Aneesh Philomina Antony’s

Set of Useful Tweets

Twitter ID: @ProdigalTrader
1

This Book is a compilation of Aneesh Sir’s (Twitter handle: @ProdigalTrader) Pinned Tweets.
Each chapter is a Separate Tweet. The chapters are in no particular Order. Please Use
Twitter’s Advanced Search feature (https://twitter.com/search-advanced) to search for a
particular Tweet if you want, using the Date of Tweet I’ve attached in the Contents Page.
2

CONTENTS

Chapter No. Topic of the Tweet Page No. Date of Tweet

1. Components of a Complete Trading System 6 Jul 26, 2019

2. Why to trade at Affordable Risk 6 Jul 23, 2019
3. Harmonic Patterns 7 Jul 18, 2019
4. On Insider information available to some people 8 Jul 17, 2019
5. Why 4hr time frame should be avoided? 9 Jul 16, 2019
6. On Wyckoff cycle and Elliott wave 10 Jul 12, 2019
7. Correlation between Wyckoff and Dow theory 11 Jul 11, 2019
8. On Psychology of traders 12 Jul 4, 2019
9. Why Doji stamps indecision? 13 Jul 3, 2019
10. Types of Harmonic Patterns 14 Jul 2, 2019
11. Two tips to struggling day traders 14 Jul 24, 2019
12. Divergence in ADX 15 Jul 22, 2019
13. Correlation between Wyckoff and Elliott Wave 16 Jul 9, 2019
14. Price Breakdown Vs. Volatility Breakdown 18 Aug 6, 2019
15. Buy Breakout v/s Buy at Support 21 Aug 2, 2019
16. Mark Minervini's trend template 22 Jul 30, 2019
17. Correlation between H&S and Dow Theory 24 May 16, 2019
18. Pyramiding Or Scaling In 24 May 9, 2019
19. Clubbing Patterns with Elliott waves 26 Apr 26, 2019
20. Behaviour of Volume w.r.t Chart Patterns 27 Apr 25, 2019
21. Anatomy of a Strong Breakout 28 Aug 28, 2019
22. Bull Traps 29 Sep 3, 2019
23. Money Management 30 Sep 5, 2019
24. Trader’s checklist 31 Sep 18, 2019
25. Analyst Vs. Trader 31 Sep 20, 2019
26. Winners Vs. Losers: Trading Motivation 32 Sep 22, 2019
27. Correct way of Drawing Trendlines 32 Oct 11, 2019
28. Movie recommendation 33 Apr 2, 2020
29. Nifty Vs Top trending stocks 34 Mar 23, 2020
30. Catching Strong Breakouts 35 Apr 17, 2020
31. Drawing a Demand Trendline 36 Apr 25, 2020
32. CadilaHC chart analysis 37 Apr 23, 2020
33. Best Books on Mean Reversion 38 Apr 22, 2020
34. Chart Quiz 1 38 Apr 20, 2020
35. Readymade Scanners 39 Apr 27, 2020
36. Top 10 Day Trading Books 39 Apr 30, 2020
37. Potential Day Trading Scanners 40 May 1, 2020
38. Book recommendations 40 May 1, 2020
39. Trading Breakout Retests 41 May 2, 2020
40. Trading Tip 42 Apr 30, 2020
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Chapter No. Topic of the Tweet Page No. Date of Tweet

41. Andrew’s Pitchfork 43 Apr 21, 2019

42. Trading Breakout using MTF Analysis 45 Apr 19, 2019
43. OI interpretation of Put/Call option w.r.t. IV and PCR of 47 Apr 17, 2019
options
44. How to Approach Intraday trades 48 Apr 10, 2019
45. Book recommendations to learn TA 48 Apr 5, 2019
46. Intraday in Derivatives 49 May 27, 2018
47. Greed Fear Cycle 49 Jul 25, 2019
48. Methods of Buying 50 Aug 7, 2019
49. Types of traders 51 Aug 30, 2019
50. Dissection of Moving Average Breakout 51 May 2, 2019
51. Day Trading Mastery 52 Apr 30, 2019
52. Buying Vs. Selling Volume 53 Jul 1, 2019
53. Why to trade in multiple lots? 54 Aug 1, 2019
54. How crucial is Risk Management? 55 Jul 31, 2019
55. Question on Short Covering Rally 55 Jul 25, 2019
56. Dissecting Double Bottom/ W pattern 56 Jun 28, 2019
57. What does stoploss do? 56 Jun 27, 2019
58. Assessing the Trend 56 Jun 25, 2019
59. A Profitable trader 57 Jun 13, 2019
60. Importance of Stop Loss 58 Jun 12, 2019
61. Spotting Trend Reversals 59 May 15, 2019
62. Defining a Profitable Trader 59 May 10, 2019
63. Understanding Chart Patterns 60 May 7, 2019
64. Pattern and it’s Breakouts 62 May 6, 2019
65. A Follower’s Query on Trendline 63 May 3, 2019
66. Price Action Trading (PAT) 64 May 3, 2019
67. Tips for Day Traders 65 Apr 28, 2019
68. Volume Spread Analysis (VSA) 65 Apr 24, 2019
69. Simple Trading Strategy by Steven Primo 66 Apr 23, 2019
70. Components of a trading journal 67 Sep 9, 2019
71. Advantages of stock screener 68 Sep 16, 2019
72. Stop Loss 72 Sep 17, 2019
73. Difference of perspective using different Time Frames 74 Sep 21, 2019
74. Importance of a Trading Journal 75 Sep 7, 2019
75. Trading in 3 steps 76 Sep 10, 2019
76. Essential traits of Traders/Investors 76 Sep 12, 2019
77. Characteristics of an Ideal Flag/Pennant pattern 77 Sep 13, 2019
78. Corrections in LTF when seen at in HTF 78 Sep 23, 2019
79. NIFTY Chart Analysis 79 Sep 23, 2019
80. Book recommendations on How To Trade 79 Sep 24, 2019
81. Role of Volume in Price Action 80 Sep 28, 2019
82. Clarity for a trader 81 Sep 28, 2019
83. Channel breakout v/s Bull trap 82 Sep 30, 2019
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Chapter No. Topic of the Tweet Page No. Date of Tweet

84. Volatility Contraction Pattern (VCP) 83 Oct 1, 2019

85. Human Emotions in Trading 84 Oct 2, 2019
86. More on Volume Contraction Pattern (VCP) 85 Oct 4, 2019
87. When a Trader with Big Following posts his trades: A 85 Oct 5, 2019
Possibility
88. Book recommendations for Beginners 86 Oct 7, 2019
89. Pin Bar Vs. Power Bar 86 Oct 9, 2019
90. A Set of Useful Tweets 87 Oct 15, 2019
91. Amateurs Vs. Pros 88 Sep 27, 2019
92. When to use mean reversion? 89 Oct 14, 2019
93. How does Market Price move? 89 Oct 15, 2019
94. How to Calculate Position Size 90 Oct 16, 2019
95. Stop Loss and Trailing Stop Loss + QnA 90 Oct 17, 2019
96. What happens if you book half your position at 1R? 91 Oct 18, 2019
97. Why/How a F&O stock comes under Ban? 91 Oct 21, 2019
98. Trend definitions 92 Oct 24, 2019
99. Brokerage Houses picks for Diwali 2019-20 93 Oct 27, 2019
100. Using line charts to get rid of Wild Bars 94 Oct 27, 2019
101. Types of Bullish Breakouts, which is Better? 95 Oct 29, 2019
102. Trailing stoploss technique - Chandelier Exit (CE) 96 Oct 31, 2019
103. Buying a Stock: Which method is Better? 98 Nov 16, 2019
104. Risk Management 98 Nov 15, 2019
105. Dissection of Chart Patterns 99 Nov 6, 2019
106. Price correlation with Volume & Volatility 99 Mar 24, 2020
107. Idealised correction pattern w.r.t. Momentum and Price 100 Mar 29, 2020
action
108. Day Trading Tips 100 Mar 30, 2020
109. Stock selection for Short in a Weak Market 101 Mar 31, 2020
110. Deep Analysis on Stock’s Movements 101 Mar 17, 2020
111. Stocks Selection for Upcoming Bull Market 103 Mar 20, 2020
112. Buying in Bull Market Vs. In Bear Market 105 Mar 21, 2020
113. HDFC Bank Bouncing off 20 SMA 106 Mar 8, 2020
114. Crude Oil & NIFTY Chart comparison 107 Mar 9, 2020
115. Alkyl Amine and 30 EMA Chart 108 Feb 28, 2020
116. Filtering Stocks for Buying 108 Mar 6, 2020
117. Gray & Vogel Method for Buying Stocks 110 Jan 29, 2020
118. Stocks Selection using RSI, Stochastics and MACD 111 Feb 22, 2020
119. Drawdown 111 Apr 5, 2020
120. Slippage 112 Apr 6, 2020
121. Trading Vs. Investing 113 Apr 8, 2020
122. Reversal Vs. Retracement Comparison 114 Apr 11, 2020
123. Chart Quiz 2 115 Apr 25, 2020
124. My Trading Preparation Methodology 117 May 5, 2020
125. Market Breadth 117 May 14, 2020
126. Trend Following 118 Aug 9, 2020
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Chapter No. Topic of the Tweet Page No. Date of Tweet

127. How to learn Trading 119 Aug 12, 2020

128. Spotting Momentum Build Up 120 Aug 1, 2020
129. Stock Selection / Watchlist Preparation 120 Jul 22, 2020
130. Book recommendations for Volume Spread Analysis 121 Aug 9, 2020
(VSA)
131. YouTube Video on Elliott Wave by Nick Radge 122 Jul 19, 2020
132. Stocks for Investment (Medium term Delivery Trades) 122 Aug 13, 2020
133. Sector Analysis 129 Jul 17, 2020
134. AFL Code for Coiling Volatility Pattern 134 Jul 16, 2020
135. How to analyse Health of Market internals and Market 134 Aug 13, 2020
trend
136. Secrets of Trading in Different Timeframes 135 Aug 13, 2020
137. Leading indicators in Stock Market 136 Jun 28, 2020
138. Volume Analysis 136 Aug 13, 2020
139. Stick to Your Trade Plan 138 Aug 13, 2020
140. Trade Plan 139 Aug 13, 2020
141. LONG in 52-week high Vs. in 52-week Low 139 Aug 13, 2020
142. Quantitative Estimation of Scrips 142 Aug 13, 2020
143. MACD Hook 143 May 28, 2020
144. Relative Strength Chart Examples 145 Aug 13, 2020
145. Stock Screening Based on Relative Strength 147 Aug 13, 2020
146. Risk Management and Position Sizing 147 Aug 14, 2020
147. Compounding and Scaling In 148 Aug 14, 2020
148. How to do Multi Timeframe Analysis 150 Aug 13, 2020
149. More on Scaling In 152 Aug 14, 2020
150. More on Mean Reversion 153 Aug 14, 2020
151. More on Trend Reversals 154 Aug 14, 2020
152. Smart Money 159 Aug 14, 2020
153. On Demand Zone 160 Aug 14, 2020
154. My Favourite 10 Price Action Setups 161 Aug 24, 2020
155. More on Divergence 161 Aug 14, 2020
Thankyou 164
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Chapter 1: Components of a Complete Trading System

How to construct it and What are the ideologies behind it

Image 1-1

Chapter 2: Why to trade at Affordable Risk

In the worst case scenario, it helps him to survive a losing spree as well.

Image 2-1
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Image 2-2

Chapter 3: Harmonic Patterns

Harmonic patterns are goldmines.

