There is a substantial risk of loss associated with trading Derivatives . Losses can and will occur. My methods will not ensure profits

Tuesday, March 17, 2015

17032015

This is an illustrative example of the concepts being discussed.Markings are just visualizations on historical data in hindsight analysis  
Nifty gaped up above PDH. CT outside gap. Went long on the BPB of PDH/BRN. TP when price failed to stay above RN. Shorted on FTC. Target was probable range low. But it broke MSP and fell. TP above BRN after a bounce from PDH. Did not get the next down move. Price hit PDL and reversed. attempted a BW range around PDC. Long on TST of range low. Short covering at the fag end took the price to HOD.TP around 8750.Keep a watch on Spike and Ledge pattern which may occur after a climatic move
http://technical.traders.com/authors/images/4675.gif. Today the last entry was on BOF of ledge bottom(LOD). Here if you wait for the test of PDL, you will miss the low risk entry. Other entry is a PP on break of  the ledge top.

Posted by at

33 comments:

  1. RajuMarch 17, 2015 at 4:34 PM

    Dear ST

    Thanks for the charts and excellent trades.
    I assumed there is a triangle pattern formation before your last entry. Pls clarify

    Raju

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 4:37 PM

      In our method we do not draw any diagonal lines.
      All the levels we use are horizontal price levels

      ST

      Delete
    2. RajuMarch 17, 2015 at 4:48 PM

      Thanks ST

      Delete
  2. Trader PaiMarch 17, 2015 at 4:48 PM

    Hi ST,
    I was away in the morning and in the evening .
    In between attempted two trades..
    Could you please comment on my 2nd trade

    http://postimg.org/image/56zz70x9v/

    rgds
    Kishore

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 6:42 PM

      Nothing wrong with the trades.Second one was premature
      Price went up 100 points and retraced it all. Dont expect it to move up again immediately
      Always expect some chop and consolidation

      ST

      Delete
  3. sqlfixMarch 17, 2015 at 4:49 PM

    Hi Sir,Thanks for the chart. I shorted at 10:30 AM observing swing low. What was wrong here or do we have to wait for the price to break the earlier high price. How to identify and avoid this trap.

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 6:50 PM

      For a reversal trade always give room for a complex pull back especially on a strong trend
      Usually after the up move price will form a range. You sell the BOF of the range high . Short the range low only if critical mass gets trapped. http://adamhgrimes.com/blog/wp-content/uploads/2014/11/pullbacks.png

      ST

      Delete
  4. Uday DaveMarch 17, 2015 at 4:51 PM

    Sir,

    Nice trades as usual. Thanks for sharing the insight about Spike and Ledge pattern. It is indeed a very powerful pattern. For your second trade, was there also the same pattern?
    Also some interesting observation. I have noticed it few times earlier and also today. "After a counter-trend full gap (outside gap), first pullback to the FTA can be bought/sold for the low risk entry rather than waiting for BPB kind of setup." Your first trade is a good example of that. Please share your views about it.

    Thanks.
    URD

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 7:17 PM

      It was not S&L. Price did not consolidate and retest the range high after BOF
      Another issue is that Buying climaxes are difficult to identify where as it will be very evident on sell side
      You can try a blind buy if price pulled back to PDH after gap up. Today BRN was an issue. Good trade comes when a counter trend move stalls at a S/R

      ST

      Delete
    2. TrekkieMarch 17, 2015 at 10:44 PM

      Hi ST, thanks. What is the difference between break of bar no. 7 and break of bar no 10 YOu have entered on break of bar no. 10, why not on break of bar no. 7? I entered on break of bar no. 3

      Delete
    3. SMART TraderMarch 17, 2015 at 11:24 PM

      I entered on break of bar no 3
      Line above bar no 3 is the line I marked for BRN

      ST

      Delete
    4. TrekkieMarch 18, 2015 at 9:22 AM

      Good morning ST. Thank you so much.

      Delete
  5. UnknownMarch 17, 2015 at 5:08 PM

    Hi ST,

    last TST entry was great but I was bit hesitant to enter there and watched the market zooming up with out me.

    I was hesitant because the bounce from PDL has not made any higher highs yet.. so am not sure trend has reversed
    and price may test PDL any time and hit our SL...

    Thanks,
    MarketNoob

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 7:19 PM

      Did you go long on break of Range high
      It was a good PP trade trapping the bears

      ST

      Delete
  6. UnknownMarch 17, 2015 at 5:16 PM

    Hi ST,

    as continuation of previous question...

    How did you get into last TST trade?

    Should I place a SL buy near LOD when price is just testing PDL ?
    i.e place the SL buy some half an hour before in our case?

    or watch like hawk for last TST and place right after TST at LOD ?
    I think this hawk method is hard !

    or any other better entry strategy?

    Thanks,
    MarketNoob

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 7:31 PM

      TST trades are very easy to execute. But psychologically very difficult
      First you should have total trust in your levels. I will give an example. today price gaped up above PDH and started sliding. You feel PDH will hold. Then you just enter a limit buy order at 8687 and another SL sell order 8677 with a trigger of 8677.50. If your reading is correct price will bounce from PDH. Then you raise stop to the new swing low formed and trail.Otherwise both orders will execute and you lose 10 points

      ST

      Delete
    2. UnknownMarch 17, 2015 at 8:46 PM

      Thanks for the ideas ST !

