Basic and specific clarifications in technicals


posted by vetri on Sun Oct 27, 2013 01:13 pm

#1

Please post all your questions here // and please wait for response // all basic doubts will be fully explained here

Starting with the Q of "Mr. RKMDU --- what is the usage of fibonaaci ??"

Fibonacci Numbers are a sequence of numbers where each successive number is the sum of the two previous numbers.

e.g. 1, 1, 2, 3, 5, 8, 13, 21, 34, 55, 89, 144, etc.

After the first few numbers in the sequence, if you measure the ratio of any number to the succeeding higher number, you get 0.618. For example, 34 divided by 55 equals 0.618 --  This is called GOLDEN universal RATIO.
If you measure the ratio between alternate numbers you get .382. For example, 34 divided by 89 = 0.382  everything in the universe appears to be "struck" at this ratio -- few examples --

posted by vetri on Sun Oct 27, 2013 01:17 pm

#2

posted by vetri on Sun Oct 27, 2013 01:24 pm

#3

posted by vetri on Sun Oct 27, 2013 01:36 pm

#4

so the Golden ratio and its supportive ratios // are important and price in stock market also moves accordingly//  all popular theories like Elliot Wave / Gann / Cmamrilla etc use the Golden ratio in their calculations.

In market // the previous swing high and low is considered as "1"  ==  for this value 23.6 , 38.2 , 50 , 61.8 and 76.4 % are calculated// these levels are marked in the chart ..   IF the prices are against the previous swing -- then they will fall in this ratio -- in other words these lines will act as resistance/support Level-line.

Live chart example of NIFTY is posted below :- 

posted by seetharaman on Sun Oct 27, 2013 02:11 pm

#5


thanks vetri sir for this thread

posted by sjnanes on Sun Oct 27, 2013 02:59 pm

#6

thanks vetri ji for introducing to fibonaaci

posted by rkmdu on Mon Oct 28, 2013 08:09 am

#7

Thank you so much for clearly explained that......

posted by vetri on Mon Nov 11, 2013 04:52 pm

#8

Result is expected on 12-11-2013 -- The technical indicates "MORE" possibility of BREAK-OUT // as indicated by the Bullish Divergence posted in the chart.  WE will post follow-up chart on EOD of 12-11-2013 ///  DO NOT enter LONG before crossing above the trend line ( The 30 minutes candle SHOULD CLOSE above this line)

happy trading,

Vetri

posted by vetri on Mon Nov 11, 2013 05:07 pm

#9

posted by vetri on Mon Nov 11, 2013 05:17 pm

#10

The Power of "Cup&Handle" -- in Think soft

The pattern was identified on 18-Sep-2013 and to-day on 11-11-2013 the stock closed at Rs. 214-30// it had frozen upper on Friday and Monday // Those who bought can start booking part profits or trail with proper stop-loss.  The stock also had displayed "HIDDEN-POSITIVE-DIVERGENCE" on the Daily chart when we entered in September . (The daily chart with clear "Hidden-divergence" is posted

posted by vetri on Mon Nov 11, 2013 05:36 pm

#11

Granules is Fundamentally a good stock -  and We recommend you to buy and hold for Long term - NOT IMMEDIATELY

BECAUSE - currently the technical is showing negative Divergence  // Hence wait for the fall and start picking the stock on decline

This is to study the negative divergence -- also indicated is the "hook" in ADX - supporting the negative outlook.

posted by vetri on Sat Nov 16, 2013 03:33 pm

#12

posted by chakradhar on Sat Nov 16, 2013 08:07 pm

#13

Hi Vetri ji

In NIFTY chart you have given trend line in Red line and using the support as stop loss. But for Positive trend line how did you come to price 6125 as the resistence level.

posted by chakradhar on Sat Nov 16, 2013 08:08 pm

#14

I am nebie to technicals and learning. Could you explain in detail Thank You

posted by vetri on Mon Nov 18, 2013 10:33 am

#15

Dear Chakradhar ji,

The chart displayed and the method used for entry and stop-loss // involves TWO technical parameters.

(1) -  Trend-line - crossing -- as you rightly pointed out - the falling trend-line marked in Red - was crossed , and the candle (daily- chart is used, hence daily candle CLOSE has to be ABOVE the trend line for reversal from bearishness to Bullishness) .

(2) - The candle pattern -- The last three candles together - has formed a REVERSAL pattern - this pattern is called "Morning-star" - or "Abandoned-baby" or "Island-reversal" ----   there is only slight difference in identifying the EXACT name for the pattern - However, that does not matter as all three patterns indicate "Bullish-Reversal" .

