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PART 1 - Intraday trading strategy - FREE Live Market Scanner
A daily candlestick chart shows the stock’s open, high, low, and close prices for the day.
What You Need to See
1- Candle Body
2- Candle Wick/Shadow
3- Candle Color
One should look for a prior trend. Strength is represented by a bullish/green candle and weakness by a bearish/red candle.
Candlesticks are based on current and past price movements, not future indicators.
#nifty50 #banknifty
#optionstrading #scalping
Steps to follow in Profitable Trading Strategy
1- Define your trading goals
2- Define your trading risk tolerance
3- Using technical indicators
4- Backtest your strategy
5- Monitor and optimize your strategy
Technical Analysis - Trading Strategies
Trend-following
Breakout strategy
Chart patterns
.PNG)
Momentum strategy
Mean-reversion strategies
HOW TO USE OPEN INTEREST IN FUTURE/OPTION TRADING
In F&O Market Trading Open Interest (OI) plays a significant role in making decisions in intraday trading as well as initiate a contract. Open Interest (OI) is a number that tells you how many futures (or Options) contracts are currently outstanding (open) in the market. Open interest reflects total long positions or total short position.
Open interest goes up or down based on how many new traders are entering the market and how many old traders are leaving. The total number held by buyers or sold short by sellers on any given day. The open interest number gives you the total number of longs and the total number of shorts.
Rules for trading with open interest:
With the help of Open interest data, we can see positions that traders are making in futures and options stocks.
Long Built up => It means people are taking positions assuming the price will go up. This is marked by an increase in open interest and an increase in price
Short Built Up => It means people are taking short positions, assuming the price will go down. This is usually characterized by an increase in open interest and a fall in price.
Long unwinding => This shows Long positions are now getting exhausted and people are starting to book profits, assuming the rally is about to over
Short covering => Short positions are getting decreased and people are booking profits and expecting reversal.
Usually, this is represented by an increase in price and a fall in open interest Combined with volumes, this can serve as an important indicator in selecting stocks for intraday or short-term
Usually, this is represented by an increase in price and a fall in open interest Combined with volumes, this can serve as an important indicator in selecting stocks for intraday or short-term
~~~~~~~~~~~~~~~~~~~~~~
What Is A Candlestick?
A candlestick is a type of price chart used that displays the high, low, open, and closing prices of a security (Stock, Index, Currency, or Commodity) for a specific period. The Japanese rice merchants began using technical analysis to trade rice in the 17th century and to track market prices and daily momentum hundreds of years before becoming popularized in the United States.
The wide part of the candlestick is called the "real body" and tells investors & traders whether the closing price was higher or lower than the opening price (red if the stock closed lower, green if the stock closed higher).In order to create a candlestick chart, you must have a data set that contains open, high, low, and close values for each time period you want to display.
Doji Candlestick
The doji represents indecision in the market. A doji is a key trend reversal indicator. Doji form when a security's opening and closing are virtually equal. The length of the upper and lower shadows can vary, with the resulting candlestick looking like a cross, inverted cross, or plus sign.
Hammer Candlestick
A hammer is a price pattern in candlestick charting that occurs when a security trades significantly lower than its opening, but rallies within the period to close near opening price. A hammer is a type of bullish reversal candlestick pattern, made up of just one candle, found in price charts of financial assets. The candle looks like a hammer, as it has a long lower wick and a short body at the top of the candlestick with little or no upper wick.
Hanging Man
A hanging man is a bearish candlestick pattern. This pattern occurs mainly at the top of the uptrend and can act as a warning of a potential reversal downward. The hanging man shows that selling interest is starting to increase.
Shooting Star
Spinning Top
Spinning Top
A spinning top is a candlestick pattern with a short real body that's vertically centered between long upper and lower shadows. The candlestick pattern represents indecision about the future direction of security. In other words, a spinning top candlestick if often regarded as a neutral candlestick.
