone who is making something......they are all liars,out to grab other people's money........And with this grand realisation,you are able to sleep the nights.You are not a failure,it's all the fault of everyone else around you,nobody can make any money anyway........blah,blahblah. LESSON 1:Learn to pin all the blame on to yourself.......not half the blame,not most of the blame,but all the blame.Accept responsibility for your stupidities.Following a set plan of attack,you can conquer the markets.......If you are not able to,something's amiss.Accept blame.Look for your mistakes.Rectify them.Be a success.But first step:Accept responsibility...... LESSON 2:First learn........then set up a Trading Plan.It's vital to have your Plan before you get into the Battle..........There must be set points of entry,exits,adds,position sizing,etc before mkts open........All written down.....When the mkt opens,you no more use your intelligence,your analysis........you just keep the fingers on the Trigger Button,and follow your Strategy.Once in a trade,you are doing nothing but managing Risks. LESSON 3:There is no thinking,no emoting,no fear,no greed,no hope,no anticipation,no regrets during market hours..............and keeping that tranquil,serene mind,you seek to put in a perfect trade,one after another. Saint


Re: Teach A Man To Fish And......... Your job as a trader is to put in a perfect trade........money will come by itself when perfect trade after perfect trade is put up. What is a Perfect Trade? A trade where you adhered to your Entry Strategies,raised your Trail stops,Added as per your Strategy,And exitted from the Trade once your trail stops were triggerred,adhering to the Position Sizing in your Plan all the while..........That's a Perfect Trade! A trade where you entered as per Plan,and was stopped out and you adhered to your Stops.....That's a Perfect Trade! Making profits and a perfect Trade are 2 different things.........focus the mind on to putting in that Perfect Trade,again and again. The money will follow.......but you have to reach a point where the mind ceases to stop counting the money in your head.Focus on the Trade when you are a newcomer......Focus on the Trade when you are a Pro Trader. Saint




Re: Teach A Man To Fish And......... Can one ever overcome fear,greed,hope,regret and all that.........?Well,we as traders.....we don't strive to overcome these emotions that can lead to our downfall.Instead,we try to focus on the processes involved.........Keeping our processes systematic,we get past fear and greed.By adhering to our strategies,we do not let Hope and Regret have a peek in. If I am in a stock at 100,with my stops at 94,and I have position sized appropriately.........there is no fear.If stops are hit,I am out.The loss of that money doesn't frighten me,doesn't give me sleepless nights.When the stock is trading at 110,and stops are at 102,the adds are in such a way where the total risk is roughly the same........Fear is not allowed in. The adds when the trade goes right prevents me from worrying about the stops taken previously,even if hit many times........As the adds keep building up,trail stops are raised........The focus is on the Trails,not on the money earned .....Greed is kept out. And adhering to stops prevents having to hope and pray............and regrets. Focus on the process,and not the result.........One of the greats in the Investing world once said,Be greedy when everyone's afraid,and Fearful when everyone's greedy........Nothing wrong with that.But as traders,have a strategy and follow it.You will realise that neither fear nor greed touches a Systematic Trader who maintains his/her focus on the Process. Saint





A rally is not an uptrend.......you can get rallies in an uptrend as well as a downtrend. Saint





A decline is not a downtrend.......you could have a decline in an uptrend,or within a downtrend. Saint





Lower Pivot Highs and Lows make a Downtrend.........A downtrend is made up of weaker rallies and stronger declines.Focus the eye onto the Lower Pivot Highs in a Downtrend.....that's where your stops are.Breaking of which you would assume that a change in trend has just occurred. Saint

Saint 30th June 2008, 07:37 PM


Higher pivot lows and highs constitute an Uptrend.Focus the eye on to the Higher Pivot Lows.........this is where your stops are,and the break of which,one would say that the ongoing trend has reverted. Saint

Saint 30th June 2008, 08:28 PM




An uptrend is made up of higher pivot highs and lows......A downtrend is made up of lower pivot highs and low.......In an uptrend,we focus on the pivot lows.A break of the previous pivot low is the end of that uptrend. The red line marks the area when we are no more thinking long,but instead thinking short. Saint











Every time,price hits the same area does not make it a Double Top.......it could very well be just some sideways consolidation before newer highs are made......or a triangle in formation.Wait for the support to break before calling it a Double Top. Saint

Saint 3rd July 2008 02:05 AM


Chart attached! Saint

Saint 3rd July 2008 03:12 AM




Today's chart( as in July 2nd).... Saint



Quote:

