Sunday, February 5, 2012

Daily Trading Patterns


Learn to recognize the daily trading patterns. There are four types of trading days

1.Type 1 days are trend days. market trends either up or down during the trading hours. This can happen after a reversal day or any significant news shifts the sentiment to bullish or bearish.More than two trend days in the markets in a row  are very rare. Trend days are generally followed by  a reversal or consolidation.

2.Type 2 days are reversal days.This happens when a price hits a strong higher time frame decision point during the day and reverses, This will show as hammers or shooting stars on a daily chart.We can expect a trend day after a reversal day

3.Type 3 and 4 days are consolidation or range days.This usually happens after a trend day when the effect of an earlier news dries up and there is no significant events to shift the market sentiment.

More than four swings very rarely happens on a day . try to catch these swings and limit your trades to a maximum of four. Do not over trade.



6 comments:

  1. Very beautifully explained.Love to relearn these structures.

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  2. Whats the difference between Range day and consolidation day ?

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  3. Hi ST,
    This is awesome! I especially like the 4 trades a day limit, am going to try to stick to it.

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  4. Well explained. Good to know. Helps me to prepare for the day.

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  5. ST Sir, Can we use this method for trading stocks in cash ? I am asking bcoz I cant start trading live on Nifty Futures right away. DP of RN can be used for stocks as well ?. Thanks.
    - Charles

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