Saturday, 19 May 2018

Pre-market Planning

If you are a full time trader, you must do your pre-market planning every single day.  There is no question of entering the boxing ring (markets) without preparation. A good trader will always have his charts and analysis ready for the stock or Index or commodity that he is planning to trade.

Pre-market planning includes knowing the current phase/trend of the market and important levels on different time frames.  It also includes your view about what kind of a day you are expecting to see ahead. It includes being aware of overnight developments across the globe as any major event can make or break the markets in the morning or at any moment during the day.  Also it is suicidal to get involved into the trade without a proper trade plan or exit strategy.

Now lets understand how to do this pre-market planning or Big Picture analysis (as demonstrated in Champion Day Trader video tutorial) with the example of Nifty Future. I have chosen 16th May, 2018 because it is the day following a Karnataka state election result (a macro event that can create a short term top or bottom).  18th December, 2017 Gujarat state election results and 1st Feb, 2018 Union Budget are most recent such macro event examples that created a short term top or bottom.

Before I start analyzing charts for pre-market planning, I want to make one point very clear that you will be able to understand everything that is presented here in this post well if you have thorough understanding of how to look at trend, trend strength, how to interpret and trade trending and ranging markets, how to confirm reversals, importance of support and resistance levels etc etc.  If you are not well versed with these different concepts, it is better for you that you first learn them.  You can think about taking the help of Champion Day Trader video tutorial and Mentoring Program to shorten your learning curve.

At the morning of 16th May before market opens:

Lets first have a look at daily chart:

As per chart, it seems there is nice up trend going on as prices have been able to make higher highs and higher lows for quite a while.  The last daily candle though is in rally mode indicates a rejection/reversal by its appearance after an announcement of results of a macro event.  As said earlier, oftentimes this sort of macro events create tops and bottoms in the short to medium term.  If we go by this theory, then this rejection candle's high may act as a short term top and will not get broken in the near future.  Also if prices are going to reverse creating a short term top, it will require confirmation and this confirmation will come if prices sustain below the previous day's low or again gets rejected from the higher level and starts trading below the lows.  However, since the trend is up, our first priority for trading should be to trade with the trend which is up because once the trend is in motion, it will continue in motion. So if the prices sustain its previous day's low today, we can safely say that the trend is intact and we can look to trade in the direction of the trend.  It can also remain range bound respecting its lows and highs for some time.  But if the reversal signs get confirmed by prices staying below the lows, we need to be ready to trade in the direction of a new trend, i.e. downtrend.

Now after analyzing daily chart, lets have a look at 30-minute chart and try to find some important levels which can act as support/resistance.

For the day along with our usual DPs (previous day high, previous day low, previous day close, day open, high and low of the day, big round numbers) and intraday range extremes, we will have some more levels as shown in the chart to watch.  Roughly, 10770-75 to 10800 price zone is very important support zone as there are multiple levels within this zone, namely 10775 (up-sloping trend line) 10785 (horizontal support + Flip), 10787 (previous day low), 10800 (big round number).  Similarly, 10900 (big round number) & 10948  (previous day high) levels may act as a resistance on its way up.

Now after having done my pre-market analysis I am ready for day trading Nifty.  My job is to just wait patiently for the prices to reach at my levels and Decision Points and do something there.  Any price acceptance or rejection of these levels will provide me a trading opportunity during the day.  I know already what to do when the levels get broken or fail to get broken and what does that mean in trading.

Intraday charts of 16th May:

Now lets have a look at intraday charts of 16th May and how trading was done with the help of pre-market planning.  Pre-market analysis gave extra confidence and conviction to trade with ease.  One chart with Decision Points with entries and one with pre-market support/resistance levels.

That day I did not keep the benefits of this analysis to me only.  I went ahead and shared the first short trade setup which I believed was most powerful one with others in my Telegram channel and allowed them to benefit from it.  Not only the trade setup was shared but also I helped them manage the trade.

I hope with this post now you would have realized the importance of doing your homework well in terms of doing pre-market planning so that you can trade well for rest of the day.  Please use comment box below for any queries or doubts.  I will always answer them.

Friday, 18 May 2018

Nifty Future 18052018

What a nice trend day!  Today BPB of PDL was the only setup to go short early in the morning session and after that it kept trending throughout the day and the day turned out to be a type 1 trend day.

Wednesday, 16 May 2018

Nifty Future 16052018

It opened gap down below PDL and presented a BPB setup to go short as marked. This moved well.  Second setup was a direct BO to go long which could have been avoided due to multiple levels.  Third setup was a BOF of LOL to short as marked once prices failed to break PDC and move higher.

Friday, 11 May 2018

Nifty Future 11052018

It opened with small gap up within previous day's range and traded in a narrow range for most part of the day.  A direct BO of this consolidation was a good setup to go long as marked.

Thursday, 10 May 2018

Trades on 10052018

I took 3 trades today in the first half of day which are here with all details.

1) CIPLA:  I was watching today red dotted line and a blue trend line closely.  These two levels were acting as good support till today morning.  As a short term momentum trader I was waiting for the prices to break this good support so that I can enter and join the winning party.  It did allow me to enter as planned and get benefit out of it.

2) ONGC: With the oil prices rising, I decided to watch ONGC today and see how it reacts.  I found a good resistance level as marked on the chart.  If prices break this resistance and get accepted above it, it will give good opportunity to go long, this is what I thought.  It did ultimately break out and allow me to enter after confirmation. 

3) NIFTY: It opened at PDC and failed to break PDH.  Once it started getting accepted below PDC/DO, it presented a good setup to create a short trade which moved well.

My Trade Book:  All 3 trades posted here, I was able to take.  It is posted just to motivate you that if you follow a system with edge with strict discipline and keep on working on improvement and further development, you too can make money from day trading. For your kind information, I have allotted a small capital of around 5 lakhs which allows me to trade 5 to 10 lots of Nifty or Bank Nifty and 1 to 3 lots of stock futures.  I follow a strict discipline and on average mostly take 2 to 4 trades in a day in total, keeping myself away from over trading.  All my intraday trades try to capture a move that happens in next one hour.

Lastly, if you want to be a successful in trading, always focus on the process, never on the end result.

Wednesday, 9 May 2018

Nifty Future 09052018

It opened within previous day's range with small gap down.  Once it got rejected from PDC after filling the gap, there was a good setup to short as marked, but it did not work.  After that it kept on trending upward.  BPB of PDH was not a good setup for a long trade as the recent high of 10788 was very close.

Tuesday, 8 May 2018

ICICI Bank Future 08052018

ICICI Bank announced its quarterly results yesterday evening and today the stock was going to react to it.  If markets really like the results, stock will go up and if markets don't like it, it will go down.  Right?  That is what happened here.  I entered long in it along with other traders who are trading with me and instead of booking out at target level decided to trail and exited with 15k profit with one lot.

As a trader, we just need to find a reason which will make the prices move.  Once we find it, trade it with small risk.