interpretation of chart timelines

1 day tick chart=super trend

1 hour tick chart=trend (positional)

15min tick chart=trade (swing)*

5 min tick chart=time**

1 min tick chart=timing***

* indicates what trade is coming or is being played out

** best for trade trigger

*** for exact timing

every lower chart is the advisor of the higher chart

every higher chart is the guide and master of the lower chart

mind frozen in strategy

whatever it does, market tires you. that is it's objective. and that exactly should be a trader's objective....to duck that.

it is a mind game to snatch each other's money.....even make others surrender theirs.....dirty mind game....that's all it is...

so, never trade with mind

trade with system

a trading system is a mind frozen in a strategy.

-

those who say timing is not important mean to say that they are finding it difficult to time. timing is important. and wherever, timing is difficult, approximate timing is the next important thing.

you can't buy anything anytime without consequences.

bat with a lose grip

gullible traders tend to believe what they want to believe! 

we must trade with a lose grip at the trading handle. 

holding the handle makes us ready and aligns us roughly. 

the rest should be left to be decided by the market cherry. 

this way, trading is slightly different from batting in cricket.

in cricket, u decide where u want to hit the ball. in trading, be ready with the bat, align ur body roughly and let the ball decide where it should be hit!

dilemma of timing the trade

timing the entry in a trade is one of the most challenging things.

but this question is the second question.

the first question is deciding the direction to trade.

once the first question is answered and decided, then comes the second question - that of the right time.

just like anti-terrorist commandoes are told to aim at centre of the forehead.

but during action time, specially during chaos, many a times, it is difficult to pick the centre point to shoot.

the target is moving and you are under stress,besides the atmospheric "noise"

at that time, it is more important to shoot and "hit somewhere" than waiting to lock the centre of the forehead.

sometimes, practically speaking, it is more important to shoot and hit somewhere than to shoot only at the perfect spot.

similarly, many a times, in trading, timing is important but absolute perfect timing remains a mirage!

when you have done your homework and spotted a target

shoot at the best available spot and not keep waiting looking for the absolute best universal spot.

inertia and indecisiveness kills both the soldier as well as a trader.

however, i must end with a note of caution.

eagerness to shoot is different from the concern not to miss the bus.

if it is eagerness, you are likely to be wrong.

but if it is a question of not being able to decide the exact point of shot while being reasonably sure of the target subject, your chances of being right are good.

which chart timeline to see and when

there are generally the following timescales in charts i see
- 5 year chart with 1week least count (tick size)
- 1 year chart with 1day tick
- 1 month chart with 30minute tick
- 5 day chart with 5min tick
- 1 day chart with 2min tick

5 year chart is for overall general viewpoint and not of very much practical value except for investors.

1 year chart is very good for positional traders who take monthly positions

1 month chart is best for swing traders who take positions for a few days

5 day chart is best for intraday or 1-2 days only

1 day chart is only for finding the exact timing for intraday.

just like the maxim "boss is always right"
if the smaller timeframe chart doesn't work
look at the outer timeframe chart fort he answer.


these array of chart timelines are just like the optical zoom in your SLR.

2x, 4x, 8x, 16x, 32x, 64x, 128x zoom
the more closely you want to see.....zoom in
and farther and broader you want to see......zoom out


never follow any son chart blindly without crosschecking the permission of the daddy chart.

trading options without worrying about time decay!

options are blessings for the traders who want to trade with controlled risk.
unlike futures, options have limited risk.

but they have a serious problem
- time decay!

their premium value decays as expiry comes closer!

i always wondered if there was any way to bypass this severe limitation.

hedging a bought option with writing another was, somehow,
not a very lucrative and convincing way.

but recently i came out with a simple but effective way
to over this disadvantage.

i noticed
that 80% of the price movement
happens in 20% of the time.

the operators use the rest of time
to accumulate or distribute
within a range
thus "wasting precious time of traders"!

how about if could take a position in options
just when the price "aeroplane" is about to take off?

why take the seat while it may keep standing
at the tarmac for a few hours or even days?

this way one can use options till the last day of expiry!!!

with this idea under my belt
all i had to do was
search for probable signals
when the price is about to move big
besides the signals
when the meat of the price movement has happened
and it may enter the phase of consolidation.

i did it with rsi and william%r.
one can do this
with any indicators of choice.

what do we do for the rest of the time?

well,
we remain in the departure lounge
watch tv, read magazine, eat popcorn and sip a cola
imported from the nation of the operators!

eyepiece, trigger, shoulder and head

"use eyepiece on the gun to aim

use the trigger to shoot

stabilize the gun with your shoulder

keep your head cool and calm"

the shooting trainer told the cadets!

