Seasoned traders would second my thought when i say simple rules when followed
during trading result in consistent profit rather than following a complex strategy
followed by too many rules.
Some one rightly said
"KISS" keep it simple stupid:).
The single most important thing for a trader(short term) is to follow the price and
volume action.
Yeah you got it right am talking about "Tape reading".The tale of tape lies in
listening to stock speak through the patterns created by buyers and sellers ,
All other indicators are secondary after all they came into picture only
because of price and volume action:).
Jeff cooper rightly said
"Stocks don't move, they are
moved." Wall Street can be a perverse place; not everything is always as it
seems. Sometimes a breakout is generated to facilitate a large player who needs
to unload inventory. Sometimes a flush-out is orchestrated to facilitate
accumulation by smart money. It pays to believe what you see, but with a twinge
of cynicism.
Because fast moves often come from false moves, larger-than-average profits
can result when most traders are caught on the wrong side of the market. Some
of my best gains have come from being on the wrong side of a situation, getting
stopped out, and going the other way.
Lets take an example of failed head and shoulder pattern..
Ideally stock should have fallen big time below red line but instead it started its
journey in reverse direction an ideal case of failed pattern.
Another pattern to look for is a Triangle
Lets take an example of Bank of India
The chart is self explanatory its a flat based triangle it gave breakout in the direction
of breakout ,Both the times it ended up moving in reverse direction with force.
These are few example out of many available ,So usually a fast move is seen after
a failed pattern,Do leave comment or example if you saw any of such failed patterns
or signals.
Regards
Rish
RESEARCH REPORTS