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Incredible Trading Lessons from incredible Traders...

Floor/Roof Lines & SL

Whenever you initiate a long trade, draw the "floor line" which should not be broken and keep your SL
around that.
Whenever you initiate a short trade, draw the "roof line" which should not be broken and keep your SL
around that.
There are few numbers that come handy to use as floor line/ roof lines. They are: JNSAR, J10SAR, Pivots, 21
or 34 hr smas, 5DEma and so on. Use the one that the market has respected often.

Ilango said...on December 19, 2011 10:20 AM

OI Interpretation
In case of option:
1. price up, o/i up > long build
2. price up, o/i down > long unwind
3. price down, o/i up > short build
4. price down, o/i down > short unwind

skmishra said...on December 12, 2011 2:49 PM

OI Interpretation
Logic is simple. If a series premium decreases with an addition of OI, it is "writing". And if the premium
increases with addition of OI, it is "buying".

Ilango said... on December 12, 2011 2:33 PM

Message of the market

Do not look for perfections in the market. Mkts are evolving. What is essential is the "message of the market"
with these patterns. And when you do get perfections (like the golden ratio), do not miss them.
Just follow each study whenever they call out for action. e.g. Regular TA calling out for Day OB with Hour ve div...stretched with a golden ratio is an ideal situation!

Ilango Said... on December 8, 2011 11:06 PM

Invalidation point for -ve/+ve divergences

There is-ve divergence in Hr Fmacd,hr 14 RSI and Hr. 9RSI and Hr 35D charts - which is supposed to
indicate ST weakness. But NS seems to be moving up and up. So, How do we assess the invalidation point for
-ve/+ve divergences?

We see -ve div in Hour charts but the prices have not closed below HEma till now. Such a behaviour is often
seen in 3rd waves and "c" waves.
If you sell aggressively, you take quick profits till a confirmation comes.
Caution: Even if a confirmation comes, there is no guarantee of a sharp fall as Day trend remains "UP".
Just know this to be an "aggressive trade" which requires "agility" as well as "High risk-reward" approach.

Ilango said... on December 7, 2011 1:32 PM

Quantitative analysis
The tendency of Nifty varies during each and every uptrend/ downtrend.
How much it dips for buy during uptrend or how much it bounces for a sell during downtrend need to be
calculated at every dips in uptrend and at every bounces in downtrend.
This is smart trading using quantitative analysis.Using it for aggressive sell trades in an uptrend, It is always
advisable to book profits even before the target levels. Let there be some sell signals, then and then only you

could expect more.

Ilango said...on December 7, 2011 1:28 PM

Trading with High/Low/Close EMA's

When prices move above Low Ema & Closes: Buy on dips to High ema+
When prices move above High Ema & Closes: Buy & Hold as upward momentum picks up.
When Prices move below High Ema & Closes: Sell on rises to Close Ema/ Low EmaWhen Prices move below Low Ema & Closes: Sell & Hold as downward momentum picks up.

/
Ilango said...on December 7, 2011 1:04 PM

Why traders get emotional and not able to follow through their plans?
The answer is quite simple.
When you make your trading plan, you use your brain. When you start to execute the plan, implement your
strategy, leave out the "thinking"...leave out your "ego".... Just do it.
Using your brain unnecessarily, you end up a loser...and you have also seen many messing up their trades
despite knowing fully well what should be done.
Now try this: Without using your brain, simply execute the trades. Wait... wait..not just yet.. Wait for those
"good trade set ups" to emerge and then start.

With this knowledge that trades are messed up when we start having "opinions" of what the market will
do....and this fear holds you back from doing the right thing. So the steps you must take include:
1. Plan a trade with one or two contingency plans.
2. Key in your order to buy or sell.
3. When the order is executed, key in the "Exit price" along with your SL.
4. Do not change it unless one of your contingency scenario start to play out.
5. For simplicity, you can do away with contingency plans.

Can you get dumber...dumber...and then see all those riches.. Stop the chatter..start hearing those money
jingles.

