31052013

Nifty opened within previous day range and sold. IR formed. Tried a long trade on BOF od PDL.. Scratched this trade later.This one was a foolish trade CT trade on such weak rejection. Nifty made a cigarette pattern for nearly three hours. Short on break of the range low. TP at BRN. This trade made some money.

30052013

Expiry day. Usually I stay out. Today tried just one trade that ended as a stop out. I shorted below the BRN on TST of PDH and BOF of range high . I expected it to go to the range low MSP

29052013

Nifty opened within previous day range. IR formed. Went long on BOF of IR low. Scratched this trade. Did not have the confidence to go long on BOF of LOD. Did not get any other opportunity

28052013

Nifty opened within previous day closing range. IR Formed. BOF of PDH gave a short below BRN and MC. My first target was MSP/DO. When it broke this area I thought there could be another leg down through the Fluid.Covered on BOF of the area. Long above the Tight trading range . TP at BRN.. Did not attempt the BOF of HOD and later BOF of BRN

27052013

Nifty opened within previous day range and spiked above PDH. Did not attempt a long as nifty had moved more than 40 points and I expected a consolidation. Made a Cigarette pattern. BO below the range low failed. Went long on the the break of range high which moved very well. due to stop triggering.

If and Then

My trading revolves around Decision Points and Price Flips. These levels create a framework or structure within which the price moves. There is nothing special about these Decision Points. These levels are good old support and resistance levels where majority of the traders act.

What is there in a name?  In fact the name matters a lot psychologically. I have written about it in an earlier article (Read). If we call a particular level “Support”, our mind automatically perceive the level as a buying zone. Here we start looking at the market in absolutes and will find reasons and patterns to go long, where none exists in reality. Further if something happens contrary to our expectations we are taken off guard and we freeze.

Trading is a mental game where we have to be flexible and dynamic all the time.. We must be able to quickly change our views as the Market changes. If we hold a fixed view it is not possible to process new information objectively. Our mind will block or misinterpret the information in support of our belief.

Trading is all about developing scenarios. Instead of seeking certainty, think “If and Then” possibilities. Hold opposing ideas in mind and be ready to change your bias as and when the price action unfolds at the hard right edge of the chart.

Now, do “Decision Points” make sense to you?

24052013

Nifty opened just above BRN and sold. IR formed.. Skipped the BPB of IRL as the entry was at PDL.Went long on BOF of PDLThis one moved well.. I expected the BOF short of DO-HOD-BRN to be a winner, but it did not. Did not attempt the BOF of range low.

23052013

Nifty gaped down below PDL. IR Formed.. Went short on the break of IRL as BPB of PDL. Nice move down. Expected the BRN to give support. But nifty moved little more. I was looking to go long but could not get a valid signal

22052013

Nifty opened within previous day range, IR formed, Attempted two long trades on BOF of IR Low. Another trade was BPB of PDL/BRN , Layer over Layer. Lost all the three trades.

21052013

Nifty opened within previous day range. IR formed. Broke the PDL/IRL. I was looking to go short. BPB of PDL, but could not get a trigger for a long time. Missed the sudden up move. BOF of HOD/PDC/IRH gave a short signal. Shorted on break of PDL. It was MC low also. LOD was the target. It moved a little more

20052013

Nifty opened above PDH. IR formed. I was expecting a Spike and Channel. Went long on the break of IRH. BO of IRH failed . Scratched the long trade. Later Nifty broke the low of the tight trading range and made another lower range. BOF of range high gave a short. I was prepared to exit at PDH, BRN or PDC. These level failed to stop the fall. Finally covered at PDL.

Goal Setting

Goal setting is an aspect of trading which do not receive proper attention. Goals motivate us to devise a plan and maintain discipline. Goals drive us to take action and are a must if one is to succeed in all walks of life. Absence of well defined goals is drifting aimlessly without a proper destination.

Goals should be realistic and achievable. Otherwise it may lead to frustration and discouragement. Better to start with realistic, achievable goals and raise the bar as you progress.

We need to set performance goals and financial goals. In my opinion performance goals are more important than financial goals. I agree the ultimate aim of every trader is to make money from the market, but focusing on profitability alone will do more harm than good.

If our goal is to make Rs 5000/- a day, trading, it will force us to trade incorrectly. We will lose patience and take mediocre trades anxious to reach the set goals. Once we achieve the daily target, we may hesitate to enter on good setups as we will be afraid to lose already earned profit  and miss the daily target. Daily financial goals are counter productive. Do not set daily financial goals; you will be better with weekly or monthly goals.

Focus on performance goals on a day today basis. Our aim should be to stick to the plan and focus on the process. Define the trading process well and set goals to achieve consistency. Let the correct process allow you to achieve your financial targets.

17052013

Nifty opened within previous day range. IR formed. Skipped BOF of IRL as DO/Range High was too close. Long on TST of  DB Range Low. Scratched later. Another long at the BOF of Range low. TP at BRN 6200. This one made some money. Market was very choppy and range bound for two days. Hope it will make a decisive move on Monday

15052013

Type one trend day. Nifty opened within previous day range. Long on BPB of  PDH above the Master Candle High. .Hope you enjoyed the ride

14052013

Nifty opened  within previous day range. BOF of PDL was a long opportunity. But hesitated to take the trade as BRN and IRH were too close. Finally went long on BPB of BRN on the break of IRH. Missed the down move as I could not find the entry points comfortable. Another long on BOF of BRN.on break of MC. This trade gave a quick 20 points.

