Thursday, 17 March 2016

Nifty Future 17032016


It opened full gap up but did not show any sign of continue to go up. First setup came in the form of BOF of Range High and DO.  Then there was a good direct BO trade setup which unfortunately did not work. Then it again gave BOF of Range High and DO. This time it proved to be a very good trade.  On its way down it also gave TRAP to enter into the running train who had missed it.

10 comments:

  1. You Mentioned Trap. I really never able understand how Trap can be identified as early as possible? Like when you said Trap, at what point you got sure that, it is a Trap?

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    Replies
    1. Anon
      TRAP is a complex pullback in a trending kind of mode or when prices are moving in only one direction. This is the basic about the TRAP pattern.

      Now if you try to trade only the pattern you will fail most of the time. You need to develop the skill of reading the prices.

      This is how I read the prices. Today it opened right at the resistance area. If you look back last few days price action, you will find area of 7580-90 where prices reacted strongly twice and pulled the prices down. So once it failed to trade above that area and started trading below that area it proved to be acting as a good resistance. After trading below it, it made three more attempts to break that area and failed. Now this is very important piece of information. Whenever market fails to do something not only twice but thrice or four times, it is most probably going to do opposite. Then it did exactly the same and started falling down. The momentum on the down side appeared good. Even after filling the gap it could not move up a bit and gave a TRAP pattern at PDH/PDc. Now why the TRAP pattern happened. TRAP happened because of the traders who booked their shorts on first sign of minor trend reversal, plus new traders who tried to join on trend reversal. Where will these new traders put their SL? They will put at the lows. So if you enter on the break of the lows, the expected order flow from trapped traders will help your trade.

      Trend, location, order flow, and your reading of the prices is what matters. You want pattern only to confirm your thought process that you are thinking in the right direction.

      I hope this will help you to start thinking and putting efforts in right direction.

      URD

      Delete
    2. Hi URD,

      Thanks for the detail reply. That will certainly help me in better trading.

      Delete
  2. URD,

    Missed 2nd trade as I hesitated with 16 point SL (including brokerage) .. which out trade of the day.

    Caught good long trade in crude.. as a compensation :)

    ReplyDelete
    Replies
    1. Rose

      SL should not stop you to take the trade. SLs are meant only for our protection. If you perceive the potential reward much bigger than what you are risking, it is worth taking that risk.

      URD

      Delete
    2. URD,

      I see FTA for this trade as LOD which is just 20 points away.. so thought like why to risk 16 points for 20 points gain.. had it been 10 point SL I would have jumped into the trade.

      Just curious how you would have scratch the trade.. if price reverse just after short entry.. u exit immediately or you let some PB towards RH happen.

      Delete
    3. Rose

      FTA is where you expect the first opposite order flow. Here the target was PDH.

      I look to scratch when it does not move in desired direction even after giving it too much time to move. Also I expect my entry level to act as a flip. If it fails to hold that flip twice I look to scratch.

      URD

      Delete
    4. URD,

      Thanks for clarifying.. i need to overcome this mental rigidity.

      Delete
  3. I too skipped the 2nd BOF because of the big SL. The discussion above helped. Thanks.

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    Replies
    1. Banafsha

      Good to know that you started trading. Go slow. Risk less. Remember what I taught you in training, there are only four possibilities. You can win big, win small, lose big and lose small. We just need to take care of losing big and keep remaining three.

      URD

      Delete