Posted by Ilango at 4:52 PM

ITrading
don't hv anyStrategy
confusion in my trading 1. My day trading - i will keep the daily cycle in mind and "trade hourly".
2. I am a positional trader too - will keep weekly cycle in mind and "trade the day".
3. I am a scalper too sometimes - will watch hourly and trade 5 min.

Sujatha said...on November 22, 2011 3:13 PM

Distribution
Distribution is normally done after completion of uptrend
they keep price up/sideways and dont let people know distribution is going on
the pattern for distribution is descending triangle or candles with wicks.

Dinesh Rishi said...

Signal
For Safe trading, make sure the trend is on your side. For simplicity, we keep either 5ema or 5 sma as a
signal.
e.g.Month/ week/ day & Hour - all are trading below 5 ema/ sma. So we can say that we are in downtrend,
hence selling closer to 5ema/ sma continues.

Aggressive traders keep 3 ema or sma as a signal.

Ilango said...on November 21, 2011 11:39 AM

Reliable Indicators to look for divergences

Divergences may be reliably seen in rsi/ roc/KST & macd. Stochastics is for just leading and for "range
bound markets".

Ilango said... on November 18, 2011 1:37 PM

OB/OS does not means SAR

Most often biggest gains are made in downtrends after the "Lead indicator"(Stochastics) has reached below
20 (Most refer it as oversold & start bottom fishing).

Biggest gains are made in uptrends after the "Lead indicator"(Stochastics) has reached above 80 (Most refer
it as overbought & start selling).

Look at the percentage of gains below 20 and above 80, they are more than 60 to 70% of the total trending
move.

Ilango said... on November 18, 2011 11:59 AM

Identify Rythem
Know these sequence:
Now If Nifty is trading below all the emas/ pivots etc.
1. It has to close above Hour pivot/ HLEma/ HEma & HHEma. And in that process, if it manages to
close above Day pivot, that will be the first sign of strength.
2. Now it has to close above DLEma for a "Pause".
3. Once closes above DLEma, it should not go more than 20 points(filter) below DLEma for a "trading
mode" to emerge.
4. Now closing between "DHEma & DLEma", it is trading time in that range.
5. If it closes above DEma, a trend reversal likely but the upward momentum comes only on a close
above DHEma.

To avoid whipsaw, watch out for follow up action. Knowing divergences helps. But beware of the
divergences; since divergences in "3rd waves"/C waves are often results into TRAPS.

Ilango said...on November 18, 2011 11:51 AM

Don't try to become Nostradamus

Do not use strong adjectives to "Price movements". One day, you'll fall victim to your own dramatic.
I do not know where the price will end and reverse ...and so on.
But I do know when the momentum is lost in an uptrend and I trade every rises and falls using TT
indications. I have repeated that often.

By doing so..I'm "mostly" in the right direction. That is good enough to make money consistently.
We are not here to become the next "Nostradamus". But to earn consistently. Take your money and run.

Ilango said...on November 9, 2011 10:09 AM

Develope Patience
Any "C" wave or 3rd wave are sharp & swift. To deal with them, put them in larger time frame structure and
they will look normal.
How & when the game changes, no one can say it surely. All one could do is to deal with them using certain
methods/ studies. Following such studies rigidly would lead to whipsawing errors.
e.g: Trendline break-out with overbought readings would lead to false break-outs. Contracting triangle's
pattern breaks below lower support line by a few points and then reverses.
If one develops patience, the art of "doing nothing most of the time in the market", he/she
will be able to spot great opportunities and then it is left to your belief/ trust.

Ilango said... on October 28, 2011 11:57 AM

Prediction...worst disease
So, a TA Buys low (when the stock is oversold and lost momentum) and Sells high (when the stock is
overbought and lost further momentum).
Once in a trade, he moves along with the Trend, following the second Mantra. When he sights his stock
enters into OB/OS condition, he repeats the process.
In between, there is every chance that one might contract a disease called "Prediction". Even learned and
experienced traders/investors suffer from this disease. Where the market will go from here?
It is absolutely necessary to guard ourselves against the thought of finding future direction of the market.
One moment a cloud in the sky takes a shape of a dog and the next moment it changes into a crow's shape.
Prediction is injurious to trading. Let us go with the market and when it reverses we will also reverse.

