slide1 n.
Skip this Video
Loading SlideShow in 5 Seconds.. PowerPoint Presentation
Download Presentation

184 Views Download Presentation
Download Presentation

- - - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript

  1. Vol.01 PRICE & TIME (health of the Stock) Trade with <CHARTS> VOLUME ) Indicators/Oscillators (Diagnosis) Theories From the desk of venKEY ……………………. Hyderabad-AP INDIA TECHNICALAnalysis TradingFriend TrendAdvisor Dynamic Subject Logical Thinking towards Price Action forex2tradeindia Your Success Story Begins from HERE Email : - venKEY

  2. INDEX TECHNICAL Analysis • Volume-1 • Volume-2 • Volume-3 Concepts & Theories On Price Chart Below Price Chart • Basing on Previous Price • MAs & crossovers • MA Supports & Resistance • Pivot Point • Bollinger Bonds • Parabolic SARs • HeikinAshi • Itchmukhi • Indicators/Oscillator • RSI • MACD • Stochastics • Momentum • CCI / ADL • OBC • ADX Def. of Technical Analysis 3 Chart Types 4 Assumptions of Tech. Analysis 5 Market Analysis Methods 7 Traders & Trading Methods 8 Dow Theory 9 Trends & Market Stages 12 Trend Reversal 14 Counter Trend 15 Trend Lines 16 Support & Resistance 18 Gap Theory (imp.) 19 INDEX HIGH PROFITABLE • Volume-5 • Volume-6 • Volume-4 PATTERNS DIVERGENCE Price Movement • Continuation Patterns • Reverse / Alone Patterns • General Divergence • Hidden Divergence • Candles & Construction • Bar-Reversal venKEY

  3. If you understand the benefits & limitations of Technical Analysis, it can give you a NEW SET OF TOOLS/SKILLS. ………………………….. That enable you to be a BETTER TRADER / INVESTOR Tech. Analysis -DEFINITION Technical Analysis - Study of prices with the help of CHART Purpose- to understand the future movement of the PRICE Where it does not works ? - Lower Volumes - Less Trades - No Open Int. Assumptions -Operated Scripts/Stocks Symptoms – Frequent Highs & Lows (upper/Lower Circuits) Opportunity – It won’t give Buy/Sell Opportunity with ASK/BID variations • Where it works ? • Equities - Derivatives • Forex - Commodities • Particularly - where free trades • (high liquidity + volumes) Definition Alternatively : Technical analysis is the study of a stock, or the market as a whole, strictly by using the price and volume history of a stock. Technical analysis uses little or no information about the actual business behind the stock. The common belief is that a stock price represents all known information about a stock. • Technical analysis is an alternative to fundamental analysis. • Despite all the fancy and exotic tools it employs: • Technical analysis really just studiessupply& demandin a market in an attempt to determine what direction/trend, will continue in the future. • In other words, technical analysis attempts to understand the emotions in the market by studying the market itself, as opposed to its components • Science : Science consists simply of the formulation and testing of hypotheses based on observational evidence; experiments are important where applicable, but their function is merely to simplify observation by imposing controlled conditions. (Technical Analysis also a SCIENCE) venKEY

  4. Types of CHARTS Winning PRICE (CLOSE) LINECharts BARCharts (OHLC -charts) CANDLESTICKCharts CHART basics • Others: • -Volume Candle • - HeikenAshi • -Rancho Charts • Point & Figure &Other charts venKEY

  5. BASIC ASSUMPTIONS of Tech. analysis: (1 /2) Market is the battle field between 2 sections of traders. Broadly known as • WELL & ADVACE informed (2) LESS & LATER informed ( known as CROWD/Irrelevant Participant) 1. Price Action (Market) discounts everything : Technical analysis believes that it is the price within which all information known or unknown is available. This 2 sections of people basically dragging the market. Hence price is the census of the value at that point of time. It has been observed that a large no. of people in the market known as Crowd (less and later informed -Irrelevant participant) • fill over enthusiastic when price keeps some rising. And they surrounded by fear when market starts falling • History REPEAT it-self: • It is another important remise on which this subject realize heavily. • Human psychology comes into play here. • It is assume that human psychology does not tempt to change under similar circumstances.. • According to “Law of Nature” nothing is last forever Assumptions • He is expected to behave in the same manner as he had done in the past. venKEY

