Incisive Nifty Trend Analysis

[Option.Trader]

Just my 2C :

There are traders who trade 1M chart, others 5/10M. Some will trade basis 15/30M. And many others who will hold on to a trade for days, weeks or months.

The question is which method superior.? Which method provides higher return.? We live in the day when the market can reverse on a dime, where computerized systems create false patterns to induce buyers. This is my opinion after analysis of thousands of charts. (Just for e.g yesterday bank stocks wiped out many shorts, induced longs and again reversed sharply to trigger SL for longs) The traders who can benefit from such stop-runs are either those who trade on very short term of 1-5-10M. Rest of the traders including those trading on daily timeframe were toast and stopped.

Again my analysis of charts leads me to believe that positional traders with very long term timeframe who have beyond 10% SL levels and trade in a time frame of weeks to months can make money in the market, as do very quick traders who day trade on the smallest of time frames

Cheers and happy trading.

Not sure I get the point being made. I was just analyzing the logic of being short @5850, whether it made sense to still hold onto a short at that level or does it make sense to let market give the signal.

 

[DSM]

OptionTrader, Just placing my thought too. What I was stating is that what % SL may be right for for one may not be for another. Positional traders who ride out on trend for months, surely cannot have 3-5% SL. Their TARGET as well as SL will be higher.

That's the reason for the analogy of time frames. No daytrader will trade with a SL of 1%, for a swing trader, this will be acceptable cost of doing business.
Besides time frame, SL will be based on one's reading of the market, be it right or wrong. Higher SL is ofcourse to avoid being stopped in the market on a positional trade. Some would argue for trailing SL, others for fixed SL. It will then depend on one's methodology.

In hindsight, short at 5,850 with 10% SL seems way out. I agree, but for a positional trade, it will be exactly at 6,435.

I have experimented with fixed monetary SL, % SL, % of capital SL. But if one is looking for a positional trade, the market direction will surely challenge one's idea. The big question here is to exit the system, or hold out? I guess the answer will depend upon the mind, method and the readings of the trader.

I agree with your argument and logic though - as I am not a positional trader (atleast now, but that could change) But if I were personally short at 5,850 my threshold for pain being low, I would be out. But then again I hope to evolve, as I find largest gains are made on two sides - the shortest time frame 1M, 5M & 10M and the other extreme i.e holding on to a position for months.

What I support is divergence of views and systems - even that are different from mine, as one is looking for reading, study, analysis and learning. The market is made up of contrarians, that why there is a buyer for every seller. For every person who says 'Don't stand in front of the moving train' there's the other who will say 'Don't follow the herd' Finally we have to use or experience and skills to guide us, and for each that will lead us to take a DIFFERNT level of entry, SL and target.

That's all I am saying.

Not sure I get the point being made. I was just analyzing the logic of being short @5850, whether it made sense to still hold onto a short at that level or does it make sense to let market give the signal.

 

[gunsho]

Not sure I get the point being made. I was just analyzing the logic of being short @5850, whether it made sense to still hold onto a short at that level or does it make sense to let market give the signal.

Option Trader, I believe what DSM says is, in simple words, its more of comparing Apples with Oranges.

IOW, same guys who shorted in Jan 2013 around 5900 and added more when it went to 6100+, made money later. I am aware of a friend who do only positional, shorted at 5960 and having a stop loss of spot with 6112. Today he has not yet closed it. But he will close it and change his mode to bull if spot cross 6112. He did the same on Jan 2013 and made huge money. This time it is hurting (not yet, but most likely it may).

Different TF/Different methods, target/entry/sl/MM all will change. No one can predict the direction with 100% strike rate. For a guy who is short and his SL hits, the guy who is long all the way will only be smiling. Doesn't mean the first guy is bad or he holding until his Sl hits is bad.. bcoz there are other times, he would have won.

