Monday, 22 July 2013

Sai Seva: TREND OF NIFTY LEVELS ALL IN SPOT FOR 22 JULY 13

Sai Seva: TREND OF NIFTY LEVELS ALL IN SPOT FOR 22 JULY 13: / सबका मालिक एक / TREND OF NIFTY LEVELS ALL IN SPOT FOR 22 JULY 13 HOUR SUPPORT RESISTANCE CHANNEL: 6034-6029-6014-6006-6...

TREND-O-NOMICS: THE 14 STAGES OF TRADING PSYCHOLOGY

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TREND-O-NOMICS: NIFTY ELLIOTT WAVE UPDATE

TREND-O-NOMICS: NIFTY ELLIOTT WAVE UPDATE: Hi Friends, In my last post I mentioned about possible decline on Nifty. And indeed Nifty has been sliding down since End Jan 2013. So ...

Egoless Traders: A True Financial Education

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Egoless Traders: Being Rich With A Rich Soul

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Wednesday, 17 July 2013

Trade in nifty future based on daily volatility

Introduction: Indian traders have realized that benifit of trading in the the nifty future from past couple of years. However it is quite experienced that many traders never make any success in nifty intraday trade. Learning little simplest technique can make some one a winner in the nifty trading. I am going to give you one such technique which no one would have tought you before. it is my own experiment and research.

Interpret the daily volatility. It is the parameter which will gives you the most likely move the nifty future can swing in a day. In this case the term ‘swing’ means high and low difference in a day.

Then the next question is how to find the volatility. In my book on Futures and options I have given the simplest method to find the volatility using the logarithmic mathematical procedure. If you do not have the book or you do not wish to calculate the volatility then the other procedure left out is refer the daily volatility column given in the NSE site against the Nifty future f &o quote section. i have taken the same to explain this concept to you. You may get a figure 1.23 for 9th October 2009 price quote in the bottom of the page. In other words it says the nifty future has the potentiality to generate 1.23% returns today either in the buy side or in sell side. For example if nifty is trading at 5000 it will generate 5000X1.23%=61.50 point return. This small arithmetic information is sufficient enough for me to take a wise trade decision.

Now it is the time to migrate to a more realistic example. On 9th October 2009 at 10:45 a.m. I found the nifty at 4999. At that time the prior swing has recorded high 5021 and low was 4973 and the daily volatility was 1.23%. The previous days’ closing was 5001. Since the daily volatility is a derivation from the yearly volatility I will calculate the return points from the previous days closing which is 5001X1.23%=61.5123 round it to 62 points. The next big thing I can do is I will take the clue from the mid point of high and low of the current day. As per my data the mid point is 4997. As per the recorded data the nifty high and low has created a swing of 48 points (i.e.5021-4973). My current price 4999 suggests I am just above the midpoint (hence I have a chance to scale 62-26=36 point from here in upside or 26 point down from here to complete the calculated return of 62 points. The 26 points the difference between the low and the current price.

Now the last job is to derive a trade decision. Here the concept of cycle will get focused since my return is 62 points as per the volatility and every completion of 62 points will start a new cycle. It is often observed that if the stock trade above the mid point then it has the most likely chance of going up and in my case Nifty is above 4997(mid point ) and I will buy nifty at current price of 4999 for target 5035(i.e. 4999+36). Same time I will put my stop loss as 4997-27=4970. If the up side target is achieved then my next target will be in the 2nd cycle termination point of 5034+62=5096. similarly the 2nd cycle of the Nifty will be 4908(i.e. 4970-62).

In between the 4970 and 4908 I will find one target at the mid point of it (i.e.(4970+4908)/2=4939 )the 2nd target will be the mid point of 4938.50 and 4907.50(i.e. (4939+4908)/2=4923.5). Same way the intermediate target of the upside move for 2nd cycle can be calculated.

Now as per the calculation I have entered the buy trade and the stop loss is triggered and given me the opportunity to enter the short trade of 2nd cycle. You may surprise to see that that nifty low was 4923.05 on 9th October 2009. I too have the answer why the 2nd cycle halted at 4923? But it is beyond the scope of this article.
For your information I will once again inform you this value is calculated when nifty were quoting at 4999 and have neither made any of these calculated high or low.