  6. BASIC ASSUMPTIONS of Tech. analysis: (2 /2) 3. Prices move in TRENDS (our Best FRIENDS) The basic idea of technical analysis is to identify the proper trend. In fact early identification of the trend help analyst to trade in favors of the trend. So it is said in technical’s that “trend is your best friend”. • TREND : movement of price action basing on different time frames • Trend - time frames are • - • - Long term trends (Tide > 1 year) • Short term trends (Ripple <21 days) • Medium term trend • (Intermediatory trend (Wave – 3 week to 3 months) Assumptions Note • UPTREND • Must confirm with • VOLUMES • …………………. • DOWN-TREND • Volumes are not particular venKEY

  7. Market ANALYSIS METHODS Fundamental Analysis Long-Term Perspective / Averaging / SIPs TECHNICAL Analysis FACTORS • Supports • Resistance • Pivots • High/Low breaks • Patterns • Divergence Averages & Indicators WAVE Analysis 8 out of 10 stocks Move Technically & Logically so Our Success Rate 80% ++with Technical Analysis FRACTAL Analysis DIVERGENCE Analysis Life Comparison Reviews / Corp. actions NEWS Analysis - Less Time -Immediate Decision - Keen Observe Spot news / Forecasts Market opens with AMETURES Close with EXPERTS.. ……………………. Closing Important INVENTORY ( D : S) Action Never chase PRICE./SCRIPT Don’t average when in LOSS Trial SL for Profit locking FINALLY venKEY

  8. TRADING METHODS/strategies Investor (LT) SWING Trader DAY Trader (ST) NEWS Positional Jobbing /Scalping Hedge TECHNICAL Martingale / Average Pyramidical Trading FUNDAMENTAL Systematic Investment Basing on : Y’day High/Low Y’day Close Pivot Support/Resistance Break out/down MA cross over Divergences Volumes Bulk Trades AWARE @ : Rounded Figures Historical Figures Life High/Low Market Closing Week-Ends Harvesting Season Ending Strikes/N-calamities Dollar fluctuation Trader vs. Trade Grid Trading TRADING TYPES Basing ON Hedging Inventory Options (call/put) venKEY

  9. Inventor is ONE…Followers are MANY DOW invented … Followers are ANALYSTS DOW Theory (1/3) Price Average discount everything :(Moving of price in Different Time Frames) Market has (3) Trends : NOTE:Should look in monthly Chart & Closing Price TIDE (LTT) The long tar trend of the market can be compared to the tide in an ocean. WAVE (IT) The long tar trend of the market can be compared to the tide in an ocean. RIPPLE (STT) The long tar trend of the market can be compared to the tide in an ocean. LONG - TERM INTERMEDIATE SHORT - TERM THEORY Main/Primary Trend Medium Term Trend Present/Minor Trend More than 1 Year Less than 21days 3 week to 3 month On Chart WAVE Ripples TIDE On Chart Oscillators venKEY

  10. DOW Theory (2/3) QUOTE : To do science is to search for repeated patterns, not simply to accumulate facts. 3. Major trends have 3-phases. 1. ACCUMULATION (insider market/well and Advanced informed) • General conditions of the economy looks very depressive, • Economy looks uninteresting to most of the market participants especially crowds. • The crowed become very bearish • Media continue publishing bearish stories and corporate deliver bad earning, • But those who are the fore-sighted (early known) start accumulating the stock.. 2. CONSOLIDATION (TECHNICAL INTEREST) • General conditions of the economy looks stable. • Technical trend followers starts participating because : • Index generate Dow buy signal at this point of time. 3. DISTRIBUTION (CROWED – large No. of people BUYING) • General conditions of the economy looks very attractive than ever before and this time crowd starts participating. • Media and Market gurus continue publishing bullish stories. • Corporate earnings looks robust (very healthy) at that point of time foresighted investors starts booking their profits (distributions –selling of accumulated stocks) Because they bought shares when nobody want to buy… now they selling shares where crowed want to buy. THEORY venKEY

