iCharts Discussions

[basu_6892]

Yes, the revised chart correlate the candles with the dates. Certainly it is an improved version and gives more informations. Thanks VINST. Will you please give the Path of command to follow for the benefits of all participants and me also ?

[smsmss]

thanx basu sir... looking forward to more inputs from ur side regarding the strategy...

[basu_6892]

HOW TO TRADE - (for selecting the ‘ENTRY POINT’, the Exit Point will be just the reverse)

As per my method, before proceeding for a BUY – an Equity / Option, I select those Stocks which has started falling just after reaching the Top. Then I find that the stock under consideration, has fulfilled the following important conditions :

 A 14-period ADX must be greater than or near to 30, and rising. This will identify a strongly trending market, be it both UP or DN market,
 I will wait to see (i) 1st Day, the Price Bar creates a LH (lower High) and LL (lower low),(ii) 2nd Day another Price Bar creates LH an LL,(iii) 3rd price Bar creates again LH and LL. In all cases the Day’s close occurs near bottom (in the direction of Falling Trend) of the respective Price Bars.(iv) Next Price Bar also creates LH and LL – but close occurred above 48% - 50% of the Price Bar. I consider this Price Bar-(iv) as the starting of a “Counter Trend” or a ‘Trend Reversal’. After a prolong study, I have found that, this Price Bar is accompanied with Lowest Volume, in comparison to that of next PB No.19.
 Now I will verify that Fast Stochastic will show an Up-direction from the ‘Oversold’ area, and the +DI will be near about 50% of –DI.
 Look for a retracement in price crossing up the 8-period Simple moving average, and proceeding to cross 34-Days exponential moving Average from below.

Let us have one practical demonstration to understand the above method.
From Cell A1, Press F5 key, type in AE104. Here is Price-Chart. Left-Click after placing Mouse pointer on the border of Price Chart. The Price Bars started falling from No.11 to No.16. Look closely to PB No.17. The close is above 50% of PB.
Look at Cell AK21 and AJ21. Volume is low but OBV showed +1.And +DI is near about 45% of –DI. So, it can be said a ‘Reversal’ PB has appeared.

This is the time for an ENTRY. Since RB No.18 will be ist one in the expected Rally, Iam certain a non-significant ‘Gap-Up’ opening may take place. So my Entry price should be between [HIGH of 17th PB and ‘plus 1% of HIGH value]. Once the Order has been ‘Executed’, a ‘Stop Loss’ to Low of 17th PB is given. If stopped out, re-enter this trade by placing a new buy stop at the original entry price.

I sincerely follow this method and ‘Earn Profit’ in Swing Trading – Equity and in Option.

Next we will discuss the use of ‘Historical Volatility’ in Swing Trading.

With regards,
BASU.

[crazyleo]

thanks

[SID2060]

DEAR SIR,

PLEASE ADD A COLUMN IN THE SCREENER (EOD), A COLUMN SHOWING ""THE BETA VALUE"" OF EACH SCRIP.. THOSE SCRIPS WHOSE ONE YEAR DATA IS AVAILABLE, BETA VALUE WILL BE CALCULATED FOR THEM ONLY TO MAINTAIN THE STANDARDS AND ACCURACY..

ALSO BEFORE CALCULATING THE BETA VALUE ALL THE ADJUSTMENTS TO THE PRICE LIKE SPLIT, BONUS, BUYBACK DIVIDEND ETC ETC SHOULD BE MADE..

A ""BETA VALUE"" DESCRIBES THE RELATIONSHIP BETWEEN THE SCRIP AND THE BENCHMARK INDEX LIKE NIFTY/SENSEX..

INVESTORS SHOULD INVEST IN SCRIPS WITH BETA VALUE RANGING FROM 0.75 TO 1.35

WHILE THE DAY TRADERS SHOULD BUY/SELL SCRIPS WITH HIGHER BETA VALUE ABOVE 1.0 (ONE) IN ORDER TO HAVE MORE VOLATILITY/MOVEMENT IN BOTH UP AND DOWN SIDE..

