Astral Poly
Pros
1). nice pin
2). ppz
3). fib 50
cons
1). normal volumes
2). immediate fta
stoploss : pin low - buffer
tp1 : 380
tp2 : 400
Bala can you please analyse hawkins chart applying above principles and try to determine short,medium and long term targets.
regards
http://img94.imageshack.us/img94/6370/hawkinsh.png
prasad-ji, here is the chart for hawkins. very strong support at 2100. ppz, tl and fib 50. if you are already holding, wait for around 2100 to add. otherwise 2200 is a good entry. there is a minor support at 2200.
this system doesnt give targets . we are following price, not predicting price. first trouble area is near 2400. if it breaks with conviction that will be the next support.
aggressive traders can buy at 2200 with stop 2100-buffer and tp 2400-buffer
Thanks Bala for your excellent tutorial.
Now I have a very fundamental/basic question, which I think is the 1st question to work when dealing with a probabilistic, non-linear, human psychology driven system called market. The question is why does this system work, and where can it go wrong.
Without knowing these two, and putting good amount of money in such game, is akeen to financial suicide as per me.
Second question, how much return this system will give me, and with how much risk. May be a 1-2 year real life experience will give me some pointer. This will help us decide whether to follow this or follow some other approach with better risk/reward ratio.
hi subhash, good questions.
1). if you notice this is nothing but a buy on declines strategy backed up by several factors like rebound from support levels. the size of the rebound/reversal and the location of rebound/reversal give good margin of safety. its possible this could be a wrong breakout. but odds are in your favor. also the MM principles suggest stoploss (near to the next support) and take profits by moving stops which could give you a chance to ride. since we are trading in the direction of trend, the momentum is with us. risk reward ratio is very good
2). where it can go wrong ? if the strength of the signal is not good (confluence of several factors not good) then your chances are less, need to tightly manage the trade and move sl to BE quickly. even after alligning sun, moon and earth, you cant predict the price action due to several external, psychological factors, thats why stoploss applies. also dont trade on results time, macro events like elections
3). i have no data or expectations on the size of annual returns. it depends on one’s ability to wait and pick value opportunities and his/her ability to apply strong MM principles/descipline. but in general i see RRR as 2:1, so two bad trades one good trade you are break even.
like any system , you need to believe and have conviction before you put money. i would suggest atleast 6 months of ‘paper’ trading this system.
even if you are not trading, these principles will help you in understanding the price action of your portfolio stocks. when to add, when to book partial profits and also confidence on the price movement
http://chartink.com/stocks/havells.html
take a look at this chart, Havells. look at the price action around EMA150 line. every time it comes near, it bounces off. one can make serious money just by EMA bounce rule itself with tight MM.
http://chartink.com/stocks/titan.html
titan daily. look at the double doji. there was another double doji on oct 20,21 followed by a bearish candle and then a sell off. now we are support level, if we get a strong bullish candle, could go long. those we are already having this in their pf and planning to add, this is a good time. double doji after a pullback and at a support level, now all we need a good bullish candle on monday
but one major risk to titan is there is no immediate support. free fall to 256 levels is possible. there is lot of free space on downside, so if double doji is broken down, then 256 will be retested
http://chartink.com/stocks/granules.html
look at this daily chart granuels india. bounce off ema150. but a tiny pin. at support level. to reverse the continuos downtrend from last 3 months you would want a stronger pin. but since its at support and ema150 levels, its worth watchng the price action. aggressive traders can buy now with a stoploss at 150-buffer (support at 153). tp 188
note, i am posting several charts. some for educational purpose, some for trading. its important you watch as many charts as possible to train your eye and mind. over a period it becomes your second nature to ‘spot’ a value pick
http://chartink.com/stocks/ingerrand.html
an example of bad chart. too choppy. market doesnt tell you whether it wants to go up or down. we need to avoid looking at those charts. for use clear visible smooth uptrend is important
http://chartink.com/stocks/lakshvilas.html
look at WRB (wide range bar) on dec 10. we should buy those type of bars on some correction. normally WRB indicates strong momentum. sl for these type is bottom of bar. tp at equal distnace (RRR 1:1)
http://chartink.com/stocks/ajantpharm.html
everones favorite ajanta pharma. look at the ema bounce. on first occasion, nice pin and close above ema line. successful. second one, if you had entered on touch of ema, you would have hit sl. the key is to wait to close above ema. if you had applied that principle it would have been a safe trade. at ema, you need a reversal bar . not a touching and ‘grazing’ along the ema line. look at nov 30 BUOB. thats a signal of reversal and entry point.
patience is the key
Thanks Bala,
I just completed reading this thread. I must say the flow of conveying thoughts and way of stitching the concepts in to a system is beautiful and simple to understand.
