indirect way of knowing the trend

can't spot or be sure of the start of the trend? 

don't worry....look for the end of the previous trend. 

new trends start only after the end of the previous one. 

this reverse way to looking for a new trend (with stoploss, ofcourse) is the alternative and less erroneous way of finding a new trend.

how to know the trend?

well, you eyes tell you

still, if you want to check it with some method, here is the one i use

assume there are 4 chart timelines

1) 1 min chart= child

2) 5 min chart = father

3) 15 min chart = grandfather

4) 30 min chart = great grandfather

the trend of the more aged is the trend.

eg if 1 min child chart sma trend is up and 5 min father chart sma trend is down, it is most likely a down trend, a sell on rise trend, for short or immediate term, atleast

sma trend means = whether price is above or below sma, whether smaller sma is higher or lower than larger sma. eg. if 15 sma is below 50 sma, trend is down.

checking of the higher generation sma trend is a good way of checking the trend. 

take trade timed by smaller generation chart but in line with the trend of the higher generation sma

taking trade pro-trend is less risky than against trend.

broom bundle of stocks in bull trend

 suppose we buy 30 stocks. on the day of buying they are like a bundle of sticks tied with a string.

while we often wish that the stocks in the bundle will go this way👇

we fear the stocks actually going opposite way with falling market

but that is a baseless fear which often prompts an investor into wrong actions or unnecessary anxiety

because in reality, it is often seen that the bundle of stocks behave like a broom.

all stocks going in their way depending upon their merit.

all a trader has to do is to try to pick only those stocks where the chances of all stocks/sticks in one direction (up) are higher

In fact,  even if market (index) dips, it momentary disturbs/ distorts the good stocks which again come back to their original track

Something like this

Pick good stocks in bull trend and don't worry about the broader index

Just because the world is going to hell doesn't mean good people and stocks are not living in heaven already. They are merrily marching to happiness and wealth

Maybe she can see something which you can’t...

One of the oldest cliché we used to listen more than a decade ago when we got serious about trading was

Trend is your friend. 

We underestimated the value of friends for so long. 

Just because you lose because of friends for some time doesn’t mean he’s not worth gold in remaining times.  

To be with the trend requires little brains and big guts.

If you can’t be with 1 minute chart trend, befriend 5 minute trend. If not 5 then 15 or 30 or 60 minute trend. But, for heavens sake, trust friend in market. Don’t leave his her hand.

Maybe he she can see something which you can’t...

the bad ATM dilemma

I am once again amused by the unwillingness of overwhelming number of traders to accept the long rally in the market. they are repeatedly taking anti trend positions and being bleeded.

This reminds me of a very interesting psychological phenomenon...

Suppose you are standing in front of an atm machine late evening and swipe card for 1000rs. Now let's consider a scenario that the atm machine goes bad and keeps vending currency note after note after note and doesn't stop. It counts 1000 and throws them out. Then again counts 1000 more and throws out...

What will be your reaction? What will you do?

Chances are you'll soon call someone and point it out to authorities instead of just collecting all and vanishing. Because that's the way you are groomed. Both fear of punishment and moral hand brakes will keep you in check. 

Same mindset and habit spills over to trading. When market whipsaws and beats you, you accept it like a victim accepts his torment. But when a trending market gives you profit and keeps giving you profit with insanity of a bad atm machine, you feel guilty in your subconscious and don't believe it. You feel so uncomfortable that in hearts of hearts wish that it ends.

the sheep lion

any trend in the world obeys this maxim....."trend ki jaan bahut mushqil se nikalti ha".....lemme share some examples...                      

: habits are nothing but trend....try changing a habit trend....it's v difficult                      

: relationships are trends.....try changing them....                      

: poverty, individual or that of a group, like country....                      

: a bad patch of a batsman...a dream run....                      

: winters.....summers......rains.....                      

: re-monetization after de-monetization is a trend.....                      

: corruption is a trend.....                      

: u can always safely bet along the trend......                      

: the decline of a crude oil prices will take as much time as was taken by it's rise!!!                      

: "bhed chaal" is good in trading but not "unanimity"                      

: hero honda (ouch....hero motocorp is riding on the splendor trend)....                      

: hillary clinton's "image""baggage" was a trend....                      

: modi wave was a trend.....a powerful one...all opposition leaders (shorters) are realizing it....

: obesity

: AAP was a trend which remained for a long time till it faded....                      

: ride waves and trends....be smart, a bit less brave......

======

anyone's trading results can dramatically change with just 2 steps......                      

