Sunday, 31 December 2017

Happy New Year

Wishing all my friends and blog readers a great 2018.  You all have been very supportive in whatever I do.  I hope your support will continue for me in this New Year as well.

Thursday, 28 December 2017

Nifty Future 28122017

Expiry day.  It formed a barb wire pattern around BRN and traded in the tight range for majority of the day.  Once it broke out of this tight trading range, it gave BPB setup to go long.  Unfortunately, volatility kicked in after that and BPB did not yield.  At 3 pm, it gave a directional move to trade as expected.

Wednesday, 27 December 2017

Nifty Future 27122017

It opened within previous day's range and broke out PDH and gave BPB of PDH to go long.  After that it consolidated in a narrow range and BOF of range low was a good setup to go long once again. Last setup was BPB of PDH on the downside which also moved well.

Tuesday, 26 December 2017

Nifty Future 26122017

It traded in a very narrow range between PDH and BRN.  Towards the fag end it could successfully break out this narrow range after a TRAP pattern.

Friday, 22 December 2017

Nifty Future 22122017

It opened above PDC and traded with bullish bias.  After breaking PDH it formed a narrow range between BRN and PDH.  In afternoon it broke this range on downside and provided BPB setup to go for a short.  Prices refused to go further down and reversed and successfully broke the range high/BRN.

Thursday, 21 December 2017

Nifty Future 21122017

It opened within previous day's range and traded in the narrow range whole day.  BOF of PDL was the only good setup to go for long trade.

Wednesday, 20 December 2017

Nifty Future 20122017

Today was a perfect example of how one can buy at lows and sell at high using DP and price action trading method.

Direct BO or BPB of range high/BRN was not a good setup to trade given the all time high level on Nifty spot.

Tuesday, 19 December 2017

Nifty Future 19122017

It opened and traded for most part within previous day's range.  It consolidated long enough within narrow range after open.  A breakout of range high and prices getting accepted above range high provided a good BPB setup to go long as marked which moved well.

Saturday, 9 December 2017

Three possible price movements at the level

Let's discuss something about likely price behavior whenever it approaches a good support/resistance level or a decision point and how we can improve our success rate while trading at such level.

Whenever price approaches a good level, be it decision point or support/resistance, traders will be ready to trade at that level.  Majority of the traders normally believe there are only two possibilities, i.e. prices will either break that level or fail to break the level and in that process give them a trading opportunity.  If the prices are able to break the level, they will trade in the direction of the breakout.  If the prices fail to break the level, they will fade the breakout.  However, in trading, traders often tend to neglect one more possibility and that is prices doing nothing at that level.

There are always 3 possible ways prices will react at the level.
1) Prices able to successfully break the level and move subsequently in the direction of the breakout.
2) Prices may or may not make an attempt to break the level and fail.  After the failure, prices reverse the direction.
3) Prices don't do anything at the level and just move around the level spending time there.

Have a look at the below picture to understand these three possibilities price action wise,

If a trader likes to trade only a breakout, he/she needs to accept the fact that blindly trading breakout of the level can give success only 33.33% of the time.  Same way if a trader is focusing only on trading breakout failures, the likely success percentage will be only 33.33%.  So it is possible that rest of 66.67% of the time, prices will likely do opposite of what a trader did.

Now, in order to improve the probability of success in trading, much better than 33.33%, no matter what we trade, breakout or breakout failure, we are required to explore other important aspects of trading.  There are certain methods/patterns/tactics that we can use for confirmation of breakout or breakout failure to improve the success and take better trading decisions.  We also need to work on proper risk management, position sizing etc to improve the win ratio.  For an example, a trader trading only breakout will make sure risk reward ratio is at least 1:3 or 1:4 every time he/she takes the trade.  If a trader is tilted more towards proper position sizing, he/she will enter at breakout with least minimum quantity and if the trade moves in favor quickly then only will add more position upon price confirmation.  A trader will also work on proper money management by risking only certain percentage of capital (0.5% or 1% of capital) for each trade.

