1. I credit lots of success to "EW study" but never in isolation. The success rate is good only because it is combined with TA.
2. "Divergences play" alone bring you the biggest riches time and again. The more pronounced they are, the more gains they get you. And when these divergences coincide with a "perceived completion of EW ", the conviction level in a trader goes high to hold on to that trade.
The two lows 4766(3rd wave) and 4675(5th wave) coincided with a clearly pronounced positive divergence and the result has been extraordinary.
Subsequent to that we have had one -ve div but that happened just after a steep rise and the oscillators showed -ve div but it is to "time adjust" the steepness in prices.
Currently a negative div. is developing but there is some "doubts" in the EW count. The strength in bank Nifty & certain stocks may cushion any falls. This one would test one's patience and one should remember the main trend and its trending up within the channel.
3. Macd defines the "Moving average convergence and divergence". One of the potent steep move indications has often come from watching the short term moving averge converging towards a medium term average (Here we have taken 35hour/ 5-day & 70 Hour/10-day sma) and then start to turn away slowly without touching or just touching the medium term average and thus setting up a "fast rise" scenario.This set up often concludes the "corrective or sideways" scenario and commencement of the next up move.
4. For the trend followers, a continuation of Higher high(HH) and Higher Low (HL) will indicate the continuation of trend and they can simple hold on to their position till this set up changes to LH & LL.
I have put up nearly 14 "Stock Charts" in my "Stockwealth Blog" with divergence factor figuring prominently. Exchange your observations by either sending a chart or name of the stock by emailing to me and I will try to put it up for every one's benefit. It is not possible to monitor so many stocks daily consistently.
"Piyush Sharda" asked about "ORB" and selecting the correct day to use it.I wish there is a simple answer to this. If one has understood the above lesson well, use of "ORB" too could be applied selectively.
Whenever you see an extreme reading in the indicators, use the ORB. It will work bothways meaning if the extreme reading is at the top in an up trending market, you get a corrective move down and ORB will guide you. Similarly when the reading is at the bottom, then the possibility of the correction terminating and the uptrend resuming and ORB will confirm that.
Even if one follows it consistently, the overall results will be very good after deducting the stop losses.
11 comments:
Hi Ilango
I shorted bank nifty for first time at 9390 only to realise it reached 9510 in 30 mins.I am still holding my position.Can you suggest if I should continue holding it or book my looses.
Viren - Thx for your VAH VAL etc..I can't post comments coz my new office doesn't allow it..
Mr Health Minister - How is walk going on?I am habitual of it now :).When ever I am tensed I just lock my system and go for walk in the office campus :)
Cheers
Akhil
hi
Dear Ilango,
Along with above, the option study was discussed with books/links in this week. Dear aarvee9 and other Blogmates have already posted their views, methods of reading/understanding the market with the help of option study in detail. I also used to comment with my limited knowledge with the help & ref. of O.I.figures; this is especially for Dear Anuj/Satheesh regarding My Nifty Fut. / Option study/views.
Long back I tried to study the subject “Option Trading”, but stopped it immediately because I immediately realized that I need just half a liter milk every day and am getting it very easily so there is no need to look for, or look after the cow farm.
I used to just visit nse India site for EOD derivative copy and option chain. For me, to trade next day, the intraday movement/range, the closing and the change in O.I. are just 3 important factors only. For me O.I. means Volume only and the change in O.I. indicates the undertone but only the actual price is always important . Generally the change in Nifty price’s nearest 100 to 200 - /+ option strike prices O.I. suggests the short term possible hurdles or supports. Very simple. Basically Option trading is always dangerous. It requires Extreme Technical Analysis, mastery, along with the APPROPRIATE entry/exit TIMING oneself by “him” only. I never write any option. When I sense the topping out of market along with expert’s analysis and if O.I.data is supporting the situation as per my own interpretation then only, I buy put option. I have no faith in buying the call option or in Strangle- Straddle strategy. This criteria is very tough to match always and the possibility of matching, is maximum twice or thrice in a year. If Nifty data is mirror then Option data is like a side mirror, which is optional but help/must for reverse gear.
“Study” is the requirement of each student, grasping is another thing but at the time of exams what you deliver in those 3 hours is the only deciding factor always, my practical thinking.
thank u sir ,
a sea of knowledge ,will try to digest slowly...
@mynac
thanks
I got your point..I have got basic understanding of options,just wanna learn about pricing and few strategies...I would like to use options during events like...election result...company results....not for hedging(I would prefer money management and stop losss).
Dear Anuj,
I am not a technical analyst but my personal experiences/money has taught me a lot during these years. In those days "MONEY" was my only analyst. When you loose your capital, realize and accept the mistakes and then also still try to learn in proper manner from your mistakes and keep the fight on then only the chances of victory are there. Late Shantanu Kirloskar is my idol regarding this subject. Once Late Shantanu Kirloskar was asked this question in a T.V. program called then “Pratibha and Pratima” that, Sir, what is the secret of your success? What do you think? Is it destiny? Or your efforts only? Or the combination of both? His answer was very interesting. He told that neither destiny nor efforts. An effort with the proper direction, but the direction was discovered by ME ONLY.
@ Ilango Sir,
i smell the "fast rise" move too..
call it "springboard" consolidation, wherein the mkt maintains a very narrow range, many a time below 50 pts, spends so much more time in the range, that the lack of direction and the build up of volumes within that range, gives a person a hunch that a strong jump up (even a dive down's possible tho) is to follow.
Springboard consolidation, 99% of the times, stages a false(volumeless) breakout in the oppositte direction, and that's the best time to jump in for the kill.
will study some more, and hopefully will post a useful chart.will try atleast.
thanks and pranams,
Wroodrah
PS:- do you know where to source my IEOD data (not yahoo) from?!
Hello to all,
Trust everybody is having a good weekend.
Values for tomorrow:
BN - 9492-9465-9403
Nifty- 5301-5295-5290.5.
Ilango sir & wroodrahji,
my personal hunch is also the same...we may see new high and then there nifty goes...the date may be 31 march 2010 - say 9.30 to 10.30 hrs...
this is purely personal hunch...
@rajaG
what's ur take....did patchi says something different....let me know
@mynac
I can understand ...I am also travelling in the same boat
Shantanurao Laxmanrao Kirloskar...the best trader ?
"He created a business empire that enjoyed one of the highest growth rates in Indian history, a staggering 32,401% growth of assets from 1950-1991. Today, the Kirloskar Group is India's largest Engineering Conglomerate."
http://en.wikipedia.org/wiki/S._L._Kirloskar
Good luck
Thank you Ilango sir. "Satheesh's quest for knowledge should lead to some profitable trades....only with some patience and persistence" - thanks again for the blessing. Yesterday the whole day I was out and so could not access internet. Sorry for the late response.
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