It is just relative. Another famous topic is, Intraday guys saying why positional guys are struggling so much, while every month can be made positive. Postional guys saying intraday guys take so many trades to reach 50% profit? They may reach it with less than 10% of the trades taken by the other party. Doesn't mean one is better than others. Whichever suits their personality, ride with happiness.

As far Prada's trade, all I am seeing is, he said upfront that, he will hedge when spot closes at 5879, which I believe he posted after he did that hedging. As long as one clearly knows what they are doing, and the risk is contained, its good. Right know, I guess everyone is interested in knowing either Mr. Prada method changing to bull mode or Nifty going back to bearish. Even I am interested in the same. I don't see much point in discussing whether our methods is bullish or not.

 

[sudoku1]

http://www.traderji.com/general-chit-chat/76650-nifty-50-_bulls-40.html#post808208

 

[DSM]

Well said gunsho.

Now that everyone and their neigbour is bullish and looking for higher targets, there will be a FEW who will be looking at opportunities to short. Is that not why 10% of smart money takes from the rest of the 90%?

The question is :

Which way the trades provides high RR?
Which way the retail crowd is looking to participate.?
What way will there be maximum pain if the market changes direction.?

In the market all scenarios 6157, 6,266, 6,345 (throw in 6 with any three random digits) are possible. Why? Er. Because everyone is now looking only higher, not lower.

What happens if the smart money which bought the lows encash and offload to take 50-70% profit.?

What happens if UPA calls for early election (having won in Karnataka) and there is political upheavel?

What happens if DOW which moving only one way, stalls and reverses?

A lot of interesting questions will be answered as the days unfold.

BTW I got two calls from people who don't trade - one asking if it is the right time to invest.... the other asking how the market was faring today.

Option Trader, I believe what DSM says is, in simple words, its more of comparing Apples with Oranges.

IOW, same guys who shorted in Jan 2013 around 5900 and added more when it went to 6100+, made money later. I am aware of a friend who do only positional, shorted at 5960 and having a stop loss of spot with 6112. Today he has not yet closed it. But he will close it and change his mode to bull if spot cross 6112. He did the same on Jan 2013 and made huge money. This time it is hurting (not yet, but most likely it may).

Different TF/Different methods, target/entry/sl/MM all will change. No one can predict the direction with 100% strike rate. For a guy who is short and his SL hits, the guy who is long all the way will only be smiling. Doesn't mean the first guy is bad or he holding until his Sl hits is bad.. bcoz there are other times, he would have won.

It is just relative. Another famous topic is, Intraday guys saying why positional guys are struggling so much, while every month can be made positive. Postional guys saying intraday guys take so many trades to reach 50% profit? They may reach it with less than 10% of the trades taken by the other party. Doesn't mean one is better than others. Whichever suits their personality, ride with happiness.

As far Prada's trade, all I am seeing is, he said upfront that, he will hedge when spot closes at 5879, which I believe he posted after he did that hedging. As long as one clearly knows what they are doing, and the risk is contained, its good. Right know, I guess everyone is interested in knowing either Mr. Prada method changing to bull mode or Nifty going back to bearish. Even I am interested in the same. I don't see much point in discussing whether our methods is bullish or not.

 

[Option.Trader]

Well said gunsho.

Now that everyone and their neigbour is bullish and looking for higher targets, there will be a FEW who will be looking at opportunities to short. Is that not why 10% of smart money takes from the rest of the 90%?

The question is :

Which way the trades provides high RR?
Which way the retail crowd is looking to participate.?
What way will there be maximum pain if the market changes direction.?