The issue in trading them is, it requires an almighty trend reversal out of nowhere.

Naturally, we need to locate the pattern where trend exhaustion takes place.

INTEGRATE THE PATTERN WITH ELLIOTT WAVE CYCLE is the solution.

Basic picture taken from myforexmagicwave site and added all the modifications and observations as per the
requirement in the thread.

Due credit to original source.

Do not trade based on the info as such. It’s just a basic awareness picture.
8

Image 3-1

Chapter 4: On Insider information available to some people

Often, there are few retail traders lament they end up losing because some privileged set of traders have access to
some data/info which isn’t available to common public.

What’s the reality behind it?

 NSE real time data is provided in 4 levels

1. Level 1 provides best bid & ask price

This includes the Best Bid and Best Ask and total accumulated volumes displayed as Bid/Ask Size. It provides
all of the info needed to trade using most price/indicator based systems.

 2. Level 2 provides market depth data up to 5 best bid and ask prices. Level 2 market data is also known as
the ‘order book’ or ‘depth of market’ (DOM) or ‘market depth’. it shows the number of shares or lots that
are available at each bid and ask prices.
 ITS THROUGH THIS DATA, THE PRICE AT WHICH WEAKER ORDERS ARE KEPT CAN BE IDENTIFIED; THIS IS HOW
SL HUNT HAPPENS. BECAUSE WHO HAVE ACCESS TO THIS DATA, KNOWS WHERE THE WEAKER ORDERS ARE
PRESENT; THEY USE IT TO PROVIDE LIQUIDITY IN THE MARKET.
 3. Level 3 provides market depth data up to 20 best bid and ask prices. Essentially the same as level 2 data
except for it shows the number of shares or lots that are available at each bid and ask prices. It’s the larger
order book; as many as 20 compared to 5 in level 2.
 4. Tick by tick: consists of every order or a change in the order. This includes all new order, cancelled orders,
executed trades both fully or partially etc. the size of the data will be big for each symbol. For example, nifty
has around 250-300 trades every second.

Info presented here is taken from scrambled sources such as NSE, truedata etc websites. Credits to original sources.
Readers are requested to verify the credibility of the info presented here. No commercial interests are kept hidden
in it.
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Chapter 5: Why 4hr time frame should be avoided?

 There is a practice of using 4 hr TF charts for stocks/index. This is completely wrong and unknowingly those
who are the exponents of this misleading new TA practitioners.

Image 5-1

 In charts above, when it is kept in 4 hr TF, now the first candle of the day contains 4 hrs price action while
EVERY SECOND CANDLE TAKES ONLY 2 HOUR 15 MINUTES (!!!!!) OF PRICE ACTION as that is the time
remaining in the day before market closes.
 Candle doesn’t take price from the next day to fill the price action to complete 4hr. Instead, by default, all
candles have to be “intraday” candles as long as the time frame is kept below daily.
 So where do we use it?? This is DESIGNED FOR FOREX MARKET where it runs 24 hrs. if we cut the time frame
into 4 hrs, now inside a day, all candles equally contain 6 candles where each has exactly 4 hrs price action.
 Why exactly, it shouldn’t be used elsewhere? Suppose 200 SMA is plotted on the chart. Now this SMA
averages last 200 periods price action assuming all candles contains 4hrs of price; where only 100 candles
contain it while rest of the 100 candles has only 2.15 hrs.
 Suppose RSI (14) is plotted below chart. It’s supposed to calculate gain/loss of each of last 14 periods and
average it. Again, only half of the candles has the actual price of 4 hrs, rest have different price.
 HOW DO A CHARTIST TRUST IF HIS ANALYSIS IS RIGHT WHICH IS BASED ON COMPLETELY WRONG
INFORMATION??
 Even the stalwarts are seen using it this way. While they might be knowing it and compensate for this
discrepancy somehow (??) through their expertise or may be using a charting platform which allows cutting
the intraday candles across EOD time frame,
 those who are new into charting will be misled horribly. Charting is actually simple if and only if the basics
are kept right. I request, the senior expert chartists to look into this and correct me if am wrong. That would
be helpful to all.
 Intention of the thread isn’t to hurt anyone’s ego/sentiments. if it does, it isn’t what the tweet meant for.
Readers are requested to use own discretion to accept/reject the info in the tweet.
 There are 375 minutes a day, anything which cuts 375 to integers are allowed, shouldn’t be fraction. 15 min
and 75 min both are good. Trend in 15 min lasts for a day or two max. Day traders use this. 75 min trend last
for few days. Swing traders can use this. Any TF which doesn't cut 375 min in the day into fraction is good.
10

Chapter 6: On Wyckoff cycle and Elliott wave

Complexities of Wyckoff cycle or Elliott waves can be avoided without compromising on the efficiency of analysis if
you are well equipped with Dow theory.

Mark up/down (Wyckoff), Impulse wave (Elliott), is simply HH&HL (Upmove) or LH&LL (bearish)
A trader only needs to identify that

Image 6-1
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Chapter 7: Correlation between Wyckoff and Dow theory

Correlation of a complex Wyckoff accumulation schematic with a rather simple Dow theory:

Wyckoff schematic general figure is available in net. It was taken and added the abbreviation interpretations.

Image 7-1

 Book suggestions on Price action and Wyckoff: David Weiss is the authority in Wyckoff methods. He wrote a
book " trades about to happen ". He has paid courses too. For price action most popular traders are Linda
Raschke, Al Brooks, Sam seden etc. They have compiled their thoughts as books too. All available to buy
from amazon
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Chapter 8: On Psychology of traders

Image depicts why retailers are always on the wrong foot in the market.

Their psychology always puts them in bad trade and it’s the market makers who are on the other side of these fickle
general public.

Image 8-1
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Chapter 9: Why Doji stamps indecision?

How do one tackle what happens next?

Image 9-1
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Chapter 10: Types of Harmonic Patterns

How to identify?

Most effective pattern and the analysis behind it:

Attempted to make a comprehensive cheat sheet of harmonic patterns.

 Note: Harmonic patterns has 4 legs: XA,AB,BC,CD

Image 10-1

Chapter 11: Two tips to struggling day traders

Image 11-1
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Chapter 12: Divergence in ADX

It’s perfect to measure the losing strength of a stock which is in lengthy correction mode in daily chart provided its
very bullish in larger TF like weekly.

Image 12-1

Its less popular version of divergence compared to the momentum divergence (RSI, Stoch....). Here the method is
less popular because of its limited application. More often than not it works only while stock is in downtrend. ADX
divergence in uptrend doesn’t mean much. It doesn’t give perfect reversal point. But can be used along with other
tools to gauge the losing strength of present fall.
16

Chapter 13: Correlation between Wyckoff and Elliott Wave

Image 13-1: Basic Wyckoff pic taken from Scoopnest site

 Ques: Does Wyckoff deal with extensions?

Ans: You mean like extended wave 5 in Elliott?
No. Not really. Infact accumulation or distribution has a specific sequence of events as per Wyckoff.
Once the sequence of events starts rolling, the highest point which occurs is called upthrust. It just a stop
hunt kind of spike, no extension.
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Image 13-2

Image 13-3
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Chapter 14: Price Breakdown Vs. Volatility Breakdown

How to correlate a price break down with volatility break down using a multi time frame pair??
How to use BOLLINGER BAND AS TRAILING STOP?

Nifty and Reliance are taken as examples

Image 14-1
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Image 14-2
20

Image 14-3
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Chapter 15: Buy Breakout v/s Buy at Support

A comparative study on "buy Breakout v/s buy at support". Pros and Cons are highlighted.

 Note: I prefer buy at support after stock makes a substantial higher high.

Image 15-1
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Chapter 16: Mark Minervini's trend template

Trend Template combines 50, 150, & 200-day moving averages to identify trend direction, Position of closing price
relative to 52-week High and 52-week Low to highlight current potential and Relative strength w.r.t. index to ensure
further strength

Image 16-1

 @scorpiomanojFRM is the one who popularized Mark Minervini and his template in another platform. He is
the one who made the scanner and made it available to public as well.
23

Image 16-2
24

Chapter 17: Correlation between H&S and Dow Theory

An attempt is made to correlate a classical pattern; H&S to correlate with DOW theory. There are many factors
makes a pattern high probable; the pic shows only the effect of overall price structure on the pattern.

Image 17-1

Chapter 18: Pyramiding Or Scaling In

Pyramiding (scaling into the winner) is most important concept in trading.

Image 18-1
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 Pyramid trading means scaling into a winning position. I.e. additional entry in order to add to an existing
position after the market makes trending move in the favourable direction

 Principle is:
o When u r right – make the winner into huge winner
o When u r wrong – make to loser as thin as possible

 Consider a stock which is in continuous uptrend making higher highs and higher lows where it is continually
breaking resistance and then retesting that resistance as new support. Market conditions such as this are
ideal for scaling into a winning trade.

 The initial buy order in the illustration above is triggered when the market retests former resistance as new
support. The second and third buy orders are similar to the first, which are both triggered when the market
retests a former resistance level as new support.

 Important thing here is the stock has to keep on breaking each level upside and should hold enough strength
to hold it above.

 Now from the image above, for example, we are buying into a winner thrice, 40,000 each time
o First entry
Worst case – 2%
Max profit – 12%
o Second entry
Worst case – break even (2% gain from first entry and 2% loss from second entry)
Max profit – 20%
o Third entry
Worst case – 6% profit (6% gain from first entry,2% gain from second entry and 2% loss from third
entry)
Max profit – 24% !!!!!!!!!!!!!!!

 Here the key result is that with pyramiding we have doubled our profit. And in no point of trade, we had a
risk of more than 2%. Simply we were mitigating it throughout our position.

 As you would have noted, we need to have proper risk reward set up prior to the entry. Here, we had a 1:6
RR set up to start with. With each further entry, the RR decreases; yet no additional risk.

 The image in the tweet has taken from https://dailypriceaction.com website and the credit goes to them for
the pic. The written texts are original and not posted anywhere before.

 A writeup on position sizing was prepared by @PAVLeader sir. Please go through that as well.
26

Chapter 19: Clubbing Patterns with Elliott waves

Elliott wave theory is one of the very few “time stood” theories in technical analysis which is used for forecast
analysis rather than trend following.

Image 19-1

Image 19-2

 Although, it’s said that no one can predict what market would do in the future, there are lot of Ellioticians
who are fairly successful in using it and of course survived the test of longevity in the market. The theory,
though have only 3 basic rules, is by far one of the most complex theory out there, owing to its subjective
nature. Digging deep into the theory for the sake of trading upon it, (IMHO) isn’t as fruitful as many peoples
claims it. If we know the basic rules to identify a trending move (MOTIVE WAVE) from the corrective ones
27

trading becomes far easier. ITS DUE TO THE FACT THAT IN ELLIOTT THEORY, THERE ARE ONLY 2 TYPES OF
MOTIVE WAVE (IMPULSE AND DIAGONALS) WHILE THERE ARE 10-15 CORRECTIVE PATTERNS.
 So identifying the motive wave from all the other noises increases our odds at trading it. Now, once we do
that, it’s all about how we trade it. If we are able to club the above information with the classical patterns,
which of course are very familiar with most traders, trading becomes much stress free as we are assured
that the pattern breakout direction is confirmed through the Elliott wave as motive wave or the TRENDING
MOVE.
 This post is aimed at helping the novice traders upon identify the patterns inside an Elliott wave cycle. Once
we are familiar with a potential location at which a pattern can occur, trading upon that becomes much
easier. Classical patterns such as cup and handle, head and shoulders, triangles or the advanced ones such as
wolfwave, harmonic patterns etc are depicted in the pictures with a potential location in identifying it.
 The post doesn’t speak about how to identify Elliott waves. Already many so many materials are available in
learning both Elliott waves and also classical patterns. Repeating it again here wouldn’t make much sense at
all. But how to club them may be a less popular concept, at least to a few peoples. I believe the tweet would
serve the purpose to them. Use this info for only educational purpose. Images used in the tweet are taken
from net and complete credit goes to the original sources. What I did only to compile it in one place
together. Info posted here above isn’t a repetition of any sorts. It’s first time, these texts are posted ever in a
public platform.
 For Elliott wave theory basics: https://elliottwave-forecast.com/elliott-wave-theory/
 For classical chart patterns: https://school.stockcharts.com/doku.php?id=chart_analysis:chart_patterns
 Link posted above are not intended to promote them. Use your discretion in using it. no commercial
interests are aimed inside the tweet.

