iCharts Discussions

[mariner]

spec sir/ shekar sir
plz see the attached nf chart. I have one doubt for current downtrend does 6144 considered as up swing pivot or not ?

tnxs
Mariner

[shekharinvest]

[Speculator]

I had not visited this thread for a long time, as i treat the "Swing trading" method as a completed project. Honestly there is nothing more to add or teach, other than the techniques discussed. For those interested, application in real-time is the only way to learn. For any doubts, you can contact me on shout-box after the market hours, if you have any doubts.

Shekar,

Happy new year to you as well !


Mariner,

Yes 6144 is a valid downswing pivot on 15-min TF. On the 30-min and 60-min we don't have any downswing pivots established yet.

Jai,

I am really glad that you are able to use the method successfully and make money. Congrats !!

[Speculator]

Shekar,

I just read your reply to mariner. The RSI not getting overbought is an excellent point you make. When the RSI(5) gets overbought and a rejection, happens, it a solid indication of a pivot without any ambiguity. Although, i must say it is strictly not necessary according to the swing trading method. A touch of EMA and rejection is sufficient. However, when there is ambiguity, one can look at the RSI for additional confirmation.

[shekharinvest]

Hi Speculator,

Thanks for the warm wishes.

May this New year bring Happiness and Joy to you and your family !

Nice to see you on the forum.


SHEKHAR

[mariner]

Thanxs Spec and Shekar sir for explaning.
Regards
Mariner

[Speculator]

Trading rejections

It's been more than an year since the "Swing trading the Speculator way" was posted. I still get basic questions in the shout-box such as "Is this a valid rejection ?". So i thought i will revisit this subject again.


Trading rejections is a way of trading with the trend. Rejections are based on the concept of mean reversion. Once a trend change occurs, the prices cross the 34 ema. Once this move gets overextended or overbought, a mean reversion to the neutral level occurs. 34 ema and 55 ema are generally the neutral levels on 15-min and 30-min timeframes. One can choose either 34 or 55 ema and both are equally valid. I personally use the 34 ema on both 15-min and 30-min timeframes for Nifty. Depending on the volatility of the stock and the timeframe, this neutral level can change. For instance on the 60-min timeframe, 13 ema happens to be the neutral level. I only trade 15-min and 30-min of Nifty generally. So let's focus on that.

Traders get anxious that they will miss a move, once a trend change occurs. But i would go to the extent of saying that a mean reversion to 34 ema "always" happens, except in some rare scenarios where a parabolic blowoff move occurs. Anyway trading parabolic blowoffs is a dangerous sport and rare occurrence, which does not merit out attention. So in a normal market environment, 34 ema acts a magnet pulling prices towards it after a trend gets overbought. Trading rejections is basically participating in the trend after a correction is over. The rules of rejection are very simple and unambigous

For a Bullish rejection, the stock/index is trading above the 34 ema, comes down either close to the 34 ema or touches the 34 ema or undershoots the 34 ema and reverses. For the rejection candle (trade entry candle) , the following rules must be satisfied:

1) Candle close should be above 34 ema
2) Candle close should be above the high of the prior candle.
3) 8 EMA should be rising (that is the 8 ema of the current candle should be higher than the 8 ema of the previous candle)

I added the rule #3 as a refinement (or filter) to avoid taking weak rejections. If 1) and 2) are satisifed and 3) is not satisfied, then it means the correction is still in progress.


For a Bearish rejection, the stock/index is trading below the 34 ema, comes up either close to the 34 ema or touches the 34 ema or overshoots the 34 ema and reverses. For the rejection candle (trade entry candle) , the following rules must be satisfied:

1) Candle close should be below 34 ema
2) Candle close should be below the low of the prior candle.
3) 8 EMA should be falling. (that is the 8 ema of the current candle should be lower than the 8 ema of the previous candle)

Here are some visual examples of rejections on both 15-min and 30-min charts which have occurred over the last few weeks. SL level for rejection is shown with a pink line and the valid rejection candles are shown in pink circles. Invalid rejections are shown in black circles.


15-min - nf1_15.gif, nf2_15.gif, nf3_15.gif



#1 - Invalid rejection. Rule 2) not satisfied.
#2,#3,#4 - Valid rejection. All rules satisfied.
#5 - Invalid rejection. Rule 2) not satisfied.
#6, #7 - Valid rejections
#8- Invalid rejection. Rule 2) not satisfied.
#9 - Valid rejection
#10 - Invalid rejection. Rule 2) not satisfied.
#11 - Valid rejection
#12,14,15,17,18 - valid rejections
#13 - Invalid rejection. Rule 2) not satisfied.
#16 - Invalid rejection. Rule 3) not satisfied.

If one had traded the valid rejections, most rejections made money except #6 and #17.

#6 occurred at the final stage of the trend, just before the trend reversal. But one has to take all the signals bcoz we never know for sure when the trend reverses.

#17 was a case of failed rejection.

So out of 12 valid rejections, there were only 2 failures. That's an 83% odds of success !


30-min - nf1_30.gif, nf2_30.gif, nf3_30.gif


#1 - Invalid rejection. Rule 3) not satisfied.
#2,#3, #4, #5 - Valid rejection. All rules satisfied.
#6 - Invalid rejection. Rule 2) not satisfied.
#7, #8 - valid rejection.


#8 although a valid rejection is hard to trade as the SL required is very huge. I would put that in the category of untraedable.

#7 is a case of rejection failure and would have lost money.

So out of 5 valid rejections, there was one failure - That's 80% odds of success !

- Speculator

[vishytns]

Spec Sir,
Thanks alot for your article. It is really great. I will come back to you with some queries later.
regards
Vishy

[vinst]

Hi Speculator,

Thanks really for a great summary with numerous useful examples.

regards
vin

[casper]

speculator sir

is it a valid rejection?

[smartcancerian]

Sir , pl help to mark entry/exits & rejections on nickel 15 mint chart..emas on chart are 8 & 34..

[smartcancerian]

sorry chart was attached twice

[KillBull]

Thnaks Spec... whatever little i know of trading i know from your methods, posts and sb comments. Thanks much!!!

[ashis]

Dear sir,
Thanks for this good post. Which is good for study.
(1) I would like to know one thing that how can you decide stop loss? Is it at the time when in up trend candle gives whole body with shadow bellow 8-EMA? So can we consider low of this candle as stop loss? Or any thing else to decide stop loss? Please guide. I observe this thing in you NF-1 (15)

(2) Other question is that you've written in rule 2 that close of candle must be above the prior high.
You means that once O.B. happened then allow RSI come to near 50- or bellow that then once again when market pulls back at that time candle's close must be higher then previous high. Is right which I understand?
If market make new high in 2nd attempt but close of it is bellow then previous high then what?

Awaiting for you reply.
Thanks
Ashis

[chetan83]