--

the above message

after translation

is equally valid

for a trading cadet

"use 1-month chart to aim

use 1-day chart to shoot

stabilize the trade with the shoulder of method

keep your head cool and calm"

right time to shoot

the 107 year old

96km long

serpentile

narrow gauge toy-train railway line

from kalka

to shimla

passes thru 103 tunnels

(only 102 are in actual use now).

the longest being 1.14km long.

--

the journey in this toy-train

is like travelling to heavens

while still alive!

--

over the clouds

under the clouds

over the bridges

under the bridges

into the tunnels

and out of them!

--

it is as much pleasure travelling in this train

as is there

in shooting it

with a powerful

camera

like a nikon d7000!

--

but obviously

you can't normally shoot it

inside the tunnel!

you've got to shoot it

only when it out of the tunnel!

(just like you can't take an aim at the market

inside the "overnight" tunnel!

you have to wait till it "comes out"

in the morning at the opening bell!)

--

to shoot the heavenly train

(with a camera)

you have to wait till it comes out of

one of the 103 tunnels!

even then

it is not easy to shoot it!

some times

it is behind mountains

while at other times

it gets hidden behind

cluster of deodars and pines.

at times

it vanishes in the folds of the valley!

--

you have to wait for

the suitable opportunity

to shoot

that great photo!

just like

you have to wait

for that correct opportunity

to shoot

that trade!

otherwise

while wasted photo in a digital slr

costs nothing more than a sigh,

a wasted trade in the market

costs something

even to professional

shooters!

kalka-howrah mail - 2

the youngman soon became a successful trader!

after a few months

he visited delhi

for some official work.

in the evening

after getting free

he took a taxi

to the newdelhi railway station.

--

on reaching the station

he jumped out of the car

without paying!

"just wait here and take care of my luggage, we need to go further!" he said to the taxi driver

and then quickly rushed inside the station

leaving his suitcase

and the bewildered driver

behind!

--

inside

he went straigt to the ticket counter

bought the "multi-purpose any-train-on-the-route ticket"

came out

sat in the taxi again

and politely ordered

"pl take me to the underbridge 3 kilometers ahead!"

the taxi driver gave a strange look to the youngman

started the taxi

and reluctantly did what he was told!

--

the driver stopped the taxi

under the bridge 3km ahead of the station!

the youngman was happy

the driver was confused!

--

the guy paid the fare

thanked the driver

picked his suitcase

went under the bridge

and stood beside

a dozen railway tracks

under the railway signal pillars!

--

the taxi driver

was still there!

he wanted to doublecheck

what the suspicious youngman was upto!

and then

what he saw

made his eyes pop out of the sockets

in sheer disbelief!

--

a train came

stopped in front of the youngman.

the youngman looked for his coach

climbed in

took his seat

looked out of the window

and waved at the taxi driver!!!

--

the train again started after a few minutes

and picked up pace!

the lad took out his cellphone

and called home

"mom! i've got the train! on time!!"

"don't catch the wrong one this time, son!" mom replied jokingly!

"this time it is the right one!!"

"has it left the station?" she asked again

"it must have left sometime ago, mom!"

"what do you mean?" the shocked mom asked

"i caught it in-between!"

"good lord! what do you mean by 'in-between'?"

"mom, i always noticed that all trains stop at the subzi-mandi rail lights after moving out of new-delhi railway station. every train has to make way for the next train approaching the platform irrespective of whether the line ahead is clear or not! many times, it isn't. almost all trains move out the station but pause at these lights under the subzimandi bridge till they turn green! i came till here on taxi and didn't have to wait much!"

"didn't you feel awkward?"

"no, mom! not at all! i do this every day in my stock trading!"

"how!?"

"everytime a stock moves out of a range platform i always notice that it pauses and retreats a bit after moving out to some distance. it makes a higher low or lower high and then zooms ahead! i always enter the trade at that time, mom! this way, i am always in the right trade at the right time!"

high probability turning points

from my experience i have seen that price has high probability of turning at the following
signals:

level 1 signal: william%r reaches extreme, rsi still away

level 2 signal: william%r stays at extreme, rsi reaches extreme

level 3 signal: william%r and rsi together reach extreme

only a very powerful rally can bulldoze all these three levels of signals.

this information can be used to trade at specific points with stop loss.

just make sure that both rsi as well as william%r are of same duration

e.g. if u r taking rsi(14) then william(14) should be taken

and if u r taking rsi (10) then william(10) should be taken

also, same duration chart is to be taken, whether 1 month or 1 year or 5 days etc.

Don't overpay!

One of the best nifty options to buy is

the option which is 200 points (3-4%) "out-of-money"

in the direction suggested by the rsi!

But what should you pay for it?

From my experience, I feel that 15 is a good price to buy!

If it is much more, it is costly.

If it is cheaper, it is a steal!

e.g. the spot (underlying) nifty price after today's close is 5988.

RSI is suggesting imminent upmove.