The Level - which is HIGH of the "Third-candle" // that is the High of 14-Nov-2013 -- has to be CROSSED for entry into Long Trade as per the pattern rules - hence , the Level 6137-50 is marked as the "Entry-point" for the long trade. (The black-line drawn MAY appear as if corresponding to 6125, but the actual LEVEL is 6137-50)  (all levels in this chart are NIFTY November future rates)

However to-day's market GAP-up has opened ABOVE this Level -- during such GAP-up times - it is better to wait for the gap to be filled // and if, it does NOT appear to happen // and the newer high is achieved -- we can understand that the market is in strong up-trend and we can enter at higher Level .

We can Trail the trade by moving the stop-loss to to-day's LOW ----

Hope I have answered and clarified your doubts .

happy Trading

Vetri

posted by safanooh on Tue Nov 19, 2013 06:22 pm

#16

hey respected sir

sorry to distrub u but i want to learn somthing frm u am positional and long term investor bt i hear from lot of pp 

abt intraday so sir i want to learn nifty call put trading if u dont mind to teach me it is highly appriciate 

if u teach me how to trade in call put intraday and positional again sorry for distrub u and thanks 

asif

posted by vetri on Wed Nov 20, 2013 07:20 am

#17

Dear Asif bhai,

The options trading appears very lucrative and tempting -- But due to "peculiar" nature of its pricing , the risk involved is high.

People may tell you that options your exposure is limited and the gain is UN-limited ,,  this is true, ONLY - IF , you have entered the trade rightly and have the experience to sustain the volatility , I have witnessed many people loosing their entire capital trading in options.

We are actually planning to expose the dangers involved in option trading, and also how to convert the danger into advantage.

----------------------------------------------------------------------------------------

A small example --- (if are really interested to trade in options you need to develop patience -  1st Lesson - let us see whether you have patience to read this fully and understand)

Last week, on (13-Nov-2013) when SBI cash was trading between 1670-80 Levels the Call option 1700 (Nov) was trading 47-52,

within a span of about 1 hour the cash price surged to 1735 - the call option 1700 spurted to 86 -- If you have just observed this alone - you will be attracted to trade the options - 35 rupees profit within one hour is great !!

BUT,  in the following 1 and half an hour -- the price of the cash fell to 1685 -- and the option price came back to 49 ,, then same day before close the cash went up to 1705 (last traded price) -  but the option closed near 58.

Assume , you have Bought the Call option at 85 rupees when the prices were bubbling and surging -- it never crossed above 61 rupees that day (last traded price near 60) -- you are in 15 rupees loss - this is 17.65 % loss - will you close or hold -- you are in panic - near the end of the day ??!!

----------  the next day on 14th the stock was simply range-trading -- and closed at 1725 - the option never crossed 79 rupees , and That was on Thursday -- Friday-sat/Sunday being three days holiday -- will you close or carry forward - again you are in panic --- 

On Monday the stock opens at 1745 - Gap-up from previous week close and goes till 1767 and closes at 1765 ,  the option opens at 75 - after waiting for three days you are seeing the cash opening gap-up and disappointed to see option not even in profit, what will you do ?? panic again ----------  during the day the option trades ONLY up to high of 93 and closes near 91 --------  now you are disappointed - when the cash traded more than about 60 points from your entry -- your option has given just 6 rupees profit - even if you have NOT sold in the open panic - you may close the trade when it goes near 93 -- getting great relief of removing your frustrated waiting for three days.

The next day again , (19-11-2013-Tuesday) when the stock opens near 1765 - you are seeing the option opening near 88 and moving slowly to 98 -- even if you have not sold on 18th you may sell here -----------  but during the day the option surges to 140 and closes at 135, the cash closed at 1823 after trading to a high of 1830.

AFTER this experience ,  you will come to a conclusion -- we need to wait AFTER entering --- and this time you may invest and keep on waiting -- the option will never come back to you purchase price at all and expire --- the experience will be different -- I will post that kind of experience afresh when that happens -- please wait ........................

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Trade Management and strict discipline is important to Trade options ---------------  We will post lessons / we are now collecting data and it may take sometime please await fresh thread to be started by HMT sir - to Learn to trade options

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happy Trading,

Vetri

posted by vetri on Wed Nov 20, 2013 07:22 am

#18

posted by rajapvt on Wed Nov 20, 2013 11:01 am

#19

Vetri sir, very nice illustration of the option buyers pain.

posted by safanooh on Wed Nov 20, 2013 12:19 pm

#20

dear respected sir

thankyou very much for ur favourable reply and am very happy to see tht u helping me and othets all

small traders to save those money  u doing good work which is highly accountable 

thanks againg

asif



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