Home
Option Tools
Services Offered
My Services
Contact Us
Charts
Charts (Premium)
Chart Watch
JCharts (EOD)
JCharts(EOD-COMM)
HCharts (EOD)
HCharts (EOD-COMM)
Forum
Stock Lists
Screener (EOD)
Screener (EOD-Comm)
Breadth Charts
Calculators
Education
Links
FAQs
Advertise Here
Charts (Old)
Login Form





Lost Password?
No account yet? Register
  iCharts Discussions

 FAQFAQ   SearchSearch   MemberlistMemberlist   UsergroupsUsergroups   RegisterRegister 
 ProfileProfile   Log in to check your private messagesLog in to check your private messages   Log inLog in 

Trading rejections...by Speculator

 
Post new topic   Reply to topic    iCharts Discussions Forum Index -> Strategies
View previous topic :: View next topic  
Author Trading rejections...by Speculator
ProTrader
Site Admin


Joined: 06 Jul 2008
Posts: 433

Post: #1   PostPosted: Wed Jun 13, 2012 3:23 pm    Post subject: Trading rejections...by Speculator Reply with quote

*-Posting on behalf of lazy Speculator for the benefit of SSPS followers-*.

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 Smile



t_nf1_15_199.gif
 Description:
 Filesize:  15.67 KB
 Viewed:  1452 Time(s)

t_nf1_15_199.gif



t_nf2_15_140.gif
 Description:
 Filesize:  16.35 KB
 Viewed:  1013 Time(s)

t_nf2_15_140.gif



t_nf3_15_900.gif
 Description:
 Filesize:  20.01 KB
 Viewed:  861 Time(s)

t_nf3_15_900.gif



t_nf1_30_195.gif
 Description:
 Filesize:  16.78 KB
 Viewed:  766 Time(s)

t_nf1_30_195.gif



t_nf2_30_689.gif
 Description:
 Filesize:  15.79 KB
 Viewed:  758 Time(s)

t_nf2_30_689.gif



t_nf3_30_185.gif
 Description:
 Filesize:  15.42 KB
 Viewed:  826 Time(s)

t_nf3_30_185.gif


Back to top
View user's profile Send private message
sonila
Brown Belt
Brown Belt


Joined: 04 Jun 2009
Posts: 1786

Post: #2   PostPosted: Wed Jun 13, 2012 3:43 pm    Post subject: Reply with quote

Thnx sir.
Back to top
View user's profile Send private message
psalm
Black Belt
Black Belt


Joined: 12 Nov 2011
Posts: 5368

Post: #3   PostPosted: Wed Jun 13, 2012 3:50 pm    Post subject: Reply with quote

thanks .....Thanks a lot....PT...
Back to top
View user's profile Send private message
bharatpatel
White Belt
White Belt


Joined: 26 Oct 2011
Posts: 397

Post: #4   PostPosted: Wed Jun 13, 2012 3:56 pm    Post subject: hi Reply with quote

Dear P T Sir,

The guys who posts charts and levels of SSPS regularly never specify anything about 8 ema. you have explained really very well, new members like me can now trade as per SSPS.

Actually you have simplified the SSPS.

Thanks a lot for the post

Regards,

Bharat Patel

Ahmedabad.
Back to top
View user's profile Send private message
chetan83
Brown Belt
Brown Belt


Joined: 19 Feb 2010
Posts: 2036

Post: #5   PostPosted: Wed Jun 13, 2012 4:15 pm    Post subject: Reply with quote

Good one PT,

But the Charts in gpf is every small and cannot be magnified, its better viewed in jpeg.

Chetan.
Back to top
View user's profile Send private message
ProTrader
Site Admin


Joined: 06 Jul 2008
Posts: 433

Post: #6   PostPosted: Wed Jun 13, 2012 5:54 pm    Post subject: Re: hi Reply with quote

bharatpatel wrote:
Dear P T Sir,

The guys who posts charts and levels of SSPS regularly never specify anything about 8 ema. you have explained really very well, new members like me can now trade as per SSPS.

Actually you have simplified the SSPS.

Thanks a lot for the post

Regards,

Bharat Patel

Ahmedabad.




dear bharat...i have copied verbatim from speculators post. it was getting difficult for folks to find it. so did it on spec's request. he deserves all the kudos from folks using this.

thanks...pt
Back to top
View user's profile Send private message
mbj
White Belt
White Belt


Joined: 13 Jul 2009
Posts: 1

Post: #7   PostPosted: Wed Jun 13, 2012 6:09 pm    Post subject: Trading rejections...by Speculator Reply with quote

I am late entrant to the topic, I have few more doubts, sorry to bother u again ..

(1) How to decide the S/L?
(2) Before trading, do we have to confirm the rejection in 15mins as well as 30 min chart?


Last edited by mbj on Thu Jun 14, 2012 2:01 am; edited 1 time in total
Back to top
View user's profile Send private message
sonila
Brown Belt
Brown Belt


Joined: 04 Jun 2009
Posts: 1786

Post: #8   PostPosted: Wed Jun 13, 2012 6:09 pm    Post subject: Reply with quote

Pt sir, in ur personal opinion, how effective ssps method is ? As u r much more experienced, so i m asking. My intention is nothing else and plz excuse me, if i have raised some irrevelent thing. Thnx.
Back to top
View user's profile Send private message
ProTrader
Site Admin


Joined: 06 Jul 2008
Posts: 433

Post: #9   PostPosted: Wed Jun 13, 2012 6:49 pm    Post subject: Reply with quote

Sonila:

I haven't tried it, but people discuss a lot about it in SB (When are you taking Sub? Mr. Green ). Also, with any strategy or set up execution is the key. How true you are to the strategy. In general either folks don't have the patience to understand it fully (like me, never read it fully till date) or are looking for result from the first try it self or mix their own TA fundas in it.

As the saying goes..Samaj mein aaya toh changa, nahi toh punga Laughing .

Regards..PT
Back to top
View user's profile Send private message
sonila
Brown Belt
Brown Belt


Joined: 04 Jun 2009
Posts: 1786

Post: #10   PostPosted: Wed Jun 13, 2012 7:20 pm    Post subject: Reply with quote

Thanx, pt sir.
Back to top
View user's profile Send private message
amitkbaid1008
Yellow Belt
Yellow Belt


Joined: 04 Mar 2009
Posts: 540

Post: #11   PostPosted: Wed Jun 13, 2012 10:13 pm    Post subject: Reply with quote

क्या पीटी सर
क्या चार्ट्स पोस्ट किए है तारीख भी समझ नही आ रही है

कम से कम तारीख तो बता दो
Back to top
View user's profile Send private message
ProTrader
Site Admin


Joined: 06 Jul 2008
Posts: 433

Post: #12   PostPosted: Thu Jun 14, 2012 7:31 am    Post subject: Reply with quote

chetan83 wrote:
Good one PT,

But the Charts in gpf is every small and cannot be magnified, its better viewed in jpeg.

Chetan.


Chetan:

If Speculator can provide me better charts, I can upload the same.

Regards..PT
Back to top
View user's profile Send private message
Display posts from previous:   
Post new topic   Reply to topic    iCharts Discussions Forum Index -> Strategies All times are GMT + 5.5 Hours
Page 1 of 1

 
Jump to:  
You cannot post new topics in this forum
You cannot reply to topics in this forum
You cannot edit your posts in this forum
You cannot delete your posts in this forum
You cannot vote in polls in this forum
You can attach files in this forum
You can download files in this forum


Powered by phpBB © 2001, 2005 phpBB Group

@MEMBER OF PROJECT HONEY POT
Spam Harvester Protection Network
provided by Unspam