OB/OS is also the signs of strength/weakness in itself. but there is something called Momentum, its essential
for a trend to continue.
Script can remain OB/OS for days but thing to keep an eye on is momentum.
So bottomline is: "when the stock is oversold and lost momentum"

Identifying Monentum:
By using visual analysis one can guage the momentum.
Visual Analysis: A form of analysis that utilizes charts and market indicators to determine market direction.
It comes with experience :D

Dinesh Rishi said... on October 19, 2011 9:49 AM

Momentum
For good momentum; momentum indicator must be in same direction for all the timeframes e.g.Week, Day
& then Hour also.

ilango Said...on October 19, 2011 10:54 AM

Million dollor secret of Trading Success!

Following the established studies in true spirit itself is rewarding.
It is our objectivity to such studies that differentiates success/ failure.
How much importance / weightage we could give to a particular study and at what situations comes with
more exposure to various markets.

How could you get more optimistic or excited or even depressed unless you have your own
opinions or expectations?
If you simply state, with discrimination, what you observe and deduct your conclusions from such an
objective analysis, you'll simply follow and not form opinions.
Your study should lead you to state buy/ buy on dips/ sell/ sell on rises/ wait for more clarity. It requires
tremendous poise of mind. When we attain such a poise...calmness, it spreads to all aspects
of our life and we become a true yogi. It is a journey in which I still struggle to shake off my prejudices.
Everyday is a progress as long as my sincerity of purpose remains. Start believing in your strength while
being humble & grateful for all the talents & resources GOD has bestowed on you. You'll then walk tall.

Ilango Said...6:08 PM 10/17/2011

How to identify a sideways market for trading?

In uptrend, it is the close below DHEma that suggests of a correction and it normally extends upto 10-20
points below DLEma. Depending on the nature of correction, it could even close below DLEma one day and
reverses.

In downtrend, it is the close above DLEma that suggests of a correction and it normally extends upto 10-20
points above DHEma. Depending on the nature of correction, it could even close above DHEma one day and
reverses.

Divergences are excellent indication of stretched market/ exhausted market.

Ilango Said on ...6:21 AM 10/20/2011

Indicators to look out for OB & Divergences

Each indicator has its own merits & drawbacks. For OB, I rely more on 9-rsi. For div, the more the merrier.
The combination of a higher T/f OB or -ve div along with lower T/F -ve div has better chances.

Ilango said... October 12, 2011 11:25 AM

High Probability Trade Setup

Once you notice OB in day, then look for -ve div in hour. Such a combination has validity. Similarly when
Hour comes to OB, look for -ve div in 5-min. In downtrend, exactly opposite.
When you get -ve div in daily as well as in Hour, such a market could be shorted aggressively.
Finally whatever observations one may note, managing a trade based on stop loss; part booking, etc should
never be abandoned. As in football, if you only have your eyes set on the goal, you will never be able to
manage the "tackles" along the way. Though goals are relevant, the job at hand should get the highest
priority.

ilango Said on October 12, 2011 10:24 AM

Why Sideways action after Sharp movements? & what it suggests?

After the sharp price movements, generally Prices stays in sideways mode for the "averages to do the
catching up" . Once the Catching up is done, they are expected to resume their original action.

Ilago Said on October 3, 2011 3:07 PM

GapUp/Down:Support/Resistance
A gap up point is a strong support zone and when that fails, assume that the buyers are getting overwhelmed
by sellers.And Vice versa.

ilango Said on October 3, 2011 9:01 AM

Patience is the key

If you really want to take advantage of your intelligence, you need to keep away from market men and if you
can not stay away from them, then stay detached.
There are two parts to your trading:One is your analytic part which observes, deduces and then makes a strategy.
The other is the "dumb trader" who methodically executes the plan.