13052013

Nifty opened above BRN and sold.. IR formed. Missed the BOF short of BRN as I could not find a reliable level to enter. BPB of IRL gave a short signal. Covered at BRN 6000.. Type one trend day.

Pressure Plays

I rarely trade direct breakouts. Most of the breakouts fail and trap traders. Do not try to trade direct breaks blindly, unless you know what you are doing. Altogether avoiding breakout trades is not advisable as we will be missing many low risk high reward opportunities.

Is there a way to know which BO is going to work and which one is going to fail? No . But we can identify some high probability setups if we think order flow. These setups are called “Pressure Plays”. Pay attention to some background information before attempting these kinds of trades.

Ensure order accumulation at the BO level. Market may need to consolidate for a while for this to happen.

Who is in control of the market?  Never attempt a counter trend breakout on a trend day where investors and higher time frame traders are in control.

Notice how the critical mass is positioned. If the breakout traps them, well and good.

How far is the FTA and how strong it is? Ensure some space is there for the trade to move.

An explosive breakout happens when four significant scenarios happen at the same time.

• Many traders perceive a potential break and enter in anticipation.
• Breakout traps critical mass and they scramble to exit
• The level should be very obvious to attract breakout traders
• Ideally breakout should take the price to a level where another set of Stop Loss orders exist, setting a chain reaction.

Good Pressure Plays seldom pullback to the breakout level. Play with a very tight stop loss just beyond this potential flip zone.

Notice the 2 trades of 10052013.Both of them are Pressure plays. I marked  them  as BOF as a BOF preceded these breakouts and the concept of Pressure Plays was not explained earlier.BOF + Pressure Play, very high probability trades.

10052013

Nifty opened within previous day range. IR formed. Went short on the LOL BOF of PDH/IRH.. Covered when the break of IRL/DO failed. Long on break of PDC which acted as a tight trading range high. TP at BRN 6100. Rest of the day Nifty formed a Barbed Wire around BRN

09052013

Nifty opened within previous day range. IR formed. Went short on BPB of IRL. This trade did not move. Scratched at a small profit. Could not get any reliable signal to go long and missed the up move. Short on BOF of IRH/HOD. Market scared me and I was thinking about exiting. But as the earlier directional moves of the day were Channels, I  decided not to scratch and was lucky to capture a good move

08052013

Nifty gaped above PDH. Initial move was down. Traded within IR for a while and broke down. First trade was BPB of PDH/IRL.. Covered when the push below the tight trading range refused to move.Long on BOF of LOD. TP around HOD. I suspected a barbed wire around PDH. Went short on BOF of HOD/DO/IRH.. I was so confident in this trade. But Market humbled me.

07052013

Nifty gaped up above PDH and moved up to BRN.. I thought price will drift down and give an opportunity to long at PDH.. But Nifty refused to fall and again climbed above BRN. Entered long on the break of previous swing high. This trade did not channel as expected and I had to scratch it. After making a Cigarette pattern finally a BOF of Range low. happened. Went long on the BO of Range High. This trade gave 20 points. There were no other reliable signals

06052013

Nifty opened within previous day range and sold. BOF of the PDL was a signal to go long above the MC.. This trade moved well even though it tested the patience for a while.. Missed the down move as I could not get a reliable entry trigger. BOF of PDL gave another long. This trade also moved 20 points.

Trend Days

Trend is your friend till it bends. All trading methods barring few option strategies need directional price move. I have written about the importance of trading with the trend in an earlier post (Read).Even though my trend definition is different from the conventional one (Read) , as far as possible I do try to stay with the trend.

Statistically, Markets trend one out of ten days. These days are called Type 1 days (Read)where market moves all the day in one direction and closes at an extreme. If we are able to enter early on a type 1 trend day, we can really make our whole month.. There are certain advantages trading these moves. Due to high directional conviction, these days offer very high probability setups where we can size up our positions and also avoid getting caught on the wrong side.

These days are very dangerous also. Being range bound traders our tendency is to fade the moves. Unless we identify the trend days earlier we will get killed, trying to fade these moves. Is there a way to identify these days earlier?

Sure. There are certain clues that may warn us about a trend day..

• Usually Asian Markets influence the open. Strong move against other Asian Markets at open shows directional conviction.
• Breakout from a range can trigger a sustained move. Pay attention to higher timeframe ranges also. Open above or below the previous day range may move further
• Large opening gap can trigger an extended move. Market may channel after the gap. Counter trend outside gaps are very reliable as they trap positional traders.
• We must pay attention to above average initial volume. This could be due to the activity of Investors and higher timeframe players entering in a big way.
• Earlier low volatility, narrow range days. There could be volatility expansion after the prolonged compression. You might have read about NR4 and NR7 concepts.
• Day after type 2 reversal days. Type 2 days are reversal days. This happens when 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

As you know, there are no certainties in Markets. We will do well if we pay attention to these signals regularly.

03052013

Nifty opened just above BRN and sold. Did not attempt any trade due to RBI announcement. After the announcement Nifty gave a nice short signal. BOF of BRN. Nice move down. TP at LOD. Done for the day

02052013

Nifty Opened within previous day range and moved up. BPB of PDH gave a long signal . TP at BRN 6000.Attempted another long on break of the tight trading range above BRN. Scratched this later.Skipped the BOF of HOD as I was not confident to attempt a counter trend short to the Big Big BRN