Thus, it is very important that we successfully apply price reading skills, confirmation, proper risk management and position sizing to each trade and improve our chances of making money substantially.

Wednesday, 6 December 2017

Nifty Future 06122017

It was an RBI event day.  Prices traded in a narrow range in the morning session.  It was difficult to short on break of BRN/PDL ahead of the event.  But once the event was out, it was possible to short at the same location.

Tuesday, 5 December 2017

Nifty Future 05122017

It opened full gap down with trend.  The first down move towards BRN was quick and sharp, difficult to catch.  After that BOF of BRN was a good setup to go for long.  In afternoon it again made an attempt to break BRN and failed giving another opportunity to go for a long trade.

Thursday, 30 November 2017

Expiry Day

On expiry days, Nifty option strikes of 50s and 100s tend to work as a very prominent decision point.  Nifty future price will do something at these strikes for sure.  It will either get accepted or rejected there and provide us good opportunity to trade.  Today's price action on expiry day in Nifty future explains this very well.  Have a look,

Tuesday, 28 November 2017

Nifty Future 28112017

It traded in barb wire around BRN for majority of the day.  Rejection after BOF from range high/PDH was very quick to short at top of range but at range low it did give BPB setup to short which moved nicely.

Thursday, 23 November 2017

Nifty Future 23112017

Trade setups as marked on chart
1) Direct BO of Range High:  It seemed prices consolidated enough, yesterday as well as today in morning session, so a direct BO trade was possible to go long above it.  Also prices refused to trade below PDC.
2) BOF of PDH/Range High:  Prices got immediately rejected from PDH even after a good BO from consolidation, so this BOF was a good setup to short.
3) BOF of PDL:  Normally, it is difficult to go for a reversal trade after a straight line fall of 80 points.  After such fall, one would expect some consolidation or continuation of down move rather than reversal.  However, there appeared good liquidity pool just below PDL which would provide confidence to go for the long.

In case you are wondering what is High Volume Node.  It is nothing but the volume value area.  Volume value area is the price area where maximum trading activity takes place during the day. Often this volume value areas work as a support/resistance because this is the area where markets found value earlier.  In Amibroker, you can find it here, Window>Charts>Basic Charts>Volume at Price Multi.

Please share this post on your social networks if you learned something useful in trading and want others to benefit from it.

Thursday, 16 November 2017

Nifty Future 16112017

It opened within previous day's range and traded in an initial range for first couple of hours.  After trading in the narrow initial range it could break out successfully from overhead resistances in the form of BRN and PDH.  After the successful BO, a BPB setup was possible to go long.  It then traded in a narrow range again but respected the flip and range low.  BOF of PDH/range low as marked was another good setup to go long.

Wednesday, 15 November 2017

Nifty Future 15112017

It opened full gap down at BRN and traded below it forming a narrow range.  It spent more than 3 hours in 25 point narrow range, hence a direct BO setup to go short was possible. Confirmed BPB setup to go short was also possible as marked and yielded 45+ points.

Monday, 13 November 2017

Nifty Future 13112017

It opened within previous day's range and got rejected from PDC but found support at BRN.  BOF of BRN was a setup to go long.  Prices could not move much after this and traded in a range.  Direct BO to go for a short appeared good setup after the complex pullback and moved well.

Friday, 10 November 2017

Nifty Future 10112017

It traded in the range for most part of the day.  When the breakout from Range High got rejected at PDC, it turned out to be a good breakout failure setup as marked.  GST News flow added fire to it.  Last V shape up move was not possible to catch.

Wednesday, 8 November 2017

Nifty Future 08112017

It traded in the range for majority of the day.  In the afternoon it seemed like it was going to break PDL/LOD.  First attempt to break turned out to be a false one but second attempt was successful.

Friday, 3 November 2017

Thursday, 2 November 2017

Nifty Future 02112017

After yesterday's trend day, today there was an expectation of rangebound day.  It did in fact remain rangebound whole day.   There was only one TST setup to short at PDC which was difficult to trade given the overall bullishness of the markets.

