Smart Trade - ST Da'S Posts

SMART TRADE ST DAs Posts
Based on my years of experience as a full time trader who trades for living and observing many
upcoming traders fail ( and very few succeed ) bring out the following points.
1) Trading requires knowledge and education about how market functions, greed and fear of market
participants, probabilities,risk/reward. This knowledge is different than the knowledge which our
schools and universities impart.
2) The basic knowledge about trends, patterns etc can be learnt in 1-2 months....but to succeed one
requires to blend this knowledge with mindset,money,flawless execution,entries,stops,adds,profit
taking,taking a temporary retreat, re-entry.........all these require tremendous practice. One needs such
practice in all performing arts such as dancing,singing.......can we imagine artists like Samnyukta
Panigrahi or Pandit Jasraj become what they are and perform in the concerts by reading books on
Oddissi or Indian classical music ?
This is where most traders fail.....they start with acquiring knowledge,read

books,systems,AFLs,psychological stuff........but they never get to a point where all the above come
togather in harmony and effortless blend. They never come to a point where they say ....ok this is a
definite trade ( here by definate I mean the trade which he will definately take....and not a trade which
definately will succeed.....) then second guessing,then the failure sets in, then starts systems hopping,
then again frustrations and the same cycle repeats till he is able to break this orbit and go to the next
orbit ,some can never do that and there we have one more failure .
3) The traders also need unshakable confidence in the system they trade. This confidence comes by
selecting a system which suits our mindset, backtest the method,have proper MM . The confidence also
comes when one tastes success on this method........it is very easy to say have confidence in the method
when the method is not making money ....but we cannot have confidence on empty stomachs...can we ?
4) Most traders come to trading with very small capital. They think that one does not need capital in
trading.....this belief is also nourished by fly by night tip vendors who claim that you just need 10,000 in
your trading account to make Rs 2000 per day....nothing can be further from truth. If one has to live off
trading one needs atleast Rs 3-5 Lacs capital......I have seen many who say Rs 25,000 is more than
sufficient but it is not true......Many are short of capital because they come to trading after they loose
their jobs,or fail in business or fail and loose huge amounts in speculation and finally all these people fail
in trading too.....
5) The most important quality is ability to accept that one is wrong, get out of the trade at the earliest
and go for the next trade which could be in re-entry of original trade direction or in the opposite
direction if the market action so demands. Most people get attached because of ego or because they
feel they cannot take that small loss ( but eventually they will take a much bigger loss....)
A trader needs to address all the above points in his journey of becoming a successful trader.
Smart_trade
Scalping
I do scapling in Nifty Options and I would like to share a few points as under :
1) I need approx 3 points in Nifty options to take cate of exchange charges,low brokerage and STT and
also a few wrong trades which always happen irrespective of what we do. So if I am scalping At The
Money options ,it means the nifty should give me a move of 6-7 points in direction of my trade that too
very quickly.
2) I select my place for scalping .....such as when a hourly bar's bottom gets broken, or a important pivot
gets taken out,break of a trend line,failure of breakouts/breakdowns....these are places where the
counter gets into high activity mode,the moves are strong and fast. I can achive my targert move in less
than a minuts in the trade. Sometimes I got even 6-8 points in such scalps agaist 3 to 3.5 points which I
am looking for.....Though this is not scalping strictly....it is actually trading breakouts for small price
move.....but whatever it is called ,these quick scalps suit my mental set up.
3) Sometimes bid/ask spread gets wide....in this case try to buy at lower side of the spread and sell at
higher side.....this is to be tried in stable markets...not in trend moves because mkts are likely to jump in
trend moves....
I am not a regular scalper...but thought of sharing few points here...
Smart_trade
Intraday trading
Intraday trading can be done in following ways :
1) Take all trades in the direction of the longer timeframe. So if we are trading on 5 min chart, see what
is the trend on 30 min chart...if it is down, take all short trades on 5 min chart.....but your trade
entry,stops and profit taking all has to be on 5 min chart.. This is relatively easy as we are trading in one
direction generally unless the trend on larger timeframe reverses during the day..
2) Trade the intraday swings without any bias....trade as the price flow moves...trade from short and
long both sides....this mode is bit difficult as we need to be fast in reversing our positions and we need
to understand the market action well....and very rigid on stops....
1) Trends and rangebound markets are cyclical....after the strong trend expect the market to be
rangebound before the trend resumes or the reversal takes place....excepion is V shape reversal
which is rare in any case. So after trend move, be ready for a sideways move and after sideways
move be ready for a trend move.
2) Volatility is also cyclical and mean reversing...so after volatile markets expect calm markets
and after calm markets the volatility is waiting to return...this is much more predictable than the
price direction.
3) For we intraday and swing traders 3 trends exist on every timeframe....they are a) Major Trend
b) Visual Trend and 3) Short term trend....these 3 trends at any point are influencing the markets
and when all 3 trends are in phase, we get a trend move......once 1 or 2 of them get out of phase,
we get sideways moves.....
4) First indication that sideways move is a about to come is when one higher degree trend fails to
make new high/low....we in daytrades trade short term trend...so when we see market is not
making new high/low in visual trend, we should expect sideways phase to set in.
5) In the initial period of sideways move the maket still trends ok.....but at later stage the market
goes flat....but by that time we know that it is entering a sideways phase....here too you will get a
trend on smaller timeframes....so in sideways move find out which timeframe gives us trends and
trade that timeframe.....market may not be trending on 15 min timeframe but it may be trending
on 1 or 3 min timeframes.But trading becomes tough in this period and the moves smaller...
6) In sideways markets the quantity automatically goes down as the supports/resistance do not
get broken and our adds are restricted.
7) In sideways market we need to trade on selling near the resistance and buying near the
supports....I have a few methods which I monitor in such phase.....
Problem of sideways phase can be tackled in the above manner.....we cannot totally eliminate
this problem.....we have to live with it....that is the reason we should add and make maximum in
trends so that we can take these sideways periods in our strides.
Hope I am able to add some value to your thought process....
Smart_trade
Trade in the direction of trend on higher timeframe

There are some methods which trade only if the higher timeframe is trending. They dont trade
when higher timeframe is in sideways mode.
On sideways move days we have to be happy with small moves and we need to trade very fast
for smaller moves
For countertrend trading one either needs to identify the exhaustion of the move and take a
countertrend position or the market has to be in sideways mode so we buy near support and sell
near resistance. There are ways of identifying move exhaustion.
We will take some range days and see how to trade on those days..
Smart_trade
1) Trade in the direction of trend on higher timeframe.....suppose you are trading 5 min bar, take
all trades in the direction of higher timeframe...say 30 min timeframe. So if 30 min timeframe is
in uptrend, take all long trades and no short trades.....our sequence of trades should be
long...add....book profits.....stay out....again long...add....book profits. But what if the 30 min is
not trending and is in sideways phase ? Either dont trade in this period or even if you take
trades, be very fast to get out on first sign of trouble....We daytraders want our trades to move
in our favour quickly after we enter....and we dont like hanging around in a trade which is going
nowhere.
2) When longer timeframe is trending, we trade more aggressively in direction of that trend....we
give bit more room for our trades to work.....but when the longer term trend is sideways.....these
trades are small , choppy and frustrating ,we enter and exit fast....grab whatever profits we
can.....but in trending period we play for big win.
GAME OF WINNING AND LOOSING
Everyone comes to the market for winning......but most end up loosing...why does this happen ? To
answer this question we need to peep into earlier part of our trading career.
We start trading most predictably on some tips given by some friends....we make some money and then
some more and we get convinced that we are into world's best business.....no efforts, no work....only
make money....this illusion soon vanishes as the reality dawns....
In initial period we have no method....later we latch on to some method....it may be moving averages,
camerilla pivot points, indicators, swings....etc and we get into a stage when we make money on 50-55 %
trades but small money as we are too scared to let the small profits turn into losses so we grab it.....our
losses are also small most of the time because market gives us a chance to get out of loosing trades with
scratch trade/ small loss. But very few trades the market does not favour us and kepps going against us
inflicting a cripling loss on us which cripples our trading account and our confidence. This has happened
to all of us.....
Just think about an imaginary opponent who is taking the other side of all our trades....this guy has made
all the money we lost and he is happily smiling. Why ? because he has never lost big ( ie we never waited
for our profits to grow big ) ...he has his share of small losses and small profits and few bumper profits
trades ( which are crippling loss trades for us ) .So if you reverse the role and take small profits/small
losses....few largish profits by allowing profits to run anf few very big profit trades then you will do much
better than this imaginary opponent in his earlier role.....It is the large loss you have to eliminate and
get some large profits trades in your bag and you make it.....
You need to have a competent method which need not be complicated.....it is a myth that good methods
are complicated .Your method should stack the odds in your favour.It could be a simple method that you
take all trades in the direction of larger timeframe moving average.....put your stoploss points, add points,
profit taking points and backtest that method....if you like that method chances are that method goes well
with your psychological setup and belief systems. Then you have your holy grail up and running for
you.....
To take a trade or Wait for some more time...........
Once we have identified a competent trading method, we have to backtest it very rigorously for a long
period. The backtest gives us an idea of the "nature" of the method, challenges it throws at you in real
trading and prepares you for any situation in the market. Though backtest is not with real money so it
cannot exactly simulate the trade environment but it definately is the second best to real trading to
understand various issues you face in real trading.
Now comes another problem.....your method identifies a set up in real trading which now you are doing
on it , the trade is about to trigger and now your mind starts playing games......." hmmmm the trade
environment is still a bit hazy....bit unclear....let me wait for some more time....." It is my experience that
all trades are a bit hazy initially....and the real money is made in between the point you start doubting
about a trade and you and everyone else get confirmed about a trade......by this time the market has
moved in favour of your trade and now all scramble to get in......the meat is over....also now the market
is much away from your stops....so now the trade looses its Reward/risk ratio advantage.....and finally
you miss the trade.
Many times this will be a big winner and you take a oath not to repeat these things in future but this
pattern keep repeating one has to break out of this pattern........let us understand how professionals
manage such dilemas.....
When a trade is about to trigger, even a good trader has the same issues which a new trader has......but
he takes the trade knowing fully well that if it does not workout, he will get out of that trade with
minimal damage.The reaction of successful and novice traders to the failed trade is totally different. The
following is the reaction of a loosing trader :
1) Damn.....this trade again going in loss....how does market know I am in a trade so it goes against
me..........game of operators.......a honest trader has no chance of succeeding........
2) I need a different tweak to this method.......
3) After such research I have taken a trade.....how the hell can it go wrong ??? I must take some more
positions and average......
4) I should have waited for it to be more clear......
Now let us see how a professional reacts.....he has taken a trade on a breakout which is not working
out.....he will say....hmmmm I thought this trade will be a great winner....but market does not want to
go in the direction of the breakout.....ok....no issues.....if the market comes back in the range it broke....I
need to get out of the trade and re enter again if the necessary.....I will not wait till my stops are
hit.....the breakout which I traded is not valid....so I am getting out....I will always get many more
opportunities in the market ....thank you market.....see you in the next trade...
Once we start accepting that loosing trades are unavoidable in this game we must minimise the damage
they do to our account and we should have no fear of loosing trade when the trade is about to trigger
and we take a major step forward in our journey of becoming profitable traders.
Smart_trade
Click this bar to view the small image.