6200 CE (around 200 out-of-money) is available at 12.

This is a mouth-watering bargain.

Any trader buying this is likely to double, tripple or quadruple (even more) his investment in a few sessions.

Only two cautions:

1. the option you buy should be favourable to rsi's stance.

2. expiry should be atleast 5 days away.

Gone with the wind!

Option trading is like a sailboat!

You don't need to move it.

You don't need to do something.

You don't need to do anything.

All it expects from you is

predict when the wind will flow

and in which direction!

Till then just sit and enjoy the sun!

Winds do move.

And when they move, they don't change direction too frequently!

So,just raise the sail

turn its face in the line of the wind

lock the sail

and enjoy fishing!

"Go get the prize!"

A great hunter's hunter son returned home in the evening

after a day out in the deep jungle......hunting

dejected and tired!

"Why are you empty handed, son?" proud hunter father asked his talented hunter son.

The son remained silent.

"Tell me, son? Did you go for hunting today?"

The son nodded in affirmation.

"Is your gun OK?"

"Yes,Dad!"

"Did u have the ammunition? Was the powder dry?"

"Yes, Dad!"

"Was the weather OK?"

"Yes!"

"Did u find the animals?"

"Yes, Dad! Many of them?"

"Then, son, what happened?"

"Dad, When I aimed at a moving deer and was about to pull the trigger,

I saw another dear closer to the first one and moving slower!

The second dear appeared more lucrative target

so I changed the aim to this second deer.

I was about to shoot when this deer changed its speed

just then I saw another deer which was not moving.

So I thought it prudent to target this stationary one.

I changed the aim and just then the deer starting running.

I chased my gun's barrel in his direction when I saw another deer who seemed an easier target.

I pointed my gun on this one but just in the nook of time he moved behind a bush!

All day, Dad, I kept aiming but never got the chance!"

"We will go together for hunting tomorrow, Son! Now come and have dinner!"

The next morning the father and the son got up early.

Father picked up his 1920 vintage double barrel rifle and wore his lucky hunter shoes.

"Why don't you take your best gun, Dad?"

"You hunt your best with mind, not with gun, Son"

They went deep into the jungle.

The son spotted a deer!

"Over there, Dad." he whispered to his Dad

The father aimed.

The deer sensed the danger and started running.

Deers around that deer also started moving.

The father kept his aim on the marked deer and ignored all in the foreground.

Locked the target

and pulled the trigger.

The deer turned in a flash.

The bullet missed the deer.

Father kept his eye on the running deer in the target eyepiece of the rifle.

And pulled the trigger for the second time.

"Go get the prize, son! It's over there near the rock!"

how to tell how long will the rally continue?

An up rally will continue till the priceline cuts the SMA 34 line in 1 month chart from above.

A down rally will continue till the priceline cuts the SMA 34 line in 1 month chart from below.

After that, the priceline may again cross back the SMA 34 line but the bulk of the rally is done. Also, the rally is definitely not over till SMA 34 line is cut!

56 and counting...

In 2004 Bollywood hit "Ab Tak Chhappan (56 and counting)"

Mumbai Police Inspector ("Encounter Specialist") Sadhu Agashe (played by Nana Patekar) says

"When we have information, we kill criminals

When we don't have information, we kill time!"

I have made this my trading credo line

"When we have got signal, we make the killing (proverb for profiting)

When we don't have signal, we kill time!"

no time for loss!

It is wrong to read someone's personal diary.

But I accidently committed this mistake.

I read my own diary which I had written 2 years ago.

Here, I am reading one page aloud

"24th July 2007

Today, I didn't wait for the right opportunity

Because I was in a hurry to profit!

But I lost.

So, my impatience for profit turned out to be as if I was in a hurry to lose!

Now, I have decided to wait for the right opportunity.

I, hereby, give profit plenty of time!

because I have no time for loss!"

Time the trades, not the investments

Have you driven on a 6-lane Expressway?

It is 3+3 lane highway.

L1 : L2 : L3 ::: R3 : R2 : R1

The left three lanes L1,L2,L3 and the right three lanes R3,R2,R1

L1,L2,L3 take the traffic to that side.

R3,R2,R1 are bringing the traffic to this side.

Vehicles on L3 & R3 are moving at fastest speed,

those on L2 & R2 are slower

while those on outer lanes L1 & R1 are moving the slowest.

Markets & Business-world in any country is also like a 6-lane expressway!

There are some companies growing and moving ahead at breathtaking speed

Others are growing at decent speed

Still others are growing but slowly.

Similarly, there are companies on the right side lanes also!

Some are stagnating, some are de-growing, some are slipping fast!

The beauty is - None of the 6-lanes is ever empty!

There are always newer and newer companies on all the highways.

Majority of them keep changing lanes.

Faster to slower to medium to faster......!

Back to forth to back to forth.......!!

Change is inevitable.

