>Some Rules for Trading Reversals

There are a few preliminary points considered common to all reversal patterns that you should absolutely know before trying to pick a top or bottom in stock trading, which is difficult enough:

1. A prerequisite for any reversal pattern is the existence of a prior trend.
2. The first signal of a trend reversal is a break in an important trendline.
3 . The larger the pattern, the bigger the subsequent move.
4. Topping patterns are shorter in duration and more volatile than bottoms
5. Bottoms have smaller price ranges and take longer to build
6. Volume is more important on the upside

Existence of a Prior Trend - A prior major trend is the most important prerequisite for a reversal pattern. Of course, if there is not trend, there's nothing to reverse. One of the key elements in pattern recognition is knowing where certain patterns are most likely to show up in a trend structure, as in uptrend or downtrend.

Breaking of Important Trendlines - One of the first signs of trend reversal is the breaking of an important trendline. However, the violation of the trendline may be no more than just a signal of a change in trend. It could be a sideways trend or price pattern later proving to be a reversal or consolidation.

Larger the Pattern, Greater the Potential - Larger, in this case, refers to the height and width of the price pattern. Height measures the volatility, and the width measures the time taken to build and complete the pattern. The wider the price swings within the pattern (the measure of volatility) and the longer it takes to build, the more important the pattern and the greater the potential for the ensuing move.

Measuring techniques which measure the height of the pattern or vertical criteria are primarily applied to bar charts. Measuring the horizontal width of a a price pattern, used for point and figure charting, uses a device called a "count" which assumes a close relationship between the width of a top or bottom and the subsequent price target.

Differences Between Tops and Bottoms - There are distinctive differences between tops and bottoms. Tops are shorter in duration, more volatile, and their price swings are wider and more violent. Whereas, bottoms have smaller price ranges and take longer to build, making them easier and less costly to identify. It is also easier to trade bottoms than to catch tops. However, traders can usually make money a lot faster by catching the short side of a bear market because prices tend to decline faster than they go up. It is always a tradeoff between reward and risk. Greater risks capture greater rewards, and vice versa. Topping patterns may be harder to catch, but Day Trading, Swing Trading and Options Trading traders all agree that they are worth the effort.

Volume is More Important on the Upside - Volume is an important factor in confirming the completion of price patterns, and generally, it increases in the direction of market trend. Noticeable volume increases should accompany the completion of a price pattern. Note that in the early stages of trend reversal, volume is not as important at market tops. Although traders like to see an increase in trading activity as prices go down, it's not critical. However, at bottoms a volume pick up is vital. If there's no significant increase in volume during an upside breakout, the whole price pattern should be questioned.

>IFCI analysis

IFCI witnessing good buying and also holding its support well due to which it looks a bood buy in dips till 55 is maintained which can be taken as stoploss for longs,So if 55 is maintained ifci can target 72-75.
This corrective wave rally may reach max 80 I think ,Also there is a news about strategic stake buy in IFCI by joint bidding by RELIANCE IND & STAN CHART.Do not trade with out stoploss

regards
Rish

>Reliance

After making an high of 2674+ Reliance has been falling consistently and has lost more than 200 points in this fall things looks upbeat for this stock for couple of trading sessions at least so reliance should try to touch 2560-2550 in the coming days to complete corrective wave rally.

Ones who want to try a trade on this analysis can long reliance with a stop loss of more than a percent from present levels and hold it.

Risky players can even try immediate strike price or 2550(resistance)call option.

Regards
Rish

>Yahoo messenger virus

This is important for you if you are a trader and use yahoo messenger to get connected with fellow traders.
There is a new virus outburst which attacks yahoo messenger this virus spreads through pen drives due to which when ever we try to login yahoo messenger disappears and gives an error message application error if any body facing such trouble can contact me on rishtrader@gmail.com or can add me in yahoo messenger id:- rish.trader@yahoo.co.in.

I would be happy to help you to remove that virus an i myself went through that virus hunting.

Regards
Rish

>Nifty 23rd may

Nifty breached today trailing stoploss which was kept near 5050 and kept trading for the rest of the day in range of 5010-5060 before closing near to todays low which is almost on trendline support.