  11. DOW Theory (3/3) 4. BOTH AVERAGES must confirm each other • Dow stated that the overall health of the economy depends on Automobile Sector & Transportation sector. • If we have found any divergence between the main index and auto index…it signifies the fact that the healthy economy in not good. • So auto index should perform along with the main index. Note : In Indian market we can compare it to the BSE-auto Index 5. VOLUME must confirm the trend • In a healthy uptrend volume should increase in favor of the trend. • If price, rising without volume then 1 should not trust it as a healthy behavior of the price action rather it is the first signal of DISTRIBUTIONs. 6. Trends once in motions shall be assumed to be continue unless it gives a reversal signal. THEORY venKEY

  12. UP Trend Correction Accumulation T R E N D (Our Friends) Counter Trend • No sup/res. line breaking Breakout Choppy Trend Breakdown Distribution Pull-back DOWN Trend Consolidation THEORY History Repeats The general direction of a market or of the price of an asset. Trends can vary in length from short, to intermediate, to long term. If you can identify a trend, it can be highly profitable, because you will be able to trade with the trend Bullish Reversal Trend Reversal Support/Resistance Line Breaking Bearish Reversal venKEY

  13. TRENDS Trends are our BEST FRIENDS Trend - The Direction of price movement is known as “Trend”. Price at a particular of time has got (3) options. It can either go up or go down or remain static. Hence Trend can be categorized as : • UP TREND: A trend is said to be so long on the price action keeps making higher tops and higher bottoms • DOWN TREND: A trend is said to be so long on the price action keeps making lower tops & lower bottoms • CHOPPY TREND / Sideways: In a choppy trend one can’t identify the clear-cut tops and bottom rather PRICE NEVER MOVE IN STRAIT LINE PASSION. So this case does not take any decision when price moves in sideways manner. THEORY Decision Making Just patiently wait for valid break-out with volumes or valid break-down (no need of volumes) venKEY

  14. Trend REVERSAL According to the ‘law of nature’ nothing last for ever. • Like wise an uptrend will not remain up for all time it has to reverse the direction at a point of time which is known as Trend Reversal… • Violation of the last established higher bottom gives us the first signal that the existing uptrend is getting into trouble. • Formation of lower tops and lower bottoms gives us the clear-cut idea that the existing uptrend is consolidating to down-trend. BEARISH reversal • Comes after a BULLISH trend follower lower tops and lower bottoms. THEORY BULLISH reversal • Comes after a BEARISH trend follower lower tops and lower bottoms. venKEY

  15. COUNTER Trend • Price generally can’t rise or falls even/line straight fashion. • It has to reverse the direction to gain fresh energy and momentum • Price again goes to its original direction which is tide or primary trend… • So we can explain counter trend as ‘the trend which goes or oppose the main trend is known as counter trend’. • Counter trend gives birth to tops and bottoms in the market. Counter trends can be categorized as: • Correction : – means market in bull run/ occur in bull run • Pull back : - means market in bear run / occurs in bear run THEORY Trading Strategy @ counter trend: When main trend is up buy at every corrective dips & Where main trend is down sell at every pull-back rally venKEY

  16. Trend Lines page : 1 TrendLINES Can be drawn on Bar chart & Candle Charts 1. Trend Lines - are those lines which are drawn in the chart either by connecting • the Rising Bottoms (up-trend line) • the Falling Tops (down-trend line) • Violations of TREND line alerts us probable trend reversal. • Trend line shows the support of the stock and at support level liquidity and inflow comes until it come to expensive and liquidity will stop. • The main significant uptrend line is ‘it acts as a STRONG support / resistance as the case may be’ THEORY Trend Line with the range around 45 degree Would be accurate venKEY

  17. A line that is drawn over pivot highs or under pivot lows to show the prevailing direction of price. Trend lines are a visual representation of support and resistance in any time frame. Trend Lines page : 2 TrendLINES 2. Validity of Trend-line: 1. Time-span(longer the trend line would be strength-stronger-strongest) We have to consider how old a trend-line… in fact long the time span stronger it will be. 2. No. of Attacks : 3. Sloping (angle/degree)– an ideal trend-line should be 45 degrees/angle • A trend line which showing below 45 degree means it is not a valid trend • A trend line which is above or around 60 degree means the price of such stock is running and ready to sour/need retracement. • Trend-line with the range around 45 degrees would be accurate. THEORY venKEY

  18. Support / Resistance Memories of Trades to recall or wish again Support : The price level which, historically, a stock has had difficulty falling below. It is thought of as the level at which a lot of buyers tend to enter the stock. Often referred to as the “Support Level". Support Level Resistance: The price at which a stock or market can trade, but not  exceed, for a certain period of time.  Often referred to as “Resistance Level". THEORY Resistance level Support & Resistance are INTER-CHANGABLE venKEY