Chapter 20: Behaviour of Volume w.r.t Chart Patterns

Ideal behaviour of volume w.r.t. classical chart patterns is depicted in the pic below.

Image 20-1
28

 Volume should increase in the direction of the price. If the prevailing trend is up, volume should be heavier
on the up days and lighter on the down days. If the trend was down, volume should be heavier on the down
days, with lighter volume on the up days.
 Hence in order to understand the true picture behind a price pattern, it is imperative to understand the
behaviour of the volume associated with the length of this pattern. if they are in correlation to each other, it
adds to the credibility of the pattern.

Chapter 21: Anatomy of a Strong Breakout

It’s an idealized picture. Not necessarily it follows the same events or sequences every time. But "any sustainable
breakout in any direction has to be preceded by complete surrender from the opposing forces"

Image 21-1

Image 21-2: Bata is a recent example for the image posted above which describes the anatomy of a strong breakout
29

Chapter 22: Bull Traps

2 types of Bull Traps

1. bull trap at the end of an uptrend - fuelling the reversal

2. bull trap in the middle of a bear trend - fuelling sell on rise

Image 22-1

Hope this write up would add its value in trading fraternity

30

Chapter 23: Money Management

Money management - a lesser discussed, but most important facet in trading. Popular methods are discussed with
potential pros and cons of each one

courtesy: http://steemit.com

Image 23-1
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Chapter 24: Trader’s checklist

What to look for while preparing it? What are its benefits?

(info compiled from NetpicksTrading and pinterest/pin/252342385355022983)

Image 24-1

Chapter 25: Analyst Vs. Trader

Difference between an analyst and a trader is so huge

Image 25-1
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Chapter 26: Winners Vs. Losers: Trading Motivation

 One day one friend asked me, "Mr. XXX on twitter has a special way of using moving averages and its highly
effective. Do u know how?"
I said I do not. But I went to his profile, dug through, saved all charts for past 24 months, saved all his trade
MTMs with date and entry,
 exit price, went through all his tweets and reply and got to know how he analyse and trades in 2 min time
frame. I analysed those data thoroughly. understood his method. coded that and found it’s a supreme
strategy. Next time, when my friend talked about this person again,
 I said "I know his method and its very effective. thanks for bringing it into my notice". After a few weeks
while discussing some TA with a newbie I told him about this person http://Mr.XXX and said he has a special
way of using MA.
 His immediate reply was "send me the link". I told him to search. after a day he said again, "I couldn’t find it.
Please send me the link"
 The only thing that separates a loser from a winner is "effort". After all, "all winners are just losers who got
up and tried one more time"

Chapter 27: Correct way of Drawing Trendlines

Correct way of drawing trendline of a stock which is trending down:

Image 27-1
33

Image 27-2

If u understand the point in the post, then bullish case can be understood easily

Weak supply is what we try to connect through TL. However, Trend line is very subjective. Especially the ones drawn
at an angle. It can, at best, be a trend analysing tool. Trading on it would be far too risky.

Chapter 28: Movie recommendation

MEEN malyalam movie: https://www.youtube.com/watch?v=y5TWIFyush0

34

Chapter 29: Nifty Vs Top trending stocks

14-Jan-2020, NIFTY made highest close at 12397

These are the stocks which were inside 20% of their 52-week highest close

Since then, in 48 trading sessions, nifty lost 39%

But surprisingly, these stocks made only substantially lesser fall from the close on 14-Jan-2020

Image 29-1
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Chapter 30: Catching Strong Breakouts

Catching a very strong BREAK OUT has a secret component. It’s not so often talks about.

It’s the VISUALIZING POWER.

At the time of breakout, a chart wont easily give clue about potential profit prospects in it. But looking after 100-
200% gain chart will be totally different & looks so easy.

Image 30-1

Image 30-2
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Chapter 31: Drawing a Demand Trendline

How to draw a Demand Trendline?

 Price must be making higher lows

 Pick a swing low & the next swing low (which is higher low)
 Draw a line connecting both lows & extend right into the future
 If price hits that line after making a higher high, price likely to find demand there

Image 31-1

Image 31-2
37

Image 31-3

Note: steeper Trendlines doesn’t sustain. They are prone to mean reversion

Chapter 32: CadilaHC chart analysis

CadilaHC: Correction might well have finished. Bullish outlook is presented in chart:

Image 32-1: Result the Next Day: 2.5% up CadilaHC

38

Chapter 33: Best Books on Mean Reversion

 Algorithmic Trading: Winning Strategies & Their Rationale-Ernie Chan

 Trading in Choppy Markets: Breakthrough Techniques for Exploiting Non Trending Markets-Robert Barnes
 Mean Reversion Trading System: Practical Methods for Swing Trading-Howard Bandy

Chapter 34: Chart Quiz

There was a request to conduct chart quiz.

Here it is: McDowell_N

How do u assess the trend?

To simplify, specific areas to look into are highlighted with queries. Concentrate on that while analysing.

Image 34-1
39

Thanks for participation. It was nice to see everyone has their own methods to assess the chart. This is my view:

Image 34-2

Chapter 35: Readymade Scanners

Readymade scanners are available in many websites.

Few useful links below:

- EOD screeners
o https://www.eqsis.com/technical-analysis-nse-stock-screener/
o https://web.stockedge.com/scan-groups
o https://trendlyne.com/stock-screeners/popular-screeners/
o https://www.topstockresearch.com/
- Live market screeners
o https://www.moneycontrol.com/stocksmarketsindia/?dashboard=l2
o https://www1.nseindia.com/live_market/dynaContent/live_analysis/top_gainers_losers.htm

Chapter 36: Top 10 Day Trading Books

Master list of #Top_10_Day_Trading_Books_for_Pros with link for each book (amazon).

List is prepared from own experience & reviews from trustworthy friend circles.

Download from here: https://drive.google.com/file/d/1cNgm4NAnYP_Iyqm9ttozzllDIA1xpRaY/view

Password: @prodigal_trader
40

Chapter 37: Potential Day Trading Scanners

Six Potential Day trading Scanners:

1. Price at 200 MA/EMA

2. Inside bar near major supply/Demand zone

3. Volatility compression patterns such as NR4, NR7 etc

4. Scrips trading at 52-weeks highs/lows

5. Scrips which have high OI build up recently

6. Top Price gainers/losers last week

Chapter 38: Book recommendations

If you know the basic technical analysis such as candles sticks, moving averages, support/resistance etc, then, these
books are enough to take u to the realms of consistent success in trading (provided you have viable risk
management and position sizing approaches).

Image 38-1
41

Chapter 39: Trading Breakout Retests

Trading retest of a Break Out is a common concept & widely looked as so simple. But, in reality, it’s so tough.

Knowing the mechanism behind it would help to trade those better.

Image 39-1
42

Chapter 40: Trading Tip

When a scrip is expected to be bullish and gave a strong gap up open, but didn’t go up as expected, rather retraces
back, where is it retraces to probably?

Ans: Previous day high after 1.30p.m. Strong chance of tradable upmove from here

Image 40-1: Ujjivan today up >4% up

Image 40-2: Srtrans on 28th = >8% up

43

Chapter 41: Andrew’s Pitchfork

How to trade using Andrew’s pitchfork?

What exactly it does when you plot it in charts?

 The most important single factor behind this tool is that it’s the study of the reaction of price action w.r.t. a
median line which we identify from the immediate previous 3 major swing high/low points within the time
frame we choose.
 1. Identify the latest 3 swing highs/lows--figure 1
2. Find the mid-point of swing 2 to 3--figure 2
3. connect pivot 1 with the midpoint and extend the lines--figure 3
4. Draw lines from pivot 2 and 3 parallel to the median lines--figure 4

Image 41-1

Image 41-2
44

Image 41-3

Image 41-4

 Now when the price reaches the median line during the pullback from the last pivot 2-3 swing, it is expected
to make a reversal from that point as it’s a tough resistance point.
 If it manages to break the resistance, then the next probable stop is the upper/lower (depends on the
direction) pitchfork boarder.
 An example Ceat Ltd is taken to exemplify the above said concept of resistance and reversal at midpoint
after the 3rd pivot confirmed and gave reversal and again the fall took support at the bottom boarder of the
pitchfork to give the perfect reversal
45

Image 41-5

Chapter 42: Trading Breakout using MTF Analysis

How to trade breakout using MTF analysis in one of the best possible way??
 1. draw the trendline in the higher TF (say Weekly)
2. plot 20 SMA in lower TF (say Daily)
3. make sure that price has crossed up SMA recently or recently it has bounced off it
4. wait for the close above the trendline in the lower TF.
5. at the time of breakout, you wouldn’t see a huge jump in volume, it’s just needs only to be average or just
above huge volume would follow later which would strengthen our position
6. a gap up open which result in the breakout usually is a signal of breakout
 Example DHFL (chart 1 and 2) and Reliance (chart 3 and 4)
the method depicted in weekly and daily as TF. it can be applied equally efficiently in daily and hourly or
even some other combo as (75min and 15 min) or (25min and 5 min)

Image 42-1
46

Image 42-2

Image 42-3
47

Image 42-4

 The method described above isn’t the only one method viable out there. There are huge number of methods
which utilities many tools in a logical combination. The aim of the post it is emphasize the importance of
being objective when it comes to make a trading system.
 NB: charts are 3 years old as it was posted back then in a different platform. But the logic still holds right.

Chapter 43: OI interpretation of Put/Call option w.r.t. IV and PCR of options

It can be a bible to those who can think over and conceptualize it.

Image 43-1
48

Chapter 44: How to Approach Intraday trades

Following is a thread about a viable method for approaching intraday trades:

 Habit of fairly successful day trader focuses mainly in how does he prepare himself for the next day. Let’s see
how does he do that (method described below isn’t the last successful method available out there, it’s just
one out of many)
 He needs to answer to 4 questions basically in order to take a trade
WHAT - prepares a watch-list for next day trades based on trend, both bullish and bearish
WHY - analyse trend based on the past data and find out the major trend in HTF and check if its aligned with
lower timeframes.
WHERE - depends on if he a pullback trader (who short on pullback rallies or long while weak corrections) or
a breakout trader (who long above or short below some particular event), he prepares the levels to
long/short based on the trend he analysed earlier)
now having analysed and finished 3/4 already, he just left with only to time his trade; means he just needs
only to answer the most important query "WHEN". There comes the most vulnerable part of an entire
trading system come into play; "the trader" himself
 Patience to hold himself till the price reaches to his predetermined level, ability to keep presence of mind,
ability to hold his thoughts steady, mental fitness to let the trade run till the trend lasts, ability to judge (in a
neutral perspective, not biased)
 when the trend weakens before turning opposite, ability to let the trade skip if it doesn’t suit your minimum
risk appetite, ability not to jump in if the stock doesn’t come to your predetermined level etc are the
psychological skills are the requisites here.
 He should have a proper method to decide what is the max risk he can afford; then decide the position size.
Apart from this he should have viable scale in/out method to maximize the winner and make it to big
winner. The risk/money management models can be applied in here.
 NB: Primary thing a day trader should understand is that he isn’t going after the top gainer/loser in the day
to get the maximum gain in the country. Neither he is trying to short at day high or long at day low which
only the trainers/advisory peoples are capable of.
 NB: so many day traders doesn't even know if they are pullback trader or a breakout trader himself. and
neither any training/nor any videos course helps them to distinguish that. identifying himself is a key
component in trading successfully.

