Some Trading Secrets

  • Stop placement
    • Don’t place stops at round numbers (which are common support / resistance zones).
    • Place stops below support zones (above resistance zones) to give price every opportunity to move in desired direction.
  • Trade with the trend
    • Select stocks that are moving with the general market and industry trends.
  • Enter on breakouts near the yearly high
    • Breakouts from chart patterns within a third of the yearly high perform best (statistically). If price doesn’t rise within a few days, consider selling immediately.
  • Exit only on expected significant price turns
    • Don’t be so quick to sell. Learn to predict significant price turns.
  • Use trendlines as sell signals
    • If prices are trending up and then drop below a trendline, the trend isn’t up any longer. However it doesn’t mean that the trend is down.
    • Victor Sperandeo’s criteria to determine if a trend has changed from up to down: (i) price drops below an up-sloping trendline, (ii) lower high (or failed breakout), (iii) lower low.
  • Ignore news
    • Don’t believe scenarios spun by news outlets.

Change Of Market Character

trend-tradingAs a trend develops, the reactions, or pullbacks, tend to become smaller. Traders looking to enter the trend wait for reactions to place their orders; as the move becomes more obvious, these reactions will get smaller and the increments of trend movement will become larger. When the reaction suddenly is larger, the move is ending; the change in the character of the move signals a prudent exit, even if prices continue erratically in the direction of the trend.

Up or Down Market-Mint Money

SMS-4 november
Dear Readers and Traders ,Always remember :
The market is a battlefield. Make sure you are on the winning side
Yesterday I had sent these Intraday Messages to my Subscribers.
-First Message :Buy NF above 4660 will kiss 4690,4730 level in hrs only.
*Grab Bajaj Auto ,Maruti and forget.Both stocks will skyrocket.
*Buy Great offshore ,Worst is over.Recommended at 518 ,stock was sleeping whole day..will roar.
*Buy SBI :Will kiss 2116-2131 & there after 2177.(Do u know it kissed 2172)
*Buy Reliance  :Target 1917 ,1944 in this rally.
*Have a eye on 454 for Tisco ,Now at 453.Crossover will take to 464-468 in hrs only.(Stock kissed 473)
*Go short in Bajaj Hindustan @ 198,will kiss 191-185-183 in panic.(In just less then hr it kissed 187 level )
So Jackpot for the day were :SBI & Bajaj Hindustan.
-From morning till end session our Mantra was NF maximum can zoom upto 4730.It kissed 4711.
Always Remember :Knowledge through experience is one trait that separates successful stock market speculators from everyone else
Updated :7:45/5th Nov/Baroda

Just follow Trend and Mint Unexpected Money

No one can predict a market trend, you can only react to them! Trend following never anticipates the beginning or end of a trend. It only acts when the trend changes. However, there is no need to figure out ‘why’ a market is trending — just follow it. You don’t need to understand electricity to use it.

Just Think :How many of u Bought or Traded in Reliance with levels ?

-Stock never broke :960 & Nifty Future support was 4898-4882 (Before Budget ,I had written)

Always Remember ,Writing/Saying and doing Bla Bla is very easy.Giving comments on Blogs…..(Those who are not earning or Failures will write comment with using Bad Words)But our AIM is to Mint Money from Market.End result should be your Balance Sheet on Plus side.

Updated at 7:27/22nd March/Baroda

Trend Following -Important points for Traders

  • Trend following historically has a relatively low win percentage, across all asset classes. The positive expectancy from using such a system comes from the size of the winners far exceeding any losses incurred;
  • Trend followers never try to predict tops or bottoms in markets – they buy on strength and sell on weakness;
  • Strict risk managment and position size minimises the losses as far as possible when a losing streak hits;
  • Probably 80% of your trades each year will cancel each other out – consisting of small winners, small losers (restricted to 1R of your capital) and break-even trades;
  • The remaining 20% of your trades will probably account for 100% of your profits, but you never know which ones will generate the profits when you open the position;
  • To achieve this you HAVE to let the profits run until you receive an exit signal;
  • Stops are updated as often as your system rules determine;
  • And you have to adhere to your stops at all times;
  • Nobody knows when a trend will reverse, however when it does, you automatically give back a portion of your profits before your (trailing) stops are hit;
  • If a trend breakout reverses or fails just after entering a position, you will incur losses;
  • Significant increases in volatility can cause losses due to whipsawing or trading ‘noise’;
  • The best market conditions for trend followers are trending, stable markets;
  • The worst market conditions for trend followers are non-trending, volatile markets;
  • There are numerous trend following methods out there, but although the entry/exit parameters may vary, trend followers as a rule will make (or lose) money in the same markets at the same times;
  • If you don’t understand any of the above points, or are not prepared to accept these facts, then you do not have the mindset to follow a trend following method.

Trading Mathematics and Trend Following

Some quick points, to be making money, Profit Factor must be greater than 1.

  • Profit Factor (PF)
  • = Gross Gains / Gross Losses
  • = (Average win * number of wins) / (Average loss * number of losses)
  • = R * w / (1-w)
    • where R = Average win / Average loss
    • w = win rate, i.e. % number of winners compared to total number of trades

Re-arranging, we have

  • w = PF / (PF + R)
  • R = PF * (1 – w) / w

Sample numbers showing the minimum R required to break-even (i.e. PF = 1, assuming no transaction costs) for varying win rates.

  • w = 90% >> R = 0.11
  • w = 80% >> R = 0.25
  • w = 70% >> R = 0.43
  • w = 60% >> R = 0.67
  • w = 50% >> R = 1
  • w = 40% >> R = 1.5
  • w = 30% >> R = 2.33
  • w = 20% >> R = 4
  • w = 10% >> R = 9


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