THANKS A LOT,
SIDDHARTH

[ManjunathG]

basu sir, thank you for your reply. sir i request you to post your new trade on this stgy, it will help us to know the stgy in simple way.

regards

manjunath

[basu_6892]

Let us open the excel file My Strategy first. From Cell A1, press F5 key type in AE209 and clock OK. Put the Mouse pointer on the white border of the Chart and Left-Click. Put the pointer on the graph, find point showing No.16. These points No.16 and 17 are very important for trading purpose. The Black Line indicates Historical Volatility (HV) of 5-Day, Red one for 15-Day. When both the line start moving up, Black line crossing up first the Red line and the two are rising up and crosses 50% level, at that time the Price sharply shots up. This is called the “Volatility Explosion”. Thereafter a Rally takes place and as a Swing Trader, you simply watch your Profit figures are changing with higher numbers !

Let us verify the situation in the Price Chart. Press F5 key type in Q72. It is your Price chart. Let us see what happened to price after volatility explosion took place in between Point16 to point 17. Put the Mouse pointer on the white border of the price chart now place it on Price-Bar No.16. After “Volatility Explosion” the Price Bar at 17 showed LH(lower High) and LL(Lower Low) compared to Bar 16, but the close appeared above 50% of the Price Range (PR=HIGH minus LOW) of Bar.17 and close was in the direction of proposed UP rally. The Volatility Explosion triggered Price rise from Price Bar No.17 to Price Bar No.20 !!

I have seen that longer the period 5-D and 15-D HV remain below 50%, the higher the probability that volatility likely to explode. In Volatility Chart at cell AE206, you can see , the tops created by 5-D HV indicates Bottom-of-the-Swings and hence the “Entry point”; and the bottoms created are all Top-of-the-swing and hence the “Exit point” verify it by comparing with Price Chart at Cell Q70. So a long move of 5-D HV below 15-D and all on a sudden rises up, cut 15-Day HV from below and simultaneously crosses the 50% level. The move is important to a Trader.

Similarly if the 5-D HV further rises up and crosses the 80% level, it is “Volatility Exhausion” the Price will start falling. Curiously, you will find that the point 16 was indicating a further fall in +DI value in the DMI Chart (placed just above the HV Chart). Even Point 17 in DMI Chart confirms the gap between –DI (at top) +DI (at bottom) was Maximum and so an Ideal ‘Entry point’. The value of +DI on Price Bar17 was near about 42% of the value of –DI. Verify it, Press F5 type in Q1.The Data in +DI/-DI against 29-Jan confirm the ideal Entry point. Again when +Di is 2 times of –DI it is ideal Exit Point. Verify, +DI/-DI value against 19-Jan. We need to read DMI and HV signals together in carrying out any profitable Trade.

So far I understand – Volatility gives us the numerical picture about reaction level of Market participants. It represents status of Greed, Fear, aspiration of Market as a whole. When the Market rises UP, your Risk becomes NIL. Your Capital is safe, Profit numbers ring up. No Panic but only aspirations grow up. So volatility number is the Lowest. When Price starts falling everybody get panicked and is worried about the Capital invested. The Volatility number grows Up.

In the current example, the statement “Bartronics at Rs.140 with Volatility of 30%” means the stocks Annualised Trading Range will be [ Rs.140+(30% of 140)] = Rs.182 to [Rs.140-(30% of 140)] = Rs.98 two-thirds of the time over the next one year. This forecast helps in knowing -what our Risk will be and where we can safely place the Stop-Loss. Suppose Price rises to Rs.160, and the volatility falls to 20% (just opposite function), the PR will shift to Rs.192 and Rs.128. Stop-Loss put earlier at 178 now has to be shifted up to Rs.188. But, suppose Price falls to Rs.125 and volatility rises to 40% the PR will be Rs.175 to Rs.75. So a Stop-loss put at Rs.178 will be stopped-out. So you need to closely monitor the Short-term Volatility on daily basis.

Again, when volatility at 40% you initiated Sell of a CALL with an anticipation that market will fall, but volatility moved as : 30%->20%->40% - clearly rising up. After selling the CALL, the Short Term Volatility rises to 59% - a “Volatility Explosion” takes place, Prices shot up and you are in a TRAP !! This Volatility is connected with ‘Normal Distribution of Daily Return’-- a Statistical Technique. Here Daily Return stands for =(Today’s Close - Previous close) . As Traders we are interested about it as an effective Trading Tool. I am still trying to understand fully its efficacy as a trading tool.

Next, the concluding thread posted will be on the use of Gann-Fan.
With regards.

Basu.