Tomorrow being all important day INFLATION figures which with the kind off crude surge looks like would be on higher side its only matter of time when fuel hike is announced politics too cant hold things for too long(election year)thing to be watched would be how much hike may come lets keep fingers crossed and watch next 2 weeks would be full volatile with expiry too nearing it would be full DHAMAAL as of now for the levels 5050-5060 would act as immediate resistance for nifty upside.


There is a posibility of a triangle formation(technically) in nifty and if thats happening we could be in for a rise say till (5090-5100) D leg up for triangle.All in all 4950 with some error of a percent holds the key for the bullish case a chart is attached

Regards
Rish

>NIFTY VIEW

Nifty gapped down but unlike most of the world markets recovered smartly and closed in green,If you are long in NIFTY 5050 remains trailing sl for longs with short term trendline support at 5000-4980 trade accordingly




regards
Rish

>SESAGOA

Sesagoa is trading in corrective wave can target 4000-3800 levels in coming days before starting to move up again chart is attached.

>Trading day 20th may

Nifty gapped down today after three days holidays banks were the culprit Real estate too was under pressure

BHARTI literally forgot to rise since MTN stake buy talks initiated:)Well bharti is nearing its supports if it holds 800 a corrective rally in BHARTI can take the stock to 855-860 levels at least,Well ,If you wanna try a trade in bharti try to trade in it as close as possible to 800.

Hdil spurted unlike other realestate players which plopped today theres a buss about HDIL that it may announce bonus anyhow technically 870-880 is the place where it may see selling pressure.

>MC Dowell

>May 15th Trading day

Nifty gapped up and held that gain through out the day unlike last few trading days where nifty fell considerably in last hour or so,

But today last hour nifty broke out from the intraday range to close above 5100 if nifty continues to hold 5100 we would target higher resistances in coming week range for may most probably would be (4900-5300) we almost touched 4900 the other day .Today orchid did exactly what I was expecting from it after it touches 280+ can check the previous post on this here....

Lets try to analyze how Bombay dyeing may move in coming days chart is attached...

>13TH MAY Trading day

Nifty gapped up,Did sustain it for quite some time Intra day counts suggested nifty can touch 5090-5100 before plopping back ,
But nifty came back crashing from 5060+ and was not able to even sustain 5000 bad stuff,Actually gap ups are usually a short in morning ,But did not do it may be it was not my day :)few stop losses were hit in morning though was able to recover in the eve by some jobbing shorts.

A lesson learned today some times when things look easy they are indeed easy(shorting at gap up).

Regards
Rish

>13th MAY NIFTY INTRADAY

>12th May Trading day

Hmmm roller coaster day Nifty plopped down hard and then came up smartly it usually not easy to trade news days

Today IIP data was awaited,A short trade in IFCI was done in morning usually when it is seen that nifty is witnessing free fall its good to short weak stocks provided you are fast enough or can trail with stop profit(it is a stop loss which is initiated when the trade is in profit for us to make sure it remains in profit )well nifty recovers smartly only to be beaten down again to the days low because of bad IIP data.


Tried another short in IFCI but it did not perform accordingly also nifty started to show strength trade was covered in loss before the stop loss.Since IIP data was bad it was really tough to take a long call suddenly as the nifty started to buzz in positive direction,
But when even market breath started to turn positive it gave confidence and few small trades were initiated in ISPAT IND ,WELGUJ and HDIL which did well rather should say quite well before the Market closed.Today CAIRN was a big miss trade though we did discuss that few trading days back exact same pattern was seen today too to see the old pattern click here...

Todays analysis is again on CAIRN chart attached.

>Performance Review for Traders

Any given trade and any given day may or may not go a trader’s way, depending upon personal and market circumstances. A three-month period, however, is ample opportunity for frequent traders to demonstrate progress in their development. Here’s a quarterly report card that you might find helpful in tracking your own performance improvement:

1) Have I been profitable after expenses over the last quarter? If so, which markets and trading ideas have contributed most to my profitability? How can I maximize those markets and ideas going forward? If I haven’t been profitable, which markets and trading ideas have contributed most to my losses? How can I minimize or modify those markets and ideas going forward?

2) Have I improved my P/L over the prior quarter? Over the average of the prior three quarters? If so, what changes did I make in the last quarter that contributed to my improved performance? What changes in the markets have aided my recent performance? If I have not improved my P/L over the last quarter and/or over the average of the prior three quarters, what have I been doing differently that has been holding me back? What has changed about the markets that’s hampered my performance?