: 1. reducing the trade size to the point of sound sleep despite adverse movement                      

: 2. go with the trend, almost like a dumb trader.....                      

======

little surprise that all intelligent guys and gals like engineers, doctors, CAs, bla bla are all shamed in stock market till they agree to be a sheep who has dropped all ambition to be a lion warrior. that sheep becomes the defacto lion, finally.

those who fear going with the trend should try gambling with v small amount pro the trend.....

the road and the round about

a trend is a trend

it is a road and not a round about, well mostly.

but u can't know when (80% of the time) it is road and when (20% of the time, approx) it is a turn/round about.

this causes the number one and fundamental mistake traders world over succumb to and suffer from.

"distrust the trend; always fear the sudden end of it"

this is wrong...trend is a friend and not a foe looking for chances or devising ways to kill you.

it is all in your own head.

u take a trading position much bigger than ur peace of mind resulting in non-stop hallucinations that the trend is going to turn!

trend, whenever present, is blind and deaf.

it doesn't know ur position, only the position of the masses, which it is rarely against till atleast the pigs are fat enough to its liking.

trend can't see ur position nor can it hear ur pounding heartbeats.

it is not threatening u. u urself are full to the brim with fear.

u r ur no. 1 enemy.

congratulations, u urself are the pseudo-operator against the sheep "u"

u are so full of fear like a pigeon that even the mischievous shadow of the operator cat is enough to pack u flying...

a trader has to admit and understand that if he keeps applying a sensible simple system time after time after time, then he will correctly get the trend road 80% of the time and the round about for the rest.

the loss at the bends shouldn't scare you from recognizing, acknowledging and trusting the road.

ur first handicap is that u don't have some tool to identify a trend.

if u have one, u take too big a position.

if not, then even one loss is enough to freeze ur confidence for several days thereby making u fire in all directions in the dark while being blind-folded.

on the contrary, if u keep trusting the trend and keep taking the trade IN THE DIRECTION of the trend, then u will be stabbed in the back only 2 to 3 (or max 4) times (on an average) out of 10, approximately.

those who don't trust, go crazy...

they can't take the market from levels to levels without trends. trens have got to be there and will always be there albeit with every effort to be there sans u.

unusable wisdom

"Significance of Trend-line is function of its length, number of times it has been tested (touched) and the angle of ascent of descent."

my view =

but nobody tells you that you won't come to know how much is too much and after how many bluffs the so called range or trend line will break.

so this "wisdom" is un usable and is a mere witchcraft for witch hunting.

I've seen innumerable sheeps getting slaughtered in this maze.

Levels and trendlines are highly subjective.

Everyone has one unique. All those add to the uncertainty nervousness of an already shaky trader.

Stop loss concept has its roots in levels and trend lines, and hence form favourite baits of operators.

the non-believers

no doubt the markets (in this nervous but sharp up rally) may soon fall.....

no doubt their may be macro dark clouds gathering around.....

but the rain may not start for quite a few days. till then what to do?

surrender meekly for the (reversal) trouble which hasn't come as yet and which may still be as far away as next week?

staying on course till the red light is what is the essence of positional/swing trading. otherwise, reversal fear starts the moment the last reversal happened.

we start fearing the longs the moment down rally ends.

distrust is in the blood of every am-trader which needs to be filtered out with the kidneys of guts and sense. otherwise, a trader will only remain spinning and keep bleeding.

if the markets start falling now, i bet many will again start disbelieving it soon and will start "waiting" for the "reversal" again, waiting to "go" long.

the markets are not unbelievable. we are non-believers.

why not?

one of my friends just asked me...if while going up from 7191, 7060 plus minus is so evident....which is a good 150 points down...why don't u go short for it??.........

my answer (just to share with allfrienfriends)

One, because I avoid anti trend trade.

Second, it is not for sure.

Third, if it does dip to that I can buy double to gain as much as it comes up again

how to day trade

dear Chandrakantji,

u have asked

"may I know strategy for intraday with single indicater or minimum indicaters?"

--

ur query gives me an opportunity to rethink, after a long time, a credible way to day trade, if i have to.

--

if i have to day trade, i would prefer to trade the following way

- a strong stock in nifty uptrend, or a weak stock in  nifty downtrend....at their respective pullbacks in their respective directions. i will not day trade in stocks which are duds. only those with strength (or weakness) should be touched for day trading. lithargic, sick, indisciplined, moody horses not for day trading! this reduces the risk tremendously. also, i will never buy a strong stock in weak market OR short a weak stock in strong market.

- for this, i would have to be sure about the nifty trend. once that is done, half the homework is done. all that is left thereafter is to spot the strong (or weak, as the case of the market may be) stock.