Chapter 45: Book recommendations to learn TA

 Technical Analysis Explained: Pring

 Getting Started in Technical Analysis: Schwager
 Technical Analysis of Stock Trends: Edwards & Magee
 Technical Analysis for Dummies: Rockefeller
 Technical Analysis of the Financial Markets: Murphy
 Technical Analysis from A to Z: Achelis
49

Chapter 46: Intraday in Derivatives

To trade intraday in derivatives, there are some factors which needs to be analysed thoroughly. They are

1. Time

2. Volatility

3. Volume

4. Price

5. Momentum

Weightage needs to be given in the order mentioned above. There are bigger factors than price which plays critical
roles.

Chapter 47: Greed Fear Cycle

How greed/fear cycle controls the retailer trader’s emotion there by forming the price patterns:

Image 47-1

Based on this greed/fear cycle a pattern could turn out to take the form of any other pattern as well.

Depicts why anticipating a particular pattern is a foolish idea

Price will rotate around without making any trending directional move till the most fickle guys are out of it
50

Chapter 48: Methods of Buying

There are 3 types of buying

1. buy breakout

2. buy at support

3. buy retest after a breakout

Which one is better? What is the reason behind that?

Image 48-1
51

Chapter 49: Types of traders

Types of traders - Pros and cons of each category

courtesy: http://1st-best-forex.blogspot.com

Image 49-1

Chapter 50: Dissection of Moving Average Breakout

 Here is a method using 50MA detailed in the chart. It’s just one of the methods out of so many good ones.
Those who are looking for validation of trend after a reaction from an inflection point might find it useful.

Image 50-1
52

 50MA is just an example, it could be 200MA or 100MA or any other popular ones. Even any form of popular
dynamic support/resistance tool would be used by pros in a similar way.
 after a breakout there will be validation of the breakout level. But if break out is from a dynamic level like
MA, there would be too much ambiguity. Can't say from sure that breakout has happened and it's due to an
MA.
 So it's really need a retest of the MA. Here no SM would pump in full money because remaining supply has
to be taken out. Once they do that, price will be back to where buy orders are pending.
 It’s after point 2, i.e. after the successful retest of the breakout is where the trend has changed bullish. Yet
it’s not the entry point. Above post uses demand zone as entry point. There can be other ways too, like using
VSA, bollinger bands, candle patterns etc

 An example for the above concept:

Image 50-2

 how to avoid the false breakout from 50MA or trend line? One way is to use MA band. Use MA of high and
MA of low. It will give a band rather than a line. That's one way. Another one is don't trade breakout. Trade
only after successful retest, whenever you find a good set up in line with major trend

Chapter 51: Day Trading Mastery

Day trading mastery is a multifaceted skill. Implement the following into your trading strategy:

 Money management – The key to day trading success is to avoid big losers. So, to avoid this bad habit, you
should only risk a total of 1% of your portfolio on any one trade. You have to prepare yourself for minimum
and affordable losses
53

 Time management – day trading is a full time business. Don’t expect to spend a few hours in a day of your
choice, hoping that a particular stock would show up favourite set up of yours at your convenience. Rather
watch the stock and play when it comes into your trading space
 Watchlist – do not track a truckloads of stocks live. Watch just 2-3 and follow it like a hawk. All stocks are
bound to give trading opportunity. U don’t need 200 stocks for that
 Patience – once u identified the stock, it’s all about waiting patiently till the right set up and the right level.
Most people jump the gun and end losing the trade. Resulting in not taking the trade when the set up
matures
 Stay informed – Mere knowledge about technical analysis part won’t be enough. If a news hit the mkt, all
patterns go shattered. So be informed about all scheduled events. (Accidents are not in our hands anyway)
 Repeatability – repeating a process is where sustainability comes in. u should keep emotions away and keep
the process pretty boring. Simply sticking to your own methods makes wonders
 Common sense – avoid the illogically and immeasurably volatile times in the mkt. usually first 15 min and
last 20-25 mins.
 Health – do not go into trading with ill health. Brain should be at its beat while trading. Any loss in mental
comfort or physical fitness leads to lethargic brain. Of course trades’ fate will take wrong turn
 Confidence – even if u had a 10 losing trade streak, it has no relation with the next trade. Stick to your
method. Keep on improve it. Don’t change the system altogether

Chapter 52: Buying Vs. Selling Volume

Buying and Selling Volume - how to distinguish that?

is it possible to do that?

Answer is YES

 This is confusing because every trade requires both buyer and seller. Means, if a candle close near high we
can’t say that its buying volume associated with that. Similar for bearish candles. Yet, you can distinguish
buying volume from selling volume through bid/ask price
 The bid price is the highest price someone is ready to pay for buying. The ask price is the lowest price at
which someone is ready to sell.
 When a transaction happens at the bid price, it is known selling volume because it has the potential to push
the price down. Assume someone is bidding 100 shares at RS:100 and someone is also bidding 100 shares at
RS:101.
 When another trader sells 100 shares to the person at RS:101, that bid will disappear, and the new bid will
be the lower price of RS:100. The selling volume at the bid lowered the price.
 When a transaction occurs at the ask price, it is known as the buying volume. Assume a trader is offering 100
shares at RS:100 while another trader is also offering 100 shares at RS:101.
 When a trader buys 100 shares RS:100, that offer consumed off, and the next best offer will be the higher
price, RS:101. The buying volume at the offer drove up the price.
 When a market has more buying volume than selling volume, there are more traders buying at the ask price,
hence price goes up. When there is more selling volume than buying volume, more traders selling at the bid
price, which pushes the price down.
 Buying volume is the volume traded at the ask or offer price. Selling volume is the volume traded at the bid
price. Whether more transactions are occurring at the bid or offer, give traders indications of where the
price could go next.
 Users are requested to use own discretion in applying this into their own trading.
54

Chapter 53: Why to trade in multiple lots?

why to trade in multiple lots? why experienced traders prefer to trade like that?

what are its benefits? what happens if he does not do that?

Image 53-1

Specifically, this is why new comers should trade in cash to let themselves flexible and minimize emotional pressure
55

Chapter 54: How crucial is Risk Management?

How crucial is risk management in protecting the capital and for healthy return as well: A case-study

courtesy: http://xtb.com

Image 54-1

Chapter 55: Question on Short Covering Rally

- Ques: Sir how effective is short covering rally, preferably happened near to expiry days and how long it
sustained?

- Answer: Great question brother. See, all rallies, I mean absolutely all rallies starts as short covering rally.
even experienced traders usually blame most rallies as short covering rally, forgetting above fact. But not all
short covering rallies end up in bullish trend reversal

- there can be a few clues. Short covering will have open interest liquidation first but it has to follow with
volume and open interest build up in upside direction. That is sustainable. If there is no follow up OI build
up, its short lived

- But beware of one thing. When OI is being built, both long and short are getting built. Eventually who wins
the battle is a matter of bigger discussion. Let’s just say, retailers are mostly wrong most of the time in most
of their trading, again, there are clues to distinguish them.
56

Chapter 56: Dissecting Double Bottom/ W pattern

Image 56-1

 Ques: Is it mandatory for considering only 2 candles or more could be allowed?

 Ans: Number of candles to consider is up to each individual. It’s called fractal pivot. Some consider 3; some
others 5, there is no standard number in it.

Chapter 57: What does stoploss do?

1. Analysis behind which a trade is taken get invalidated at some price point. Accept it.

2. There should be a measurable maximum risk in a trade. Take the trade if and only if it stays inside your risk
management plans.

Chapter 58: Assessing the Trend

 One small point to be noted while assessing the trend: “A trend which is in place will stay that way until a
bigger (way way bigger) opposite force acts upon it”
 while something is falling what most amateurs are doing is anticipating a reversal at each moving averages,
Fibonacci levels, RSI supports etc. and of course burn their hands in the process of executing it.
57

 In contrast, if one thinks and acts on a continuation of an existing trend, u have chances of going wrong only
once, which is when the reversal comes. But u have bigger, way bigger odds at continuation
 NB: most elliotticians, if u observe, talks about reversals exclusively which would come in the future. They
never talk about the present scenario which can be traded if analysed properly.
 They are the ones creating the illusion in novice traders mind that these guys possess some magic tools
which predicts the future. In fact, most of them have a pathetic win rate

Chapter 59: A Profitable trader

Correlate a positive P&L outcome of the trading with the trader himself

Image 59-1
58

Chapter 60: Importance of Stop Loss

WHY IS IT SO IMPORTANT TO KEEP STOPLOSS ON THE STOCKS ONE IS HOLDING IN HIS/HER PORTFOLIO??

 Let’s see with an example. Suppose you were to buy a Rs 100 stock and instead of going up, it started going
down.
 Let’s say you did not set a stop loss and it went all the way down to Rs 80. Now you have lost 20% of your
capital. But in order to regain the original capital, you must earn 25% of the capital u r left with now!!
 This situation will get only worse as the initial loss widens as the price further drops below 80. Cutting loss
shouldn’t interfere with emotional aspects of a trader. What’s to be done, must be done.
 NB: image from http://quant-investing.com

Image 60-1
59

Chapter 61: Spotting Trend Reversals

Where to make an entry to trade it?

Dow theory explains it. It can be seen that how and why a head & shoulders is a reversal pattern

NO PATTERN EXISTS WHICH DO NOT COMPLY WITH DOW THEORY

Image 61-1

Chapter 62: Defining a Profitable Trader

Who is a profitable trader? How to achieve that status? How to stay profitable once u achieve it?

Image 62-1
60

Chapter 63: Understanding Chart Patterns

 Least concerned yet the most important 2 aspects of candle patterns are;

1. Psychology behind the pattern

2. Location of the pattern formation

 Every bar we see is the result of a battle between bulls and bears. If we see a green bar, it doesn’t mean that
there were no bears then; simply it’s that bulls were able to overpower the bears in the bar.

 If a trader is able to correlate the pattern being formed w.r.t. the psychological aspects of the force behind
making it, he/she would be empowering himself ahead of his/her fellow traders. The picture below would
give a brief out line about the same.

 All other parameters we regularly check such as size of the real body, length of wicks, location of real body
w.r.t. the wicks etc give too much information if he/she dig deep into the psycho aspects while the bar was
being formed.

 Another important aspect is the location of the pattern. Why does the price action do what it’s doing where
its doing now? A question of much importance. An engulf pattern at various location would mean different
things and would signal varying strength of the trend

 For example; a bull engulf at support would mean a buy signal, but the same pattern at resistance mean
bulls are stronger than the bears and even if price fall, we shouldn’t short as bulls are still not yielded;
bounce can be lethal and hit SL for the short

 An understanding of the above aspects would make wonders and enable the traders to make bar by bar
analysis. The real revelation for a price action trader is that PAT isn’t about merely memorizing candle
pattern; rather its way deeper

 Image used in the tweet is from following link: https://www.quora.com/Is-it-important-to-learn-

candlesticks-chart-pattern-to-be-successful-in-stock-market
61

Image 63-1
62

Chapter 64: Pattern and it’s Breakouts

Image 64-1
63

Chapter 65: A Follower’s Query on Trendline

 Ques: Do you think HDFC may hit a resistance here?

