27062013

Usually I stand out on expiry days.Today took one trade.Nifty gaped up above the PDH. Did not channel. Drifted down. Long on BOF of PDH/IRL. Quickly took profit. when the breakout stalled. Notice the entry point. This is the ideal price behavior. Our entry point should act as a flip zone.after the break.

26062013

Nifty opened within previous day range. First bar acted as the IR. Skipped BOF of IR as IRL/PDC/BRN very close. Attempted a long on BOF of PDC/IRL/BRN. Scratched. BPB of BRN gave a short. Quick 20 point trade.

25062013

Nifty opened within previous day range. IR formed. Skipped the BOF of IRL as BRN,IRH,PDH were  just above the entry level. Long ON BPB of BRN/IRH. Second trade was a short on BOF of HOD. I expected PDH to hold. But it did not. TP at BRN

24062013

Nifty gaped down and broke PDL. Skipped the short below the first bar as BRN was very close. Did not take the BOF of BRN long as t I felt the rejection very weak. BPB of BRN gave a short signal. 20 point trade

Mission Statement

My mission as a consistently profitable trader is to wait patiently till the price hit a Decision Point, to execute the trade without hesitation on price action confirmation being well aware of the trouble areas, to cut the losses short and allow my winners to run, to focus on the process rather than on money, and to accept the end result without emotions.

Capitulation

Capitulation refers to the act of surrendering or giving up. In financial circles, generally the term is used to indicate the point in time where investors give up their hope to recover their losses due to falling prices, and bail out.

Many investors consider capitulation as an indication of Market bottom. Almost every one who wanted to sell or forced to sell has done so. Only buyers are left now, who will eventually drive the prices up.

It is very difficult to forecast and identify the capitulation levels. Often, investors will only agree in hindsight as to when the market actually capitulated.

In trading parlance capitulation is traders throw in the towel and say “Enough is enough”,and exit their current positions either to cut their losses or to avoid further reduction in their profits. In futures markets no body can exit a position without creating an order flow against their own position. Many traders reverse their positions and trade in the new direction.

Short term traders are creatures of habit and with some experience we can identify and pin point where they are going to capitulate and reverse their positions. Our success as a trader will largely depend on our ability to correctly identify capitulation levels.

Learn to identify levels where traders trading the current move realize they are on the wrong side of the market. These are levels from where we can expect a very high probability, non random, directional price move.

21062013

Nifty gaped down below PDL. First bar was a rejection bar with lower tails. Skipped the short trade. Further BRN was close. Long on BOF of PDL. Nifty channeled for a while.TP When channel overshoot failed. Short on FTC above the strong flip ( Low of previous day cigarette range). PDL failed to arrest the fall. TP at LOD. Pressure Play long above PDL  in to the fluid.. Nice 30 point trade.

20062013

Huge Gap down. Thanks to Ben.IR formed. Nifty made a Cigarette pattern. BOF of range low failed to move up. Finally shorted the break of Range low.A 20 point trade.

19062013

Nifty opened below PDL. First bar acted as IR. Shorted the break of IRL as BPB of PDL. Scratched. Second trade was another short BOF of PDC/PDL/BRN.. Anther scratch. Last trade was BPB of BRN on break of HOD/PDC. One more scratch. Market was chopping around too many DPs. If our entries are correct , we will always get enough time to scratch the trade at breakeven.

18062013

Nifty opened within previous day range. IR formed. BOF of IRH gave a short signal . TP on BOF of IRL. Long on BOF of IRL. Nice up move. TP above PDH. BOF of PDH gave a short. Suspected the IR high to act as support. Shorted only below IRH. TP At BRN 5800

17062013

Announcement day.. Market trapped the shorts and bounced back. I expected a barbed wire around PDH. But market channeled.after the spike. Did not get any good entry trigger. No trades

From Harish Thahkkar

Reproduced below is a comment received from  Harish Thahkkar which is self explanatory
He is using VWAP to supplement his trading decisions.

"I am presenting some my observations which I think will be helpful to blog readers

(1) Draw horizontal lines on plain charts of Open,PDC place VWAP.Full IR above/below will be trend day

(2)VWAP works as regression line,turning points of mkt eg.price gap down open < PDC price remaing  mostly above VWAP throught day,it makes BO,PDL,PDC,sometimes even PDH

(3)VWAP can show success of BO on DPS eg.VWAP remaing good distance above PDL but price rmemains below it,if low volumes price moves above VWAP,makes BOF like wise on PDC,PDH

(4)1st swing H-L,1st BO or BOF.1st attempt to turn the market.1st WRB dominate the market.eg.1st attempt to turn the market is strong means bottom is near.If 1st low and next 2-3 lows are nearer with 5-7 points diffirence it is rounding bottom and trapes short sellers.List is big If you like, I will write.Thanks.