- i would shortlist a few indicators - 2 or 3, to act as markers for entering and exiting the trade. e.g. one can ne sma crossovers, the second being rsi and the third being (fibo) pullbacks (higher lows or lower highs as the case may be)

- i would trade with strict pre-defined stop losses.

- would trade high volumes (small rides never mind).

- would exit in steps (and enter that way also).

- would have a sound low brokerage broker.

- would have lightening fast assured net/broadband connections

- will never take stakes more than 5% of the money in my trading account, even if that means it will take me 50 years to be a millionaire. (because i know there is something called compounding effect which will take care of the things later on)

- i will have good software (even if it is a free one called google finance)

- i will keep god out of trading and not blackmail him. (god helps those traders who help themselves)

- i will be ruthless in stop losses and methodical in profit booking.

- i will treat the loss, if resulted after following the above rules, as the unavoidable, expected and healthy cost of trading.

- i will not spend the profit but keep 50% in buffer fund and 50% ploughback for the next trade.

- i will not trade just because i want to. i will trade only if and when there is one, as per the written-down well-defined carefully selected method.

- i will not trade if i am excited or depressed or nervous or threatened or happy or sad or under any influence.

- i will not count my profit or loss. i will keep trading as per the method. i will remain living a decent frugal life i have always been living. 

beauty of being pro-trend

dear dhiraj,

yes, no change in the uptrend, though the trend has paused (rather locked!)

at such points, trend can be considered neutral (neither up nor down), yet i am long (and saying that uptrend is hidden) because of certain parameters discussed above. 

markets may slip down sharp but that will be temporary. those who are in the bus since 8000 or 8100 or 8200 won't mind any such hiccups. for others, any volatility might be a cause of anxious moments testing nerves.

the earlier u catch the trend, safer it is. but, at times, u have no option but to get on to the trend in between (even near the last leg). in those cases, u have to have good holding capacity and cool like a poker player.

however, in my opinion, those who take pro-trend position even at later stages or with terrible timings, rarely lose big!

that's the beauty of being pro-trend.

vice-versa is also, true. those who take anti-trend position even at best times, rarely make big profit! 

catching the missed train

- entering trade midway is risky, till there is a pullback. pullbacks are the least risky points to enter the train who couldn't at the platforms.

- it is least risky to enter at the appearance of the signal. entering in-between (once the trend has started) is quite risky as market may retreat/pullback or trend may reverse prematurely. entering immediately at the signal gives lot of safety cushion. often, i have got away "rate to rate". earlier used to think "let the trend get established and then will enter." not correct!

trading is essentially answers to these 3 questions!

for me trading is essentially answer to 3 questions:-

1. is there a trade?

= should i trade or should i stay out?

2. which direction?

= if there is a trade, judging the direction is the next question. finding the trend, knowing which way the market is or about to move is the single most important decision. this is decisive! this is the heart of the trading. it took me years to get this right. once this step is right, rest is fine tuning, though therein lies the efficiency of the trade.

3. what quantity?

= this decision, answer to this question, decides the effectiveness / efficiency of the second decision above. not all situations are to be traded with same quantity. you have to enter and exit in steps. u have to commit the stake depending upon the probability, risk. u have to hold some cards for the contingency!

once the answer to first and second question are settled, all i am left to do is keep adjusting and managing the third one. i have to keep reducing or increasing or monitoring the magnitude of my stakes.

all this depends upon my market analyses and my answer to operator games. this also took many years to spot and learn.

i am rarely with zero stakes in the market when the answer to first question is 'yes'.

"hone ko to bahut kuchh ho sakta hai?"

"hone ko to bahut kuchh ho sakta hai?"
(as it is, anything can happen)

market can rise unexpectedly, market can collapse.....

that u can come to know only once it has happened! u can ofcourse wait to see what happens and then come in the trade. but then what's use? what was to happen has happened? u were not in the contention for the possible rewards.

trading and fishing are rarely meant for those who intend to keep sitting at the shore waiting for the absolutely calm sea......which anyhow, as they say, never makes a skillful sailor!