Atul
Hi Bala,
A nice post. Suggest you give live examples with charts so novices can understand what you are deriving at. I too have begun learning technical analysis, but i do it with Point and Figure charting as taught by Tom Dorsey. If interested would love to share the little knowledge i have with you. I find it the most easiest thing in Technical Analysis.
Hi Bala,
Sorry for the delay in replying. It will be difficult to explain things in a thread. I did start a thread but then thought otherwise. However, i wish to share a book with you which can be down loaded by you. It is available in the market at a huge price. If you are interested please give me your email and i will post it to you.
The name of the book is Point and Figure Charting by Tom Dorsey.
I found technical analysis via this method very easy and I do keep manual charts of around 40 companies. It has helped me a lot. So wish to share it with you
http://chartink.com/stocks/508486.html Link: http://chartink.com/stocks/508486.html
those who entered at 2200 can book 50% now. reached and broke the resistence 2400 and closed above it. move sl to be for the rest. this kind of fundamentally good stocks give such opportunities with less risk and more reward once in a while. we need to be patient and grab the opportunities
Link: http://img94.imageshack.us/img94/6370/hawkinsh.png http://img94.imageshack.us/img94/6370/hawkinsh.png Link: http://img94.imageshack.us/img94/6370/hawkinsh.png
http://chartink.com/stocks/astral.html Link: http://chartink.com/stocks/astral.html
atral poly met both T1 and T2 very quickly. thats the power of such pins at swing lows
1). nice pin
2). ppz
3).
1). normal volumes
2).
Link: http://img526.imageshack.us/img526/8830/bakedchartl.png http://img526.imageshack.us/img526/8830/bakedchartl.png Link: http://img526.imageshack.us/img526/8830/bakedchartl.png
http://chartink.com/stocks/kscl.html Link: http://chartink.com/stocks/kscl.html
kaveri hit fta. power of confluence !!! less risk more reward
Link: http://img651.imageshack.us/img651/7129/kaveri.png http://img651.imageshack.us/img651/7129/kaveri.png Link: http://img651.imageshack.us/img651/7129/kaveri.png
1). huge volumes
2). ppz rejection
3). tl rejection
4).
5).
Hi Bala,
Thanks for your detailed explanations - it was very useful to increase my knowledge about entry points. What do you use to get a better idea of exit points? What I mean is - suppose I have a TP of 150. Now the stock blows past 150. Human nature kicks in - I get greedy and want to book the max gains. Do you have some exit rules? E.g. do you just flip your entry rules?
I know that one could do partial profit booking etc. but just want to know if you have some thing for exit points.
Hi HG,
just like we use the support, resistence, tl, fib, BRN for entry, we can use same for exit. always identify the first trouble area (fta). this is where space comes into picture. at fta, i book 50% and ride the rest by moving sl to be. if you see all my examples above, i have marked the fta at immediate resistence zone. this will be our first take profit line.
other approach is to have fixed RRR. that means if my risk is 10 rs, my RRR is 1, then i book profit at 10rs gain. nothing wrong with this approach if your psychology suits this way of thinking. but i would always let the price action tell me where to exit
since these are fundamentally strong scrips and we are using techno-fundamentals, you can ride the wave by trailing stop losses for which you need good comfortable space between entry and stoploss, so MM comes into picture again.
depending on your conviction (on the system and stock) and comfort level (psych) you follow one approach and stick to it. i know its not so easy as i mentioned here, but thats what seperates successful traders/investors from others
Thanks for the quick reply. Will spend some time experimenting.