Wednesday, 18 October 2017

Thursday, 12 October 2017

Bank Nifty Future 12102017

It tried to break out PDL in morning but failed and after that traded in a narrow range for most part of the day.  Once the Indusind Bank quarterly results got announced, it made an attempt to break the range and the breakout turned out to be successful.  A BPB of HOD/Range High/BRN was a good setup to go long.

Tuesday, 10 October 2017

Friday, 29 September 2017

Reversal Setup Trade in Hindpetro

Today I took my morning trade in HINDPETRO.  It was a good reversal setup to trade.  More details are here.

1) Was in established downtrend for last many days and today opened with CT full gap, along the same lines of Nifty.  This was the first sign of reversal.
2) After the open, it got comfortably accepted above PDH and gave a successful follow-through confirming the short term reversal.
3) There was a positive news flow which provided fuel in the fire.

An entry was taken above 422.85 with the target of 426.20.  As an end result, 2R (1:2 risk reward) target was met in less than 15 mins.

Nifty Future 29092017

It opened CT full gap up and there was a follow through.  After that it consolidated for a good amount of time.  A direct BO above this consolidation could have been tried which moved well.  A fall from the top was difficult to catch.

Tuesday, 26 September 2017

Nifty Future 26092017

After 2 consecutive big down days, today expected it to take some rest and consolidate.  It did exactly the same and remained range bound and provided opportunities to fade the range extremes as marked on the chart.

In fact, markets have behaved exactly as expected this month.  Read it here.  On daily time frame it got rejected from upper range extreme and now approaching lower range extreme.  Lets see what it does there.

Thursday, 14 September 2017

Nifty Future 14092017

It traded inside previous day's range whole day.  In afternoon it formed a barb wire around BRN and once it broke out successfully, BOF of BRN trade was possible as marked which ended as a scratch.

Tuesday, 12 September 2017

Nifty Future 12092017

It opened full gap up and consolidated.  Once it broke out of initial range, it presented a setup to go long.  After that it again consolidated and breakout of this narrow range was a good trade setup which moved well.

Monday, 4 September 2017

Nifty Future 04092017

It opened and traded within previous day's last range.  A trade setup emerged once it broke below that range's low.  This was the only tradable setup of the day.  BOF of BRN in the afternoon is not a good setup to trade and hence avoided.  The reason is simple.  Prices need to consolidate after a good move and V shape reversals happen rarely.

Tuesday, 29 August 2017

Bank Nifty Future 29082017

It opened below PDL and seemed to get accepted there.  BPB of PDL was a good setup to short and benefit from morning move.  In afternoon, it again presented a setup to short on BOF of range high which also moved well.

Monday, 28 August 2017

Nifty Future 28082017

It opened above PDH and took support exactly there.  Once it got accepted above PDH and BRN, a BPB setup to go long emerged which moved well after testing some patience.

Friday, 25 August 2017

Nifty analysis for next month

Lets have a look at its daily chart and try to figure out what exactly is going on there.

On daily chart, it seems to be in a nice strong up trend since start of this year 2017.  In an up trend like this, money can be made by buying into every pull back or buying at range low.  

After making a high of 10137, currently it is pulling back or doing a small correction.  Also it seems like it is in the process of forming a range like this,

If it has really started to consolidate, which seems likely, then 9700 to 10100 is the range to trade.  If it remains in this range, then buying at range low close to 9700 is the right thing to do.  If 9700 level does not hold and it breaks out of it, then it can likely test 9450-9350 levels.

Thursday, 17 August 2017

Nifty Future 17082017

The most easiest day to trade Nifty with DPs and price action.  After a big move yesterday a rest was expected.  It did exactly the same.  BOF of PDH/BRN/LOD was the perfect setup to go for a long.

Wednesday, 16 August 2017

Nifty Future 16082017

It opened minor gap up but could not sustain and tested support at PDL BRN.  Once it broke out of HOD, it presented a nice BPB setup to go long which moved well.