"hone ko to kuchh bhi ho sakta hai!"

but u can't make a living out of trading like that! u can't realise ur dreams like that!

here, probability comes into play.

trading, as i always say, is probabilistic and not deterministic.

there are times when the market's move in a particular direction high probability and then there are times when the said probability is low.

a good trading method + trading judgement is the one which can segregate the low prob opportunities from high prob ones.

a trade can never be assured. otherwise, all trader universe will jump in that direction and there will be no buyers for sellers or sellers for buyers! market will vanish!

probability is the sister of opportunity.
sensing the probability is like spotting the opportunity.

with time, practice, experience and learning, probability picking skills can be astonishingly honed!

and the beauty of the probability going wrong (mostly initially, rarely later) is that a trader anyhow always has the brakes and steering in his/her hands.....isn't it?

u can always stop and turn!!!

indecision is dangerous in trading. doubt freezes ur ability to act.

it is the indecision which causes loss in trading.

2 types of trades

there are 2 types of trades i (am forced to) take

one= when my technicals whisper that the market is about to move in a particular direction.

two = when technicals enter a dark tunnel (are unable to see), and only tacticals are there to guide.

in the second case, while there is no or little directional indication from technicals (i typically call it fog), tactical possibilities with operators to dodge/surprise/maneouvre/shakeup-the-market are good invert indirect indications.

presence of fear covered with froth of disbelief keeps such opportunities covered and potent.

while the first type are pro-active trades, the second ones are more of anticipatory types.

no wonder, it is easier to catch the formers than the latters.

(the current long position in a downtrend is a typical second type of trade)

soap operas of the market

i don't generally watch soap operas
neither on tv, nor in the market.

my way of trading is simple

- find the direction of the trend (if any trend is there)
- align
- wait for the reversal signal
- in between keep booking/adding as the case may be

all the tamtrums and dramas and baits of the market operators are more boring than the tv melodramas.

i simply mute the market and practice pity on the poor souls.

love to hate them! but they are so magnanimous that they still teach me!!!

trade in the present

dear harish

thank u!

to answer ur first question as to whether there can be a fall of 2-3% in coming days

= i don't know. and i doubt if operators have decided that this early! i doubt if anyone can be sure about that this much in advance!

it is certainly possible......though chances are less.

i would like to say one thing.....a range bound movement during a trend is generally of 50-150 points....which comes out to be 2-3%......but if that comes, it will be like a drift of the market and buying chance. the market is in a pause mode / ranging as of now.

the tools i have developed accurately indicate me the instantaneous trend only. i.e. trend as of now. they tell me the time when trend changes. but they don't tell me that much in advance. but i am more than satisfied by this much. i have to live the present first. and the next week will come next week and that too in the form of present.

intentions of the market can't be known before market finalises its own intentions!

for the future gazing (1 week and beyond), i have to rely on my other (lesser evolved) tools which tell me that we are yet to peak in this short-term rally.

i am absolutely sure that the down trend has not started AS OF NOW. i can bet any amount on this. and i strongly expect that resumption of upmove is unlikely for the next 1-2 days. i am long as of now in nifty. at the indication of resumption of up-trend, i would like to add to long positions.

--

about ur second question as to whether market can slip 20% or so in coming weeks/month

= i don't know......can't rule out. frankly, i don't have tools to ACCURATELY predict that.  i doubt if any one can. studied guesses can be made, but accuracy....i doubt.

--

but i strongly feel....where is the need to think about what will happen after 1 week or later? (unless, of course, if u r stuck in wrong side trade, in which case u should immediately square and take right side trade. chances of recovering and making money are more in the direction of the rend, which is up, as of now)

just trade the present. future is only in the mind! it doesn't actually exist!

trade the present successfully....and u will always be successful!

u will never look at the market like that again!

I used to get depressed everytime i heard someone say
“now i can’t make money.....market has already run up so much!”
Till i realised a great truth
“all u need to make money in trading are
1. a reliable method
2. a moving market”
--

It doesn’t matter whether the nifty is at 4500 or 6500 or 8500 or 10500
All that matters is that it should be moving!
Up or down never mind.....
If it is at 6500 it should either be moving up or down
If it is at 10500 it should be either be moving up or down
Unless ofcourse, u r options writer who makes money by eating premium with the ketchup of ur blood! (ughhh...)
Would u care and give a damn if u make money at 7700 and not at 8700 or 5700?
Frankly, whose health does it effect as to at which height the market moves? Till it is moving and u know in which direction?
I have seen traders lose money at 4600, 5600,6600,7600.....and i am sure they will be losing at 8600 also! And the beauty is they have always been complaining at all these levels that the “market has moved up so much already!”
Isn’t it amusing!
I no longer am scared of market heights!
NiftyAcrophobia conquered, i guess!!!
Right now, nifty is howering around 8100. Am i scared? Ha, ha!!!
I have drawn a horizontal line, floor zero, at 8100. Above it will be plus 100, 200 et all. Below it minus 100,200...
Keep moving the floor zero!!!

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!