Thursday, November 6, 2008

Educative, Lucrative SAR (Stop And Reverse)

You will find at the top right corner of this blog a link to "Nifty Intraday Charting".

Everyday When you read the SAR with the stochastics & Rsi and trade as per the green(Buy) and Red (Sell) dots as they begin to appear, you can eliminate some whipsaws and take sizeable profits in each trade.

Alternatively when the trend is down, trade only the red dots and vice versa.

If you know in advance the likely targets, critical levels or a completion of a wave structure( Fives or ABC), you can then book out before the trend reverses.

Try this exercise diligently and see your profits growing. Trade with the trend. If you are trading a counter trend, trade small & with strict SL and for a very short duration.

And don't go around trumpeting your triumps but just keep to yourself and trade consistently and gratefully say a "thank you to your favourite GOD", thereby keeping your feet firmly on the ground and heads bowed down to receive the bounty consistently.

Below is today's intrachart with " 4 trades" of sizeable profits. Even if you had traded the one whipsaw, you still would have ended up mighty happy with your performance.



And also keep in mind our "15 minute trading range break out". If these methods don't work out some days, don't lose heart but keep at it.You will become more choosier as you gain experience. I learnt this 15 minute trading from Mr. Sudarshan Sukhani's blog(Trading steps).

21 comments:

Yoda said...

I'm glad you mentioned this method, Ilango!

Let me mention my experiments on the same - the pluses:
1. going along with the trend and
2. maximizing profits on the up and downside of a movement is the main advantage.
3. On a trending day, a small contract like the mininifty can give you almost 25% of your margin.

The minuses:
1. The whipsaws will cost a great deal in brokerage;
2. Flat days you'll make a small (and frequent) loss - be prepared if you're loss-averse to small drains;
3. The intradayer will initially *lose* on the gap up or down;
4. The emotional discipline required to just "follow the dots" is next to impossible if you're used to more 'intuitive' and emotional plays. It's almost disappointingly monotonous to make money on SAR - the most accurate tool for winning trades.:)

Yoda said...

Oh ... and it wouldn't have been "4 trades" - more like 10 -14 buy/sell signals (sometimes more 25 - 30 signals on a single day).

(Sites on using the SAR say that Wilder meant for it to be used with the ADX and RSI signally >25 for a trending mkt.)

Ilango said...

Hi.Yoda,

I have been thinking all night after I posted this "SAR" that I have forgotten to mention your name for the credits as You have brought it to my attention through Jay.

Thank you very much.

I fully agree with your detailed points. It works beautifully in a trending market. In a sideways market, it needs to be traded as supports-buy & resistance-sell style.

One need to identify such trends for which EW is quite helpful.

I have been preferring a count of 4th up from 2253 and now a 5th down from 3240. Having the count, you know that 4th up is quite bullish & 5th down quite severe and your trding can be tuned to take full advantage of the same.

In the above scenario, options have been excellent to trade calmly.(Brokerage being 10 times the future)

Once again, thank you for sharing your experience and enriching our life.

Yoda said...

1. re: options - I'm completely against them these days, Ilango - the time-decay is a terrible [di]stress. Better instead to get a 20 - 40k account to cover the daily range of a mininifty, and trade futures to prevent erosion of capital.

The net indicates that SAR is used quite widely in the west.

**** Credits return to Jay (and you) as always, for sharing all her knowledge so patiently and openly for so many years. And of course, Wilder, who created this simple tool.

It's certainly helped my mom's learning and earning curve.

ram said...

res sir. eagerly waiting for ur reply on moving ave. posted on nov 6

ss said...

ORB's (Opening Range Breakouts)is a well known strategy. And fading ORB's is more fun. You may want to refer to 60/30 m ORB's. Google it out. Dr. Brett's blog has some excellent posts.

ss :)

Prabhanshu said...

Hi Ilango,
I was going through all your write ups...Really..you are doing great job for all newbies like me and looking forward to learn TA.
I have few queries which might be silly ones... but still I will ask you :)
1. For S&R system, which indicators I need to follow to confirm the trend? Is it Slow Stochastic: Uptrend when blue line cross red line in upward direction and vice versa for downtrend??
2. Is RSI can also confirm the trends. If yes, how I can make it out? (Will learn more abt RSI..but asking now..so that monday onwards I can do paper trade for this system).

Ilango said...

Hi..Prabhanshu,

To keep it simple:
1. When "green dot" appears for a "buy", look for the Stochastics to reverse from below 20 or 30 and rsi in Oversold area (about 20-30) and any channel break out.
2. When "Red dot" appears for a "Sell", look for the stochastics to reverse from above 80 (or even 70) and rsi in overbought area (about 70-80) and any channel break down.
3. Know whether you are trading an uptrending or downtrending or a sideways market and look for opportunities accordingly.

Best regards.

ilango

Prabhanshu said...

Thanks alot Ilango.!!

Tarak said...

But where to get the chart with these dots?

Ravi said...

Hi Tarak,

Use the below link, this chart will be updated live.

http://ichart.finance.yahoo.com/z?s=^nsei&t=1d&q=c&l=off&z=l&p=e5,e20,p&a=ss,r14

Thanks,
Ravi

jvnreddy said...

Hi Tarak,
http://nsetracker.marketcalls.in/ is also a right link.

Raj said...
This comment has been removed by the author.
Raj said...

Dear All,

Thanks for sharing the info on SAR. Although the links shared by Ravi & Jvnreddy are SAR charts for Nifty Spot. Where can I find SAR chart for Nifty Future?

Thanks.

Regards
Raj.

jvnreddy said...

@ Raj,
As of now no SAR charts for Nifty Futures.You have take the position as per Nifty signals only.

parminder said...

gm sir

could u provide me the link to ur nifty intradaycharting i could not find it on
on the blog
thanks
Parminder

Smita said...

Many thanks sir Ilango , all the posts are increasing my understanding of how to approch markets ....Putting it to practicle markets seems like still a challenge for me ...Trying to observe markets movements according to the guidelines

With Regards

Shekar said...

what is methods of calculating SAR. please any body inform

Shekar said...

please any body post how to calculate daily and weekly SAR

Ankita said...

Can u explain how to use SAR along with MACD and Stocastics
Which combination of MACD STOC be use ....the timeframe to
be used SL and targets....I am new to this site

shaileshkumar mehta said...

Is anyone doing a successful intraday trading with Parabolic SAR? If yes pl. share

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