iCharts Discussions

[maneesh007]

[rk_a2003]

Thanks Casper !

Aptly presented writeup on Gaps , Wonderfull.

Yes, gaps need to be filled.If not on the sameday then tomorrow or.........at some othertime.

But you presented a way to exploit them.

Do you have any statistics on this ,what is the percentage they fill up or continue to widen on the same day?.

Am I greedy by asking this question ?

[bolband_macd]

[Arjun20]

[casper]

hi maneesh, vinay and bolband_macd (its really a good combination......im serious)



thanks and welcome

rk

i would like to say it will work 80% time if i want to put it very humbly

as i mentioned, thr shld be no "hue and cry"

let me explain a bit

if some body down grades USA its a news, if an earth quake comes and ruins a developed economy, its also a news...... if a financial giant go bankrupt that's also the same...... all these are spectacular news which u will find in "white paper" (any standard news paper such as TOI) in such a case , market will open gap down and will go down

in those cases, forget about RSI, even if u use a steel cable and heavy duty pulley still u cant lift the market....... that's for me "hue and cry"


but we do gap up or down without this kinds of spine chilling reasons too, in fact having a 20-30 pt gap in nifty is no big thing...... we work here from 9.15 to 3.30 grossly and our sgx darling gets up much earlier and goes to bed much later than us

it is capable of giving us this kinds of gaps every now and then

and....... this is my gaps without any hue and cry

if u check nifty eod, u will find lots of gap up and gap downs, came and as they closed on same day, remain unnoticed for a cursory view, only if u compare the prev close to that candles opening, u will find that it was actually a gap opening
check it for say 1 yr or so, i hope u will find a fair idea of what i wanted to say

besides, its all about divergence, which is very much objective situation indeed, so if u take a back test on nifty div, say in 5 min chart, u will get satisfactory results


arjun

i could not understand what u meant by explanations with charts, so i am posting both the charts, and from above writing i hope ur question is answered too

if any more explanation is needed, plz feel free to point out

[rk_a2003]

Casper!

I read it that all gaps to be filled and some one wrote that most of the gaps will be filled on the same day. I don't know the reason - but I never believed it and not even back tested.( may be I must have thought that things can not be so simple in stock market)

Now after your explanation I hope I got one more weapon in my arsenal.

[casper]

[newinvestor]

[pkholla]

Casper: Can I humbly ask one q? In Nifty out of 100 times how many times u r successful in getting -div for gap up start OR +div for gap dn start? From your post of 02-10-11, it looks like 100 out of 100!
Prakash Holla

[casper]

hi newinvestor

its really a long time i see ur post, hope all is well



what u have asked,will need some practical examples to explain properly, and now a days i am very very busy during market hours, so its quite hard for me to find and post live examples

so i am going to put down the basic guide lines i follow. plz go through them, and make sure that u hv a crystal clear idea of these guidelines, if any point needs further explanation then point out,

once u r through, find chart and post them if u need corrections or confirmations, do it in live market, if any of u posts, i will, any how, manage some time to go through

1. 1st of all, maker sure u hv rsi 14, if u r in basic chart, it will be rsi 21/30/70, change it to 14/30/70 and save the settings

2. divergence is useful for choppy or range bound market and clearly a failure of TRENDING MARKET

let me explain here, some time market moves in 100-200 points range, this range is generally covered in 2-3 days, which shows nice "trend" of 50-80 points on intra day and we happily call this market a "trending market"

its a false statement indeed, market is still range bound here , thats why u hv only 100-200 points range, so its not true trend and u can use ur rsi in this market too

a true trend comes like hell, like 500 pts in 2-3 days...... thats a trend actually, which comes once in a blue moon, like last years September-October or this year during USA downgrade drama...... it was a trend and in those days do not use rsi
(make sure u understood this point..... its very very important to have a clear cut conception of when u r going to use a particular tool and when not!!!!)


