MARKET SPEAKS...TRY TO LISTEN
Forget about HEAD AND SHOULDER, DOUBLE TOPS, TRIANGULAR PATTERNS and all other complex studies
Two simple studies, Moving Average (MA) and stochastic are required to discuss initially.
MOVING AVERAGES (MA) STUDY:
This is one of the best analysis tools used to predict the market direction. Though there are many Moving Averages, 5 and 10 min moving averages are proved to be the best for intraday.
IF THE 5 MIN MOVING AVERAGE (MA) IS ABOVE THE 10 MIN MA, THEN BUY NIFTY
IF THE 10 MIN MA IS ABOVE THE 5 MIN MA, THEN SELL NIFTY
These are just basic signals of 5-10 MA for buy/sell. Note that all signals are not sure. For identifying sure signals, profit booking and stop losses, continue reading...
STOCHASTIC STUDY:
This mainly deals with over bought and over sold regions. If Stochastic is around 20(over sold zone), it means that, it may tend to bounce back and touch 80 (over bought zone). As well, if Stochastic is around 80(over bought zone), it means that, it may tend to bounce back and touch 20 (over sold zone)
There are two types of stochastic studies:
Slow stochastic - Moves over a period of time
Fast stochastic - Moves with tick to tick market movement
IF THE %k (BLUE LINE) IS ABOVE %D ( RED LINE) THEN BUY NIFTY (SHOULD BE AROUND 20)
IF THE %D (RED LINE) IS BOVE %K (BLUE LINE) THEN SELL NFITY (SHOULD BE AROUND 80)
Note 1: Slow stochastic is used in this method as it is more effective than fast stochastic
Note 2: In the stochastic study, crossover (%k above %D for buy (or) %D above %K for sell) should be done completely as in many cases they will tend to cut but will not. So, we advice you to make sure that the crossover took completely
These are just basic signals of slow stochastic for buy/sell. Note that all signals are not sure. For identifying sure signals, profit booking and stop losses, continue reading...
HOW TO FIND THE SURE SIGNAL
It is practically proved that, in a whole day, markets give 1-2 sure signals to buy/sell. All that what a perfect trader must have is only and only patience
IF BOTH MOVING AVERAGE STUDY AND SLOW STOCHASTIC STUDY GIVES BUY OR SELL SIGNAL AT SAME TIME, BUY OR SELL NIFTY RESPECTIVELY (MAKE SURE THAT THE SLOW STOCHASTIC IS AROUND 20 FOR BUYING AND AROUND 80 FOR SELLING)
Note: It was found that the above method (MA and slow Stochastic) delivers around85% - 90% accuracy
In the above chart, 3 sure signals generated during the whole day. We have shown only how to identify the sure signals using MA and Slow Stochastic. For profit booking and stoplosses continue reading...
HOW TO FIND OUT THE PROFIT BOOKING AND STOPLOSS SIGNALS
There are 2 methods to find the Stop Loss for your trade
Fixed SL Method
After Buy/Sell call generates, keep 25 to 30 points target (0.5% for nifty index and 1% for stocks) as well same stoploss. In this case, you do not get any huge profits even in case of free fall or sudden rise of markets in our direction
The above chart shows where to book the profit for those who are safe traders. 2 sure signals generated with 50 points profit
Trailing SL Method
Second and most effective way of finding the stoploss is, once after the Buy/Sell call generates, initially place 30 points SL (This is to ensure that, we will not end up with big loss even if market moves against our trend). Keep trailing the SL till both the studies give reverse signals
The above chart shows how to book the maximum profit for those who want to catch some big moves with small stop loss (Make sure that both the indicators show reverse signals for exiting/profit booking). 3 sure calls generated with 70 points profit
Note that, Fixed SL method is best suitable when are markets are in the range bound/less volatility whereas Trailing SL method delivers huge profits in high volatility sessions.
IMP NOTE: THE ABOVE METHOD CAN ALSO BE APPLIED FOR 'SLOW STOCHASTIC AND FAST STOCHASTIC' INSTEAD OF 'MA AND SLOW STOCHASTIC'.
CHARTS NEVER FAIL BUT CHARTISTS MAY...
Forget about HEAD AND SHOULDER, DOUBLE TOPS, TRIANGULAR PATTERNS and all other complex studies
Two simple studies, Moving Average (MA) and stochastic are required to discuss initially.
MOVING AVERAGES (MA) STUDY:
This is one of the best analysis tools used to predict the market direction. Though there are many Moving Averages, 5 and 10 min moving averages are proved to be the best for intraday.
IF THE 5 MIN MOVING AVERAGE (MA) IS ABOVE THE 10 MIN MA, THEN BUY NIFTY
IF THE 10 MIN MA IS ABOVE THE 5 MIN MA, THEN SELL NIFTY
STOCHASTIC STUDY:
This mainly deals with over bought and over sold regions. If Stochastic is around 20(over sold zone), it means that, it may tend to bounce back and touch 80 (over bought zone). As well, if Stochastic is around 80(over bought zone), it means that, it may tend to bounce back and touch 20 (over sold zone)
There are two types of stochastic studies:
Slow stochastic - Moves over a period of time
Fast stochastic - Moves with tick to tick market movement
IF THE %k (BLUE LINE) IS ABOVE %D ( RED LINE) THEN BUY NIFTY (SHOULD BE AROUND 20)
IF THE %D (RED LINE) IS BOVE %K (BLUE LINE) THEN SELL NFITY (SHOULD BE AROUND 80)
Note 1: Slow stochastic is used in this method as it is more effective than fast stochastic
Note 2: In the stochastic study, crossover (%k above %D for buy (or) %D above %K for sell) should be done completely as in many cases they will tend to cut but will not. So, we advice you to make sure that the crossover took completely
HOW TO FIND THE SURE SIGNAL
It is practically proved that, in a whole day, markets give 1-2 sure signals to buy/sell. All that what a perfect trader must have is only and only patience
IF BOTH MOVING AVERAGE STUDY AND SLOW STOCHASTIC STUDY GIVES BUY OR SELL SIGNAL AT SAME TIME, BUY OR SELL NIFTY RESPECTIVELY (MAKE SURE THAT THE SLOW STOCHASTIC IS AROUND 20 FOR BUYING AND AROUND 80 FOR SELLING)
Note: It was found that the above method (MA and slow Stochastic) delivers around85% - 90% accuracy
In the above chart, 3 sure signals generated during the whole day. We have shown only how to identify the sure signals using MA and Slow Stochastic. For profit booking and stoplosses continue reading...
HOW TO FIND OUT THE PROFIT BOOKING AND STOPLOSS SIGNALS
There are 2 methods to find the Stop Loss for your trade
Fixed SL Method
After Buy/Sell call generates, keep 25 to 30 points target (0.5% for nifty index and 1% for stocks) as well same stoploss. In this case, you do not get any huge profits even in case of free fall or sudden rise of markets in our direction
Trailing SL Method
Second and most effective way of finding the stoploss is, once after the Buy/Sell call generates, initially place 30 points SL (This is to ensure that, we will not end up with big loss even if market moves against our trend). Keep trailing the SL till both the studies give reverse signals
Note that, Fixed SL method is best suitable when are markets are in the range bound/less volatility whereas Trailing SL method delivers huge profits in high volatility sessions.
IMP NOTE: THE ABOVE METHOD CAN ALSO BE APPLIED FOR 'SLOW STOCHASTIC AND FAST STOCHASTIC' INSTEAD OF 'MA AND SLOW STOCHASTIC'.
CHARTS NEVER FAIL BUT CHARTISTS MAY...
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