  19. Theory of G-A-P-S A gap is a place are pointing the chart where no official transaction occur. Any news or information which can after the market hour and inflate the trader causing them to become over optimistic or pessimistic as the case may be. And the result of which higher over supply or demand comes into the system. Which causing a GAP in the chart. • Bullish/ +ve Gap • If todays Low >yesterdays’ high • (not yesterday close) Both the GAPs may lead to fresh trend • Bearish / -ve Gap • Today’s high < yesterdays’ low (not yesterdays close) According to the place of origin • Common Area Gap- Common area Gap occurs when market moves in a sideways manner and there are no technical importance of such gaps because it can’t takes the price beyond boundaries. Common area gap usually get filled up within 2/3 trading sessions. • Breakout (or Break-down ) Gap • – when price comes out from a bondage with a gap is known as Break-out Gap. • – It gives us the first indication that the price structure after a long consolidations entered into a highly trending-phase. (high volume need for VALID BREAK-OUT) • Run-away (measuring gap) • – Run-away Gap occurs in the mid-point of the Rally. • - It is also know as measuring Gap because it can measure the next movement. • - At first measure the distance between Break-out gaps and Run-away gap and there project the same distance from the point of run-away gap. • Exhortation of Gap • – Exhaustions gaps is nothing but a converged run-away gap . • - Any run-away gap which gets filled-up within 3-4 trading sessions converted into exhortation gap. (a trend where going to take reversal) If a Gap UP trend followed with a Gap-down Trend with in less trading sessions Island reverse (Bullish & Bearish) BULLISH Island Reversal BEARISH Island Reversal THEORY  Note : If break-out gap is starting point of the RALLY then exhaustion gap is the termination of the trader. venKEY

  20. Theory of RETRACEMENT Conventional Technical/Fibo • 1/3rd (33%) of the • previous movement is • SUPPORT / Resistance • Beyond 33 % -50% of the movement previous movement acts as a tremendous support. • Which is also known as • Half-way level of retracement • Or 50% retracement. • Beyond 50% • Next support level is 66%. • But practical observation over the period has proved that any retracement which goes below 50% normally get back price to that level from where it starts rising. • Which is known as • 100% retracement THEORY Assumption Indicators • Support and Resistance exist because people have memory • Resistance is the place in the chart where price faces selling pressure • from the bears. • Trend Lines ( Strongest) • Moving Averages • Halfway movement • Fibonacci Support & Resistances venKEY 20

  21. How to survive on investment markets Keep a hold of your plan.You should forge a plan according to which you will invest your money with the addition of strict rules that should never be broken whatever the circumstances. Strict rules will help eliminate emotions like hope, greed, fear and many other emotions that could prove destructive on the market. Do not invest all your capital in one particular investment. 10-20% of your capital in one transaction should be enough. Do not change the level of your stop loss with hope that the market will change direction. Hope will lose you money and should be eliminated. Cut losses as soon as possible. On the other hand do not fear losses. They are part of the game. Do not be afraid to earn money. Hold winning positions as long as possible. Remember that before opening a position you should have an aim. If this aim is fulfilled then you may close your position, never earlier. Do not force yourself to open a market position. If you do not see anything happening, just take a break. Always evaluate how much you can earn in comparison to what you can lose.Try to hold at least a 3:1 relation. Note down all your transactions. Analyze both the winning and losing transactions. By doing so you will not only understand your mistakes but you will understand your emotions when making different decisions. Do not invest in a group. The more opinions, the more emotions. Does this mean that you should not read the analysts comments and reports? No, but it does mean that if you have a planned position, then do not change your decision upon reading some analysts differing opinion. Why should you be wrong? And remember, analysts are not always good traders. Investors should keep in mind that both technical and fundamental analysis are not enough to earn money on investment markets. Investors often forget about two significant aspects. The first is the management of our capital and the second is market psychology. Here are a set of basic rules that will help you achieve your goals in the world of investment. THEORY Rules: Always open positions in the direction of the trend. Never break this rule even if it helps you earn money a few times. Break this rule and you will learn that the market is the ruler of the world of investments and unfortunately not the investor. venKEY 21