      I didn't take the long trade as I was not mentally prepared for such quick spike, after managing to take a decent short trade in the morning.

      Thanks,
      MarketNoob

      Delete
  7. UnknownMarch 17, 2015 at 5:27 PM

    ST
    What a day perfect for DP style my net connection and new software PI of zerodha i could not made the full use of the move
    My thought was the same as of you any way I want to know which DP is most important in my view PDL and PDH decides most of the moves, you have mentioned in your book but only told us important DPs are places where movement are expected so please guide taking into account of my views

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 7:34 PM

      Prominent levels are from where price got rejected strongly earlier. Usually PDH and PDL rank higher
      Then it depends on other factors also. trend,range,space,criticall mass, fluid etc

      ST

      Delete
  8. L.V.GandhiMarch 17, 2015 at 6:28 PM

    Your second trade was CT. What was your thought process to take the trade at that point with out waiting for confirmation and what was your trailing SL.

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 8:29 PM

      Price had already moved up 100 points from PDC. I felt it is a bit extended and need some consolidation
      When BOF happened I went short ignoring RN and I was confident that it will reach Range Low. Luckily it broke down
      SL was brought down to 61 and later to 51

      ST

      Delete
    2. L.V.GandhiMarch 18, 2015 at 7:36 AM

      Thanks.

      Delete
  9. UnknownMarch 17, 2015 at 6:44 PM

    Whats CT ? your 2nd trade.. it can be taken as BOF also ??

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 10:43 PM

      Counter trend
      Yes it was a minor BOF of LOD

      ST

      Delete
    2. UnknownMarch 18, 2015 at 1:35 PM

      Thanks for your reply.
      Was watching todays nifty futures chart and around 1326 as 8740 broke next level buying was around 8733, when 8730 broke buying came around 8722, i wasnt trading so dont know at what price anyone with market order below 8740 or 8730 would have got.. whats your experience ? how much slippage is usually there in cases like these ? you prefer to enter with market orders or stop loss orders on breaks ?

      Delete
    3. SMART TraderMarch 18, 2015 at 1:49 PM

      I use SL-Limit orders for entry. So there will not be slippage. On a momentum move entry may not get filled

      ST

      Delete
  10. veerMarch 17, 2015 at 7:02 PM

    Dear ST

    I have the same question as L.V.Gandhi. I shorted below range low 8740 - was it too late ? Since there is outside gap which is bullish and any CT should be after confirmation - is it right ?

    Secondly what do you mean by spike and ledge pattern - is it doji (or) spring (or) pin bar ? Please throw some light on this.

    Regards,

    Veer

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 10:59 PM

      It is not wrong. But most of the CT breakouts will fail.
      Best entries are always selling the high and buying the low of a range
      Logical target of a range high BOF is range low and a trade is taken to this FTA.
      Extra run is only a bonus.Spike and ledge is a range formation a little far from the early extreme

      ST

      Delete
    2. TrekkieJune 14, 2015 at 12:57 PM

      Hi ST,
      Could you please explain the Spike and Ledge part?. Thanks.

      Delete
  11. BharatMarch 17, 2015 at 7:06 PM

    ST,

    Have some queries.

    1. you put both buy above 9.24 and sell below 9.21 order in first trade?for failure of BRN and BPB brn
    2.in which bar you took entry for FTC below 11.45 bar or 11.39.. upto 11.39 it was not brkout failure . Pls explain your thought process and action after 11.36 bar.

    3.Why attempted counter trend test trade .. that too on doji bar. ?

    Regards
    Bharat

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 11:11 PM

      No. First I kept a buy order at PDH which did not execute. When price moved up I entered with a SL below BRN
      I was looking to go long. Shorts after breaking below BRN
      Below 11.36 bar. entry was at 53. .SL brought down to 51 later so that I will cover commission also
      Real range low was at breakdown was just an overshoot. See how price behaved at 8660 before and after the BOF.
      Price attempted twice to go down and got rejected. I entered after second failure. It was a TST entry at the range low. Bars are not important levels are

      ST

      Delete
  12. NeethiMarch 17, 2015 at 7:12 PM

    ST Sir,

    Thanks for the chart.

    a) I took the 1st trade as such yours.
    b) I thought of the trend/bias is bullish, so, haven't tried the short at FTC

    But the problem I expected the reversal / and gone for the Longs at
    1) Long 12.22 BRN PP
    2) Long 13.30 PDC PP
    with tiny losses.

    after that don't have confident on taking other trades, so, missed the last one.

    how to confirm about the reversal ?
    as you said have to wait for consolidate/chopping?
    how long the consolidate/chopping can happen before the reversal ?
    is that should be confirmed by more TST happened at the bottom / reversal point ?

    Please guide.

    Thanks,
    Neethi

    ReplyDelete
    Replies
    1. SMART TraderMarch 17, 2015 at 11:17 PM

      PP trades are done after a consolidation for a long time
      Finally price traded between 8660-80 for a long time. Long the break of that range
      Such rules cannot be made about time. Go with the trend. Trade when a CT move stalls at a prominent level

      ST

      Delete

Note: Only a member of this blog may post a comment.

Subscribe to: Post Comments (Atom)