Every company going from Ahmedabad to Mumbai on the Expressway has to come back some day!!!

Atleast it has to change the lane to make way for younger and more relevant companies!

The Highway is alive! Always! 24x7x365 !!!

So, how to time investing into these companies?

Companied growing fast will continute to grow even when times are bad! At worst, their speed will slow down a bit!

Companies who are already on the "return-journey" will not reverse just because the economy and market are booming!

-------------------

Though late, finally I have got it right.

Trades should be timed, not the investments!

(When i say don't time the investment, I don't mean buy anything anytime. What i mean is if you see a great fundamentals' company at mouth-watering price, don't look at the watch!)

All the internet, print and electronic media

is cluttered with myths, confusion and misinformation about timing the market.

On one hand everyone is busy trying to learn to time the market or stock

with the help of bag-full of technical indicators,

on the other hand everyone has been mindlessly chirping

"Never try to time the market"

I have realised that short to medium term trading can be timed to reasonable accuracy with indicators but companies ready to take-off due to fundamental strength don't wait for the indicators to turn green.

So, trades should and must be timed

Investments - never!!!

Some businesses make a killing even when "the markets are down"!

Great investments are not done while looking at the clock.

As Warren Buffet says " As far as I am concerned the stock market doesn't exist. It is there only as a reference to see if anybody is offering to anything foolish."

As Peter Lynch says " I don't believe in predicting markets. I believe in buying great companies - especially companies that are undervalued and/or underappreciated."

Be punctual ! Use Watch !

When the market is going down
=We buy it, fearing it will move up and leave us behind.

When the market keeps going down
=We square off, fearing it may keep going down.

When the market starts going up
=We fear it will start falling again, so we keep out

When the market keeps going up
=We say "now it is surely going to fall" so we should stay away

When the market has gone up
=We say "we should have traded"

When the market doesn't stop going up
=We jump in!!!

When the market, then, stops going up and turns
=We ignore the turn and turn our back to the the fact

When the market starts going down
=We "expect" it to turn around again and "give" us "profit", we hold on

When the market has fallen a lot
=We square off!!!

Moral of the story :

Be punctual! Use watch (indicator)!

The Good,the Not-so-bad & the Ugly timing

They say you can't and shouldn't time the market.

But they don't tell you that although you can't "time the market", you can "time the trend"

Also, good timing is better than no timing.

And no timing is better than bad timing.

It is sad that most traders have bad "trend timing".

As someone rightly said, "Don't be an eleven o'clock bull or a five o'clock bear."

So, never be misled by the statement that "never try to time the market".

Time the trend with your trading method.

Many unsuspecting retail traders mistake "never try to time the market" statement as a license to trade at "any" time.

And they get trapped!

That is sheer bad timing.

You can time the trend of the market to very high level of approximation.

Only a few point inaccuracy this way that way is left.

RSI exhaustion is one of the best ways to time the market.

MACD, 34/8, Base line theory etc. are some of the most useful tools for timing the market.

Often traders use emotions rather than technical indicators to "time" the market.

Often traders hang on till they can emotionally withstand the market pressures. Then they throw in the towel irrespective of the trend-timing.

This is known as "I-can't-stand-it-anymore" timing system.

It relies on emotional reactions to market fluctuations. And, needless to say, this is the virus responsible for majority of trader ailments.

So, forget what they say.

Just "time the trend" with technical indicators.

Do u have this money plant at home!

Scindapsus aureus or Money plant

Among the plants that you needn't pamper!

No watering or regular monitoring required. Just leave it.

Thrives with the minimum of fuss.

Adds to greenery!

Also, In olden day the money plant kept in the house/backyard/courtyard was believed to bring the goddess of wealth to the house with prosperity ,wealth etc. following her.

This led to the plant being called as a money-bringing plant (money plant).

There is a money plant in stock market as well.

Its scientific name is

"Nifty Futures"

Just plant it when RSI 14/1d on 3 month chart is exhausted near the lower wall of 30-0.

That is all!

Historically, it has been seen to keep growing for next 2-4 months by 300-600.

No watering or regular monitoring required. Just leave it. Just like the money plant!

Every morning don't put an alarm in your mobile phone to wake up.

Instead, everyday you will be woken up by an sms from your bank informing that so and so amount has been credited to your account for the previous day's gain in nifty.

All you have to do is

- Keep replacing the water (carry forward to the next series on expiry day, if required)

- Discard the old plant (book profit) when the RSI 14/1d on 3 month chart has exhausted near the upper wall of 100-70.

- Wait for planting the next one.

The latest Nifty money plant was planted on 10 Feb 2010 and is likely to continue growing (without any fuss) till April'10 end or May'10.

Similarly, previous to this one, the Nifty moneyplant was planted from 4 nov'09 to 19 Jan'10.

Shubh Labh!

Keep a Money plant!