3) Have I managed risk well compared with other quarters? Have I made more in my largest winning days than I’ve lost in my largest losing ones? If so, what has worked for me in capping my losses that I can carry forward to the next quarter? If not, what do I need to do to limit my losses better in the next quarter?

4) Have I adapted well to market changes? How have my markets changed over the last quarter, and what did I do to adapt? Which of those adaptations do I need to emphasize in the next quarter? Which further adaptations can I make next quarter to deal with market changes?

5) How have I improved myself as a trader over the last quarter? What improvements have I made in my trading? In my finding opportunities? In my discipline and self-management? Which improvements do I most want to emphasize and carry forward to the next three months? What improvements haven’t I made in the last quarter that I need to focus on during the coming months?

Notice that the follow up questions are as important as the lead questions. It is those follow ups that turn the quarterly assessment into next quarter's goals. It is not enough to plan trades. Career success also means planning your development.
Brett N. Steenbarger, Ph.D.

>Trading day 9th may

Nifty opened gap down but recovered smartly to come back to positive today being friday inflation nos were awaited ,Well numbers turned out to be higher than previous week .

Which set the stage for shorting nifty trading below 5050 was negative which paved way for 5000-4980 ,I expected nifty to show some strength near 5000 and bounce back but ultimately breached 5000 today it was mostly because of heavy selling in Mukesh Ambani led RELIANCE IND and RPL both fell in excess of 5% Selling in these counters were mostly attributed to the Rumor that "govt is considering to ban export of RELIANCE and RPL products"Lets wait and what really is happening and whether this remains a rumor or turns out to be true.

Today morning did one long trade in TVS MOTORS it was a good setup would explain that with a chart.

Did some jobbing in ifci long

In the later half of the day tried to long TVS MOTORS again but sl was hit!!!
Bombay dyeing was shorted below 970 this trade would have fetched great return provide done in futures since i traded it in ICICI i was not able to capitalize fully on the fall as they usually cove all intra day positions by 3o'clock well my short was covered neat 925 whereas it touched a low of 890:( Never mind i did make money in that.
Regards
Rish

>08TH MAY Trading day

Over night DOWJONES dump was big but Asia did not react much to it the gap down lows were maintained but as I have said many times before too gap up and gap down days are usually lackluster without much trading opportunities though jobbing can be done like I did in few scripts BOMBAY DYEING and RELCAP:)

There was no clear trend today each substantial rise was followed by big sell offs.Surprisingly many unknown mid caps were blasting today Nothing much to write today it was a dull day.

Today trying to analyze ABG SHIP which is consolidating for some time after the spike up.Chart attached

>Substantial Acquisition of Shares and Takeovers dated 07th may

>Trading day 7th may

Yesterdays Bombay dyeing spiked today morning went all the way to touch an high of 1014 before falling back that was a good BTST or may be an early intra day trade.

As nifty topped out most of the stocks started to fall but this cairn India didn't fall some one big had acquired huge quantity of cairn some time back I even mentioned about it in my messages well if you want to check the quantity click here Would try to analyze cairn India today.

Yesterdays pick RENUKA SUGAR spurted today handsomely.Today was a good day for day trade provided you are with trend it was kind of W formation on nifty so it was good for jobbing nifty came very close to 5100 but bounced back smartly from there.In the afternoon volatility suddenly increased when there was a news about GOVT ASKING STEEL Co's TO REDUCE PRICES BY 4000 PER TONNE . Tisco in a matter of minutes was beaten down 2% after trading much of the day in positive territory which shows that a news and make or break things quite fast.

Substantial Acquisition of Shares and Takeovers dated 06th may

>Trading day 6th May

With morning nifty rise many new breakouts were seen which turned out to be false by eve wth nifty taking beating as long as 5100 with 1% error either side is maintained the wave structure looks fine .
In straight words come out of longs if the above condition fails.