Why not use the KISS strategy... From the last 15 trading days (April 15th ) everyday has seen a higher low. theorotically if you had taken a position on any one of these days you would have been in profit by now.
Now how many of us can predict tops... 5970 has come and gone, same with 6030,6050 and now we have another so called mountain of 6113...instead why not just be with the trend ,albeit even late and then keep an appropriate SL of a lower low for the day... if the trend lasts you can make some money.. and then if the trend changes you could enter the reverse position at a better price... especially in such a strong trending market
Sometimes the beauty lies in simplicity.. hence KISS

 

[DSM]

Thanks OT. You may well be right, and the market may move us as well. But after tomorrow's short session, Monday is another day. I think the RR ratio in the next few days favours sell. BTW my trade for now will be intraday - Seeing the two days down moves which later reversed, as well as many biggies and midcaps going down 1-2% down is not exactly my idea of a bull market. The index may be up, but can't say the same of stocks. It just doesn't seem right or convincing now. But then each one to his own. I do hope you make money in your longs. Good luck and happy trading.

Why not use the KISS strategy... From the last 15 trading days (April 15th ) everyday has seen a higher low. theorotically if you had taken a position on any one of these days you would have been in profit by now.
Now how many of us can predict tops... 5970 has come and gone, same with 6030,6050 and now we have another so called mountain of 6113...instead why not just be with the trend ,albeit even late and then keep an appropriate SL of a lower low for the day... if the trend lasts you can make some money.. and then if the trend changes you could enter the reverse position at a better price... especially in such a strong trending market
Sometimes the beauty lies in simplicity.. hence KISS

 

[EagleOne]

OptionTrader, Just placing my thought too. What I was stating is that what % SL may be right for for one may not be for another. Positional traders who ride out on trend for months, surely cannot have 3-5% SL. Their TARGET as well as SL will be higher.

That's the reason for the analogy of time frames. No daytrader will trade with a SL of 1%, for a swing trader, this will be acceptable cost of doing business.
Besides time frame, SL will be based on one's reading of the market, be it right or wrong. Higher SL is ofcourse to avoid being stopped in the market on a positional trade. Some would argue for trailing SL, others for fixed SL. It will then depend on one's methodology.

In hindsight, short at 5,850 with 10% SL seems way out. I agree, but for a positional trade, it will be exactly at 6,435.

I have experimented with fixed monetary SL, % SL, % of capital SL. But if one is looking for a positional trade, the market direction will surely challenge one's idea. The big question here is to exit the system, or hold out? I guess the answer will depend upon the mind, method and the readings of the trader.

I agree with your argument and logic though - as I am not a positional trader (atleast now, but that could change) But if I were personally short at 5,850 my threshold for pain being low, I would be out. But then again I hope to evolve, as I find largest gains are made on two sides - the shortest time frame 1M, 5M & 10M and the other extreme i.e holding on to a position for months.

What I support is divergence of views and systems - even that are different from mine, as one is looking for reading, study, analysis and learning. The market is made up of contrarians, that why there is a buyer for every seller. For every person who says 'Don't stand in front of the moving train' there's the other who will say 'Don't follow the herd' Finally we have to use or experience and skills to guide us, and for each that will lead us to take a DIFFERNT level of entry, SL and target.

That's all I am saying.

And you said absolutely right things, DSM. It is always a pleasure reading words coming straight out of from someone's frontal lobes of the brain instead of emotional limbic system residing on top of spinal cord.

 

[Option.Trader]

Thanks OT. You may well be right, and the market may move us as well. But after tomorrow's short session, Monday is another day. I think the RR ratio in the next few days favours sell. BTW my trade for now will be intraday - Seeing the two days down moves which later reversed, as well as many biggies and midcaps going down 1-2% down is not exactly my idea of a bull market. The index may be up, but can't say the same of stocks. It just doesn't seem right or convincing now. But then each one to his own. I do hope you make money in your longs. Good luck and happy trading.

Yep, live each day... i was of the same opinion when nifty was in the 5970 zone... RR ratio of selling is much better... outcome.. came out of my 5900CE taken @82 too soon and then coming out of 5900PE taken @78 too late..Hope this experience helps somebody

 

[14092012]

And you said absolutely right things, DSM. It is always a pleasure reading words coming straight out of from someone's frontal lobes of the brain instead of emotional limbic system residing on top of spinal cord.

Like your word play boss..