In pursuit of Financial independence thru Trading

Monday, 18 July 2016

Maruti Paper Trade

Today's paper trade is on Maruti.

My view : Bearish to sideways.
Motive of trade : Stock has formed a weekly top and should be sideways to negative this week. 26th July is the quarterly result. So , Exit would be before 25th July.

Profit & loss Graph : Maximum profit will be 14500 @ 4300 strike and  If stock remains above 4400 then we will loose 120 rupees + brokerage. Our stoploss will be 4200 . We can not hold position below 4200 as our loss will pick pace after that point.

Technical reason  : Why I have bearish view on Maruti , because stock has formed a bearish candle at top of a channel . Also RSI also suggests over-bought on daily chart. See chart below

Friday, 6 May 2016

Technical Analysis introduction

Technical Analysis ( Introduction)

Trading using Channels

Channel Trading :

Channel is an area or space created by Scrip movements in a space/range which is having resistance indicated by tops and support indicated by lows of a an asset . Channels are the simplest of chart patterns to identify. All we have to do is sketch a line joining tops of a stock and same with the bottoms of stock. The Lines would roughly be parallel to each other or can be in shapes of wedges. When you start joining tops & bottoms with Lines then you would realize that  all the tops & bottoms you just joined makes some sense. Yes , If you have discovered this , then you are on right track. See image below (Self-explanatory).
Buy at supports and sell at resistance
See few Live trading examples using Channel trading. Few of you must have worked on these calls and surely reaped profits out of it.
But , before that lets see what happens when the so-called ” Trading Channel ” is broken by price. See Image below
Upper Part of an image shows a Price BREAKOUT
Entry (My style ) :  The breakout from range should be with high volume.
I enter/buy half Qty. on breakout . The stock will come back to retest the resistance it broke (which now becomes support).
Our stop-loss is just below the Entry line (Minor support level ) . If stock holds the line and start moving up from the Entry line. I buy the rest of the position .
Targets : The simple way is to just measure the breadth of channel and then assume target equal to that .
Lower part of image shows a Price Breakdown .
Entry , stop-loss and Targets Vice versa as explained above.

Buy on breakout , Sell on breakdown
Few more examples

Trade examples

Few of our trading calls described and shared here.
HEROMOTOCORP original Buy call given on 5th December :
SHORT TERM CALL : BUY HEROMOTOCORP at 1820-1830 , stoploss 1795 closing basis , TGT 1869-1895-1920-1950
Result : 1912 High . All targets almost hit.

Trendlines support intersecting

Buy call example of mahindra satyam


Important Patterns – The Triangles

Types of triangles

There are mainly three types of triangle chart patterns : Click to know more about particular triangle :

Psychology of Technical Analysis

First of all , We will try to keep language and approach of this course as simple and straight  as it could be kept because as the name suggests this course is for beginners and new-comers to markets who may not be knowing much of the terms and processes.
Psychology as you all know is a study of human mental functions and behavior. Psychology has the goal of understanding individuals and groups by both establishing general principles and researching specific cases . In this field (Trading) , a professional practitioner or researcher who reads  is called a technical analyst. Over the years various analysts have developed various tools and indicators which are based on their study of traders psychology.Which are over a ton like macd , rsi , bollinger bands and many many others.
Why is Traders psychology so important that they have done some much research on it. The answer is that we humans in markets are driven my common forces like greed and fear , optimism and pessimism . Humans act predictably and market technicians have developed descriptions of emotional patterns that are reflected in the price action. This applies to both rational as well as erratic market gyrations. A consensus amongst market participants is reflected in a ‘trend’. Incorrect assumptions and disappointment is considered a ‘breakout or breakdown’ . The market highs and lows are really a graphic representation of human desires and fears in action .
Continued ………. page 2


Types of Charts

Line chart
Candlestick chart
Bar chart (OHLC chart)
Point and figure chart
Now, Lets learn about each of the charts.