These two should stay separate. Having known many traders and myself in the early years, all the problems
start when "both sit together" which opens up unending possibilities and ends eventually in "misses &
losses".
You have to develop calmness. You just can not get excited about spotting a divergence or a
pattern. You have to be mechanical about "exploiting such opportunities" in a cold,
calculating way.

You have to tell yourself that your "goal is making money" and "not just spotting & being
right".
Take it slowly. There will be 1000 opportunities in a year. Just capture 50 to 100 of High probable ones. Dig
into your years of experience and discriminate between gambling and "well thought out-high probability
trading plan".
Knowledge is good only if applied well. You need not trade everyday. Patience is the key here. Just like the
"Crane which waits for the big fish letting go all the small fishes", you need to wait for such
good trading patterns that emerge after an extended market at extremes showing divergences
and sell into strength and buy into weakness.
You tone down your expectations. If you make Rs.500 out of Rs.10000, try to protect it. And build on it
slowly. Skim away some profits. Build your trading a/c slowly.
How many times it has occurred to you that if only I have waited for this moment..So wait..

Get Rich slowly and quietly.

Best wishes.

ilango Said on September 19, 2011 8:16 PM

80% retrace Invalidation

80% retrace is generally used to negate the prev price action (rise/fall) scenario, though it is not a "Rule" but
a guideline and fails rarely.

Ilango said... September 13, 2011 10:04 AM

Trading in Stretched areas

"Stretched areas" in technical analysis is the area one should "DARE".

Ilango Said on September 9, 2011 3:14 PM

Wait for desired levels, Patience Pays

If you are sure of the week TA, then you wait patiently for the desired levels in the day T/F to initiate a best
trade. Similarly if you are sure of the Day TA, then you wait patiently for the desired levels in the Hour T/F to
initiate a best trade. This is the main trick.

Ilango Said on September 8, 2011 11:46 AM

Two ways of trading:

1. Once a signal is confirmed, initiate a trade. Followed by many which we call as conservative trade.
Signals are generated away from tops & bottoms but nevertheless profitable to the disciplined. Works
well in trending market. In fact, all positional trades work well in trending market.
2. Once the market reaches the extremes, using OB & OS readings combined with divergences & EW
ending possibilities, a trade is initiated. These signals are generated closer to the tops & bottoms. It

works well in all markets. We call it the aggressive trade. The biggest & most potential threat to this
method comes in a strongly trending market where in the OS or OB can persist for a long time;
Divergences can fail or even becomes traps; EW extensions happen and 5 waves become 9 and more
too. Combine these two with your experience.

Guidelines for Conservative trade:

A complete EW structure with one or more of the following evidances : Day Lead indicator reversing
from above 80 mark or from below 20 mark, Macd turning down/up, Closing below DHEma/ above
DLEma followed by a close below/ above DEma & Divergences if any.

Guidelines for Aggressive trade:

Same as above but in Hour Time frame.

Guidelines for Aggressive intra-trade:

Knowing the direction (current trend); Using Global cues; Using Pivot table & Tech.Table to choose
the resistance & Support numbers; Using RT Chart; Willingness for small SL; No hesitancy to book
profits at your target levels inspite of trend continuing to favour your trade.

Ilango Said

Making "Intraday Trades"

Wait for overbought sitauations in down trend and then fine tune the selling level using Tech table and
fiboonacci numbers and initiate a trade.
Once you are in a trade with "good entry", then part book...resell..till one of your trade gets stopped out or
exhaustion is visible with divergence or a known target is reached.

Apply the same principle during uptrend in oversold situations.

This way, you may skip few days but the days you trade would give you good returns.
Another strategy is to "Use the global cues along with our market's trend" - This gives you still better returns.

Ilango Said on August 24, 2011 3:08 PM

News Impact on Market

In a bear market every good news gets sold off & vice versa i.e.In bull market every bad news gets buyed.

