Trading it the JustNifty way.

The oft repeated query is how to use the TT(Tech table) for trading purposes. There are improvements made in the TT over a period of time. Before you begin to read the tech table, you need to understand the market moves with the help of two basic classic technical indicators:

Trend indicator (Macd) & Lead indicator (Stochastics). Once you are able to put the segments of market uptrend with corrections with the use of the above two tools to be followed with market's downmoves with its share of corrective rallies, you will then be ready to integrate the numbers that are appearing in the tech. table to fine tune your trading plans/ executions/ management.

For eg: A buy in a lower time frame while the higher time frame is in BUY MODE would be a valid signal. (If you get a price closing above Day Low Ema while it is staying above Week Low Ema, it is a valid & viable one., exceptions when a market is reversing with +ve divergences). You read your tools starting to give a buy from oversold region, prices would close above the "Low Ema" of that time frame in the TT(depends on the hour/ day/ week TA).

Once the prices close above Low Ema, it is "Buy on Dips" for the short term until prices close above "Close Ema" signalling a "Hold". The prices are then expected to close above "High Ema" indicating momentous moves ahead and you may plan your trades accordingly by adding more for the short term swift gains.

In a sideways market, the prices tend to oscillate between High & Low Emas.

Similarly when the TA tools indicate a overbought with negative divergences, the prices will close below "High Ema" to suggest a "Loss of momentum" signalling a "Sell on Rises" and confirm it with a close below "Close Ema" for a hold and once closes below "Low Ema", the downward momentum will accelerate.

For Positional Traders, the TT has JNSAR and J10.SAR numbers to initiate trades which is a simple "Stop And Reverse" method.

If you can identify a larger trend change with TA tools, TT will confirm the same with its colour changing as the prices close below HEmas first followed by Day, Week and Month. You are safe as you side with these trend indicating colours. Do not go against them as one never knows how deep is the correction/ Fall or How high is the rally/ Upmove.

Besides these, TT also has Pivot table of three time frames & Fibonacci retracements to choose supports/ resistances for profit booking & re-entry.

If you can understand the rhythmic changes of the market (Using Elliot wave/ Technical Analysis), TT becomes a ready reckoner to choose the trading as well as investment numbers.

Yes, you can use the TT for individual stocks for an effective short term as well as Long term invertment/ trading purposes.

Always have JNSAR Trade,(Positional Trade) & Aggressive trades independently as per their criteria to maximise gains.

Use Option Strategy at critical moment to Maximise your returns.

OPTIONS: A powerful tool to be used with high discrimination

Options trading:

It is a tool to be employed after studying the Technical set up of any market/ stock.

Before using options as a tool, you need to understand what are the option's characteristics and what it is made of:

Characteristics of Options:

Option premium, as its price is called, is based on firstly the "Time element" - start of the series the time element is high and hence a high premium and closer to the end of the series lesser premium as time element becomes quite less. This fact is used to write options if the market is expected to be in a range or in a sideways mode.

The second factor that determines the premium of the option is the technical set up of the underlying stock or index. If it is trending up. option premium increases and if it is trending down, option price decreases and if it consolidates in a sideways mode, option premium moves in a range but loses its premium due to "time decay".

The most important aspect of options is that its premium tends to outrun the underlying stock/ index when there is "frenzy in an upmove" or "panic in a downmove" and option players can take full advantage of such "Premium excesses".

Usage:

Having understood its working, its useage will be relatively easy provided you discriminte its usage.

For a retailer, it should be used only during a trending period especially at the Breakout & Breakdown stages.

• One can use a combination of "Day & Hour" Lead indicators(Stochastics) to initiate trades.

• One can use JNSAR or J10SAR or anyother SAR pivots to initiate trades.

Few examples of Highly successful implementation of "Option strategy" in recent times are:

1. On 11th.Nov., JNSAR triggered a sell @ 6260 after serious negative divergence in the "Weekly TA". 6100PE & 6000PE would have become 5 to 10 times as the November settlement ended @ 5800. Alternatively one could write 6000 & 6100CE as the time window was favourable to capture the time decay even if the downtrend does not unfold but a sideways with a down bias emerges.

2. On 1st Dec., JNSAR triggered a buy @ 5880 after positive divergence in the "Hourly TA along with highly oversold daily TA". 5900CE & 6000CE if entered at that moment would have doubled in value. Alternatively one could write 5900 & 6000PE as the time window was favourable to capture the time decay even if the uptrend does not unfold but a sideways with a upward bias emerges.

Principles that are essential to follow are:

1. Always buy a minimum of 2 options and part book on one and Hold the other one till the "reasons to hold" lasts.

2. Choose the option strike price appropriately based on likely targets, time left for the series.

3. Never be greedy to risk with "Big quantities" as larger the size of your position, more difficult to stay objective. This helps you to stay in the game and play long innings. Get rich slowly.

4. Get Greedy when you spot a larger time frame suggesting a trend reversal as it happened on 11th November 2010 with "Weekly reversal". Such reversals are to be followed with "BUY & HOLD".(PE)

5. Keep it as simple as illustrated here and be patient enough to "Wait for a proper trade set up" to emerge while doing NOTHING during the wait.

6. You may lose a lot of your capital if you start trading the smaller moves using Options though some experienced traders manage to do well keeping their expectations under control. AVOID it.

Remember the Golden Goose Story and allow the market to show you those "Golden trade set ups" and get rich steadily.

Contribute:The above write up is a brief introduction to the powerful financial tool often misunderstood and illused by many. I would welcome contributions from "Open Interest(OI)" experts on the study of OI, volume & prices to arrive at strategies to "Write or Buy Options" at certain junctures and hold the same and other such relevant inputs. Share your experiences that have produced good results as well as the ones that has deceived.

Read the following write ups:

Tech.table reading

SAR Signals

JNSAR method

Breakout/ break down trading

Applied Technical Analysis

Read also the 8 topics listed under "Always start trading with these" at the side bar of my blog.