Please click the links to view charts

http://prntscr.com/1a222b

http://prntscr.com/1a2b7s

http://prntscr.com/1a2d5v

http://prntscr.com/1a2dsb 

Please do give your feedbacks

Do you want to know a simple method with which  you can get rid most of  your psychological and discipline problems in your trading ? Believe me it is very effective.
Start a blog. Every day document your trades in it. While trading imagine you are trading public money and you need to report the trades each and every day. You are accountable and you are responsible for every action.Your blog post is going to be this report.Try it. 

Re-read and Rediscover

Last week I received an email from a reader. He wrote me that earlier he was reading the blog regularly and used to comment. He tried to trade the method for a while and failed to make profit. Then he lost interest and left.

He wrote me that after a year he is rediscovering the blog. Now he has started viewing trading from a different angle and finally price moves have started making sense to him.

This always happen. At a later stage, we may find new uses for something we discarded as useless earlier. Something we have read earlier and thought crap will suddenly start making sense. Something that can change our trading dramatically could be just in front of us. But we fail to recognize it.

I used to download and read a lot of E Books on trading. Recently while cleaning up my hard drive, I came across a book titled “Phantom of the Pits”. It was the worst book I have ever read on the subject. It is very difficult to read beyond one or two chapters as it is so boring.  I never had patience to read it completely. Before deleting the file, luckily, I scrolled down. Believe me.I struck gold.

Phantom’s Rule 1 and Rule 2 in 5^th and 6^th chapters make the book worth its weight in gold. Probably you might have read it. If not Download, read and let me know your feedback.

Reread and Rediscover.

14062013

Type 1 trend day after a Counter Trend gap up.Expected  a VWAP run climax. But it did not happen

13062013

Nifty gaped below PDL , attempted to close the gap and failed. Went long on the BOF of BRN. This did not move as expected. Scratched it. Nifty channeled for a while and then traded in a range. Did not get any other signal to trade.

Trading Plan

"Plan the trade and trade the Plan" is perhaps the most common advise given to traders. Planning the trade is very easy. But most of the time we fail to trade the plan. In the heat of battle we become nervous, tensed and fail to execute as per the plan.Still it is better to have some plan and  teach ourselves to stick to it.

We are trading a discretionary method. Everything cannot be defined in such a method. It is impossible to set rules for everything.Discretionary trading totally depends on our judgement. We need to take decisions as per our judgement. So the end result will vary from trader to trader even though we are trading the same method.

I have prepared a brief plan to guide us in trading the method. I think I have covered the most essentials in this check list..I wish you to remind that the method cannot be traded mechanically. It all depends on your ability to Read and feel the Market

TRADING RULES

Entries

• Trade only at Decision Points
• Hide Initial Stop behind a DP
• Entry preferably on break of a potential Flip Zone(To ensure two layers of defense)
• Counter Bias Trades preferably on BOF (Ensure orders from trapped traders)
• BPB entries preferably only on the first BPB of the move( To avoid over extended moves)
• Ensure Space for the trade to move

Trade Management

• Scratch if price crack flip and settle (Think Pressure Plays then)
• Trail using flips and pivots
• Exit at the next DP
• Exit on reasonable profit
• Always consider strength of the move before the exit

Market  Bias

Initial

• Price Inside or Outside of Previous Day Range?.
• Daily chart in Rally or Decline?
• Price at Upper or lower side of Previous day range?
• Price above or below PDC?
• Price above or below Day Open
• Price Gaped on open? Trend gap or CT gap ?
• Initial price move. Bullish or Bearish.

Ongoing

• Current range above or below the previous range?
• Last DP crack. Upside or Downside?

 Other Helpful Concepts

• Master Candles at DP
• Initial Range
• Channel after a spike
• Barbed Wires
• Layer over Layer
• Brackets and envelops
• Cigarettes
• Pressure plays and Traps
• Fluid
• Critical Mass

Finally the most important thing. Always think order flow. Learn to identify locations where other traders are likely to keep their orders. Try to position yourself to take advantage of this accumulated orders

Your suggestions are welcome for improving the template

12062013

Nifty Gaped down below PDL and started trading in a range. Being an announcement day did not attempt any trade till it is over. First trade was a BPB of range low which failed immediately. Scratched. Long on the break of Range low to the up side. TP at BRN.Shorted on the BOF of PDL/BRN. This one also ended as a scratch. Rest of the day Nifty got trapped in a Channel.

11062013

Nifty gaped down below PDL and failed to go above it. Shorted BPB of PDL. Nice move down. TP at BRN. Went long on the BOF of BRN. Covered when the next flip zone resisted. This acted as a range. Missed the next two moves. Tried a long on the BPB of Range High. Scratched it later. Short on BOF of Range high. TP below  BRN 5800

10062013

Nifty opened within previous day range.An Envelop formed overlapping the single bar IR. Did not go short on BPB of IRL as BRN/PDC and PDL was very close.Long on the BOF of BRN . Scratched the trade later as it did not move as expected.. Nifty again broke BRN and made a TST of PDL. Long again on the BOF of BRN. I expected this one to move. It moved after stopping me out for a point. Missed the down move as Nifty reversed before reaching HOD. Skipped the final BOF and break of  MC as it was too late.