ay/Swing Trading
This image has been resized. Click this bar to view the full image. The original image is sized
1228x624.
They say that trend is your friend but that statement needs a qualification that it is your
friend as long as it is not about to end.......how does one know that the trend is strong ?
I use following critaria to judge how strong the trend is...and when it is about to give explosive
move. The technique I follow is based on Trends knowledge from William McLaren and also
from Saint....All credit to them, I just apply that knowledge to the markets....
See those magenta colour lines on the chart ? Those are the lines showing gaps in the earlier top
and the reaction bottom after breaking the tops....these gaps show that the trend is strong and
about to blow off.. .... After such gaps the trend accelerates.....you can see that on any chart, any
time frame......if coupled with other techniques, it gives great confidence to hold the positions,
add and wait till the trend is about to end.....
Smart_trade
1228x624.
Adi,
Trending and sideways phases are cyclic in any market and after a trending phase expect a
sideways phase and after a sideways phase expect a trending phase.....if there is anything certain
in the markets ...it is this.
Traders make money in trending phase and give it back in the sideways phase....sometimes they
loose more in sideways phase. Every trader has to understand how he is going to negotiate the
sideways phase so that he makes some money in it or at least preserve what he has made in a
trend and again ride the trend when the market starts trending again...
Traders handle sideways phase in different ways depending on what he is comfortable with
...various ways of handling sideways phase are as under :
1) If you are a range trader, trade the extremes of sideways range....buy near the bottom of the
range and sell near the top....
2) Decrease your volumes in sideways phase and increase back to normal volumes when trend
starts.
3) Trade on sideways market indicators, oscillators, Bollinger bands extremes etc
4) Totally stay away in sideways phase and trade only trending phases....
How do we know that we are in sideways markets ? The charts will indicate that. I have taken an
example of Nifty Futures 5 min chart.....we had a nice downtrend till point A , then we had an
upmove upto point B.....the first indication of sideways market came when at point C market was
unable to take out point B...then D,E,F,G all sideways moves till we get a breakdown of the
range.....
So in this range either trade the extremes or just stay out and dont loose your capital and energy
trading sideways markets......get on to trends when they start again.....
1228x624.
Markets routinely go into trending and sideways phases and see any chart on any timeframe, you
will see periods of trending moves and sideways moves. Trend traders trading
breakouts/breakdowns make money in trending phase ...but give back large part of that (
sometimes even more than what is made in trends )in sideways phase. Most of us always wonder
whether there is any way to stay out of sideways moves....and trade only trending moves....as a
breakout trader when a trader takes a position on breakout/breakdown he wants the market to
move in direction of his trade...and move quickly. He will get frustrated if he sees market going
nowhere and that is where he is prone to make plenty of trading mistakes.......
I have posted a Nifty futures 5 min chart for last 3 days. Here we see periods of trends and
sideways moves....can we know that we are likely to be in sideways phase ? Yes it is
possible.......
Let me explain....when you have points A and B defined and market does not break these two
levels it is in a sideways phase.....so at C, D, E .....it is sideways so it is a no trade zone for
breakout trader...a range trader can sell at the top end of the range and buy at the bottom end of
the range.
I have marked No Trade zones and Trade zones.....you will see that if you trade only trade zones,
you will catch 75-80 % of the vertical distance which the market has travelled in last 3 days. And
the beauty is you have been totally out from sideways phase and thus not getting into those
frustrating trades which give back the profits you earned in trending phases.
Anybody can trade a trend.....but if one understands when not to trade, that will make him
an expert trader and separate him from the normal "must trade all the times" type of
traders.........
Smart_trade

Today's Bank Nifty fut 5 min chart. See the gap in the pivot low which broke down and rally
pivot high ,which indicated that the downtrend will accelerate....also see the creeping trend at the
bottom indicating that it is time to book our gains........
TD POINT REVERSAL
In trading we continuously view the price action from different angles to collect as much
evidence as possible about the direction and the trend the market is displaying. If we get 2-3
techniques giving us same indication, it will stack the odds in our favour.
One such technique which help me a lot in knowing the trend reversal is a technique developed
by Thomas DeMark. It is called TD Point Reversal.
I am posting the same BNF 5 min graph to demonstrate this technique. For trend reversal to
down , following are the steps :
1) Identify a Pivot high on the chart ( marked as PH )
2) Go back 4 bars and in the look back period of 4 previous bars find out a lowest close. ( 4 look
back bars are marked as -1,-2,-3 and -4 ....minus sign is put to indicate previous 1,2 etc bars.Here
the lowest close is in bar marked -3 )
3) If in next 4 bars after the PH bar, the market closes below the lowest close of 4 look back bars
level, it is almost certain that the trend has changed to DOWN....
4) 2nd bar after PH bar closed below this level ( marked in red horizontal line ) thus confirming
that the market trend has turned DOWN....
In today's market action many techniques such as trendlines, pivots, Oscillators,TD Point
Reversal....all speaking in one voice that market trend has turned down and that stacks odds in
our favour and give us confidence to go short in the market.....
Smart_trade
972x592.
Can We Choose Good Trades From The Bad/Marginal Trades
In trading we have to analyse the market environments and trade all the trades according to our
systems/methods. Though we can avoid few bad trades by having a set up critaria but sometimes
such set ups too gives us our share of bad trades
I have posted a Bank NF chart 5 min timeframe . Here the trades are taken in the direction of 30
min timeframe. Without going into specifics of entry critaria, we can see two days trades....one
very choppy and small profits day and one very good big profit day..... The green line indicates
long, red line short,dotted lines adds and black line profit taking levels.
On 2-6-2011 we had following distribution of trades :
1st trade small scratch trade,second trade a looser, 3rd and 4th small profit marginal trades...so
end the day with small marginal profit.....
On 3-6-2011 , same method...just 1 trade and hugely profitable....such days give you enough to
sustain 2-3 small profits/marginal days....
We do not know when we take a trade whether it will be a big profit trade or a scratch trade. Our
method should be such that it gets us out of such trades with minimal damage.....and stay with
our winners once we get one till the market shows signs of trend change, with proper MM and
adds....
Our distribution of profits/losses should be a few small profit/scratch trades, a few small
loss /scratch trades , a few big profits trades ...but NO big loss trades ( this our exits should
ensure )
We should take all trades with the belief that they will be big winners.....but manage all of them
with extreme care in such a way that any of those trades can loose and we don't want a single big
looser.......
All the above is not easy....but we need to work towards achieving this goal....
Is there a perfect system/method known to some one or hidden somewhere ??
In last few days I am getting many pms and I thought I will discuss the common information asked in
these pms so that everyone benefits.
1) Day trading is not easy....as you come to lower timeframes your margin of error goes down. I need to
be more accurate in daytrading than swing and position trading. One has to be very fast in reversing the
position if the market action warrants that. Day trading has an advantage that my stops are small and
well defined. I donot have to bother about overnight gaps, price shocks etc.Daytrading is definately
profitable....
2) Contrary to many people's belief,there is no perfect system. There has never been one in the past
and there will never be one in future. There is no magic formula, no secret indicator,no AFL which will
make money for you without any efforts from your side. There are competent methods but each will
have its share of choppy trades,losses, frustrating periods,big profits etc.My experience tells me that
you need to have a good method but it is not that it will make money for you if run on autopilot. A good
trader is equally necessary behind a good method in daytrading and that is a winning combination along
with good MM.
3) A method though is important, is not everything. A good method given to 10 traders and all 10 will
have different results.
4) Day trading requires good feel and understanding of bar by bar market action . It helps us in getting
out of bad trades and booking profits before the market hits our stops. This comes by reading thousands
of charts, candlestick patterns, and observing each bar and trying to read the supply/demand
equilibrium from each of these bars and reading when the advantage is tilting to bears or bulls.
5) Do not fall prey to the people who claim that they have some great system/method which is easy to
trade . You can make money on simple methods such as trade on 5 min charts...and take all trades in
direction of 30 min trends. So if 30 min is in uptrend, take all long trades and do not take any short
trades. This method is simple but it requires a good screen experience to trade it like a
professional....learn those skills and you will succeed with any simple method.
These are my views which I wanted to convey to all the friends who wrote to me about their specific
trading problems. I am sure each will find some answer to his problems in the paragraphs mentioned
above....
Smart_trade
Yes Krish...you can have fun and get paid too in trading.... .Keep an aim to achieve that stage when
trading is no longer tension/friction/agony/stress...but it is fun and enjoyment like you have when
you play your favourite game....
972x592.
Inside Story
The trading idea which I am sharing this week is a very powerful idea and I have used this idea
to book profits and initiate new positions. As Nifty futures gave examples of both long and short
on the same day ....ie on Friday 17-JUN-2011 , I thought of sharing the same with you.
Price Action study is nothing but study of price bars to judge the strength of bulls and bears and
many times the price bars reveal the "Inside Story" of the fight between bulls and bears. As
traders we just have to read these signals in time and join the dominant or more powerful
group,bulls or bears....
The chart posted is 5 min Nifty Futures chart of 17-JUN-2011. The market has been trending
down and look at the price action in the bottom circle. You see 3 skinny and leggy bars with long
legs . What does this mean ? It means that the market is attracting buyers at lower levels and the
prices snap back.....and bears are unable to press the market further down.Now see the bar
marked as A in that circle....it is a bearish bar which closed into the wicks of earlier bars but a
clear down close bar....this is the last attempt of the bears to pin the prices down...and the next
bar bounces back and proves that bears got exhausted......once we broke the high of the bar
A ...we knew that the short term bottom has been in place.
Look at the top circle......the bar preceeding the bar marked as B is an inverted hammer with a
long tail......it is something like a 60 Kg weightlifter lifting 150 Kg weight and suddenly
dropping it.....the bar marked as B is a bullish bar which has its high lower than the earlier bar
and is a last attempt of the bulls to once again lift the weight....and once low of the bar B was
cracked we knew that the bulls gave up.......
These are trading ideas and not proper trading methods/systems.....but they can be incorporated
in your existing trading methods to give you an edge in the market.
Re: Thoughts on Day/Swing Trading