Friday, 11 August 2017

Nifty Future 11082017

It opened full gap down.  Same as previous day, made an attempt to fill the gap and reversed. There was a TST setup to go short at PDL BRN but was difficult to trade.  At LOD a direct BO or BPB was possible for a short trade.

Thursday, 10 August 2017

Nifty Future 10082017

It opened full gap down but could not go lower.  After that it reversed and filled the gap but again failed to move higher. Once it started getting accepted below BRN, a short setup was possible around 1 o'clock as marked with the target of LOD.  Another short setup was a direct BO of range low which also moved well.

Monday, 7 August 2017

Narrow range day in Nifty

It was a 30-point narrow range day in Nifty, not giving any good setup to trade.

This was not the case with overall market.  There were plenty of good quality stocks moving 5% or more.  I could find and trade one good setup in stock futures which generated a profit of Rs. 5900 per lot in less than 10 minutes.  What else you want in such dull day?

Friday, 4 August 2017

Nifty Future 04082017

After the open today it failed to break below PDL and formed a narrow range.  Once it broke out of this narrow range successfully, it presented a powerful BPB setup to go long which yielded handsomely.

Thursday, 3 August 2017

Nifty Future 03082017

It opened just below PDL and traded around it for some time.  Later it pulled back to PDL and failed to break it.  This attempt to break was rather FTC kind of setup to go for a short.  It then broke LOD and moved much lower.

The above chart is prepared from Alpha Trader by SAS Online. It is more of a replica of Pi from Zerodha but much much better from Pi.  Also Alpha mobile app is there with lightening fast trade execution and confirmation.

Tuesday, 1 August 2017

Nifty Future 01082017

It traded above PDH whole day.  A refusal to break below PDH and other bunch of levels provided a good opportunity to go long.

Monday, 31 July 2017

Wednesday, 26 July 2017

Nifty @ 10000

A historical day.  Congratulations to all investors and traders.

Traded Nifty Future today once it comfortably started trading above 10000 level which yielded some.

Friday, 21 July 2017

This is how my day starts for stock trading

Here is the screenshot of my terminal which I use to screen stocks for trading in the morning session. This is just to give you an idea what kind of screen or charts that I keep looking at during the day.   No AFL or fancy charting software.  Here I just try to keep all the information like Nifty level, number of advancing and declining stocks, intraday and historical charts and cash and future stock watch lists, in one single screen.

I start my day at 8 o'clock in the morning by watching TV for potential news flow and its likely impact on the stocks and sectors.  This will give me a list of stocks and sectors where I can expect potential price moves because of news. At around 8:30 am I will start my PC and set up the screen.  I will then go through short term and long term charts of around 50 stocks that are in my watch list and mark the levels.  I will also spend some time analyzing the Nifty and Bank Nifty charts and big picture.  Now around 9:10 am I am ready with my homework and trade plan.  I am aware of the news flow and technical setup of the stocks.  I then just wait for the market to open.  Once it starts to trade, I keep going through the charts one by one looking for my kind of setups to trade based on price action.  For example, today I could spot a good setup in ASIANPAINT.  It was breaking out some sort of consolidation at the open in expectation of good quarterly results that is going to be announced on Tuesday, 25th July.  It gave the profit of Rs. 5600.  Here is its intraday chart,

In short, it requires me to start my day at least an hour early so that I can start trading once the market opens.  It is not like I just come to screen at 9:15 am and start to trade.  It requires to do all the planning and be aware of current market trend, sentiment, news flow, volatility and technical setups.

My charts are always clean.  There are no indicators or moving averages.  Only price and volume are there on the chart.

Once the potential trade setup is found, it again requires to put trend, sentiment, news flow, volatility etc together and make final decision to trade.  After making the decision to trade, again it requires to patiently wait for the setup to trigger and enter at proper level.  If it does not allow to enter or does not trigger, need to find some another setup.  So this is how the cycle repeats and I normally end up taking 2 to 3 trades in the morning session.