How to trade with an oscillator

[murthyavr]

I was away from TJ for a quite some time. However just last week i was back and very glad to see this wonderful thread by ST. I read the whole thread and now trying to apply the concept to live trading. Of course with very small trade size

I am attaching ICICI bank chart for today till 2 pm. I have marked a divergence. Also a long entry. The trade went on to hit SL. I do understand that there will be few cases where the trade will go in other directions. I only want to know whether i analyzed the case properly..whether i was right in taking this trade?

Thanks ST for this amazing thread.

Suraj

Suraj,

What is the trend in ICICI today?
Down

In a downtrend, which leg will be stronger - Down leg or Up leg?
Down leg

So, what kind of divergences should we look for?
Negative Divergence - Regular or Hidden

What is Negative (Bearish) Divergence - Regular?
Higher Highs in Price, and during the same time Lower Highs in Stoch

What is Negative (Bearish) Divergence - Hidden?
Lower High in Price and during the same time Higher High in Stoch

***

Such simple analysis will tell you what to look for.

 

[Suraj]

Dear Murthy

Thank you so much for your explanation..much appreciated...i have to train my mind to think in that manner...

Suraj

Suraj,

What is the trend in ICICI today?
Down

In a downtrend, which leg will be stronger - Down leg or Up leg?
Down leg

So, what kind of divergences should we look for?
Negative Divergence - Regular or Hidden

What is Negative (Bearish) Divergence - Regular?
Higher Highs in Price, and during the same time Lower Highs in Stoch

What is Negative (Bearish) Divergence - Hidden?
Lower High in Price and during the same time Higher High in Stoch

***

Such simple analysis will tell you what to look for.

 

[rangarajan]

Dear Rangarajan,

When you say 12:20 and 13:50, I hope you are referring to the lows of
the stoch and the lows of the price. Right?

Yes.. there is divergence.

It is not negative divergence. It's positive divergence (hidden). After the
positve divergence, prices are likely to go up.. And the price has gone up
from approxmiately 260 to 275 (approx.)

murthy,
you are very correct.How many times u have explained this.
Inspite of that,it was stupid on my part not to have noticed it.
Better luck next time.
But,what about the gap(run away).How to trade it?Seperate topic.Forget it.

 

[rangarajan]

Dear Rangarajan,

When you say 12:20 and 13:50, I hope you are referring to the lows of
the stoch and the lows of the price. Right?

Yes.. there is divergence.

It is not negative divergence. It's positive divergence (hidden). After the
positve divergence, prices are likely to go up.. And the price has gone up
from approxmiately 260 to 275 (approx.)

Again coming to my chart for h/D,
Between 14.20to15.00,Stoch made higher low & Stock made L/Low & went up.
Am i correct pl.:annoyed: If so,missed twice.

 

[murthyavr]

Again coming to my chart for h/D,
Between 14.20to15.00,Stoch made higher low & Stock made L/Low & went up.
Am i correct pl.:annoyed: If so,missed twice.

You are right, Rangarajan!

Since you are learning things, allow yourself sometime before you apply the new
techniques to your trading. Opportunities are always there. They were there
yesterday, they will be there tomorrow too!

Best wishes!

 

[Suraj]

Can anyone list trades with charts on Nifty and Banknifty Futures today ? Just want to know where is went wrong and where i missed trades
Thanks
Suraj

 

[Suraj]

For academic purpose..I am attaching REL INFRA Daily chart.. Had a nice Negative Divergence...followed by Oscillator trade..
ST, Murthy kindly comment if my understanding is right?
Can this concept be used for short term trading with daily chart?.. one drawback which i feel is large stop losses..however i am fine with it.. Just want to know if the rules remain the same?
http://s6.postimage.org/qm3qn6dfl/RELINFRA_Daily.jpg
Thanks
Suraj

 

[Smart_trade]

For academic purpose..I am attaching REL INFRA Daily chart.. Had a nice Negative Divergence...followed by Oscillator trade..
ST, Murthy kindly comment if my understanding is right?
Can this concept be used for short term trading with daily chart?.. one drawback which i feel is large stop losses..however i am fine with it.. Just want to know if the rules remain the same?
http://s6.postimage.org/qm3qn6dfl/RELINFRA_Daily.jpg
Thanks
Suraj

Suraj,

Correct on negative divergence ......

The oscillators can be used for short term trading on daily timeframes ....one more way is wait for a signal on daily timeframe...then trade the immediately next signal on smaller timeframe such as 30 min ...keep stops as per 30 min charts....once the trade moves in your favour monitor the trade on daily timeframes. This way you take the trade with smaller initial stops and then manage the trade on larger ( daily ) timeframes. This requires bit of practice of trading in different timeframes.

Smart_trade

 

[Suraj]

Thanks ST... will work on this

Suraj,

Correct on negative divergence ......

The oscillators can be used for short term trading on daily timeframes ....one more way is wait for a signal on daily timeframe...then trade the immediately next signal on smaller timeframe such as 30 min ...keep stops as per 30 min charts....once the trade moves in your favour monitor the trade on daily timeframes. This way you take the trade with smaller initial stops and then manage the trade on larger ( daily ) timeframes. This requires bit of practice of trading in different timeframes.

Smart_trade

 

[rangarajan]

Suraj,

Correct on negative divergence ......

The oscillators can be used for short term trading on daily timeframes ....one more way is wait for a signal on daily timeframe...then trade the immediately next signal on smaller timeframe such as 30 min ...keep stops as per 30 min charts....once the trade moves in your favour monitor the trade on daily timeframes. This way you take the trade with smaller initial stops and then manage the trade on larger ( daily ) timeframes. This requires bit of practice of trading in different timeframes.

Smart_trade

Smart,
can u pl elaborate to make it more clear.