What makes the markets to go up
Markets go up and down and have we ever thought of what makes the market go up ?? Todays
market was a very strongly uptrending market. Do we get any clue about such strong markets in
real time ?
Markets go uo on money inflow and it goes down when the money is sucked out from it ...so the
strong buying pushes the market up. No amount of intelligent analysis, brokers tips, financial
news channels wish talk, greed and fear of the market participants will take the market up. It is
only strong buying which will take it up.
When the strong hands buy or sell, they may try to hide their real intentions but they cannot erase
the trail. They walk with heavy boots and leave behind impressions in the sand which they
cannot hide/erase.....I am talking about the volumes...the volumes reveal the market's hand.
I have posted today's 5 min Nifty Futures chart. I have marked uptrend and corrections by red
vertical lines.When the market opened, observe first few bars....the volumes are 2-3 times the
normal volumes of earlier day. This indicated right in the beginning that we are going to have
some fireworks today. Today's market had all tell-a-tale signs of a strong trend day.
See the correction marked by red vertical lines.... observe the angle of these corrections, a
shallow correction with volumes dwindling down to 1/3 of the trending period volumes....and
when the correction gets over and on breakout volumes surge again this indicated that this
upmove is going to sustain,it is durable...we had two such corrections today and many small 1-2
bars dips....
All the action necessary today was buy, add on every breakout and trail the stops to the black
supports shown and let the market do the work. Last 30 min rally , even the bears came to help
the market to go up by last minute short coverings.
We are traders...neither permanant bulls nor parmanent bears...we just join the more powerful
side and relax....and today more powerful side was unarguably bulls.......
Smart_trade
Few things come to mind when to take counter trend trades.They are as under :
1) When you have a prolonged and steep move in one directon, look for possible trend reversal
in a V shape reversal formation. The fall/rise has to be steep...
2) When you have a reversal formation on larger timeframe, think of taking anti trend trades on
smaller timeframes.
3) Take antitrend trades when the psychology of market participants is likely to be in

extremes....such as a large gap,take antitrend trades...
4) Take antitrend trades when market is doing totally opposite of what is the general
perception.So if the trend is down, you open with a large gap down....the whole trading
/investing world is expecting the market to crash further....but market starts climbing up.....take
antitrend trades because large number of participants will be trapped in the reverse position and
they will will look for cutting their losses at various stages depending on their risk
tolerence.....and that is your prey.... or good economic numbers....and market fails to go
up.....take antitrend trades as lots of longs will be trapped....
Sideways
Once you identify that the market you are trading is in sideways trend in your timeframe, you
can use the following techniques to trade the sideways range.
1) Use oscillator such as stochastics or RSI to sell in overbought zone near the resistance and buy
in oversold zone near supports.
2) Draw the support/resistance levels boundries and observe how the market behaves near the
support/resistance levels, observe the volumes, candlestick patterns. A hammer near a support is
a low risk buy and so is a hanging man or an evening star near a resistance level low risk sell .
3) Observe the angle of a rally or a decline in a sideways zone and if the rally looks tired out near
resistance , sell .....if decline looks exhausted near the support, buy.....
4) Observe some patterns on lower timeframe...so if you are in sideways in 30 min charts, mark a
TDST resistance line in 5 min and a rally in 5 min approaching this TDST resistance line....that
is a great place for a low risk sell. Will explain what TDST is in next few posts.
Or a Wolfe Wave 5 on 5 min happening near resistance level in 30 min is a great place to initiate
a sell trade......or a Wolfe Wave 5 happening on 5 min timeframe near a support on 30 min is a
great place for a low risk buy trade.
5) Failures and Rejections happening near sideways boundries offer great trades . So if you see a
breakout failure on 5 min chart near a upper boundry of sideways move on 30 min, that gives a
excellent place to take a short trade with very close stoploss. Similarly failure of a pivot
breakdown on 5 min chart near a lower boundry support line on 30 min chart gives excellent buy
trade with close stops.
6) Selling near a resistance and buying near a support with stops slightly above the resistance and
slightly below the support are low risk trades.
Hope you will find some trading ideas given above useful for your trading in the sideways zone.
Smart_trade
_____
My best advice is trade intraday on price action. Moving averages, oscillators etc always have a lag
and a bit late for trading intraday. Concentrate on intraday supports/resistances,larger timeframe
trends,consolidation and distribution happening during the course of the day. Also keep an eye on
breakouts/breakdowns failures and rejections....they set up great trades in opposite direction with
very tight stops.
SET UPs and TDSTs
I use Set ups and TDST which are sub systems of Thomas DeMark's Sequential method. I find
that these TDST levels act as very good support and resistance levels. I use these levels to initiate
new trades and also to book profits from my existing day trades and swing trades.
1) SET UP :
A.BUY SET UP ( Set up leading to a buy signal)
A buy set up is complete when we have a period of 9 consecutive bars whose closing is less than
close of the bar 4 bars earlier
so if we call current bar as T then its closing has to be less than close of the bar 4 bars earlier i.e.
T-4....so CT<CT-4 should be satisfied for all consecutive 9 bars.....if this relationship is
discontinued...the set up gets cancelled and fresh set up needs to start afresh.
B.SELL SET UP ( Set up leading to a sell signal )
This is a mirror image of buy set up.....
A sell set up is complete when we have a period of 9 consecutive bars whose closing is more
than close of the bar 4 bars earlier
so if we call current bar as T then its closing has to be more than close of the bar 4 bars earlier ie
T-4....so CT>CT-4 should be satisfied for all consecutive 9 bars.....if this relationship is
discontinued...the set up gets cancelled and fresh set up needs to start afresh.
Power of 9
In a buy set up after 9 bars the market exhibits a peculiar tendency. On 8th,9th or 10 th bar
market makes a short term low and goes sideways to slightly up move....this is called Power of 9
In a Sell set up after 8th,9th or 10th bar the market will most likely make a short term top and go
sideways to down in Power of 9
The following points are to be remembered in case of set ups :
1) Set up requires minimum 9 consecutive bars following a particular relationship. The set up
does not end on 9th bar....it continues till the bar closing relationship is maintained.....
2) After Buy set up is complete, draw a horrizontal line from the true high of the first bar ( true
high means high or the earlier bar's close whichever is higher ). This is called a TDST
line......this acts as a resistance to any up move.
After Sell set up is complete, draw a horrizontal line from the true low of the first bar ( true low
means low or the earlier bar's close whichever is lower ). This is called a TDST line......this acts
as a support to any down move.
3) Low of the bar 9 of Buy set up will be generally lower than low of the bar 6 ....if it is not, then
in next 3 bars low of bar 6 will be broken.
High of the bar 9 of Sell set up will be generally higher than high of the bar 6 ....if it is not, then
in next 3 bars,high of bar 6 will be broken.
We will post some more examples of set ups to understand it better....
Smart_trade
1228x624.
Posting examples of a Buy set up......a buy TDST ( blue line ) and sell TDST ( red line )
The TDSTs work great in smaller timeframes such as 30 min/15 min /5 min or even 1 min
chart....
In the next post I will try to demonstrate how these TDST lines could be used for trading
intraday or swing positions.
Smart_trade
Profit taking in daytrades is a delicate balance between two contradictory and often conflicting
principles of " grab your profits,else they will disappear...." and " Let your profits run"......daytraders
need to have a different mindset than swing traders or position traders and they have to take profits on
first sign of market going against their trade direction.
So if we are short , and market after going down for 3-5 bars, stops making new low and goes
sideways,prints a aggressive pivot and if sideways range's top is taken out, take profits. If market makes
a hammer with long tail and the hammer's top takenout, take profits but instead of top getting taken
out, the low is cracked ,come forward and add in your short positions.....candlestick patterns come
handy here....
But the above should not be confused with getting scared and taking quick profits without any reason.
That we avoid....you will see that on first two short trades in the charted quoted by you we took quick
profits but we waited and added in 3rd trade....why ? because there was no indication of market
reversing and we got a big trade and we booked profits at the support levels shown in the chart. While
booking profits, flags are the worst enemies of daytraders.....but based on the previous bars one can
anticipate the flags and stay clear of them. We need to stay in the profitable trade for a long time to let
the trade mature too.......
Regarding options , yes you can trade options when you get a trade signal on the charts. So if you get a
signal to short the market, you can either buy ITM puts or ATM puts and ride the trend. You can also sell
ATM calls....that choice is really based on your estimate of how strong the down move will be.
Based on my years of experience as a full time trader who trades for living and observing many
upcoming traders fail ( and very few succeed ) bring out the following points.
1) Trading requires knowledge and education about how market functions, greed and fear of
market participants, probabilities,risk/reward. This knowledge is different than the knowledge
which our schools and universities impart.
2) The basic knowledge about trends, patterns etc can be learnt in 1-2 months....but to succeed
one requires to blend this knowledge with mindset,money,flawless
execution,entries,stops,adds,profit taking,taking a temporary retreat, re-entry.........all these
require tremendous practice. One needs such practice in all performing arts such as
dancing,singing.......can we imagine artists like Samnyukta Panigrahi or Pandit Jasraj become
what they are and perform in the concerts by reading books on Oddissi or Indian classical music
?
This is where most traders fail.....they start with acquiring knowledge,read