Image 65-1

 Ans: First touch point in your TL is invalid. That high was made while still was making lower low. If you want
to draw a supply line on a chart with rising price, u consider only those highs which was made after the
lowest low point
64

Chapter 66: Price Action Trading (PAT)

PAT is all about going deep into each and every bar. A bit of understanding about why a particular bar is trying to do
what it’s doing would take trader to better conviction in his/her own method

An old analysis posted here:

Image 66-1

After "eluding the retailer" bar, next 2 day’s price went in very small range where it has continuously revisited the
eluding bar low and today made another low in the region to complete the accumulation and a good spike up was
seen, thus proving the hypothesis

Image 66-2: Price when comes into the exhaustion gap would meet with strong shorters. We can’t say for sure that
who will come out winning. So the rationale of buying low gives a tight SL with a good space above for the price to
go up without resistance. When price reaches the resistance zone, a lot of pending short orders gives a perfect exit
to us without even a trace of slippage.
65

Chapter 67: Tips for Day Traders

 Sustainable Success of an intraday player in market solely depends on his ability to refrain himself from jump
onto trading entry before the huge volatility in the first 20-30 minutes.
 Reactions to price towards the overnight positions happens inside the opening hours is always an
unpredictable entity. attempts of quantifying or strategizing over the price moves during this times is a
suicidal attempt.
 Stable and clear trading signals always comes after around 9.45 am. Always we need to remember that we
are NOT bound to have a position during live market at any given time at all.
 To watch and to keep on watching till the ball comes into your court is the best method to make sure that,
you are taking control from here on, at least w.r.t. to the controllable parameters we r able to manipulate.
 For a sizable return for an Intraday player, we don’t need huge number of trades. what we need is to
maintain best RR and avoid big losers. Avoiding such big losers or keeping an objectively high RR during
opening minutes is almost impossible.

Chapter 68: Volume Spread Analysis (VSA)

VOLUME SPREAD ANALYSIS is a school of thought that believes volume plays a crucial role in understanding moves
of prices in financial markets.

CONCEPT IS BASED ON FOLLOWING IDEAS

1. Volume is activity. Hence tick volume can be used where actual contract volume is not available
2. Two ways of looking at volume
a. relative volume: volume in relation to the previous bar or bars.
b. actual volume: the amount of volume an individual bar represents
3. Strength comes in on down-bars and weakness comes in on up-bars
4. Markets do not like high volume up bars with wide spreads? Why because there is a possibility of Pro Selling
into such a bar
5. Professional Money deals in large amounts and thus sells into up bars so as not to be hurt by their own
selling. The converse would also be true.
6. 85% of a volume histogram represents Smart Money activity.
7. Smart Money is active on all time frames. Various time frames are used to hide their actions from those that
can read a chart and each other.

 OPEN VALUES TO BE IGNORED AND ITS CLOSE, WE HAVE TO LOOK FOR. Pure VSA as described by Williams
does not pay any attention to the open. Williams does look at the previous close in comparison to the
current close. Infact this is the basis used to determine an up bar / down bar.
 He also looks at net change (last close -> current close) but that’s a fairly secondary thing and not written
about anywhere. Most of the information is there with HLC bars though perhaps not in as visually accessible
form as a candle.
 Of course the only time that it is not is when there is a gap i.e. last bar close <> this bar open. Intraday not
likely to be much of a problem. When there are gaps VSA may consider a bar an upbar where a traditional
candle may consider it a downbar.
 The thinking is that the close is the most important price point as it represents the result of the struggle
between the bulls and the bears for the particular interval you are looking at.
 MAJOR SIGNALS IN VSA
tests (successful and unsuccessful)
66

shakeouts
no demand
stopping volume
pushing through supply
upthrust
selling/buying climax
climactic action
support/weakness coming in
trap up/down move
no result after strong effort
selling/buying pressure
bottom reversal
end of a rising market
 Volume Spread Analysis was previously known as Wyckoff Volume Spread Analysis and has been in existence
for over 20 years. Tom Williams, the inventor of VSA, is a former syndicate trader.
 VSA is an improvement upon the teachings of Richard D. Wyckoff, who began stock trading in 1888 at the
age of 15. Wyckoff was at odds with market analysts whose trading was based on chart formations.
 He believed that mechanical or mathematical analysis techniques had no chance of competing with proper
training and experienced judgement. Tom Williams, improved upon the work that Wyckoff started. using the
importance of price spreads w.r.t. volume and the close.
 Most part of the thread is copy paste from various sources including trader’s laboratory site. Use the info
above for educational purpose only

Chapter 69: Simple Trading Strategy by Steven Primo

Following is a simple strategy aired to public for free by Steven Primo.

1. Set the bollinger band at 0.382 SD (it is a proprietary set up of Steven Primo. commercial use is punishable by act)

2. Price has to cross the band from below and close above

3. we need 5 candles fractal set up which completely close above upper band

4. note the highest high of the 5 candles fractal set up

5. entry on any candle afterwards, which trades above the highest high of the candle fractal set up

6. SL is the lowest low of the 5 candle fractal set up

7. Target is determined by range expansion. using Fibonacci retracement tool, measure 200 and 300% of the price
wave from lowest low before crossing the band till the highest high of the 5 candle fractal set up.

Personal inputs

1. Width of bollinger band, if its bigger on completing the 5 candle fractal set up, w.r.t. the width at the starting
of the price wave from lowest low before crossing the band, would be ideal
2. In the 5 candle fractal set up, if the highest high is made on 2nd, or 3rd candle and 4th and 5th candle
retraces back near to upper band, set up becomes stronger
3. It is better the total body of all the 5 candle fractal set up is above the upper band, rather than just close
above upper band.
4. 4. if the very next candle after the candle fractal set up, meets entry criteria, then it’s a very strong set up.

Example image of the concept:

67

Image 69-1

The contents and the chart are around 3 years older. it was posted in another platform then. tweeted since the
importance still holds.

Apart from adding personal inputs, complete credit goes to steven primo.

Please watch his channel to find more quality contents

Chapter 70: Components of a trading journal

Image 70-1
68

Chapter 71: Advantages of stock screener

Examples:

1. stocks qualified mark minervini's trend template

2. stocks which are all bullish or all bearish as per Ichimoku

3. stocks which had huge jump in delivery this year @ lower price levels; accumulation

Image 71-1
69

Image 71-2
70

Image 71-3
71

Image 71-4

 Data is from Amibroker

72

Chapter 72: Stop Loss

 Info courtesy: http://blog.iqoption.com

Image 72-1

Image 72-4
73

 Image 72-2: Having set rules will minimize subjectivity and promote objectivity with your trades. Here are
trailing stop-loss strategies, you can apply the concept and change it based on your own personality. credits:
http://investagrams.com

 Image 72-3: Trailing Stop Loss Guide for Investors (Average 12 months). credits: http://stageanalysis.net
74

Chapter 73: Difference of perspective using different Time Frames

Look @ the image of Timefame: daily: it looks very less attractive & not looking god to buy at all. Lots of lower highs
and lower lows.

Now look at weekly chart. It’s an ever bullish stock. perennial uptrend. Great buy !!! Potential list such stocks below

Image 73-1
75

Image 73-2: List of Stocks

Chapter 74: Importance of a Trading Journal

A write up about why a trading journal is a must for all traders. courtesy: http://equityfeed.com

Image 74-1

 Usually a trading journal is an Excel sheet where we keep relevant details. Not sure if we can add an image in
it. But one thing you can do is, post chart in your google drive, get the link and paste that link in the
respective space in your journal. Sample journal is available all over the net.
76

Chapter 75: Trading in 3 steps

Image 75-1

and just repeat........that’s it

Chapter 76: Essential traits of Traders/Investors

The essential traits of traders/investors can be captured in the profit/loss matrix. Basically, we belong to one of the
traits. The two factors that define traits of traders are profit and loss. Credits: http://wintick.com

Image 76-1
77

Chapter 77: Characteristics of an Ideal Flag/Pennant pattern

Image 77-1
78

Chapter 78: Corrections in LTF when seen at in HTF

"CORRECTIONS IN LOWER TIME FRAMES ARE JUST MINOR PULLBACKS IN HIGHER TIME FRAME"

Dissecting this statement takes one to an important facet in technical analysis.

Image 78-1

- Ques: But if I am just into trading for say 6-8 days holding time, then would you suggest to look for monthly
time frame as well
- Ans: Not really, monthly to understand the broad picture. To take an entry you don;t necessarily need to
take monthly tf. You can time your entry in lower tf. You can use hourly if you are looking to trade for 4-8
days. but, my point is when ltf align with htf trend, you have better odds
79

Chapter 79: NIFTY Chart Analysis

NIFTY

Price is back at the demand zone where index started making higher highs since Jan 2019. chances are high that
demand at this level would arrest a fall tomorrow. Might bounce from here

Image 79-1

Enough to brag

"I picked the bottom of the market"

"I called the reversal when entire world was bearish"

Honestly I had no idea reversal is coming. I was just ready for it if it comes

If I did not make money, no point in bragging

If made money, no need to brag upon right analysis

Chapter 80: Book recommendations on How To Trade

Excellent books for those who consider trading seriously. Not just technical analysis, It's about how to trade

 How to Make Money in Stocks - William O'Neil

 Trade Like a Stock Market Wizard - Mark Minervini
 Secrets for Profiting in Bull and Bear Markets - Stan Weinstein
 Secrets of pivot boss - Frank ochoa
80

Chapter 81: Role of Volume in Price Action

Image 81-1

One of the many secrets in price action lies in volume.

81

Chapter 82: Clarity for a trader

Image 82-1: Traders needs to be disciplined; but how about CLARITY??

82

Chapter 83: Channel breakout v/s Bull trap

83

Chapter 84: Volatility Contraction Pattern (VCP)

Patterns found by mark minervini.

It’s long only set up for stocks that were trending up substantially in the recent past, which is consolidating now.

Image 84-1
84

Image 84-2

Chapter 85: Human Emotions in Trading

There is no better way to picturize the whole process of trading w.r.t the psychological aspects of the trader. All
credits to the original source https://financialoccultist.com

Image 85-1
85

Chapter 86: More on Volume Contraction Pattern (VCP)

VCP pattern which is based on the decrease in volatility of the successive dip in a stock which is in strong uptrend.

While each dip makes higher lows, the swing highs maintain same horizontal price level. Few classical patterns
resemble this.

Image 86-1

Chapter 87: When a Trader with Big Following posts his trades: A Possibility
Just a possibility, not everyone does this; but a potential scenario.

Novice traders, better be cautious before copying any trades blindly from anyone. When money is at stake, rather
livelihood is at stake, trust no one. You are waging a lone battle.

Image 87-1
86

Chapter 88: Book recommendations for Beginners

Which technical analysis book is the best for a beginner?

1. Technical Analysis of Stock Trends- Ninth Edition - Robert D. Edwards, John Magee and W. H. C. Bassetti

2. Technical Analysis of the Financial Markets – John J.Murphy

3. Technical Analysis Explained – Martin J. Pring

Chapter 89: Pin Bar Vs. Power Bar

What happens when a pin bar doesn’t stop being just a pin bar rather it makes substantially more gain?

How does it look like then? What does it implicate?