POWERTRADE Said on August 12, 2011 11:13 AM

Technicals discount everything

Technical Analysts always believe that no reason to analyze fundamentals etc. bcoz all these fundamentals
are already accounted for in the price. Technical analysis believe that all the information they need about a
stock can be found in its charts. Bcoz insider like management, CA, tax deptt, ministry official know in
advance that what is cooking in any company. Dow surged almost 450 points but Nifty responded less than
40 points so something negative for India, it may be -ve IIP data or any other thing. If USA will cut their
expenses, that will be negative for Indian companies.
So Dont try to guess all these, just look @ the prices without any bais.

Kumar Technicals Said on 10:31 AM 8/12/2011

Market Illusions
Bear market's rallies are so sharp (Like the bull market's drops) that it questions our beliefs. TT would
suggest any changes.

Ilango Said on July 21, 2011 9:54 AM

How to Survive in Range Bound market

Keep calculating fibo. retracements, combining with regular Technical analysis this is the way to trade in a
range bound market. In simple way
Part booking @supports & reentering @resistances = Trading.
but it will need lot of expertise to book @supports & then again reenter @resistances within very small
range, since it was rangebound market.

Ilango Said on July 21, 2011 9:54 AM

How to find bottoming signal in hour TA

It was Not an easy task to do & there is no any specific rule for it. It requires an elaborate TA study. Simply
Looking out for double bottoms, candlestick reversal patterns (such as morning star,Bullish Engulfing,
Piercing Pattern, Bullish Harami, Hammer, Inverted Hammer) and prices closing above Hr JNSAR preceded
by a close above Hr.Pivot, HLEma, etc. and oscillators making +ve divergences may help.

One more way, Watch the TT. The HEma is descending for all timeframes (Month/ week/ day & Hour). The
Close Ema too is descending for all timeframes (Month/ week/Day & Hour). The Low Ema is yet to place
itself in descending order - Once it aligns, then look out for those supports or bottom formation. This is my
observation. August 5, 2011 9:35 AM

Ilango Said on July 12, 2011 2:50 PM

General
We dont jump the gun
We are not intraday traders
We dont want to become rich overnight
We know mkt will be there forever
We are not agrresive traders
We love our money
We have lost lots of money in mkt
We have some rules

Trade less trade wise

no loss in stock market is also equal to profit

Discipline in trading is sitting ideal in front of screen

Dinesh Rishi Said on July 12, 2011 1:43 PM

Part Booking Strategy in Sideways Market

For Part booking, a knowledge of classic TA as well as "Break-out/ Break-down" levels are important. When
we are in "Sideways market"(Once Nifty closes below DHEma in uptrend or above DLEma in downtrend),
one should book profits within the established resistance and supports to stay in the game.(HLEma &

HHEma are such good exmples of support & resistances).

Ilango Said on June 30, 2011 10:36 AM

Havala Price
"Havala Price" is the closing price(Spot Nifty) of previous settlement. Hence, the havala price for June
settlement is the closing spot price of May series which is 5412.(26th May).
Buy above 5412; Sell below 5412.
1. On 27th May, the low was 5413.60 and market moved to 5605.
2. On 16th June, Market moved below 5412(On 17th June, it made a high of 5421-Hence use a filter) and
fell to 5196 in 3 days.
3. On 24th June, Nifty moved above 5412 and today reached 5532.
Generally it gives 100+ points move.Combine it with other TA methods.

Ilango Said on June 27, 2011 10:32 AM

1st wave Low rule

At such a critical juncture, I had suggested a practical strategy. As far as EW concerned, 5457 is the low of
"i"st wave. "Below 5455 weakness persits" has been mentioned in all our EOD posts. As long as Nifty is
contained below it, weakness would return once Hour TA becomes Overbought.

Ilango Said On June 24, 2011 10:47 AM

Managing Stoploss
Stop loss managment is little difficult job. I dont mention hourly closing stop loss in my blog, and i always
follow end of the day only. But somebody say if it goes 100 points up into closing from stop loss then what
they shud do? Actually its tricky, so i say that minimum hourly closing needed but that is not maximum.
Actual strength of Bulls & Bears always tested in last hour.

KUMAR TECHNICALS said On June 24, 2011 10:14 AM

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