books,systems,AFLs,psychological stuff........but they never get to a point where all the above
come togather in harmony and effortless blend. They never come to a point where they say ....ok
this is a definite trade ( here by definate I mean the trade which he will definately take....and not
a trade which definately will succeed.....) then second guessing,then the failure sets in, then starts
systems hopping, then again frustrations and the same cycle repeats till he is able to break this
orbit and go to the next orbit ,some can never do that and there we have one more failure .
3) The traders also need unshakable confidence in the system they trade. This confidence comes
by selecting a system which suits our mindset, backtest the method,have proper MM . The
confidence also comes when one tastes success on this method........it is very easy to say have
confidence in the method when the method is not making money ....but we cannot have
confidence on empty stomachs...can we ?
4) Most traders come to trading with very small capital. They think that one does not need capital
in trading.....this belief is also nourished by fly by night tip vendors who claim that you just need
10,000 in your trading account to make Rs 2000 per day....nothing can be further from truth. If
one has to live off trading one needs atleast Rs 3-5 Lacs capital......I have seen many who say Rs
25,000 is more than sufficient but it is not true......Many are short of capital because they come to
trading after they loose their jobs,or fail in business or fail and loose huge amounts in speculation
and finally all these people fail in trading too.....
5) The most important quality is ability to accept that one is wrong, get out of the trade at the
earliest and go for the next trade which could be in re-entry of original trade direction or in the
opposite direction if the market action so demands. Most people get attached because of ego or
because they feel they cannot take that small loss ( but eventually they will take a much bigger
loss....)
A trader needs to address all the above points in his journey of becoming a successful trader.
Smart_trade
_____
Originally Posted by Niranjanam View Post
Hi
I would like to advice all traders to prepare two annotated charts everyday. One is for the actual trades
taken and another one is for model trades. Compare these two and find out what went well and what
went wrong .Learn from it.
Skill learning is not possible without trial and error. Correction process should go on till successful
performance is achieved .Once this success is achieved you will forget the errors and remember only the
successful action that will be imitated and initiated automatically by your brain.
Watch a baby trying to grab a toy. His brain has no stored information what to do for this . He has no
proper control over his muscles .So his hand will move somewhere else and he will try to correct the
wrong move. This goes on for many days and finally his brain will store the right move and he starts
doing it without any difficulty
Remember how you learned to drive the car. How difficult it was to coordinate your eyes, hands and
foots.How long it took you to handle the steering properly.
But once you master the right moves by trial and error these actions are taken over by your brain.
All the knowledge necessary to trade profitably is available in the posts of Saint, Raghav and ST. What
we need is deliberate practice .
All the best
Here is a Model chart , I use a free software to annotate my charts. It is called Jing. Click on the chart for
a detailed view
[IMG][/IMG]
With assumed permission from Niranjanam , I am quoting an excellent post he posted in Vjay's thread
and my post on that as under :
I agree with you Niranjanam......one can learn any amount of theory but the trading profits come by
actually pulling the trigger, taking the trade, deciding right quantity, adds,stops, profit booking
,monitoring the trade and finally cashing out and putting money in our pockets...and this process
requires tremendous practice. It is a great idea to prepare a model trades chart by EOD and compare
your actual trades performance with the model trades. It may be possible that you skipped some trade,
booked profits early on some trades, did not take that add.......and if you achieve 65-70 % performance (
trades wise and profit wise ) then you have traded well......pat yourself on the back.
If the model trades have profits of 70 points and we have made 35 points...then our performance is not
upto the mark and we cannot live in comforting thought that the day was profitable.....and we certainly
need to improve. This is how we compare our performance everyday and start on the road of perfect
execution and profitable trading.
I find that going above 75-80 % mark is very difficult.....but that is how one improves, we have to set the
bar a bit higher to achieve good performance everyday.
Even if it is repeating the post....I am quoting both the posts here as I think this is a great idea to
improve our skills and practice in execution of trades. I have been doing this for sometime and the
benefits I got are huge.....I claim no credit for this idea, this idea was picked up by me from Saint who
does this excercise everyday at the end of the day and when I read it again in a brilliant post be
Niranjanam.....thought of sharing the same for the benefit of all our friends here......
Best wishes,
Smart_trade
Scaling in and out of timeframes
800x407.
I am demonstrating the use of this important concept with the help of charts of Nifty futures for
29 th and 30 th sept 2011.
The upper chart is Nifty Futures 5 min chart . Here many trade opportunities are marked on
various concepts/methods/ systems . See the elliptical areas shown on 29th and 30th. On 29th the
market broke out from sideways movement and the decline after this correction did not come
below the pivot high it broke and there was a gap in between. This indicated that the market is
set up for an upmove. The reverse is on 30th , market broke down and the rally failed to go into
the sideways area it broke ( taking candle bodies here ) and this indicated that the market is setup
for a downmove.

( Nifty Fut 3 min chart )
Once we observe the trade set up on 5 min timeframe, we get down to lower timeframe of 3 min
to finetune our trade entry and initial stoploss. This is done for getting more clarity and precision.
We use 3 min chart only for initial entry and stoploss. Once the trade moves in our favour we
scale back to 5 min which is our trading timeframe. In the 3 min NF chart posted we can take the
trades with much better clarity and tighter stops......
The trades marked are on various methods ( most of them come to same location ) but observe
the precision which a lower timeframe of 3 min provides with a comfort of tighter but clearly
defined stops.....
Smart_trade
Larry Connors on Advanced Trading Strategies
THE 8-DAY HIGH/LOW REVERSAL METHOD:
FOR BUYS
1. Day one must be an eight-day low.
2. Day two must trade above the day-one high.
3. Days three or four or five or six must trade under the day-two low
(this can be a new low).
4. When condition three is satisfied, we buy one tick (1/8 for equities)
above the day-two high as long as the one-tick breakout occurs
within four trading days of condition three.
5. Our stop goes one tick below the day-two low.
FOR SELLS
1. Day one must be an eight-day high.
2. Day two must trade below the day-one low.
3. Days three, four, five, or six must trade above the day-two high
(this can be a new high).
4. When condition three is satisfied, we sell (short) one tick (1/8 for
equities) below the day-two low as long as it occurs within four
trading days.
5. Our stop is placed one tick above the day-two high
Price Shocks
Unexpected price gaps against our position are called " Price Shocks" and every futures trader has to
understand that such shocks he will get and though they are unpleasant but he has to take them in his
stride as "unavidable evils" . These shocks are caused because of terrorist attacks,sudden change in Govt
policies,assasinations of world economic and political leaders, currency devaluations,Acts of God such as
earthquakes,floods etc. These events are sudden and never expected so after these events prices will
gap against you but I have found that even such events ,the chances of gap against the trend are much
less than gap in the direction of the trend........so if you are trading positional / swing then you will
mostly get such gaps in your favour than against you. But still having such gaps against our position can
happen.
This is where the importance of money management comes in. If you are trading say 50 nifty futures (
meaning one contract ) per Rs 1,00,000 trading capital such gaps will knock off 4-5 % of your capital but
still your account will not get paralised.But if you are trading 300 nifty futures....then things could be
much more difficult.....
Now let us see how we can minimise effect of such gaps. When our markets are going to be closed and
other world markets open for trading , we always keep overnight positions light. In case nothing adverse
happens, we can always open the positions which we open on the next trading day.....it is something like
slowing down the speed of our car when we are on the blind turn...we all do it...don't we ??
You could have also considered selling 4700 strike Oct Nifty puts which would have given some relief if
the market gaps against you.......some price decay if the market opens at the same level and a loss of 35
points if the market had opened 100 points gap down in your favour, but no complaints here....
Such price shocks cannot be predicted and hence cannot be provided for in our MM calculations......but
we make sure that 200 points against us does nor criple our trading account( in present world economic
scenario, a 200 points gap against our position is possible on any day....). And the good news is that
these shocks don't happen too often......
VWAP SQEEZE
SQUEEZE THE LAST DROP OF THE JUICE ........GO FOR THE KILL
This is one trading technique which I use very regularly and I wanted to share the same with all. At 2:40 -
45 I was long in Nifty Futures and the market was looking strong. I had to take a decision whether to
book some profits there or wait till the end.
We play on simple technique that find out which is a side which is trapped and how much are they
under water. At 2:45 the weighted average of Nifty future was showing 5035-40 whereas NF was
quoting at 5085....a clear gap of 40-45 points. This means that the market is heavy at the bottom or lots
of trades have happened below 5035 ......and the longs are comfortable but shorts are now feeling the
heat. They will come for covering their short positions......also at 3:10 the brokerages will square off all
loosing positions which are not covered by margins. So here instead of booking profits add on every dip
......the bears are dieing to cover their short positions.
After 3:10-3:15 there is panic in bear camp.......the die-hard bears come to cover after 3:20 and it is
adding fuel to the fire. We just have to watch market going up like a rocket.....last 20 min give us a very
quick move up.......and we get best price when the bears say " damn.....cover at any price...." and that is
where we liquidate our long position built up anticipating this to happen.........it is a fun to trade this
move.......
Compounding
Trade 1% of your trading capital on each trade. Increase the % only after you reach 50 % profit on your
trading capital....This should take about 3 months. Then at the end of 3 months devide the profits
equally between trading capital and risk capital.....continue trading 1 % of your trading capital.....and
trade 4-5 % of your risk capital......let this continue for 100 % profit....then repeat the same step.....
Let us take an example...say your Initial trading capital is Rs 5 Lacs......you make 2.5 L profits devide that
50:50 ...so trading capital now becomes 5+1.25 =6.25 L and your risk capital is 1.25 L now on each trade
you take 1 % of 6.25 L plus 5% of 1.25 L = 6250 +6250 = 12,500 on each trade......continue this till your
trading capital + Risk capital becomes 15 L ....then same steps.....
If you find 5 % too large, then go for 3-4 % of risk capital but this compounding will increase your trading
capital exponentially without taking undue risk with your trading capital which goes on increasing
continuously.
Smart_trade
Market Reaction to News
OBSERVE MARKET'S REACTION TO GOOD NEWS AND BAD NEWS----It tells you a lot about what the
market has in mind
I saw a post by someone yesterday which said market should have tanked 500 points on bad GDP
numbers. True.....but always remember that if you can read the market's reaction to good news and
bad news, it will put you light years ahead of rest of the traders.....market took a very weak reaction to
a strongly bearish news of GDP numbers.....and that should tell you something that the markets are
poised to trade higher.....and that what it did today after yesterday's high is taken out.....
I remember a day when the market was in downtrend and the news came in the evening that the
coalition partners are withdrawing support to Government and it has to prove its majority on the floor
of the house the next day.....I was short a large position in Reliance and was expecting the market to
tank by atleast 50-60 points the next day......
The market opened just 7 points below the earlier days close......and I thought to myself, damn, is
market giving only 7 points for the survival of the Government ?? Something is not right.....the market
knows something which we all dont know. The market stabilised in next 30 min and started going
up.....and I started covering my short positions.....went a small position long above the earlier day's close
and it so happened that the confidence motion was won on that day, Government survived and RIL
opened 60 points up and went on to over 100 points by the time markets closed.
The above incident taught me so much in trading that no book would have ever taught me..... It is a
real incident from my early days of trading.....
1228x624.
SCALE IN AND SCALE OUT OF TIMEFRAMES .......To trade fast and furious markets.
Fast and furious markets are great markets to trade as they offer very good Reward /risk in
shortest possible time. But they are also very volatile and furious and can hit you very hard if
they suddenly reverse and you are not trading with tight stoploss.
Many trader friends mentioned that they could not participate fully in yesterday afternoon's crash
because of they did not know how to enter in between the running trend and how to protect
themselves if the market suddenly reverses. This is one of the questions a trader always faces.
I am posting a NF 3 min chart with markings. If one is normally trading 5 min timeframe, then
scale down one step,say to 3 min. The chart shows the green bars , short the low of the green
bars and keep a stoploss of the swing high in 3 min ( stops indicated by black lines ) This 3
min timeframe is only for initial stoploss. Once the trade moves in our favour, we scale up to 5
min timeframe and trade that. The chart shows that there were atleast 5 places where one could
have entered with 8-12 points stops in the downmove which we had yesterday.
The beauty of these strong and violent trends is that your trade moves in profits very fast and
then you are relaxed and the only job is to manage the trade.
With these entries and stops one can participate in strong and violent trend moves very profitably
without any fear of large loss.....
Happy trading....
Smart_trade
Originally Posted by balasoft80
Hi ST,
Today I am just posting 30 minute nifty chart to understand the price action. I think we can
interpret same price action to 60 minute as well. Could you please post your price understanding
during your available time? Thanks much
Today's price action was simple. First 4 bars are continuation of the downmove which started
yesterday. So short in the first half. See the 4th bar , it went below 4700 and closed as a strong
bearish bar. Next candle was an inside bar. it failed to make new lows. This should alert us of
possible reversal. Then 5th,6th,7th and 8th ...all sideways bars....still no new low. And once 9th
bat takes out pivot high, it was clear that market has reversed...so above 1:00 high take a long
trade with apropriate stoploss on 5 min bars......ride the upmove and when the move gets too
steep, trail the profit taking below each successivey higher bars....so market takes us out below
the low of 2:45 bar.....just 2 trades on price action.
Smart_trade
Originally Posted by balasoft80
Hi ST,
Today I am just posting 30 minute nifty chart to understand the price action. I think we can interpret
same price action to 60 minute as well. Could you please post your price understanding during your
available time? Thanks much

