HERE I AM WRITING CONCEPT OF MY FAVOURITE SWING TRADER.VVONTERU
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credit goes to crystal clear view of this excellent trader in india[i copy paste it
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let us start....1I do swing trading. I like site:
http://www.icharts.in/home/ to start with, which I got from this group. Please take a look at:
http://www.icharts.in/breadth-charts.html. The market in the hindsight will have a deeper correction (more than a pull back). So, be carefull and have stops
any slight downturn, can make people jittery and leave their positions. Result, deeper correction and heavy losses.
trading and investing is different. I am a trader using TA
you placed a stop at 450 (below the recent base and taking into consideration the volatility of the stock and below its 50 day EMA). Right now, the stock is at 650. so, you had more than the risk run. I would take 50% off, and move the stop to 530 (break even). So, now you can let the stock run on table's (read others) money. As the stock moves up, move the stop. Make sure you put the stop below 50 day EMA, around 100 rupees (volatility based on price of stock) less than current price and below a recent base.
In TA, when you select a stock, look at the chart considering data from all years. Then compare the chart with the sector and the market. The reason I like stock pick 1 than 2 is that, stock 1 mimics the market more than stock 2. I did not compare with the sector. Ideally, the sector should also be trending. We want the momentum. We want the wind to sail easily. Avoid the harder stocks. There are so many easy ones like the stock pick 1.
Remember the saying, Bulls make money, Bears make money, Pigs get Slauttered. Don't look at your paper money and be happy. Till you book your profits, you will see the money and then one day, you don't have it. Think stock trading as business. If you had profits in your business, will you continue to invest all the profits in the business?, or
you are picking good stocks and making right entries. Concentrate on the market, pick right sector and then the right stock. Take profits (always).
Again. Market, Sector, Stock, Clean Chart. I know the market is shooting. I didn't see which sector your stock is it in. I don't have to. The chart is all over the map. Its like a heart beep. beep! beep! beep!.... Like Sine curve. Avoid those stocks. Ask yourself a question. Is the market doing the same. Market is trending at an angle 40 to 70 degrees. Pick stocks like that. Take some from harmad's pick. You don't have to reinvent the wheel. I like Godrej Consumer Prod. Wait for a pull back around 2 to 4 days. Make sure the market has also pulled back (distinquish between pull back and sell off). Go long with a stop 10 rupees or X amount based on the volatility (determined based on the stock price and how much average it moves in a day) above previous high. If you are interested, here are suggested readings on swing trading.
1. Dave Landry's 10 Best Swing Trading Patterns and Strategies
2. Dave Landry on Swing Trading
To get basic ideas of stock trading, I would read
1. Come Into My Trading Room: A Complete Guide to Trading - Elder
More to read
1. Reminiscences of a Stock Operator - Edwin Lefvre
2. Trading for a Living: Psychology, Trading Tactics, Money Management - Elder's 1st book
Buying high is a fool's game. When you buy high, what you are expecting is that another fool will come along and buy it from you at even higher. The guy who bought at pull back or at 50 day EMA will run all the way to the bank by sell the shares to you. You like that? So, next time, buy at pull backs or given the volatility of the current market, buy at 50 day EMA.
Positive: Having said the above, hopefully the bad times are over. 8 day EMA has crossed above 50 day EMA. MACD is showing bullish. There will be slight pull back before the stock takes off.
Negative: Trend line has been broken. It may depend also on the general market. Index is moving up. Stocks are not. See Advances versus Decliners chart comparision with Index chart.
So what we do. We put a stop. Conservative - 230. You want to give some room, 220. All depends on the market and the sector in which this stock is in. Frankly, there are no enough tools to see the sector chart.
Be careful of the 50 day EMA. In this kind of bull market, stocks always test 50 day EMA and have high volatility. 50 day EMA for this stock is 369. I would put a stop at 400. Hopefully, the stock comes out of the pull back. Based on your risk (hopefull you thought at some loss, you would come out of the stock), take partial profits. Lets say, when you entered at 412, your stop was at 380 (base below previous pull back), your risk was 32 rupees. So, at 444, you would take 50% of profits, and trail the stop on the remaining shares. Hope you got the idea.
You can Buy, Sell, Short & Cover stocks. But, there is time to Buy, time to Sell, time to Short and time to Cover. Trying to pick top is a loser's game. Many tried that and lost shirts. Always first allow selling to happing first (I forgot something, Profit Taking. Do you know profit taking is different from selling?). Then, depending on the percentage of % drop (above minimum 7%. Conservative 10%), how much the stock has recovered, and based on the volume of recovery (volume must be low for recovery versus sell off), you would decide to go short.
Ofcourse, there are other patterns (Double Top, Head & Shoulder's) under which you can decide to go short.
Stock selection is most important. In the previous email, I mentioned, one can Buy, Sell, Short, Cover and take Profits. I forgot to mention another thing you can do with a (lot of) stock(s). Just pass on. Don't pick a stock because you see something in future or something is going to happen. You should say to yourself, let it happen. Let the stock show why I should buy it. Its like playing cards. Who will show their cards first. If you buy now thinking something is going to happen 1 month from now, you already showed your cards. You should wait for the stock to show. Then, on a pull back, you will reward the stock by buying it.
The chart by itself was not interesting. Stuck in a trading range from the last 6 months. So, if you want to buy this stock, let it come out of the trading range, go beyond the previous high aroung 120 and then on pull back, you would buy it.
Rather, look at some stocks previously, I discussed in this thread. Compare those charts with this stock. You will understand what I am after. Need a clean chart. No mumbo jumbo Sino curvo heart beto.
You need to select stocks which
a. have high average volume ( high liquidity)
b. Move a lot - high beta ( you don't want something not going anywhere. They are waste of time)
2. You need to know where to enter and where to exit. These points should typically help you make money. Thats the hardest part. Since, there is lot of noise during the day.
3. However, in this market, for the most part, they always go up. Just avoid trading when they go down. I mean to say, avoid trading when the market is pulling back
4. Use good money management. When the stock moves on your side and crosses what you risked, take 50% profits. Then, move the stop where you bought to break even. This way, you make enough income to keep you going. During day trading, the stocks typically move up and down (noise). Don't expect to see chart like what you see in EOD chart. They don't just go up. So, if the stock goes towards you, take half off. There are high chances that those profits will also go if you don't make a move. That way, you will not last long enough
What were your reasons for entering (rewarding) this stock. Its below 50 day EMA (read Bearish). Could not take previous high (Aug vs Jan at 130). The market is pulling back. So, ask yourself why you entered this stock today
how much time we need to spend studying for the opportunities of endless wealth. You need to give yourself atleast 2 to 10 years. Everyday you learn something. Please read the books I mentioned before you put your money. Start with small amounts so that you will lose less amount while you learn your lessons.
I don't remember the exact definition of MACD. Please refer the books. But, the way it works: there are 2 EMAs. Short term EMA (9) and Long Term EMA (12,26). Short term EMA tells what is happening right now. Long Term EMA tells you what has been happening for some time. Difference between these EMAs will give you the divergence (Present - Past), shown by MACD histogram. MACD is a very powerfull indicator. It can tell you what is happening underneath the price movement. As with any indicator(s), MACD may not be usefull all the time. For instance, if the stock is any trading range, MACD is not useful. MACD Histogram above 0 will tell you bullishness and below bearishness. This is useful to compare how strong bullishness/bearishness between 2 points.