This same trick can me applied to all the stocks just by referring its daily volatility and applying the mid point concept on it. It will yield much refined result if you will apply my mid point method as describe on my book on Gann method under the 34 intraday technique section. You will be in a position to calculate many intermediate target points and most likely reversal points using midpoint method explained in the book.

In Smart finance we always experiment and teach you the simplest method which is easy to understand and follow. However stock market or commodity market or forex market has different price tags and each method has its limitation and can me applied only on selected group of price tag. These refined techniques we teach in seminar programs. However many of these techniques are featured in our published books. Try to use the above discussed technique in Nifty Future and experience the success.

Pivot Points Trading (The Most Basic)

Using pivot points as a trading strategy has been around for a long time and was originally used by floor traders. This was a nice simple way for floor traders to have some idea of where the market was heading during the course of the day with only a few simple calculations.

The pivot point is the level at which the market direction changes for the day. Using some simple arithmetic and the previous days high, low and close, a series of points are derived. These points can be critical support and resistance levels. The pivot level, support and resistance levels calculated from that are collectively known as pivot levels.

Every day the market you are following has an open, high, low and a close for the day. This information basically contains all the data you need to use pivot points.The reason pivot points are so popular is that they are predictive as opposed to lagging.

Because so many traders follow pivot points you will often find that the market reacts at these levels. This give you an opportunity to trade.

If the market opens above the pivot point then the bias for the day is long trades. If the market opens below the pivot point then the bias for the day is for short trades.

The three most important pivot points are R1, S1 and the actual pivot point.

The general idea behind trading pivot points are to look for a reversal or break of R1 or S1. By the time the market reaches R2,R3 or S2,S3 the market will already be overbought or oversold and these levels should be used for exits rather than entries.

A perfect set would be for the market to open above the pivot level and then stall slightly at R1 then go on to R2. You would enter on a break of R1 with a target of R2 and if the market was really strong close half at R2 and target R3 with the remainder of your position.

If, after starting the day above the Pivot, the Price crosses back through the Pivot, the Pivot will act as a Resistance area. Pivot Points and Support and Resistance levels behave exactly like any historical Support and Resistance level.

Unfortunately life is not that simple and we have to deal with each trading day the best way we can. Combine these with simple channeling, retracement levels, past critical supports & resistances, SAR will enhance the success rate.
Pivot Points - Trading Methodology:
To make the discussion a bit less abstract, let's take a most superficial look at some simple trading methodology employing Pivot Points.
Step 1
"In general, if the day's Price Action starts above the Pivot, it will tend to stay above the Pivot.
This simple observation provides the basic rules for two of the simplest Pivot trading systems.
System 1:
Open is above Pivot: Buy
Open is below Pivot: Sell
System 2:
Place Buy and Sell stops bracketing the Pivot. Whichever is not filled acts as safety stop for the other.
These "systems" are very much too raw for my tastes. Too much chance of getting whipsawed. Let's take it one step deeper. Let's refine these simple systems just a bit more:
Step 2
First Fundamental Of Pivot Trading After the opening range (first 15-30 min. to one hour), if price is above/below the Pivot, Price Action will strongly tend to remain above/below the Pivot for the session.
Although this rule bids us to wait out the Opening Range and thus avoid much of the wildness and whipsawing, overlooking the next Fundamental Of Pivot Trading could be disastrous:
Step 3
If the market opens, or later trades at the extremes (R2, R3 or S2, S3), it will exhibit a tendency to trade back toward the Pivot. Thus, the general rule, 'Avoid buying the High or selling the Low', becomes increasingly more stringent as price moves farther from the Pivot.

I have picked 5 days of last week and what follows are some ideas on how you could have traded those days using pivot points.
........................26.10.09-Monday.......................

.........................27.10.09-Tuesday....................

.........................28.10.09-Wednesday.................

.........................29.10.09-Thursday.................

.........................30.10.09-Friday....................

.......Week starting 26.10(Mon) to 30.10(Fri).....