Today's price action was simple. First 4 bars are continuation of the downmove which started yesterday.
So short in the first half. See the 4th bar , it went below 4700 and closed as a strong bearish bar. Next
candle was an inside bar. it failed to make new lows. This should alert us of possible reversal. Then
5th,6th,7th and 8th ...all sideways bars....still no new low. And once 9th bat takes out pivot high, it was
clear that market has reversed...so above 1:00 high take a long trade with apropriate stoploss on 5 min
bars......ride the upmove and when the move gets too steep, trail the profit taking below each
successivey higher bars....so market takes us out below the low of 2:45 bar.....just 2 trades on price
action.
Smart_trade
__________________
While amateurs go broke by taking large losses,professionals go broke by taking small profits......
William Eckhardt in New Market Wizards
The Following 19 Users Say Thank You to Smart_trade For This Useful Post:
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January 2012), murthyavr (6th January 2012), NTrader42 (7th January 2012), Pralhad (10th January 2012),
ramlaa (7th January 2012), rasasen (7th January 2012), rr_inp (7th January 2012), SavantGarde (6th
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TRADING THE HOLY GRAIL Trade in the direction of 21 MA using the pivots
----------------------------------
Posted Nifty Fut 5 min chart of today 06-01-2012. The entry is on pivots, and trade direction determined by
21 SMA red line. Plain vanilla entries...no indicators, no oscillators,no higher timeframes ....not to
complicate life with all those.
Below the red line we are looking to go short.....above the red line we are looking to go long......stops
trailed as per shown in black lines.
For profit taking we have taken help of stochastics positive divergence....also the green arrow between
10:00 and 11:00 is a Sequential Buy point.....additional reason for booking profits there.
In the long trade, the move gets steep and we trail the profit taking levels to the lows of each of
successively higher bars.....
Trading is simple...we traders make it too complicated......
Smart_trade
__________________
Originally Posted by NTrader42

Thanks for this example and method.
I use SSMA 20 Envelope with M5 on Crude Oil, I guess 20/21 should not make a big difference but i
try to take the directional clue from HTF (M30)
Would directly trading based on direction indicated by MA 20/21 give a few more whips? At my end
I will try to scan the old charts and see how it works on crude oil, but will also like to know your
view. Over all which is better, trading M5 in direction of M30 or directly using the MA21 direction
on M5.
Thanks
Having traded both the methods, I have found that trading pivots in the direction of 21 SMA
gives better and early trades. And as we are trading on pivots, and supposing you go long over a
pivot high( above the red line) the moment it closes below the red line or takes out the pivot low
( even though it is still above the MA line ) we liquidate the long position. This way our losses
are kept low.....and a few large trend moves and few small profit moves and few small losses
overall give very good results.
In any MA based method the sideways period is sure to give whipsaws and frustrating
trades....the trick is to step aside the moment you sense that the market is making sideways
moves . No one will know that we are in sideways correction initially but as the market unfolds,
it quickly becomes clear that the move is sideways.....it is best to step aside and wait for the
sideways zone to be cleared.
Good trades, NTrader...
I would have traded this chart a bit differently as under : Please fergive my paintbrush skills...
957x578.
Smart_trade
Profit Taking
just taking my post forward..

Sanjay,
Marking trades on the chart. 1st long trade as you have taken. Profits to be booked right at top as
shown . Why ? Because you see the figure 9 that is 9th set up bar...after that market takes a
correction. Also by the time this 9 was done, market still not broken the earlier 9 top......so
immediately after 9, look for profit booking below that doji bar as shown.
Then we have come to know that market is sideways...so wait for it to clear the top and avoid
small pivots trades...it cleared the top so go long and immediately sold off....so get out of long
positions...and wait...
Then short trade as shown.....the red line support broken, there is one add....and here after the
support was broken, market started coming up...we already booked some profits near the support
of earlier day....balance profit booked as shown.
9 bar Set up, TDST,Oscillator,Earlier support/resitances will help in booking profits at right
time.
Smart_trade
Trend and VWAP
Today we see that inspite of market going up substantially, the difference between the Nifty Fut and its
VWAP is just 12-15 points. This means that this is not a bear covering desparate rally...but it is more
durable rally which is expected to continue even tomorrow in the first half....but no fireworks expected
in the end...
Best of Demark
1) TD Sequential
2) TD Combo
3) TD Double TD Point
4) TD Point Reversal
5 ) TD camouflage
6) TDST
7) TD POQ and Oscillators
8) TD Open,TD Trap,TD Clop and TD Clopwin.....
The above I find are the best of DeMark.
ADX
We can overcome this problem with the use of one simple indicator ADX(14)
The level of ADX can help us to decide which system to use at a given point of time.
Now let me explain you how to accomplish this goal.
PLOT ADX(14) ON CHART FOR YOUR CURRENCY PAIR.
IF...
1)ADX is below 20 - USE OSCILLATOR BASED SYSTEM(RSI,STOCHASTIC ETC.)
2)ADX is above 30 - USE TREND FOLLOWING SYSTEM(MOVING AVERAGE,MACD ETC.)
3)ADX is at 45 or above it - BOOK PROFITS.(Wait for new entry)
4)ADX IS RISING FROM LEVEL BELOW 18 AND THEN GOING ABOVE 23 - USE TREND FOLLOWING SYSTEM.
5)ADX DECLINING FROM LEVEL ABOVE 30 AND THEN GOING BELOW 27 - USE OSCILLATOR BASED
SYSTEM.
The above mentioned method will help you select right system at right time
This system selection technique works very well according to my experience.
I want to tell you again that this technique only helps to select right system at right time and it is not a
holy grail.
I hope everyone will like this system selection technique and use it to improve their tradingI use this for
trading in stocks and hope it will work well in the forex market.
A GOOD SYSTEM NEVER FAILS IT FAILS ONLY BECAUSE IT IS USED AT A WRONG TIME.
Thoughts on Day/Swing Trading
1228x624.
TDST as supports/resistances and trend indicator
TDST is a great tool for identifying supports/resistances and the trend direction.
The chart posted in 30 min NF chart with TDST lines marked. Blue lines are resistance lines and
Red lines are support lines.See how after we broke a blue resistance line at 4832, the trend was
confirmed as uptrend.....market all throughout held the red TDST line support so beautifully.......
1228x624.
Now we see the TDST action on 5 min timeframe....see how the areas marked with red eliptical
marks are the TDST support held while the market was trending up giving us multiple entry/add
points in this uptrend....
Smart_trade
More on TOM Demark
Sequential is a long term position trading method. When it catches a trade it is for 500-700 Nifty points
profits ( The buy signal was a sequential buy at 4650 on 2-1-2012 and we are already up 800 points from
that level ). It also has wide stops and very few people can hold trade this method because of its wide
stops and huge gains.
Coming to combo, today was 13th count down day. Now we have completed the countdown process.
The sell signal will be the close of the day when we have close less than the open or a bearish candle on
daily charts.
The stoploss level is calculated by adding the difference between the low and high of the highest high
day in between starting of set up and 13th count down completion.In present case 13th countdown day
ie today has a high/low of 5451.65 and 5304.65. The difference is 5451.65 - 5304.65 = 147 points. We
add this difference on the high of the day to get a stoploss level. So the stoploss = 5451.65 +147
=5598.65. The stoploss is on closing basis and said to have hit the stoploss in following conditions :
1) If any daily bar closes above 5598.65 and the next day the high of this day is taken out.
2) OR we get 2 closes above this level of 5598.65.
Now suppose the market keeps going up without giving a downclose, and finally gives a downclose
above 5598.65 means the sequential/combo is recyclying. In other words the the demand is so strong
that it will go up much higher so it may do the set up and countdown phase for the second time again.
Please note that neither Combo nor Sequential has still given a sell....but we are monitoring this chart
for reversal . In case the recycling takes place, we atleast know that the market uptrend is going to last
for much longer time and will take the marker much higher.
Smart_trade
How To Proceed
1) Supports,resistances...how market behaves near these supports /resistances, tests and failures of
supports and resistances. Failures of breakouts/breakdowns.
2) Candlestick patterns, implication of each candle on the price chart.
3) Price action, trends, various types of trends and their interplay.....trend reversals.
4) Reward/risk equation in trading...concept of position sizing, % of trading capital to be risked on any

trade, RR ratio,profit factor,% profitability and drawdowns of your method.
5) Any good competent method which you like ....back test it very thoroughly. There are many methods.
I have seen traders trading profitably on oscillators,pivots,MAs,Ichimoku,Hiken Ashi,TDST,Trendlines,
Failure Trades....and so many ....
The fact that you like a method will mean that your mental set up and beliefs are in tune with that
method and you will have better chances of success with such method.
The above 5 paragraphs are not easy....but it will give you the direction in which to proceed in your
journey to trading proficiency.
Best wishes for your success ...
Smart_trade
Day Trading Stocks
You must have a list of 20-25 stocks which has good volume and which trends well. At the end of the day
just have a look at all these charts on daily or hourly timeframe. There will be stocks which has just
broken out of consolidation/distribution, or going through a low volume corrective move after a
breakout/breakdown. These are the stocks which you must keep on radar when you daytrade for the
next day. Just eyeballing the charts and it is simple and does not take much time ( max half a minute per
chart....so total 25-30 min max.)
You will always get 5-6 stocks which look good on daily/hourly charts.... and these are the daytrading
candidates for the next day.
Smart_trade
Thoughts on Day/Swing Trading - Trends
1228x624.
Savio/T4J,
I have posted a 60 min Nifty Futures chart showing part of the uptrend and the current
downtrend.
Please observe that the successive higher tops and bottoms make an uptrend....successive lower
tops and lower bottoms make a downtrend. There is a definite level marked in the chart where
the intermediate trend changed to down.
Various types of trends and their interplay are a subject of one full thread. But in my view there
is nothing else more important in trading than to understand the trends and their interplay.....it is
the "holy grail " in trading in my view and traders need to have sound understanding of these
concepts....
I am unable to devote that much time for this important concept...but sometimes in future I will
try to start a thread on this very important topic in trading
Can Options buyers Make Money ?
Option buyers and sellers both have advantages and handicaps working for them. It is a myth that only
option sellers can make money. This is true in practice because option sellers are high netwoth
indivisuals and financial institutions who understand the game better than a retail investor who
generally is a buyer of options.
Option buying can be very profitable if the option buyers understand that they have a handicap of
eroding premiums because of time decay. This handicap can be overcome by the help of strong trends in
favour of buyer. So buy options when the trend starts, get out when it halts....dont stay put buying the
option and hoping that the trend will start some day.
For people more interested on options buying , read Bernie Shaeffers "Options Advisor" book, which is
one of the classics on options along with few books by Lawrence McMillan.....There is also a
site/newsletter by name " Options Advisor by the same auther.
Options buying can be used very intelligently to make huge gains by identifying sudden increase in the
options activity. Read Anthony ( Tony) Saliba on how he reads this option activity.
I mostlly trade futures...but sometimes try my hand in options too.....so thought of sharing my thoughts.
Trading Parabollic / verticle Moves
Following is the reply to a question of how to trade parabolic moves.....do we always fade them ? asked
in another thread....sharing here as many may find it useful.
All parabolic moves are not the same and they are to be traded differently depending on where such bar
comes in the total trend.
1) Suppose the market has been trending down for many bars, it has printed a few large range down
bars.....a prolonged downmove.....and now the move gets verticle and prints a huge bearish bar which
opens and closes at the extreme endswith big volume, no tails.....expect this to be an exhaustion or
capitulation and the market is ready for reversal to uptrend. Trade accordingly.
2) Suppose the market has just reversed its earlier trend,and it prints a big bar which probably breaks a
few pivot highs....that is a trend bar.....always expect this trend to continue for long time and trade in
the direction of the breakout/breakdown.
3) Market has just reversed the trend and it goes into small consolidation or sideways movement with
low volumes and it breaks out of that range with a wide range bar......it will never be an end of the
trend...it will continue in the direction of the breakout...trade from that direction...
Hope the above helps you to trade such large range bars better.
Quote:
Originally Posted by mangup

