This being my first note on this platform, I must commence this with thanks to King Nag (affectionate nick name for our dear Nagi)
On this platform, I am going to leave the actual counting to guruji. We do not want two of us burning the mid night oil for the same objective.
The first post here is dedicated to King Nag whose initiative has provided all of us a brand new platform. My hope is one day this platform will rise well over the level of the platform provided my mmb. I am sure it will, when we, as usual, make the Disciplined effort to attain that goal. In real life or in the market I am of the opinion that
EFFORT + DISCIPLINE adds up to success. If it does not, then we need to examine one or both of them in depth. It works for me and I sure hope it works for the rest of you all.
Using the Effort + Discipline with just the absolute basic knowledge of how Technical Analysis works, one can be a successful trader.
CAUTION: What I am about to describe below works on very short time frame and hence may suit day trades and swing trades for one to a few days. The objective of the trade is to limit the risk aspect to a very minimum. After all, in the markets we have ZERO control over the reward while we have FULL control over the risk. I prefer to excercize this FULL control in support of Rule No. 1.
There are two rules for this kind of trade and incidentally they stay the same for any kind of trade as far as I am concerned.
Rule 1 - Capital Conservation at all cost.
Rule 2 - Keep the loss short and let the gains run.
If any other rule besides this is causing KONFUZION - I suggest we have one more rule:
Rule 3 - When KONFUZED - Please refer to Rule 1. Game over.
Now to the actual nitty gritty.
Requirement listed in random order except the first one which is absolutely necessary to trade:
1) Capital
2) Ability to read a chart - especially to recognize the reaction highs (RH) and reaction lows (RL) on an intraday chart.
So far we have dealt with the "EFFORT". We now move on to "DISCIPLINE".
Wait for the underlying to post either an intraday high or low. Using the basic philosophy which ofcourse has become part of my trading life "Go short at resistance and long at support".
For longs - buy low, sell high and for shorts - sell high and buy low is the mantra. If our stock or index opens and makes a new high for the day, we watch and wait for the next move. We will call this first RH. If the next move is corrective and does not go below the open, that would be the first RL.
Go long just above the first RL with a strict, HARD STOP LOSS a point below the open (also the day's low at this time).
When action gets close to the 1st RH, liquidate 1/2 the holdings for gains and leave the SL untouched on the other 1/2. If the price action continues to go beyond the 1st RH and posts its 2nd RH,
Go short with a SL to buy back a point above the 2nd RH at the same time - revise the SL on the balance 1/2 of the long position to a point below the 1st reaction high.
If the SL is triggered on the long, it has violated the 1st RH - The longs will deliver similar gains on the entire positon and we are now riding the short postion to gains. Its time to lock in gains on 1/2 the short position when the SL on the long is triggered.. SL on the other 1/2 to be left untouched.
If the SL on the short positon does not get triggered and the underlying continues to post a new RL which is lower than our open. We may be on to some astounding gains.
For those who are new, I suggest start with only one side trades, Those who can grasp the info, process it and can quickly convert it into action - can play both side.
What is important is the discipline part - waiting for the reaction highs or lows and getting out when the trade goes against us with a minimal loss.
The EFFORT, gives us the know how to enter the trades and the DISCIPLINE, the know how to EXIT the trades while respecting our Rule 1 and allowing the Rule 2 deliver gains.
To be successful, the effort part can come up short once in a while but the Discipline part can NEVER EVER be compromised under any circustance. This in view of the ultimate respect to Rule No. 1
Have a great weekend and cheerz
Waverider
On this platform, I am going to leave the actual counting to guruji. We do not want two of us burning the mid night oil for the same objective.
The first post here is dedicated to King Nag whose initiative has provided all of us a brand new platform. My hope is one day this platform will rise well over the level of the platform provided my mmb. I am sure it will, when we, as usual, make the Disciplined effort to attain that goal. In real life or in the market I am of the opinion that
EFFORT + DISCIPLINE adds up to success. If it does not, then we need to examine one or both of them in depth. It works for me and I sure hope it works for the rest of you all.
Using the Effort + Discipline with just the absolute basic knowledge of how Technical Analysis works, one can be a successful trader.
CAUTION: What I am about to describe below works on very short time frame and hence may suit day trades and swing trades for one to a few days. The objective of the trade is to limit the risk aspect to a very minimum. After all, in the markets we have ZERO control over the reward while we have FULL control over the risk. I prefer to excercize this FULL control in support of Rule No. 1.
There are two rules for this kind of trade and incidentally they stay the same for any kind of trade as far as I am concerned.
Rule 1 - Capital Conservation at all cost.
Rule 2 - Keep the loss short and let the gains run.
If any other rule besides this is causing KONFUZION - I suggest we have one more rule:
Rule 3 - When KONFUZED - Please refer to Rule 1. Game over.