INTRA DAY O-H-L STRATEGY
This is a very popular Intraday Open High Low Strategy with good Accuracy. In this strategy, a Buy signal is generated when a Stock or Index or Commodity has the same value for Open and Low, while a Sell signal is generated when it has the same value for Open and High.This is a Tried and Tasted Strategy. Traders should follow 100% discipline in executing those strategies with Risk and Money Management Rules.
Traders can keep the Stop loss at 1% from the Entry level or the Previous Day's high or Low levels.
Take ENTRY after 9.30 AM
Check Stocks where Open=High OR Open=Low (before 9.30 AM)
RULE: Open=High means SELL AND Open=Low means BUY
Buy Stocks where Open=Low above the High of 1st 15 minutes Candle
Sell Stocks Where Open=High Below the Low of 1st 15 minutes Candle.
Traders can use a time frame of 5 to 15 minutes.
Traders can Book Profits As per their risk appetite or End-of-the-day
~~~~~
Top 5 Technical Analysis Tools used for Trading.
Technical Analysis can be defined as the art and science of forecasting
future prices based on past price movements. Technical analysis is based on analyzing demand-supply of stocks,
indices, commodities, futures, or any tradable instrument. Traders use this
study to predict the price of tradable instruments which also includes information
like prices, volumes, and open interest on a chart and applying various patterns
and indicators to it. Traders can predict trends, support, and resistance levels, and entry and exit levels using technical analysis.
Following are the top 5 Technical Analysis Tools used by traders for
trading.
Moving
Average – This
is a widely used indicator in technical analysis that helps traders to smooth out
price action by filtering out the noise from random price fluctuations. A
moving average (MA) is a trend-following
or lagging indicator as it is based on past prices of securities/commodities.
The two commonly used MAs
are the Simple moving average (SMA),
which is the simple average of a security over a defined number of time
periods, and the Exponential moving
average (EMA), which gives bigger weight
to more recent prices. Moving Averages are used to identify the trend
direction and to determine support and resistance levels of trading instrument.
Most important MAs are 10, 21, 50, 89, 100 and 200.
MACD - Moving Average Convergence Divergence (MACD) is a trend-following momentum indicator. The MACD shows the relationship between two moving averages of prices.
The MACD is calculated by subtracting
the 26-day exponential moving average (EMA) from the 12-day EMA. A nine-day EMA
of the MACD, called the "signal line", is then plotted on top of the
MACD, functioning as a trigger for buy and sell signals.
There are three common methods used
to interpret the MACD.
1. Moving
average crossover
2. Centerline crossover
3. Divergence
Relative
Strength Index (RSI)
- The RSI is A momentum oscillator. RSI is a momentum oscillator generally
used in sideways or ranging markets where the price moves between support and
resistance levels. It is one of the most useful technical tools employed by
many traders to measure the velocity of directional price movement of a security/
commodity.
How to use RSI Indicator?
The RSI oscillator ranges between 0
and 100.
Technical analysts use 30% as
oversold and 70% as overbought lines to generate the buy and sell signals.
Buy/long when the indicator moves
from below to above the oversold line.
Sell/short when the indicator moves
from above to below the overbought line.
Stochastic- A stochastic oscillator is a momentum
indicator that uses support and resistance levels. The Stochastic indicator
was developed by Dr. George Lane developed this indicator in
the late 1950s. The term stochastic refers to the point of a current
price in relation to its price range over a period of time.
How to use Stochastic?
Technical analyst use 20% as
oversold and 80% as overbought lines to generate the buy and sell signals.
Buy/long when the indicator moves
from below to above the oversold line.
Sell/short when the indicator moves
from above to below the overbought line.
The stochastic oscillator
is calculated by the following formula.
The default number for n
previous trading periods is 14
%K= (today’s Close)-(Lowest
low over a selected period)/ (Highest over a selected period) - (Lowest low
over a selected period)
Buy/long when %K line
crosses % D line to the upside in oversold zone and sell when %K line crosses %
D line to the downside in overbought zone
ADX - ADX is a lagging indicator that
measures the trend strength not trend direction. ADX is formed by combining two
other indicators which are positive directional indicator (+DI) and negative
directional indicator (-DI). Positive Directional Indicator is calculated based
on differences between current high and previous high over recent trading
periods. Negative Directional Indicator is calculated based on differences
between current low and previous low over certain recent trading periods.