Image 89-1
87

Chapter 90: A Set of Useful Tweets

1. Book Recommendations for those clear with Basic TA

If you know basic technical analysis, read the following, potentially the fastest route to be profitable
 Secrets of a pivot boss- F. Ochoa
 How to Make Money in Stocks- W. O'Neil
 Trade Like a Stock Market Wizard- M. Minervini
 Secrets for Profiting in Bull and Bear Markets- S. Weinstein
2. Price Behaviour
Price has two behaviour:
 Range bound
 Trending move

Price is range bound when there is complete balance between buyers and sellers.
Price breaks out to give trending move when there is fresh imbalance between sellers and buyers till it finds
fresh balance between buyers & sellers.
3. About Indicators
There is wide perception that indicators lag. But,

Momentum precedes price

Volume precedes price
Volatility precedes price

Only thing, one must know: how does it work & how to interpret it
4. Using MA as trend filter
Those who use 200 MA as a trend filter as:
Above 200ma bullish and below bearish

better filter it as follows

Bullish if 200 MA goes up since last x bars (minimum 20bars)

Bearish if 200 MA falls since last x bars (minimum 20bars)

5. Dealing with Successive failures

Successive failure brings

1. dent in confidence
2. capital erosion

Remedy:
trade with smallest quantity (literally, lose only commission if u lose).
This way, you will learn how to trade, capital won’t erode this way,
while
dented confidence will be reinstated, then gradually grow.
88

Chapter 91: Amateurs Vs. Pros

Image 91-1
89

Chapter 92: When to use mean reversion?

While price is in range, supply in control at top extreme (short), demand in control at bottom (long), use Mean
Reversion.

When to use trend following method? Once price broke through the range, use trend following methods to catch the
ride

Image 92-1

- Ques: Sir some info about mean reversion?

- Ans: E P Chan, Google him

Chapter 93: How does Market Price move?

 Not many people actually understand how buying and selling moves market prices. It’s confusing since every
market transaction requires a buyer for every seller. Every market has two prices; a bid price and an ask
price.
 The bid price is the highest price at which a buyer is posting an order. The ask price is the lowest price at
which a seller is posting an order. There are bids at multiple prices as well as people bidding different
amounts of shares @ each of those prices. same goes for ask
 This is because different people only want to buy or sell at certain prices. Assume someone is selling 200
shares at 90.50. If someone buys those 200 shares at 90.50, a transaction occurs and those 200 shares are
no longer available.
 The next ask may be to sell 100 shares at 90.55. If someone buys those 100 shares then that order
disappears and the ask moves to the next available price at which someone is selling, let's say 90.60.
 If the buying was great enough, it will remove the successive ask prices. That is how prices move up. The
same thing happens on the bid.
90

Chapter 94: How to Calculate Position Size

Image 94-1

Chapter 95: Stop Loss and Trailing Stop Loss + QnA

"If the trade goes against you, it should hit your stoploss",

Nothing more

"If the trade goes in your favour, it should hit your trailing Stop",

Nothing else

Read,

think over it,

execute it,

understand the difference yourself

- Ques: How long did you take to get comfortable with trading and your set ups?
o Ans: In market since June 2015
o Learned basics in TA in next 1.5-2 years
o Took around one more year to become profitable
o In fact, being profitable brought all comfort with setups, never before
- Ques: Sir, have you joined any training programs or self learner. Is training very important?
o Ans: Learned by myself
o Trainings won't be helpful bro.
o Imagine, there are 100s of training programs out there. Every year, minimum, 5000 traders are
getting trained by them.
o How many are profitable? If these attendees were all profitable, we wouldn't have had any loss
makers now
91

Chapter 96: What happens if you book half your position at 1R?

Image 96-1

Chapter 97: Why/How a F&O stock comes under Ban?

A stock is banned from trading when its open interest crosses 95% of MWPL (market wide position limit) means
when the combined OI in futures & option in all the contracts crosses 95%.

MWPL is the least of;

1) 30 times the average number of shares traded daily, of the previous month in the cash segment of the exchange

2) 20% of the free float i.e. non-promoter holding in terms of the number of shares

*If a stock enters the ban period traders are allowed only to square off their contracts

*Trading in the cash segment or intraday positions is allowed, as they do not further increase OI

*A stock comes out of the F&O ban list when its open interest falls to 80% or below the MWPL

*MWPL does not apply for Indexes; Nifty, Bank Nifty does not have an MWPL. MWPL is set only for stocks in the F&O
segment
92

Chapter 98: Trend definitions

Uptrend = higher highs and higher lows

Strong Uptrend = low above previous swing high

Weak Uptrend = low breaks below previous swing high

Downtrend = lower highs and lower lows

Strong Downtrend = high below previous swing low

Weak Downtrend = high breaks above previous swing low

Image 98-1
93

Chapter 99: Brokerage Houses picks for Diwali 2019-20

It will be interesting to keep a watch on how these performs. List of picks for last year from various broker houses
are available in google. Those who are interested, may check that as well

Info compiled by google search

Image 99-1
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Chapter 100: Using line charts to get rid of Wild Bars

What would you do, if a wild bar shows up in a chart which broke all the pattern but has no relevance at all?

Petronet had a huge candle gap up bar which forced fake demand into market on September 23, shattered all
patterns

How would you analyse the charts now?

Ans: use line chart

Image 100-1

Image 100-2
95

Chapter 101: Types of Bullish Breakouts, which is Better?

Two types of stocks give bullish breakouts

1. stocks which are in downtrend (TVS motors)

2. stocks already in uptrend; breaks from consolidations (ICICI)

Which is better and why?

ICICI breakout is better -

there is no supply to left, broke into all-time high, smooth ride ahead

Image 101-1

Image 101-2
96

Chapter 102: Trailing stoploss technique - Chandelier Exit (CE)

 It is a volatility-based trailing stoploss indicator based on the Average True Range (ATR). It shows 2 lines –
the chandelier exit long and the chandelier exit short.
 The exit long is used as trailing stoploss for long positions whereas the exit short is used as trailing stoploss
for short positions. The Chandelier long and short are used to compute the value of ATR.
 Then, using the recommended setting of 21 periods, Chandelier exit will calculate the highest high or the
lowest low for the same period used to calculate ATR. Lastly, subtract the multiple ATR (recommended
setting - multiple of 3 times the Average True Range) from the figure obtained 4 the highest high, & add
multiple ATR to the value obtained 4 lowest low
 The formulas for the two lines are as follows:

Chandelier Exit Long: n-day Highest High – ATR (n) x Multiplier

Chandelier Exit Short: n-day Lowest Low + ATR (n) x Multiplier

Image 102-1

Image 102-2
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Image 102-3

Image 102-4
98

Chapter 103: Buying a Stock: Which method is Better?

Two types of buying

1. Buy low, sell high

Example: Wyckoff logic- buy mark up after accumulation

2. Buy high, sell higher

Example: Mark minervini- buy stocks near all-time high/52-week high

Which is better?
Type 2
Why?
Very less resistance from left side of the chart
However, all methods have it’s own pros and cons
type 2 has the path of least resistance while there is a risk of buying near top
type 1 has too many supply zones ahead, but has larger space above to move up

Chapter 104: Risk Management

If you risk only 1% of capital, it will take 69 continuous losing trades to lose half your capital
If you win continuously with 1% gain each time, it will take 69 trades to double your capital

Manage your risk using position sizing, this alone will fetch u success.
99

Chapter 105: Dissection of Chart Patterns

"ALL PATTERNS ARE JUST SIDEWAYS MOVE. THEY ARE THE CONSOLIDATIONS AFTER A TRENDING MOVE"
Geometrical shape isn’t that important. It’s the supply & demand inside the pattern which is relevant. Till both are
balanced there won’t be any breakout. It breaks, once one outweighs the other.

Image 105-1

Chapter 106: Price correlation with Volume & Volatility

It is one of my favourite tool in analysing the trend and the variation in it.
Now how high is high volume? How much is high volatility?
Make your own tools, standard/default indicators aren’t much useful here.

Image 106-1
100

Chapter 107: Idealised correction pattern w.r.t. Momentum and Price action
In NIFTY Chart:

Image 107-1

Chapter 108: Day Trading Tips

I am a day trader, I usually treat first hour of the day completely different from rest of the day while I trade
Below table is compiled based on personal experience, It can vary from person to person

Image 108-1
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Chapter 109: Stock selection for Short in a Weak Market

When market is weak, it’s always better to short the ones which have negligible support on lower side.
List of FNO stocks which are inside 10% above their respective 52 week lows
NB: Among nifty and all other sectorial indices nifty trades the closest (10.2%) to own 52-week low.

Image 109-1

Chapter 110: Deep Analysis on Stock’s Movements

1. Did the stocks which led the bull run fell least in next correction?

2. Did the stocks which fell least in correction lead next bull run?

3. Did the stocks which fell deeper in correction not participated in next bull run?

4. Did the stocks which led the bull run participate in next bull run?
102

Image 110-1
103

Chapter 111: Stocks Selection for Upcoming Bull Market

When the broad market makes bottom, the reality is scrips which would fly ahead of the market in coming days
would have already completed strong accumulation from smart money.
PVR is the only scrip in FNO which had increasing OI since 5-8 days while everything else were liquidating

Image 111-1

From 25/02/2016 NIFTY is making higher high/low in weekly TF and made 80% return over this time till highest close
on 14/01/2020
Now,
choose the scrips which had return minimum double compared to NIFTY
Now select scrips which fell substantially lower than NIFTY till yesterday
104

Image 111-2
105

Chapter 112: Buying in Bull Market Vs. In Bear Market

Buying in Bull market and Bear markets are largely different. From scrip selection to trade management, everything
demands different approaches.

Image 112-1
106

Chapter 113: HDFC Bank Bouncing off 20 SMA

Whenever it comes near to monthly 20 SMA, it gives a chance to accumulate it for higher prices.

Image 113-1
107

Chapter 114: Crude Oil & NIFTY Chart comparison

When crude goes below 35, NIFTY which already in correction seems to be making bottom. Important point is NIFTY
makes back and forth move for 2-3 months in this area for making proper bottom, not a V reversal.
Nifty at 200 SMA weekly now. This might be a stand-off point

Image 114-1

Image 114-2
108

Chapter 115: Alkyl Amine and 30 EMA Chart

Image 115-1

Chapter 116: Filtering Stocks for Buying

The Following list was filtered using following conditions

Increasing relative strength

Increasing volume
Increasing delivery
Average daily volume >5000
No LC in last three months
price >10
price > 10% below 52-week high
new 52-week high in last 3 months
109

Image 116-1
110

Chapter 117: Gray & Vogel Method for Buying Stocks

Wesley Gray & Jack Vogel found a method by which measuring the momentum using 12 months of historical data
giving list of stocks with enough room for further upside price action.

Image 117-1

The method is as follows:

Monthly momentum values are calculated as cumulative returns over the past 12 months. The monthly momentum
is calculated in 3 steps

1) We calculate gross monthly returns by adding one to the percent monthly return.

For example, from a monthly return of 5% (0.05), we get the gross monthly return value of 1.05 (0.05 + 1) while from
a monthly return of -5% (-0.05) we get a gross monthly return of 0.95 (0.05 + 1.0).

2) We multiply all the gross monthly returns of past 12 months.

3) We subtract one from the resultant value from step 2 to get the net 12-month momentum score.

credits: traderslounge site

111

Chapter 118: Stocks Selection using RSI, Stochastics and MACD

Following is a list of stocks with

RSI>70 & Stochastic>70 in daily, weekly and monthly

MACD>0 in daily, weekly and monthly &

MACD>0 in monthly and weekly TF since more than 200days

Image 118-1

Chapter 119: Drawdown

Image 119-1
112

Chapter 120: Slippage

Slippage is the difference between the expected price of a trade & the price at which the trade is executed.