Dear ST Da,
I am unable to grasp the points explained above. Can you plzzzzzz explain with some charts as
"Charts speaks 1000 words"? It well help a lot to understand the setup.
Quote:
Originally Posted by Smart_trade

Trading Parabollic / verticle Moves
Following is the reply to a question of how to trade parabolic moves.....do we always fade
them ? asked in another thread....sharing here as many may find it useful.
All parabolic moves are not the same and they are to be traded differently depending on
where such bar comes in the total trend.
1) Suppose the market has been trending down for many bars, it has printed a few large
range down bars.....a prolonged downmove.....and now the move gets verticle and prints a
huge bearish bar which opens and closes at the extreme endswith big volume, no
tails.....expect this to be an exhaustion or capitulation and the market is ready for reversal to
uptrend. Trade accordingly.
2) Suppose the market has just reversed its earlier trend,and it prints a big bar which
probably breaks a few pivot highs....that is a trend bar.....always expect this trend to continue
for long time and trade in the direction of the breakout/breakdown.
3) Market has just reversed the trend and it goes into small consolidation or sideways
movement with low volumes and it breaks out of that range with a wide range bar......it will
never be an end of the trend...it will continue in the direction of the breakout...trade from that
direction...
Hope the above helps you to trade such large range bars better.
Smart_trade
Click
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mangup,
I have posted Tata Motors Futures 15 min chart.
1) Topmost red horrizontal line indicates reversal of the trend from earlier uptrend to downtrend.
2) Large bar No 1 is the breakdown bar. The down move has been kicked off and it will continue
for much further distance.....this is where one needs to buy puts ( not at the top and waiting for
the trend to reverse). This is point /case No 2 of my original post
3) Large bar No 2 ...the downmove continues, but it is still very recently started so not expecting
the reversal.You can add on your put buying positions....
4) Market goes into a sideways zone....
5) Large bar No 3 ...this is a breakdown bar from the sideways range....this is most safe place to
add to your put positions...trend will proceed in the down direction.( Point No 3 of my original
post.)
6) Two downbars and a big bar No 4...now see that the move has played out for number of bars
and the move has got into a steep downtrend......this is where one should look for possible
reversal....and in the zone marked by red eclipse, liquidate all your puts for handsome profits as
now the market is likely to reverse....but dont buy calls yet....and when it finally reverses, then
you start trading from long side ( now you can buy calls ).....This is point /case No 1 in my
original post.
I hope all the 3 cases mentioned in my post can be seen on the charts.....
Things will not always be so perfect but there is nothing perfect in trading.....so if you catch part
of the move also it is great....but DONT get on the wrong side of the trend....
Smart_trade
Small Quantity, loose stops ,small profit , low risk....OR Large quantity, tight stops,much larger profits
and Larger risk too.......a constant dilema of any trader
Any trader, whether he is a scalper scalping for few ticks,a daytrader or a swing trader is always faced
with this dilema whether to trade small quantities for small profits or large quantities for much larger
profits. The large quantity and profits are also associated with larger risk....is a trader comfortable with
this larger risk ??
Have we ever thought whether can we have large quantity, larger profits but smaller risk ?? That will be
an ideal combination for any trader. Also trading is a game in which no one can avoid the risk but we
must take controlled and predetermined risk. To be profitable, we must make 3-4 or even 5 R ( R is % of
total trading capital risked on a trade ) by risking 1R......but most believe that it is not possible.....I will
just discuss few thoughts in the next post , think whether it is possible...if you think it is possible,
incorporate these in your trading , but if you feel it is not possible, then ferget it.Kindly remember that
these are trading thoughts ....and should not be considered as complete systems ( for systems, you have
to work on parameters like entry, exits, profit taking, adds....stops....early exits.....and that is the work
every trader has to do himself.). Genuine doubts/discussions, I am prepared to answer and discusss, but
have no intentions to argue with neysayers or" nothing works in the markets believers"..as it does not
help anyone......
I am sure that this post will raise many eyebrows.....wait for the next post which will be posted in the
evening....
Smart_trade
768x618.
NIFTY Fut 30 min chart
768x618.
SBI 30 min chart
I am posting 2 charts to illustrate the concept, the first chart is Nifty Fut 30 min chart and the
second chart is State Bank cash 30 min chart.
The first thing which we want when trading large positions is that the market should quickly go
in the direction of our trade. We would not like to take large position and see that market does
nothing for next 1-2 hours or worst, goes against us.....no one likes it psychologically. So the first
principle is trade in the strong trend, uptrend or downtrend....but avoid meandering sideways
trends....just stay out of sideways......
Many will wonder why I am showing 30 min charts in daytrading examples. Small timeframes
such as 3 min or 5 min give noise sometime....larger timeframes of 30/20 or 15 min are much
more stable.....I am taking 30 min for illustration.
The next area is how do we define strong up/down trend....there are many ways....some of them
are listed below :
1) An uptrend on daily timeframe, and some sideways movement and a breakout/breakdown