Now to the actual nitty gritty.
Requirement listed in random order except the first one which is absolutely necessary to trade:
1) Capital
2) Ability to read a chart - especially to recognize the reaction highs (RH) and reaction lows (RL) on an intraday chart.
So far we have dealt with the "EFFORT". We now move on to "DISCIPLINE".
Wait for the underlying to post either an intraday high or low. Using the basic philosophy which ofcourse has become part of my trading life "Go short at resistance and long at support".
For longs - buy low, sell high and for shorts - sell high and buy low is the mantra. If our stock or index opens and makes a new high for the day, we watch and wait for the next move. We will call this first RH. If the next move is corrective and does not go below the open, that would be the first RL.
Go long just above the first RL with a strict, HARD STOP LOSS a point below the open (also the day's low at this time).
When action gets close to the 1st RH, liquidate 1/2 the holdings for gains and leave the SL untouched on the other 1/2. If the price action continues to go beyond the 1st RH and posts its 2nd RH,
Go short with a SL to buy back a point above the 2nd RH at the same time - revise the SL on the balance 1/2 of the long position to a point below the 1st reaction high.
If the SL is triggered on the long, it has violated the 1st RH - The longs will deliver similar gains on the entire positon and we are now riding the short postion to gains. Its time to lock in gains on 1/2 the short position when the SL on the long is triggered.. SL on the other 1/2 to be left untouched.
If the SL on the short positon does not get triggered and the underlying continues to post a new RL which is lower than our open. We may be on to some astounding gains.
For those who are new, I suggest start with only one side trades, Those who can grasp the info, process it and can quickly convert it into action - can play both side.
What is important is the discipline part - waiting for the reaction highs or lows and getting out when the trade goes against us with a minimal loss.
The EFFORT, gives us the know how to enter the trades and the DISCIPLINE, the know how to EXIT the trades while respecting our Rule 1 and allowing the Rule 2 deliver gains.
To be successful, the effort part can come up short once in a while but the Discipline part can NEVER EVER be compromised under any circustance. This in view of the ultimate respect to Rule No. 1
Have a great weekend and cheerz
Waverider
Congrats WWJi on your first post!! I am sure, this Team of Nagi,Raghuvanshi,you and Harshal will really rock!! All the very best to you!!
ReplyDeleteDear WW, congrats for this new blog and thanks for providing us a different forum.
ReplyDeleteI do feel that EW theory should be applied in conjunction with traditional TA for analysis.I think doing trade only on the basis of EW can be disastrous because there are so many variables and a trader is having so few options after taking a trade.But when EW confirms traditional TA levels results can be almost 100% right.Regds.
Dear WW ji.
ReplyDeleteCongrats for the new platform.
Goood luck.
Jeevan.
Dear WW guruji,
ReplyDeleteOpen 5068.40
1st RL 5035.5 (09:23)
1ST RH 5059.30 (09:47)
TRADE 1 short NIFTY 100@ 5055, sl 5069 ( 09:50)
10:27, Nifty moves northwards till 5060.30 posting 2nd RH, turn down again without triggering our sl.
11:21 Nifty again shoots up and post 3rd RH@ 5058.8, but again our sl is not being triggered.
11:51, nifty drifts down, booked NIFTY 50@ 5035 ( near the 1st RL, and the sl on the balance remains untouched.
12:14, nifty slides more down till 5024.95 post 2nd RL, NOW, Revise the sl on the balance ½ nifty @ 5035
TRADE 2, BOUGHT minifty 100 @ 5026, with sl @ 5023.5 (12:17)
12:36, Nifty moves towards north and our sl get triggered on the short position @ 5035, hence net 20 points are being booked per lot.
Now, the net holding is minifty 100@ 5026 with a hard stop @ 5023.5,
At 12:55, nifty made a 2ND RH@ 5047, so some qty is booked i.e 40@ 5041 (13:01), and holding the balance ½ with sl being untouched at 5023.5,
14:34, nifty drifts down and triggered our sl 5023.5 and made 3RD RL @ 5019,
NOW, all the positions are being squared off and net gain comes out to be as follows,
1. Shorts 100*20 = + 2000
2. Longs 40*15 = +600
60*2.5 = -150
Brokerage -200
NET GAIN = Rs 2,250
Dear WW sir,
I have some questions regards this method of trading, if u can answer I will be very thankful to u.
1. If 1st RH goes above open, where should we place our sl on the shorts? Is it just above the 1st RH.
2. If our sl gets triggered, as a reference in the above trade, if 2nd RH goes beyond open, what would be the next trade we should initiate.
regards
dan
There is a correction sirji,
ReplyDeleteat 12:55, nifty posts 4th RH@ 5047,
WW ji,
ReplyDeleteAll i can say is "you started with a bang".
Regards,
Gautam