Originally Posted by diamondnerve (Post 194168) Saint,

You are requested to have a look at the attached chart and the explanations and do correct where

ever you feel it to do so:-

Bar 1 :Sell @ 4155 with HOD ie. 4185 as stoploss (as per gap rule,as the nifty has opened gap up

,did short at the low of first 5 min. bar)

Bar 2 :Lower s/l to 4137 as new p/l

Bar 3 :s/l hit (point standing +18)

Bar 4 :Sell @ 4115 with s/l 4164 (as 30 min pivot broken)

(Doubt: The 30 min pivot is broken @ 12:15 on 5 min chart ,but the bar would be formed

@12:30 on 30 min chart,so one has to wait for the completion of bar on 30 min chart or go for



the short on 5 min chart @ 12:15)

Bar 5 :Lower s/l to 4098

Bar 6 :Add @ 4065 with same s/l of 4098


Bar 8 :Add @ 4030 with same s/l 4052



Bar 11 :Add @ 4030 with same s/l 4045

Bar 12 :Stop loss 4005 hit as the piovt(3.00) has been taken out and all postions has been closed

thanx

dn

Excellent,Diamondnerve.........great going!! Saint ps:A warm welcome 2 traderji as well!





Don't take the short trades above if you only go long and position.....Another thing,exit on the first bearish bar after an uptrend is only in these big WRB Vertical moves......Please don't go about doing this in every trade......In all trades,pivots as usual.Vertical moves as gradient gets steeper,2 bar method. WRB Vertical moves......as above! All the best! Saint





All the best! Saint



SENSEX is at present undergoing a Primary Bear within a Secular Bull........therefore as a long term trader,the conclusion of this Bear the moment previous pivot highs on the monthly are taken out is



the place to get back in the market. If you are a short term to intraday trader...........who cares about the Primary Bear or the Bull........there are profits to be had in all directions. Saint



All the best! Saint


Re: Teach A Man To Fish And......... If I were a 5min trader........I probably would take a look at the 30/60.I probably would not give a care what is happening in the daily/weekly/mthly. If the 5min triggerred a buy call,and I buy all my 5min buy calls despite whatever is happeniing on the 30/60......I would still be doubly or triply bullish knowing that this current rally on n outthe 5min has managed to take out previous pivot highs on the 30/60. If I use the 30 to keep me out of unnecessary trades on the 5 by only going in the direction of the 5(except in a few instances),then too knowing and analysing the greater trend is vital.



If I were a daily chart trader,I realise that the weekly and the daily converging to a point,.....and when that pivot is taken out,is much more bullish than the weekly in a strong dntrend,and the daily making a weak rally. Time Frame Analysis done correctly helps you in your adds and therefore your profits. Saint


Re: Teach A Man To Fish And......... http://www.traderji.com/technical-an...e-light-4.html Lots of candlestix stuff over here and browse through the forum for more................and patterns and candles at Stockcharts.com. Saint


Re: Teach A Man To Fish And......... So,my friends,.......this journey comes to an end as all journeys should.It has been a great pleasure to be able to run these ideas over the last many years........I have myself benefitted and grown over these posts.As I had said in the beginning,it is a process of sharing and learning from each other.....I have,and I hope you have too. There are still many seas to cross,and many lands to conquer in the world of trading.........but all of that is not in keeping with the objective of this thread.Sincerely hope you all continue your education of the charts and the markets. Please always remain students of the markets.....always remain humble.Never ever let anyone tell you that Trading Mastery is not possible.Never let anyone tell you how you cannot succeed.......Your job as a trader has and is always to put in a perfect trade,and then again and again and again.Focus on the trading,not on the money.....You can attain great wealth from Trading.You don't have to run newsletters,give tips,sell softwares,........there is more money in Trading than in any of these.Therefore,focus on Trading Perfection.......and reach heights that you imagine as unreachable. Hope all of you make that first step and then continue your journey to those great heights.........Wishing you all the very best in your pursuit of Trading Excellence! Happy Trading! Saint



ps:Any questions to be asked,plz go to "Questions from the Students of ..." in the TA Section. Any queries on the Swing/Intermed Uptrend,you can find me at "New Intermed Uptrend" in the Position Trading Forum in the Equities Forum. Any queries reg the 60min Flow, get me in the Equities Section......

Thanks Saint. Will Append this threads Part – II. And upload the file when possible.

Note: I am sorry if any mistake is done while converting Teach A Man To Fish…… Thread to

this file, Raj.

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Teach a Man Fish Complete