from this sideways zone on daily timeframe.....this analysis is required to be done the earlier
evening for shortlisting trading candidates next day morning.
2) Market trading above important level/pivot...
3) Market trading above the previous day's high or previous days lows.
4) Market trading above 21 SMA on 30 minand the gradient of 21 SMA is steep...( dont trade
when the gradient is flat and market is going up/down of 21 SMA )
5) Market trading above Blue TDST for long side trades and trading below Red TDST for short
side trades.
The above list can be expanded based on each trader's favourite trend detection techniques.
Now we come to actual position sizing. Suppose we are in uptrend, we locate a bar as under :
1) a small inside bar ....we go long over the high of this bar and our stops are just below the
low.....
2) A small range doji ...signifying a pause in the ongoing trend....
3) a small bar which is of different colour than the main trend...so for long trades we will identify
small red bar...long above the high of the red bar and stop below the low.
So here the thought is we are trading in the direction of the trend, strong trend, small pause in the
main trend and the trend resumes and we get into the trade....the small bar enables us to take
large positions with very low risk...tight stops and we will get atleasr 65 % and above success
rate.
The chart shows few long trades on Nifty Fut and few short trades on SBI ( cash ) for those who
trade futures or cash markets.if our trading capital is say Rs 5 Lacs....we risk 1 % so we rish Rs
5000 on a trade....if we get a NF trade with 12 points stops we go for 400 NF position.and we
sell 1/3 at 2R or 24 points profits, 1/3 at 3 R or 36 points profits and 1/3 at 4R or 48 points
profits. We can bring our stops to our entry point when the market moves 1 R or 12 points in our
favour.......the last lot can be put on the trailing stops instead or 4R .....
We can even trade a 5-6 stocks group on this ...each time trading 0.25 % risk....so our total risk
on all positions is never above 1.25 -1.5 % of our capital and we diversify our risk to some
degree...so on some days NF is in sideways but Tata Motors or SBI is moving and we get trades
in those counters....
Now we come to the maths.....assuming very conservative 40 trades in a month, and 50 %
success rate....and average 2.5 R profits....we loose on 20 trades so we loose 20 % gross and we
make 2.5 R on 20 trades so we make 50 % ...that still leaves us 30 % per month......even
discounting this and we make 50 % of this ie 15 % per month still a very good return with risk
never exceeding 1-1.25 of our capital.
The above are the trading ideas, everyone has to use these ideas in whatever methods he/she is
trading......but it just opens our views that large returns with small controlled risk is possible . I
have seen some traders making huge profits of say 4 R to 8 R on each trade on methods based on
this concept and their profits are beyond the figures given above ( let me also clarify that I am
much below these achievements ) ....but small steps...let us start walking in that direction ....
Smart_trade
Our trading capital is Rs 5 lacs.......not Rs 5000=00. We are risking 1 % of this capital on each trade.....so
on each trade we risk 5000...with Rs 5 Lacs kept with the broker as margin or even 3 Lacs kept as margin
and 2 Lacs kept in our OD accounts earning interest, one can easily trade upto 600-800 NF positions
also......
The 12 points is just taken as an example ( it is actually 12 points in the first NF trade shown ) It is the
difference between our entry point and the stoploss point....or in most cases it is the length of the inside
bar/doji or diff colour bar we are trading.Based on the length of the bar, it could be 8 points or 10 or 12
points. If it is 8 points , then we trade 5000 devided by 8 = 600 NF positions.....we have to adjust position
size based on the stoploss...smaller stoploss, more positions, larger stoploss...lesser position . The risk is
kept constant at 1 % of the capital.
Smart_trade
If one is trading just 1-2 counters such as NF and BNF one can trade with 0.75 to 1 % on each trade. If
one is trading with 5-6 scrips ....then 0.25 % of the capital on each trade......
One can even start with 0.25 to 0.5 % on each trade in NF/BNF till one gets comfortable with this
strategy. It looks simple...but it is very tough risking Rs 5000 on each trade and sitting tight for next 3
hours doing nothing , not looking at small timeframe of 5 min, supressing the urge of booking small
profits ......
We can re-enter....but we need another inside bar for that as we have to find small inside bar in the
direction of the trend.If the market hits our stoploss and not moving quickly in our direction, it is the
first sign that the market is getting in sideways mode...and we would like to avoid trading in this zone.
But if market moves vigorously, then find another trade and take it....
ST
Our trading capital, margin kept with the broker and the % of capital risked on each trade are all 3
different things....we are not saying that we use 1 % of trading capital ie Rs 5000 as a margin....Our
margin is Rs 3 to 5 Lacs.....it is fully used...but we take quantities defined by out stoploss as that is the
most important parameter for our risk control. We will never increase our risk to 1-1.25 % of our trading
capital for daytrades and 2 % of our capital for swing trades....
ST
VWAP Sideways
When market trades near its VWAP for a long time means the market is in sideways phase. If the pice
and VWAP have come down from the top and now going sideways, the chances are we are going to see
the breakdown soon so position yourself for that breakdown......mirror image for breakouts....meaning
market and VWAP both have come up from the bottom and now going sideways, expect a upwards
breakout. But I use this tool for the end game only as there are many more effective techniques to judge
the direction of the market. And by the time we come to end of the day most of the time we are
positioned in direction of the final crash/pull .
If price stays near the VWAP and the VWAP continues moving in one direction,that means no big move
in the market yet. Small move with up/downwards bias...but it does not squeeze the participants on the
other side of the trade and can expect a explosive move only when the price and VWAP diverges big in
the end....else no big move expected.
Markets and Trends Can Change Anytime
994x618.
Markets and the trends are never static...they can and do change anytime. This is the first
lesson each trader has to learn by heart....and once the trend changes, no amount of our hope,
courage,prayers, positive thinking ( positive wrt our loosing positions ) can make things any
better for us.....so we have to accept that the trend has changed and align ourselves to the new
environment.
Posting today's chart of Nifty Futures 5 min , market was in uptrend in the morning and then
once it cracked the red line as shown, the trend changed to down and it dropped like a stone....
One of the senior traders taught me many years ago that in such panic situation never freeze, but
act ....atleast get out of the loosing positions and start building small positions in the direction of
the new trend . After so many years of trading, I still remember his teachings on a day like
today.....
Smart_trade
5 min TDST lines could be used for daytrading....I have been trading with them for years and I found
them very good.....but if you find them not so good, then go to some other method which you have
confidence on......we have to trade a method with which we are comfortable and confident.
Regarding 30 min flow, there are many versions of 30 flow.....not clear which one you are trading. 30
flow went into long mode above 11-4-2012 over 10:30 PH (above 5233 ) and it was in long mode till
today...and reversed to short below in the afternoon today...
We find 30 min is a very good timeframe for flow 30......that method is profitable for many many
months.....and it has undergone many refinements/improvements....
Filters
My views on the filters are as under :
1) Filters do provide some protection against false starts trades but they also reduce your profitability.
2) Filters are very useful to prevent false starts in swing/position trading methods as in these methods
we are trying to extract 50-80 or even 200 points from the trade. So filters of 10-15 points are ok.Also a
wrong trade in 30 min timefame is much more expensive than it is in daytrades. In swing trades the
frequency of trades is not very high.
3) In daytrades I don't use filters....or max use 1-2 points in NF....this is because of a simple calculation. If
I take 5 points as filter and if I am doing 4 trades in a day, I loose about 30 points every day in filters ( 20
points while initiating a trade....and assuming only 10 points while closing/profit booking as sometime
filter will not be used ) ....so I loose 30x20 =600 points in a month. Instead of that I trade without filter
and take some bad trades and get out of those fast may be loosing 5-8 points each....still works out
much cheaper. But if the trade starts going against us right from start, we must close it loosing max 8-10
points.....
4) I rely a lot on pivots and their breakdowns and failures.....the false trade always results into a failure
of a breakdown/breakout and I am always alert for such failures....
Hope the above helps....
Smart_trade
AW10
1) Have your rules for entry, profit, stop exit, money managment, risk management in place.
(and have confidence in them. Your paper trading should have proved it to you)
2) Develop right beliefs about the market. Some of sample belief / thoughts are
a) As a trader, my job is to find, plan and execute trade as per my rules. If there is no trade
then I am not going to force a trade.
b) As a trader, I am here to trade.. not to gamble. Putting a trade against my tested rules is
gambling.
c) Once in trade, I am ready to accept whatever market gives to me.Whether this trade will be
profitable or not,is not in my control.
d) If this trade goes against me, my stops will get me out and save my account.
3) If you loose the confidence, then go back to paper trade or trade with small size to gain the
confidence.
4) Know you strategy well in terms of number of consecutive loosing trades, biggest loss, how
strategy behaves in various market conditions etc. You backtesting results will help you here.
5) Know the time when you have to stay away from the market. Market does test your
patience and keeps us waiting for long time without giving potential opportunity meeting our
rules. But thats the market.
Yesderday was Inside day for our market (bar is completely inside previous bar). Over a period
of the time, you will know that Inside days are some of the most boring days and chances of
getting stopped out are more on such days. But that shd be ok. This only indiacates that
trending day is just around the corner. Inside days are followed by breakout in next one of
two days. So you will have nice trending day very soon. Be prepared for that.
Thrust ...sideways....thrust
Markets very rarely go straight up or down....but the trend manifests itself in sequence of
Thurst,Sideways,Thurst . The sideways hase after the thrust is necessary as the weak holders
book profits,scalpers book profits, strong holders buy more,and then comes a breakout from
sideways movement.
In todays Nifty Futures there are 4 such sideways zones marked...market brokeout each zone
with a strong thrusting bar to continue its uptrend. Thrusting bars are like a rocket launcher
which launches the rocket into the new orbit and in strong trend , it will not come back into the
orbit ( sideways zone ) once it leaves it.....once we understand that , the rest is easy... We can
use this behaviour of the market to time our entries, trail stops, adds....
Smart_trade
When Not To Trade Is Very Important Trading Decision
Last few days have been sideways range days and the up moves as well as down moves are very
fragile and they are not holding up. I have received many pms, phone calls from traders who are
either trading their own methods or trading on calls given by others . And as these systems are
mostly trend following systems they are hitting stoplosses regularly . Some call services have
had 8-12 stops hit consecutively on full quantity, thus seriously damaging the trading account of
some traders.
Trend following methods need sustained trends in the timeframe which we trade. Though the
market trends only 25-30 % time, there is a trend on larger or smaller timeframe. Trend
following systems cannot make money in sideways markets where trends are not durable
tossing us in both the directions.
I have done some posts about how to know whether the market is trending or not. A trader has
to understand the structure of the market he is trading and mindlessly following trend following
systems in sideways, small range markets saying that " Descipline and Faith on the system will
make money finally" is like banging our heads against a wall and saying if we do it with discipline
and faith,one day the wall will break.. It may put our heads out of shape.
In such markets it is better to step back and not to trade till the market is in the sideways
range....or trading smaller lots is very essential in preserving the capital and being able to keep
the gun powder dry so that when the market comes out of the range and starts trending we
can go with all guns firing.Large and continuous losses also put pressure on the mind of the
trader and I really wonder whether after 10-12 continuous losses even most " disciplined" trader
also will be able to take 13th and 14 th trade.......everyone should ask this question to our own
minds....After sideways phase a trend will always come....it is much more cyclical in nature...so
be financially fit to take full advantage of the trending phase...
So preserve your capital, trade small in sideways markets.....dont do "Financial Harakiri" in the
name of discipline. Remember that " When not to trade is a very important trading decision
too "
Stop loss for VWAP Trend Trades

We will look to enter the trade when difference between the current price and ATP is large so
indicating trapped bulls/bears and that the market has gone against then. So stoploss at ATP will
be too large. I would suggest a nearest Pivot Low in 15 min timeframe if we are long. In NF I
have found that when the market gathers momentum and traction, it wont dip more than 20
points.....so even 15-20 points in NF works well, in case of stocks one has to find out depending
on the volatility and strength of the trends.
Scalping Idea
These days I am doing scalping on a simple method....I have 13 bars average as the direction in
which to scalp....I identify a small bar ( a NR7 or a small inside bar) and if the direction is up,I will
buy the breakout of high of that small bar...with SL as low of the bar....and book 1/2 at R:R 2 :1
and balance trailed at low of successive bars...works well,and simple.....
Profit Booking
for booking profits lot of things such as trendlines,support/resistances,longer timeframe
pivots,various patterns and their targets will be useful....oscillator could be one of them.
I find in miniflow,for booking profits,trailing the profitbooking levels at 5 min timeframe clear
pivots will help you...dont take small inside the swing pivots,they are misleading...for example
yesterday (07-08-09) market did not break a single clear pivot on 5 min....keeping us in the trade
till the end of the day.Volumes in antitrend moves also provide useful clue for profit booking.
) Strong market does not give too many opportunities to enter...so after market stays in OB
region for more than 5 bars,I want to buy every dip...and keep a stoploss of 20 points if there is
no Pivot low stop nearby...you can buy break of pivot highs,break of previous bar's high etc...but
your stops go that much further...in strong markets I must get in as early as possible.
2) Trail the stops on clear cut pivot lows...but once it goes in OB zone again and starts printing
hammers and dojis...take profits. I have marked the trailing stops on todays chart for you...hope
you will find it useful...
Re: General Trading Chat
764x618.
Nifty Futures 3 min chart with VPL /VPH marked. Note the breakdown failure, sideways move
pivots and the resistance area for booking profits. Nifty Fut had more relative strength than Bank
Nifty today.
Smart_trade
VPH/VPL must be same whether I mark or VJAY marks. How we use the information is
different for every trader. Everyone trades with his own tweaks.
I use these pivots in my trading along with many other things like support/resistances,failures,
lower/higher VPL/VPH and taking trade entries on minor pivots in a visual trend in direction of
the visual trend. But all that will come with practice and you learn to handle the trades on this
method....one of the most important information I seek is how the market behaves at important
pivot points.
Smart_trade
I always want to be in a trade when the market is moving in my direction I dont hang around in a dead
market not moving . If it is not going anywhere, I prefer timebased exit. I take lots of early exits also and
very rarely wait till the stops are hit...stops are only for if I take the trade and market violently goes
against my trade.
But today Nifty was doing a grinding upmove till it crossed 8623-25. I took an add at 8612 and had trying
time as Nifty was going 3 steps forward to retrace 2 steps back....but after 8625 it was a sweet move....
Smart_trade
Quote:
P-1 or 2 Bars Entry
[IMG]
1228x620.
[/IMG]
Today I will share an entry technique which is my favourite entry technique for getting into a
trend move, Many times we either miss an entry in a trend move or we get out in between and we
want to enter again with small, predefined and controlled risk.
The chart is attached. Here market was in uptrend, it opened with a gap up and after a bit of
correction, the uptrend resumed and we want a low rish entry in this uptrend.
Here we locate a small pivot low. And our entry in long trade is above high of the bar which is
one bar earlier to pivot low bar provided it is higher than the pivot low bar high, else we go 2
bars earlier.
I have marked 5 places where market gave us a low risk entry shown by blue lines. The stoploss
is at the low of the pivot low bar....and you are hooked into a trend...enjoy the ride.
This is an entry method....it is NOT a stand alone trading system....please use it as an entry
method only.
The method is based on the fact that an uptrend is made up of higher pivot highs and higher
pivot lows and if we keep stops at a pivot low, it will not be hit in a strong uptrend, and if it is hit,
it means that the uptrend is weak and we better get out instread of hanging around in a market
which is not trending strongly. It is based on sound trading principle and hence this entry
technique has more than 75-80 % success rate and is my favourite.....This entry is a great entry
for adds even if we are already in trend. It gives low risk add points.
Mirror image to get into a downtrend.....
Smart_trade
How to identify Trending Days..
Quote:

791x618.
Thrust ...sideways....thrust
Markets very rarely go straight up or down....but the trend manifests itself in sequence of
Thurst,Sideways,Thurst . The sideways hase after the thrust is necessary as the weak holders
book profits,scalpers book profits, strong holders buy more,and then comes a breakout from
sideways movement.
In todays Nifty Futures there are 4 such sideways zones marked...market brokeout each zone
with a strong thrusting bar to continue its uptrend. Thrusting bars are like a rocket launcher
which launches the rocket into the new orbit and in strong trend , it will not come back into the
orbit ( sideways zone ) once it leaves it.....once we understand that , the rest is easy...We can use
this behaviour of the market to time our entries, trail stops, adds....
Smart_trade
Quote:
HOW TO IDENTIFY A TRENDING DAY
I had posted silmilar post in miniflow thread some months back,tried to locate it but it seems to
have got burried...
Nobody can identify a strong trending day before the day starts...but as the day's market action
progresses, it can be identified with fair accuracy. Some of the tell-a-tale signs of strong up
trending day are as under : Mirror image for down trending day.
1) Strong up day starts near the bottom of the day's range and closes near the top of the range
both within bottom/top 20%. This means that the market does not retrace much after opening
and quickly gets down to its business.
2) Strong up days are made of 1-2 Wide Range Bars ( WRBs)with large volumes.
3) In up trending day the rallies will be have more volumes than declining bars.
4) In uptrending day, there are no frequent reversals.
5) Market overall is strong and broadbased meaning there is strong move in many
stocks/indices.
6) In uptrend day market does not retrace much....retracements are small and market gains the
retraced ground fast.It is my thumb rule that if the market in-between retraces more than 25
points in Nifty Futures from its intraday top,chances of strong up day are remote.
7) In strong up day market gallops after 2:00 -2:30....and rises very fast from 2:45 to 3:10....and
may retrace some ground gained afterwards.
We daytraders must have some large trend days on our side ,where holding till end and adding
on every dip is all we need to do , to keep us on winning side.
Best wishes,
Smart_trade
Nice explanation by ST da ...which is we using here
Quote:
Hi ST Sir & other fellow traders

I have some queries related to Price action
1) I understand trend & I have decided also on what direction should I trade..Suppose I have
decided I will take short..so i wait pullback to enter?but how do we know that pull back has
finished..like will it be one leg pull back or 2 leg pullback..will it be simple pullback or
complex..
as trend was bear & I wait a pullback rally..so I Can just notice when price gets weak in rally & i
enter..& then sometime it happens..rally go 1 more leg & then comes down in my direction..so
My sl hit & loss & then next trade, I couldnt take due to fear..
despite most of the times right about trend, I couldnt get right entry at right time..how to solve
that
2) when price touches support & resistance, how do we know will it sustain that or not ..example
if price goes down & stops at resistance..so how do we judge that will it takes support there or
will it break..what price action should we there to decide?
kindly solve this problem..I know those decison comes with practice & have to use
discreation..but can we make some price action rules or price action patterns there which can
help in taking more objective decision
Thanks
Quote:
1) Here we take trades in the direction of the visual trend. In your question the visual trend was
down. If there is no corrective rally, we short the immediate next mpl. But we get a minor
uptrend in the form of a corrective rally.We are looking for a place to short. The minor uptrend
we are in will have few mpl and mph. We short the highest mpl and keep a stoploss of the
immediate mph. The very fact that mpl is cracked means that we are now in minor downtrend.
This will result in only 2 situations one is that the corrective rally is over and the visual
downtrend is manifesting itself in which case we have shorted at highest mpl in the corrective
minor uptrend.
The second possibility is the market will do a minor downtrend and will go up again to make a
higher VPH in which case our short position will be liquidated on stoploss as now we are in
some kind of visual uptrend.
The above does not apply in sideways range markets.
2) When market comes to a support/ resistance level, we have to see the type of bars it prints. If
it is printing small up/down bars and going sideways, there is a possibility of breaking of that
level. But if it is snapping back from that level strongly, that means the level is holding so we
take our profits and wait for the crack of another mpl to start a fresh trade. Sometimes the market
will break that level and then go back above the PL it broke ( in the form of failure ) in which
case we book profits. But if the breakdown is on a strong bar with good volume, that means that
the support has been broken ...then we look for adding in our short positions as we are expecting
the downmove to accelerate.
The above is fairly objective way of trading,with reasoning and not hunch for our trading
actions.
Smart_trade
Re: General Trading Chat
Quote:
Originally Posted by niftytaurus

hi friends
RBI day..trading is stopped..Going through some old charts..& I found a gem from ST DA in My
collection..I am posting that chart
972x608.
St da can you tell me what are the pivots on you are putting entry& exit/sl & tsl..its minor pivot
or visual pivot..When I read the text with that chart..it shows me just pivot high & pivot low..so
please specify
besides, what are those red slanting lines..are the trendlines or some other lines?
thanks
You will see that I have taken all trades on mpls in direction of visual trends. The stoploss is not
always at opposite pivots. Profit booking is done more aggressively here when the market looked
halting the move ,profit is taken, market making small bars in sideways move the profit is taken,
ERLs used for profit taking and reversing.. We have re-entered also.Stoploss at the low of entry
bar also in some cases. The idea is exit the trade fast if it is not working out in our favour and
stay put when it is going in our favour.
The red lines are trendlines and also lines showing downwards sloping wedge.
Smart_trade
RBI NEWS Day Volatile Trading
Quote:
Originally Posted by SwagatN

ST Sir, Today it was difficult for me to trade as too many ups and downs.. Was all the ups and
down moves catchable ?? I am posting my trades marked here.. PLz comment on any missing
opportunity and areas to improve..
1280x588.
and plz guide me on exit strategy.. many times i am giving away profits to market
Another things, I found that following the visual trend difficult today.. but i followed your advice
for trading the boundary in case of range.. Is it right to draw the widening range here.. That was
my logic for short at upper boundary..
News events days such as RBI policy, Budget,Company results etc are days in which the market
gives both side moves. Such days are very volatile with large swings. But these days are like a
street fight....we cannot keep thinking which punch to use on the opponent we have to be quick
in thinking and fast in actions.
When you have a steep fall, and the market reverses on the upside that time we cannot wait for
visual trend to change....by the time it changes, the move will be over. Such moves are to be
traded on minor pivots on both sides and tight stoploss.Such days dont give many pivot entries.
Ideal entries on such days are small sideways move and breakout...small pause and the move
resumes and we have to use such entries on a day like today. Waiting for pivots is a luxury we
cannot afford on such days.
Today both the moves were tradable....but any amount of chart posting and explaining will not
help as market will throw new challenges at us every time.No 2 days are identical. Each trader
has to study the chart and figure out how he could have traded both these moves.
Today was no trend but a high volatility day and here trends wont help. But even if one could
catch one side move,it is still pretty good. The market today took the support and resistance at 2
days VAL/VAH.
We can book part position at some important points...like today I went long on upward reversal
and booked part profits at VWAP line ( it gave me 45 points from my entry and I was happy for
part booking....the market went above that but part booking gives comfort and then we can hold
the remaining position for larger gains.

Smart Trade - ST Da'S Posts

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SMART TRADE ST DAs Posts

This is where most traders fail.....they start with acquiring knowledge,read

I am not a regular scalper...but thought of sharing few points here...

Hope I am able to add some value to your thought process....

Trade in the direction of trend on higher timeframe

GAME OF WINNING AND LOOSING

To take a trade or Wait for some more time...........

2) I need a different tweak to this method.......

4) I should have waited for it to be more clear......

Click this bar to view the small image.

3) Trade on sideways market indicators, oscillators, Bollinger bands extremes etc

Click this bar to view the small image.

Click this bar to view the small image.

1) Identify a Pivot high on the chart ( marked as PH )

On 2-6-2011 we had following distribution of trades :

Is there a perfect system/method known to some one or hidden somewhere ??

Re: Thoughts on Day/Swing Trading

Click this bar to view the small image.

3) Take antitrend trades when the psychology of market participants is likely to be in

SET UPs and TDSTs

B.SELL SET UP ( Set up leading to a sell signal )

This is a mirror image of buy set up.....

The following points are to be remembered in case of set ups :

Re: Thoughts on Day/Swing Trading

This is where most traders fail.....they start with acquiring knowledge,read

Scaling in and out of timeframes

Click this bar to view the small image.

Larry Connors on Advanced Trading Strategies

THE 8-DAY HIGH/LOW REVERSAL METHOD:

Market Reaction to News

Originally Posted by balasoft80

Click this bar to view the small image.

6th January 2012, 10:03 PM

Join Date: Apr 2008

Location: On the internet

Re: Thoughts on Day/Swing Trading

Trading is simple...we traders make it too complicated......

Originally Posted by NTrader42

Good trades, NTrader...

just taking my post forward..

Trend and VWAP

7) TD POQ and Oscillators

8) TD Open,TD Trap,TD Clop and TD Clopwin.....

The above I find are the best of DeMark.

PLOT ADX(14) ON CHART FOR YOUR CURRENCY PAIR.

2)ADX is above 30 - USE TREND FOLLOWING SYSTEM(MOVING AVERAGE,MACD ETC.)

3)ADX is at 45 or above it - BOOK PROFITS.(Wait for new entry)

Thoughts on Day/Swing Trading

More on TOM Demark

2) Candlestick patterns, implication of each candle on the price chart.

4) Reward/risk equation in trading...concept of position sizing, % of trading capital to be risked on any

Best wishes for your success ...

Thoughts on Day/Swing Trading - Trends

Can Options buyers Make Money ?

Trading Parabollic / verticle Moves

Originally Posted by mangup

Originally Posted by Smart_trade

I have posted Tata Motors Futures 15 min chart.

4) Market goes into a sideways zone....

Re: Thoughts on Day/Swing Trading

NIFTY Fut 30 min chart

1) An uptrend on daily timeframe, and some sideways movement and a breakout/breakdown

2) Market trading above important level/pivot...