3. if u r a die hard chartist who does not look on any other source and solely depend on charts for signals........ like i forgot when i last saw TV program about market or read a news paper about market and i trade only on chart's signal, then here is ur criteria for filtering choppy or range bound market from a trending one


a) if in ur trending tf, rsi goes up and stays above 80

or

b) or rsi dips down and stays below 20

forget divergence, its not a range bound any more, market is experiencing a break out move....... if u have any trend following method in ur arsenal and preferably already taken position in direction of the trend...... enjoy ur profit, or else , its a good time to have a chat with ur old time friends or taking ur wife for a shopping...... its no longer a entry point in the market

what i want to say here is, u r trading for ur own, u can have a luxury to take a decision on whether to trade on a particular day or not, its really a big thing which i or any one who trades professionally, knows too well and envy all of u

there is no burden on u take trade and gain on impossible days, but we have such burdens..... so use this luxury when u see things are not quite proper for u to take an entry

bottom line is, im sure whoever asking for help in this thread and whoever reading my writings for curiosity, all of them have lots of potentials to make gains but as they try to trade on impossible days...... they contribute whtever they made in "winners welfare fund" and gets back to the territory of loss, so if we filter out impossible days and impossible trades, all of us will be a clear winner

3. now come to the point of divergence itself, lots of peoples knows what is it and lots of peoples trades it, but unfortunately, they have a misconception about top and bottoms and thats why they loss

what is a top????

a top is the top most point of a swing, its not merely a high which u will point out and will start shouting that its a top

so, plz dont start checking for div on every high....... if ur high is a green healthy candle then its candlestick nature shows that it can go up and up move from here is still viable, so if u see rsi and got divergence on this green candle, then its more than likely that it will make a new high and u will soon be cursing ur luck for ur sl hit

MAKE IT A POINT........ ALWAYS WAIT FOR A REVERSAL CANDLE ON TOP OR BOTTOM BEFORE CALLING IT A TOP OR BOTTOM

like lets say we have a 4 green candle upmove on 5 tf, now u saw rsi is not going up, and u took it for a div and went contra, i can guarantee that ur sl will be hit here, bcoz a series of 4 green candles does not shows slightest chance of weakness in trend, hence, if it makes a couple of green candles more..... we have nothing to say, and if it does, ur sl will be gone

now suppose, after this 4 green candles, it made a red candle, be it a hammer or inv hammer, or a pretty good red marubozu... the all red candle

now u r sure that the swing is "might be" stopped here and from here a new trend "might " start, so now since u hv some indications of swing's reversal, now only u r allowed to check for price tops and rsi tops

remember, i am using words"might" bcoz i just can be sure if its really stopping here or not, but since this time, apart from rsi, candles are also suggesting that there might be a change so we this time, standing on a more firmer ground than the previous one

specially, if u find this kinds of activity is some resistance zone...... the chance of success increases manifold......

got it????

same goes for a bottom tooo

and finally , one more point..... dont trade a stock whr adx in below 20 in ur trading tf..... its not a trade, it will be a gamble unless u hv specially designated rules to trade that

(like ravee paaji has his rules and he is allowed to trade below 20 too, coz he has the setting done, but since i dont trade in his method, so below 20 adx trading is gambling for me)

ok newinvestor

check now and tell me if its clear now or not,

RK and maneesh bhai, if u r around, plz check once as u two were chasing me for a few days regarding divs


if any point is missed or more clarification is needed, plz point out

[casper]

[rk_a2003]

Yes! I have gone through it and started thinking of a title for your forthcoming book

Complex TA Broken Down To Easily Digestible Capsules …… No … too long for a title

TA Made Easy ….. TA for Dummies...No… Beaten down titles

Are you Averse of TA?.... This is For You
By a Friendly Little Ghost - CASPER

….No I will come up with a better Title...I promise.

[pkholla]

Casper:
No ji please, I am a very humble man esp. in front of clear thinking gurus like u! Crystal clear answer. Thanks a lot.
Prakash Holla

[Arjun20]

Hi Casper,
PFA Nifty cash 30TF chart 12 oct-13.00 candle.
I have some queries :
1. There were tow TOPS ( at 13.00 on 12oct) ( If we cut the chart exactly at that time, they were Two TOPS at that time)
2. Also Bearish engulfing candle was there , which allowed us to check for RSI dIV.
3. RSI also gave us -ve Div( Class B). So there was set up for Short. Now we shorted, but our SL was hit.
Now what i want to ask is : is my understanding clear? and was that a correct Short entry ? ( SL hit afterward is a diff matter, first u pls validate my Short entry).

rgds
Arjun

[Arjun20]

Hi Casper,
Continuing with ongoing discussion regd RSI Div i have some (mis)conceptions.
I am pointing to your earlier posted charts explaining Div.
http://www.icharts.in/forum/download,id,8699.html
http://www.icharts.in/forum/download,id,8692.html

Now, my conception (/misconception) is that : second high of RSI should be out of OB region while checking -ve RSI Div.
What's the fact

rgds
Arjun