Today Maharashtra seamless both targets were reached was booked there.
Rajesh export 100+ was reached.
TTML was a great example of breakout + retracing back to breakout point it was a kind of triangle breakout since triangle breakouts are usually good at times I try to cash in by playing options.
For example TTML was consolidating in a triangle for last 6 trading days which made options to shed considerable premium time decay too comes in play ,I usually play out of money options provided if have some time at my disposal .
Before the breakout day 42.50 CA had shed its premium considerably from 1.80+ to a mere 0.70paisa in about 6 days,and to my delight on breakout day it went to 1.45 money doubled!! thats one advantage with out of money options
provided you have enough time left + I assume you are good at analysis to see which out of money option strike price is most effective.
Today again am gonna analyze BOMBAY DYEING.I like that stock:)

>Substantial Acquisition of Shares and Takeovers dated 05th may

>Trading day 5th may

Two days holiday mind fresh glutted with fresh ideas to trade was fairly bullish with few new trades in mind PENINLAND ,SOBHA DEVELOPERS.

Well market started and you see when everything looks good something bad happens my live data feed stopped sucking data into AMIBROKER and me being a chart guy am blind without charts ,I usually don't trade with out charts until forced.Well kept fighting with that software without any sucess.It was only by 12.30 pm my live charts started to bulid those up down hills but by that time i was frustrated also felt like lost many trading opportunities well had some juice and started to concentrate.
Peninland was already up so no trade there.
Same with sobha developers.

Let me update on swing trades still active
ORCHID moved up(no profit booked yet)
DCB did 120 and was booked there
TVS MOTOR 50 CA fell today holding on to it.

So virtually no new trade today till about 1.30 pm
Divislab started to look good on chart since was feeling but left out jumped into the trade without any confirmation and yes Sl was hit game over!!!.Did not do any other trade The only positive thing was Maharashtra seamless which spurted 7% .All in all an ok ok day will try to analyze orchid today which is an swing trade taken since 240+.



Regards
Rish.

>Substantial Acquisition of Shares and Takeovers Dated 2nd May

>Futures the luring Ghost

First the bad news: best estimates suggest that 90% of individuals who trade futures lose money doing
so.
Now for the worse news: This estimate may be too low.The sad fact is that somewhere along the way the majority of traders make one or more critical mistakes in their trading, which cause their losses to exceed their winnings.The good news is that the mistakes that cause most losing traders to fail are quite common and readily identified.
.The better news is that by being aware of the potential for making
these mistakes and by taking steps to avoid them, you can make a great leap towards becoming a more consistently profitable trader. Target to achieve is
to become a more successful trader – not
necessarily by trying to be a “good” trader, but trying how not to be a “bad” trader.

the high rate of failure among futures traders can be attributed
primarily to three factors:

• The lure of easy money
• The lure of excitement
• An utter lack of preparedness to deal with the potential downside
Unfortunately, it seems that many individuals are lured into
futures trading for a lot of the wrong reasons.

Let me try to explain with an example!!

Suppose someone offered anyone who shows up the
opportunity to drive an sleek Ferrari race car around the track
with the promise that the person with the fastest time will
receive a Rs 1crore prize. Will a lot of people show
up to take a shot? You bet(Many would be present just for the adrenaline rush).
Will most of them be truly
prepared for what they are about to do? Not likely. Will
someone win the Rs1crore? Of course. Will 90% of
the drivers fail to make it to the finish line?

Welcome to the exciting world of Future speculation!!!

If you are reading this article and trade futures too, Share your experience.

Regards
Rish.

>Maharashtra Seamless Ltd

Stock looks like out of Down channel and is showing strength coulpled with good volumes
A trade can be initiated according to the levels given in the chart.
Regards
Rish.

>2nd MAY Trading day!!

Nifty opened with a gap up which was evident by the overnight DOWJONES rise.
Well a thumb rule short at gap up in a bearish trending mkt (relief rally) was bit annoyed that was not able to short BOMBAY DYEING yesterday ,though it was not a great short any how to satisfy my crave to short BOMBAY DYEING kept waiting for a setup to short it intra day . Chart is attached
Other swing trades faired well today ORCHID CHEMICALS, DCB only eyesore RANBAXY sl is not hit yet so holding it though its testing my patience .

DCB is a sleek 3rd wave kind off example though its still questionable near 125 anyhow half DCB was booked near 115

orchid long was taken anticipating B up rise still some more pending in that .

Nifty am not touching these days bit vary of its movement may be in few day will find a good trade in it .A new option trade initiated today 50 ca TVS MOTORS may month also a possition in Deepak fertilizers LETS SEE how these fair in coming days ,Have a great week end
cheers
Rish

>Substantial Acquisition of Shares and Takeovers Dated 30th april