Keep those weekly, daily Pivots and fine tune them to perfection.

Trending & Sideways market Trading

Every trader needs a trend to make money. If you think about it, no matter what the technique, if there is not a trend after you buy, then you will not be able to sell at higher prices..."Following" is the next part of the term. We use this word because trend followers always wait for the trend to shift first, then "follow" it.
One of the first rules of trend following is that price is the main concern. Traders may use other indicators showing where price may go next or what it should be but as a general rule these should be given less weightage. A trader need only be worried about what the market is doing, not what the market might do. The current price and only the price tells you what the market is doing.
Money Management: Another decisive factor of trend following is not the timing of the trade or the indicator, but rather the decision of how much to trade over the course of the trend.
Risk Control: Cut losses is the rule. This means that during periods of higher market volatility, the trading size is reduced. During losing periods, positions are reduced and trade size is cut back. The main objective is to preserve capital until more positive price trends reappear.
Rules: Trend following should be systematic. Price and time are pivotal at all times.

A Predictive market trading algorithm or Trading System is defined as a calculable set of trading rules that uses either technical analysis and/or Elliott wave analysis and results in entry, exit and stop loss trade price points. Trading algorithms are not exclusive to swing trading and are also used for day trading and long term trading. Trading algorithms/systems may lose their profit potential when their strategies obtain enough of a mass following to curtail their effectiveness: "Now it's an arms race. Everyone is building more sophisticated algorithms, and the more competition exists, the smaller the profits,"
The markets are said to be trending sideways most of the time. During this time they can be quite volatile. It is for that reason that many traders have come to loath them. However some traders actually prefer sideways trending markets over trending markets.
The bulls and the bears are in this together, scratching their heads and wondering what’s going to happen next. Up and down, down and up. As soon as you think you know where the stock market is going, it doesn’t…An increasing amount of money has been flowing into fast-trading (and often short-selling) hedge funds that may be whipsawing the market with their staccato trading patterns…What’s a small-time investor to do? Perhaps it sounds facile, but the best thing to do with a sideways trending market is “not much.”
Sideways trends can be found inside support and resistance levels that are near each other. Inside the trading trend line the price still fluctuates, but with rather small ups and downs. A sideways trend is said to be broken when the price goes outside the previous limitations of the trend line. You might like to make sure that the price goes outside the barrier of the trend line twice before being sure the sideways trend is broken.

Friday, 12 July 2013

Three Types of Analysis

The Big Three

By now you've learned some history about the forex, how it works, what affects the prices, blah blah blah.
ZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZZ.
This is all obviously super important, but know that you're now thinking...
BORING!
SHOW
ME
HOW

TO
MAKE
MONEY
ALREADY!!!!
Well say no more friends because here is where your journey as a forex trader begins...
This is your last chance to turn back...
Take the red pill, forget everything, and we'll take you back to where you were before.
You can go back to living your average life in your 9-5 job and work for someone else for the rest of your life...
OR...
You can take the green pill, which is fully loaded with the dollar extract, and learn how you can make money for yourself in the most active market in the world, simply by using a little brain power.

Just remember, your education will never stop. Even after you graduate from the School of Pipsology, you must constantly pursue as much knowledge as you can, so that you can become a true FOREX MASTER! The learning never ends!
Are you ready to make that commitment?
Now pop that green pill in, wash it down with some delicious chocolate milk, and grab your lunchbox... the School of Pipsology is now in session!
Note: the green pill was made with a brainwashing serum. You will now obey everything that we tell you to do! Mwuahahaha! <--- evil laugh

Three Types of Market Analysis

To begin, let's look at three ways on how you would analyze and develop ideas to trade the market. There are three basic types of market analysis:

Technical Analysis
Fundamental Analysis
Sentiment Analysis

There has always been a constant debate as to which analysis is better, but to tell you the truth, you need to know all three.

It's kind of like standing on a three-legged stool - if one of the legs is weak, the stool will break under your weight and you'll fall flat on your face. The same holds true in trading. If your analysis on any of the three types of trading is weak and you ignore it, there's a good chance that it will cause you to lose out on your trade!