How to use ADX?
When ADX is above 20
and +DI line crosses over -DI line, buy signal is generated
When
ADX is above 20 and -DI line crosses over +DI line, sell signal is generated.
ADX
above 40 indicates extremely strong trend.
ADX
value pulling back below 40 indicates trend getting exhausted and likely to
reverse.
How to become a part of growing Indian economy through Mutual funds investment?
“India is
land of opportunity” – This is become a tag line for the investors who are coming
in India with big bags of money for investment in India. The new Indian
government which came in power from May 2014 has introduced number of reforms
which are going to make India a great place for investments for long term
horizon. The new government is changing the ways of doing business in India by
making it simpler by Policy action and reform initiatives. Make in India is
such an initiative program of the Government of India to encourage companies to
manufacture their products in India which will help to achieve a growth rate of
double digit in near future.
Many big
investors directly invest in companies looking at the growth aspects and
returns. The government policy and initiatives, foreign investment and ease of
doing business in India can make it possible for India to become a leader in
world growth in coming years. Looking at these major steps, investors keep
their investments in different sectors and industries for a longer period to
take advantage in overall portfolio growth.
The question arises as to how a small investor whose income is in just five figures can take advantage of this Big Bull Run in India. They also lack required knowledge for investment. The simple answer to that is they can invest in mutual funds which invests huge amount of money in various sectors and industries to benefit from different parts of growth.
One of the
ways to invest in directly to mutual funds is New India
Portfolio (NIP) from FundsIndia.com. This scheme of FundsIndia.com
invests capital in a powerful set of four mutual funds that are set to benefit
from the upcoming growth of new Indian economy and creates wealth for small
investors.
Their expert team of mutual funds researchers analysed hundreds of schemes to identify these four funds that are best positioned to take advantage of the revival story & create wealth for their investors.
The following are FundsIndia's portfolio which provides variety in investment and long term wealth creation for investors with assurance of safety of capital invested.
Diversified
Fund – This
fund invests in premium quality large cap blue-chip companies which gives
stability to portfolio and avoid risk in long term due to less volatility. It
is because of these reasons; this fund has performed consistently for many
years.
Mid-cap
Fund – This
basket of portfolio provides better returns when economic sentiments are good
for investments and investors are confident about growth of an economy. Using
this fund, overall performance is improved as mid-cap companies show high
growth prospects in present sectors.
Diversified
Theme Fund – A diversified fund in simple terms is a fund which invests
across a diverse range of companies and sectors which may include
infrastructure, telecom, banking, mining, pharma, etc. in order to ensure that
the portfolio is protected from dramatic movements in one or two sectors when
markets are more volatile than expected.
Long-term
Debt Fund – Debt funds are mutual funds that invest in fixed income
securities like bonds and treasury bills, Gilt fund, monthly income plans
(MIPs), short term plans (STPs), liquid funds, and fixed maturity plans (FMPs)
are some of the investment options in debt funds. Debt funds are best suited to
individuals who are not willing to invest in a highly volatile equity market
and to take huge risks. Fund Managers have kept medium-to-long term maturity
government securities and AAA-rated bonds in this category to gain from debt
instruments.
Here's how
the New India Portfolio has delivered in the recent past:
There are
many investors weather big or small have faith in the growth of Indian economy
and also invests directly in various instruments can also invest FundsIndia's
New India Portfolio (NIP) to supplement existing portfolio and take
advantage of qualified professional research.
Disclaimer:
Mutual fund investments are subject to market risks. Please read the scheme information
and other related documents carefully before investing. Past performance is not
indicative of future returns. Please consider your specific investment
requirements before choosing a fund, or designing a portfolio that suits your
needs.
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