Higher volatility, Lack of enough volume, Wider bid/ask spread are the reasons behind slippage

During Entry/Target - happens with market orders

During SL - happens when big gap up/down

Image 120-1
113

Chapter 121: Trading Vs. Investing

Image 121-1
114

Chapter 122: Reversal Vs. Retracement Comparison

Comparison between both and how to differentiate between them

Image 122-1
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Chapter 123: Chart Quiz 2

If all 3 charts are to be treated as potential trade set ups, then which one you prefer that to be?

For making it easy, I would answer it.

It's Ambujacem. Why Ambuja? Give the reasons behind it as per classical TA.

Image 123-1

Image 123-2
116

Image 123-3

Very simple reasons:

1. current price is well above the first support/Last high

2. strong volume on advances, weak on declines

3. red bars not finding follow through sell offs while green bars have follow through upmoves

Image 123-4
117

Chapter 124: My Trading Preparation Methodology

1. Prepare bullish watchlist previous day night

2. Observe pre-open market & confirm strong buyers
Detailed execution procedure starts at preopen, strong interest is seen in these stocks:

3. Check opening few candles have enough momentum, volume & OI

Which scrip has good volume to start with
adani, escorts, marico qualifies
&
mfsl which had poor volume to start with, removed from watching

4. Execute

Chapter 125: Market Breadth

How to choose the right day and the right time?

Market breadth (the king in the live market !!)

Image 125-1
118

Proofs:

 https://twitter.com/ProdigalTrader/status/1260790755733368832
 https://twitter.com/ProdigalTrader/status/1260789266323402752

More About Market Breadth: https://www.motilaloswal.com/blog-details/Understanding-Breadth-of-Market-while-

trading-and-investing/1355

Chapter 126: Trend Following

1. There is already a strong one sided directional move. You take a trade on a new #breakout - #Momentum Play

2. There was a strong trend, now weak pullback with poor volume. When price reverses at support, take an entry -
Net Force favours Upside

Image 126-1: Breakout

119

Image 126-2: Pullback

Chapter 127: How to learn Trading

How to start connecting #TechnicalAnalysis and trading? How to avoid going broke in trading before you learn to
walk on your own?

 Choose the type; positional/swing/intra

Choose an instrument; NF/BNF/any stock
Choose a segment; cash/futures/option
Choose a trading strategy & backtest it
Choose min position sizing
Choose a good journal template & review it regularly
Now, Execute & Repeat

 First thing you need is having a comfortable feel, not to panic, keep presence of mind & steady head while
your hard earned cash is at stake. Start with 1 share, Trade minimum 50 times through one single strategy.
You will learn to trade. Slowly rise #PositionSize

 Trade in cash
Reduce position sizing to minimum
Literally lose only commission if you lose
There by you learn how to trade
That build your confidence
Rest you will know then
120

Chapter 128: Spotting Momentum Build Up

Silent build up in momentum while price shows no signs of that. #Nifty last week closed with substantial
accumulation even without price moving anywhere, #momentum silently built up.
If u watch #rsi closely, you can see the attempt to rejection from neutralising the bear zone was nullified and it looks
very #bullish

Image 128-1

Chapter 129: Stock Selection / Watchlist Preparation

 Biggest puzzle in transformation from analyst to trader is about stock selection. How do you do that?
Chose a primary filter: Can be candle pattern, indicator based, Volume spike etc
 1. Stocks which have morning star pattern
2. Stocks near to 200 ma
3. Stocks which had overbought RSI, now correction bounced from 60
4. Volume and open interest spike last week
5. Above previous week value area in market profile
 Now having a list of stocks, analyse I separately based on your analysis methods. Find trend, find entry, exit
levels. Now stock selection is completed. Now trade based on your plan.

In http://nseindia.com, under the tab Live market you would see Live analysis list. This can be used as "Primary
Filter" to find a small list of potent scrips upon which you can do your own analysis to short list the watchlist scrips
121

Image 129-1

 When you create watchlist for day trading

If you end up getting >5 scrips
You need to tighten your filter to reduce scrips to as less as possible.
Say, you have 4 scrips on EOD analysis
which upon pre-mkt analysis, 2 would pass
& at mkt open, 1 show enough strength.
Trade that 1 scrip only.

Chapter 130: Book recommendations for Volume Spread Analysis (VSA)

Those who are looking to learn Volume analysis may understand that this is very tough. One of the most complex
thing to master.

Read the following authors.

Buff Dormier

Tim ORD

Anna Couling

Mark Leibovit

Tom Williams

Gavin Holmes

Pascal Willain

(read in this order)

122

Chapter 131: YouTube Video on Elliott Wave by Nick Radge

Elliott wave analysis is the most elusive topic among novice traders. Its deemed as very tough to learn & many
traders fall prey to trap lured by fake trainers.

Nick Radge already solved by giving out most comprehensive presentation on it:
https://www.youtube.com/watch?v=rEifQi71rcs

Chapter 132: Stocks for Investment (Medium term Delivery Trades)

Many queries are directed to me specifically asking about potential long term investing scrips. Here I am trying to
analyse best 10 scrips I track since more than year now and trading with strong price-volume structure

Image 132-1: GMMPFAUDLR

Price broke out in recent past on the back of strong demand and we have a successful retest in the last week with
price closing near highs, strong momentum and strongly increasing delivery as well supporting the continuation of
the trend
123

Image 132-2: ALKYLAMINE

one of the very few scrip which made a higher low even in the corona fall 2020. A strong breakout few weeks back
stalled from going up despite strong demand. Indecision cleared last week with a bar making new highs, confirming
accumulation in the last few weeks

Image 132-3: DIXON

It was moving around the resistance since a month, gave a strong breakout in the last week with strong volume.
Everything suggests complete dominance of demand over any weak supply remaining in the scrip
124

Image 132-4: NAVINFLUOR

Price was making consistently new highs till the recent heavy fall. resisted the fall and made a higher low despite a
big negative sentiment in the mkt. A weak correction was met with strong demand and price signals steady up move
further

Image 132-5: COROMANDEL

trading above all resistances with sky is the limit, very weak supply in it since many years, should go up with same
momentum as it does now
125

Image 132-6: ATUL

Price has made a strong recovery from recent fall quite steadily with good demand. checking the supply with minor
correction met with stronger demand. Poised to make new highs again

Image 132-7: GRANULES

trading near the highs, rally from the lows were quite fast and pullback came with extremely weak volume, signalling
further breakout and bullish move
126

Image 132-8: NEOGEN

It’s trading near its all-time high, pullback to support met with fierce demand and looks like trend getting even
stronger with bigger volumes coming in

Image 132-9: VINATIORG

easily cleared an important resistance with strong demand. It provides a strong support to price now, retest into the
same was met with strong buyers, strong trending scrip
127

Image 132-10: GSKCONS

Glaxo, name is enough. Perfect historical example for bullish Dow theory example. Every time a new high is made,
immediate support will be saved. nothing signals a trend change. awesome scrip

These are the scrips I would choose if I think of making a portfolio. Much time and effort is required to make brief
write on all charts. (did not want to post chart with few lines drawn across it)

Image 132-11: #BDL: High volume breakout, low volume retest, high momentum up bars, Poor bearish bars, #Bullish
128

Investment Scrips (like 1-3 years or so)

Here is a list of #equity in #nse which might serve #investing purpose

Screened based on various parameters in #technicalanalysis such as #priceaction #volume #RelativeStrength etc

Use it to keep in #watchlist & learn the price movement

Image 132-12

Those who trades in equity & looking for suitable scrips to make short to medium term delivery trades, may analyse
the scrips in the list, if they match with the parameters you follow. Screened based on the trend strength with
respect to both price and volume. #investing

Image 132-13
129

Chapter 133: Sector Analysis

CNX_Auto looking very bullish.

How & Why?

Those who r interested check the major players in the sector and find out the best candidates

Image 133-1

 There are only 2 indices closed near day high

1. Metal
2. Auto - highest close since march 6th

 Auto and Metals are way ahead of the market. #Relativestrength at play here

FMCG was the third sector recently identified as the one which leads the mkt, not strong performance today

Image 133-2

 Leading the market, auto index, highest gaining sector today. RS is at its very best, composite support from
the heavyweights in the sector
130

Image 133-3

Image 133-4

 CNX auto consolidating the breakout strength, new high today, trading near day highs
components are very bullish as well, second highest sector gainer today
Best RS sector, Best RS scrip in it - smoothest trend
131

Image 133-5

 Retest is done, only sector which has got any kind of follow through after today’s mad gap up open is metal
index, up 3.25%, jindal steeel, jsw steel etc running up with big demand

Image 133-6
132

Image 133-7

 As it was mentioned multiple times, #cnxauto and #cnxmetal, in all likelihood would make further stronger
gains

Image 133-8
133

Image 133-9

Image 133-10
134

Chapter 134: AFL Code for Coiling Volatility Pattern

MB = (C-O)/(H-L)>=0.70 AND (C-L)>0.8*(H-L);

coiling = Ref((H-L),-2)>3*Max(Ref((H-L),-1),(H-L));

Filter = Ref(MB,-2) AND coiling;

AddColumn(Close,"C",1.2);

AddColumn(Ref(H,-2),"Entry",1.2);

AddColumn(LLV(L,2),"SL",1.2);

AddColumn((2*(Ref(H,-2)-LLV(L,2)))+Ref(H,-2),"Target",1.2);

It’s exploration code, you will need to explore for last 2 bars. Otherwise, last bar which is being formed would
repaint

Chapter 135: How to analyse Health of Market internals and Market trend
These 12 scrips are:

Top 10 in #Nifty as per weightage

Top 5 in #banknifty as per weightage

On weekends analyse these scrips carefully with respect to all available data from cash, futures & option segments

It’s one of the best ways to assess the directional bias of broad market

Image 135-1
135

Chapter 136: Secrets of Trading in Different Timeframes

 15min TF- king in lower time frames
15 min is the TF which rules the day trading. Patterns rarely fails in this TF. One doesn't necessarily need to
trade this TF But he must align his trades with 15min TF trend. Use a combo of 15min (trend) & 3min(trade)
 Most important bar for a day trader - 15min TF, first bar
Look 4 ORB/failed auction. Most important bar 4 swing trader - Monday first hour bar, Sets the tone 4 rest of
the week.
Most important bar 4 futures traders - first EOD bar of the series. Any retest/rejection here give big move
 Correlation of high liquidity & time frame
In small TF like 5min, few high volume stocks have good uniform volume throughout all the bars in the day
While others have huge volume only in few bars when price hits specific zones. Former category of scrips
only ideal for day trading
 All tools in TA such as Ichimoku, Elliott wave analysis, moving average systems, Bollinger band strategy, RSI
analysis etc works beautifully in trading. Only thing is trend in at least 2 higher time frames compared to the
TF you are trading should align in same direction. Suppose you trade long in 5 min TF based on Ichimoku.
Same ichimoku should be bullish in 15 min and 75 min as well. Similar for any other tool be it RSI, Elliott
wave etc. Trend should be same in three TF where u trade in the lowest TF of all three.
 Secret in scalping
You scalp in 2min/3min TF. Check the trends in next 2 higher TFs; 15 min & 75 min. Suppose both bullish,
then scalp on long side only. Logic is you have high odds at catching a continuation trend of 75min which
lasts even a week. Such scalping goes to huge profit.
 75 min TF cuts a full day’s price action into 5 candles; each contain 75 min of price action each. If time frame
is hourly, there will be 6 candles which contain 60 minutes of price action + a 15 min candle. Here price
action isn't distributed evenly. Choose your TF carefully.
 How to use multi time frame trading
Use 3 TFs; say, Daily, 75min, 15min.
Scrip selection;
Daily- very bullish
75 min - pulling back to support
15 min - bullish reversal from support
& Trade long in 15min TF. It's the most logical approach I can think of to trade upon.
 Suppose price is at resistance in daily time frame, & you are trading in 5 min TF. In 5min, same price can be
seen as at support at times. Now, if u trade this on long side, Odds of success is too less as daily TF is bearish
Always align your trade with higher TF trend
 If you are looking for #Investment using #TechnicalAnalysis, You should analyse the scrip in #weeklyTF or
higher timeframes & for entry, You shouldn't look to time it, anything lesser than hourly Tf
 When the trend reversal happens, it's starts from the lowest time frame & then it traverses upward to next
higher time frame. A new trend in 5min TF, would last 1-2 hrs & If that trend happens to progress to 15min
TF, trend would last the whole day.
 Price trend in all TF in either direction
Trend in 1min might last 20mins
Trend in 5min might last 1-2 hours
Trend in 15min might last whole day
If u trade in 1min/5min, is aligned with 15min trend you may catch a big trending move with small SL, huge
RR & multiple #ScalingIn
 2min TF - trend lasts for 15-20min - scalp in first hr
5min TF - trend lasts for 1-2hr - day trade
15min TF - trend lasts whole day - day trade typically squire off @3:30
75min TF - trend lasts for 2-5 days - swing trade
Daily TF - trend lasts for 15-20 days - short term trade
136