Quit and Win

Recently I happened to read an advice given by a veteran trader to his deciples. The essence was, if we select and follow a study with discipline and patience Market will eventually reward our loyalty.

Yes, I agree. There is some truth in it. Many traders waste a lot of time and energy searching for the Holy Grail. They flirt from system to systems and methods to methods. It makes sense to stick to a method and become an expert trading it. Winners never quit. Wise men stick to their methods and get rewarded. It is conventional wisdom.

But there is a problem, Most of the traders are not lucky enough to find a profitable method from day one of their trading career. Many traders end up selecting a method without a true edge or something not suitable for their personality and stick with it for years without any progress.

Finding a method with an enduring edge is a trial and error process. We traders must be good at quitting. We must quickly abandon .and quit a method which is not providing a true edge. Simply sticking to some method will not make you profitable. Ensure there is an enduring edge.

Edge is simply the ability of your study or method to repeatedly  identify actionable price levels from where you can expect a very high probability non random directional price move. Test your chosen study and ensure there is an edge in it. Throw it out if not. Believe me,. Most of the conventional studies have no edge. Majority of the traders adopt these studies and you know very well what happen to them.

 Cult Leaders may reward your loyalty. Markets will never

07062013

Nifty gaped down and attempted to break BRN. BOF of BRN gave a long signal. TP at PDH. Price broke PDH and there was a BPB signal. Skipped it as Critical Mass was long. Went short on the BPB of PDH to the down side. Sudden bounce from the PDC scared me, but stop was above PDH. Covered the trade when price again fell to PDC. Could not get any reliable signal for the final down move.

06062013

Nifty gaped down and broke PDL. I thought of shorting below the first bar but hesitates as I expected some consolidation after such a gap. But when Nifty broke the swing low I tried a short and had to scratch it. BPB of BRN/IRH gave a long . This gave around 20 points.Shorted the BOF of PDH. I was concerned about PDc but the Fluid 5950-30 gave confidence. Price moved to the swing low as expected.

05062013

Nifty opened just below PDL. Did not short the BPB of PDL as BRN 5900 was very close.Skipped the BOF of BRN  also. But this trade moved very well without me.Shorted the BOF of PDL. TP at BRN. DB TST of BRN gave a long signal. Nice move up TP at PDC. Another short on the BOF of HOD. But price did not break the range low Scratched.

04062013

Nifty opened just below PDC and spiked. Formed a wide initial range. There was no space for a channel move with BRN and PDH very near. Short on BOF of IRH. Did not move as expected . Scratched. Thought of going long on BOF of  swing low. but was not confident to trade into a  prominent flip zone 5980 and the market proved me right.Missed most of the down move. Short was late on the BPB of DO/IRL. TP at PDL

03062013

Nifty opened within previous day range. Broke below PDL, but did not extend beyond BO candle. IR formed. My expectation was a Barbed Wire around PDL. Two attempts to go above PDL and BRN failed. Hence went short on the break of IRL.. Next trade was a BPB of range low.Shorted below the MC.. Whole day market was grinding.

Burn the Chart

Do we really need charts to trade?  I don’t think so. Charts are just pictorial representation of the underlying data. Live auction markets produce streaming data and we cut and chart it for our convenience. There is nothing magical about the charts and chart patterns.

There is a misconception among the traders, especially beginners that their success as a trader will depend on their chart reading skills. They spend count less hours perfecting their chart reading skills and waste their time on identifying patterns where none exists.

Markets move up and down for a reason. Unless we understand the Reality of the Market, no amount of chart reading skill is going to make us consistently profitable. Only the horizontal price levels are important in Markets Everything else is just illusions.

Look at the picture. It is the 1M chart of NF on 31-05-2013. Immediately after the open there was a BPB trade opportunity. I have given the raw data along with the chart.. We can see from the raw data that in the seconded minute nifty broke below BRN and made a low of  6095.40.Then there was a pull back and price failed to go below the earlier low for the next three minutes.. Price attempted to move above the BRN. Now we are ready to short if price falls below 6095.40 with our orders. Next minute we are in.

Before the introduction of computers and live charting the good old tape readers were doing the same thing. They were interpreting the raw data. Thank God. Everything is much easier now.

You do not need the charts to trade. Burn them. But ensure you can read the raw data before you do it.

While posting the link I found out that this one is my 100th write up. Now there are 65 under "Rants and Raves" and  35 under "Structure and Patterns". I really wonder how long I can continue writing on such a small subject. Frankly I do not know if anybody is getting benefited .I hope at least one will.