 Timeframe (Trend analysis/Trade execution combo) & #trading style

Scalping/day trade 15min/3min
Swing (1-2days) 75min/15min
Swing (1-2 weeks) Daily/75min
Short term (1-2 months) weekly/daily
Medium term (0.5-2 years) monthly/weekly
Long term (>2 yrs) Quarterly/monthly

Chapter 137: Leading indicators in Stock Market

Leading indicators in #StockMarket:

Market breadth
Derivative data
Vix
Volume

Best Live indicator

Market profile - #trading auction

People worshipping "price is ultimate" fail to appreciate that smart money takes position before actual move
happens which rarely reflect on price.

Chapter 138: Volume Analysis

 Price - volume relationship
price up volume up = long candidate
price down volume up = short candidate
price down volume down = low volume pullback - long on bull reversal if prior trend is up
price up volume down = low volume rally - short on bear reversal if prior trend is down
137

Image 138-1

 2 types of #volume in #trading

Volume which creates #priceaction (#smartmoney)
Volume which propels & provide liquidity in #priceaction (retailer)
#MarketBreadth, #derivativedata helps to identify smart money
while
#price (created by smartmoney) leads retailer volume
 Volume Indicators
- some uses volume alone (Volume oscillator)
- some uses volume & price (Force index)
138

- but few indicators use volume, price & H-L range as well (Accumulation Distribution indicator)
Make your choice, but choose wisely, Link:
https://school.stockcharts.com/doku.php?id=technical_indicators:accumulation_distribution_line
 uptrend & downtrend (in futures) are largely different on two fronts
1. steady volume growth in uptrend (shorter MAs have increasing values) while downtrend generally shows
erratic volume
2. variation from average volatility smoother in uptrend while downtrend shows violent variation
 Price can go up because
1. Demand > supply
2. Aggressive demand pushes price up while huge supply waits in mkt
3. Lack of supply in the mkt, though demand is weak too

Only 1 is bullish, rest are traps. If you think "price is god" & avoid volume, OI, F&O data, you are just a sitting
duck
 When a stock pulls back with lesser volume after a strong rally & volume fall again as price moves further,
It's always a signal that soon trend would continue &
1. Previous high from which price broke out
2. Last demand zone are the Areas where from rally would restart again
 For a trend reversal to happen, there must be huge volume to make that happen. In other words, whenever
there is huge volume surge after a lengthy downtrend, it's sign of Bullish reversal. Same is true in case of
volume surge after a long rally; sign of bearish reversal
 1. While already in uptrend, at some point big volume comes in & price makes vertical rally from there
2. While falling in the past, at some point volume comes in to reverse and push the price up
areas where volumes come in 2 strengthen/reverse the trend r strong future supports
 Before every big sharp move in price, there will be "unusual activity" in chart
 If u concentrate on volume and it's correlation & anomalies with price you can learn to identify that well in
advance. Such an expert grip on price & volume will put you well ahead of the herd.
 How to identify smart money using a chart?
Volume build up is cyclical process happens over period of time which lasts many days/weeks aiming to
accomplish certain move in price. If it's accomplished, it's smart money.
Identify such patterns in volume in correlation with price

Chapter 139: Stick to your Trade Plan

You will enter a trade when entry criterias are fulfilled

If you are wrong,

it will hit SL & you exit

If you are right,

you will scale in
&
will exit to book profits
when trend exhausts.

Sensible plan
Now, where is others views & twitter hysteria in this plan?

Nowhere, So, ignore them.

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Chapter 140: Trade Plan

 Trade plan
1. Market Analysis - Identify trending/ranging day
2. Sector - Based on relative strength
3. Scrip selection - Choose based on market; trending/mean reversion potential
4. Trading Strategy: Even simple MA cross over would do wonders
 Your knowledge matters only when you analyse charts, finding your set ups & prepare your trade plans
After then,
when you look to execute your plans,
what matters is your will power, determination, ability to keep presence of mind & stay calm with your plan
knowledge matters least here
 Biggest puzzle in transformation from analyst to trader is about stock selection
How do u do that?
Chose a primary filter: Can be candle pattern, indicator based, Volume spike etc
1. Stocks which have morning star pattern
2. Stocks near to 200 ma
3. Stocks which had overbought RSI, now correction bounced from 60
4. Volume and open interest spike last week
5. Above previous week value area in market profile
Now having a list of stocks, analyse each separately based on your analysis methods
Find trend, find entry, exit levels. Now stock selection is completed. Now trade based on your plan
 After making entry, if trade isn’t moving either way, ask yourself;
Did it hit SL?
Did the entry set up invalidated?
If both NO, then do nothing, but stick to your plan & manage the trade
"Don't make the mistake of exiting just because you didn't get a move when you wanted it to come"
 There is always uncertainty about where would market go But there shouldn't be any uncertainty about
what would u do when market does what it does So what would you do?
Make trade plan for all potential market directional moves, Prepare your levels. Make proper position size
 2 types of trade plan:
o Assess the overall trend; bullish/bearish. If the scrip is bullish, trade long only if entry is active
o Make plans for both short/long. Basically, long above/short below method. Trade based the levels
Both has pros and cons. Choose the one that suit you & Practise it.
 To start the day, Day trader shouldn’t have any bias of the trend; Yet he should have a plan each for bullish,
bearish or range bound.
Having no bias will help him to judge the trend promptly;
-can enter early in a trend
-can hold, till maximum
-can exit early if entry is wrong

Chapter 141: LONG in 52-week high Vs. in 52-week Low

Two different types of scrips for going long

1. scrips near 52-week high - they have less resistance, steady gains in the day, lack of supply enough for upmove

2. scrips near 52-week low - all resistances ahead, strong demand needed, stop hunts/short covering are gold mines
140

Image 141-1: Near 52-week High

Image 141-2: Near 52-week low

Trend justifies the difference in methods

Both retained the trend & went substantially up

141

Image 141-3: Auropharma which was trading at highs went 717 to >785 & since it was already above resistances
JUST AVERAGE VOLUME WAS ENOUGH

Image 141-4: Ujjivan went 175 to >205 NEEDED HUGE VOLUME to clear the resistances
142

Chapter 142: Quantitative Estimation of Scrips

Scrips in

Wave 3 in Elliott wave theory

Mark up phase in Wyckoff analysis

Stage 2 in Stan Winstein Stage analysis

All these scrips have something in common;

Strength in price, trend, volume, momentum & relative strength

Check the following scrips and match it with theory

Image 142-1
143

Chapter 143: MACD Hook

CNX_Auto chart looks very positive and it might give an explosive upmove soon

It has a very strong signal in MACD, it’s highlighted in chart.

what is the pattern? what is it called?

Image 143-1

CNX_Auto highest gainer among all sectors today, leading the broad market. Explosive move as mentioned

Signal was MACD Hook. Quite unfortunately, not even a single person was able to identify that (MACD founder;
Gerald Appel was expired yesterday, RIP)

Image 143-2
144

Image 143-3
145

Chapter 144: Relative Strength Chart Examples

 Image 144-1: srtrans up >4.5%. Here is the rationale.

Last 6 days price completely in range, yet whenever it made bullish close inside the range, relative strength
thrice made a new recent high since the bottom clearly showing strong bullish undercurrent. Such huge
move is accidental though

 Image 144-2: Simple illustration of #RelativeStrength. #Heromotoco

1. RS gave bullish divergence in march-20 while market made bottom after a steep fall
2. #Bullishkicker candle pattern (many times i said: this pattern at bottom is a strong reversal sign)
3. Price moves up in bullish channel
146

 Image144-3: Zeel
Secret behind Zeel chart: Simple relative strength breakout well before price does; signalling impending BO
in price. Today >4.75% up

 Image 144-4: 3.5% up #Escorts

Thanks all who came up with answers. It was simple #RelativeStrength. When the first lower low was made
RS was up; it was resisting fall against mkt. In the pullback rally, it again beaten market
Any dip was an opportunity for long. At DZ; even our cheapest bids fills
147

Chapter 145: Stock Screening Based on Relative Strength

 Edge in #DayTrading
Select scrip which would trend strong
Long entry when price near support, not on breakout
Big winner has big position size through continuous scale up
Trade in the direction of higher TF trend
Trade in high & rising volume & #RelativeStrength scrips

 Which stock would you choose to play breakout?

Answer is so simple
Check relative strength
Pick those which runs ahead of own sector and overall market
When they break out from consolidations, they are least prone to fail

 Relative strength w.r.t. market should have an increasingly positive reading. Breakouts in such scrips tends
to sustain a lot more.

Chapter 146: Risk Management and Position Sizing

 Wealth creation in #trading depends solely on #ScalingIn your #PositionSize as the capital grows
If you are risking 1% of your capital, as the capital grows, this amount increases, making you capable of
higher risk amount, where by you increase your trade size & the profit compounds along with

 Write down your rules on

Trade plan preparation
Entry, exit set up execution
Position sizing &
Journaling the details

This simple practise will erase "Lack of Clarity" on the whole trading process Which otherwise is a major
failure reason for traders

 #Trading Journey of Loser to Winner to Legend in #StockMarket

1. Find a viable strategy (avoiding random trades)

2. Set #riskmanagement & #positionsizing rules & apply them (Sustainable success)
3. Rise #positionsizing as capital grows (Least known wonder- #compounding )

 Learn to trade systematically, be consistent in execution & then repeating it will lead to sustainability
1. Find a good #trading set up, #backtest it & test it in live mkt
2. Decide optimum #riskreward ratio
3. Fix suitable #positionsize
4. Execute & Journal them
5. Repeat
148

 If you are in #StockMarket long enough, eventually all the focus will come down to #riskmanagement &
#positionsizing
You will –
be more systematic,
stop reading books on strategies
reduce the number of instruments to trade
reduce the number of trades
trust simple tools
stop watching TV

 Sustainable success over a long period of time in trading depends on

*Risk Management
*Position sizing &
*Compounding
Issue with paid courses/webinars is that they are mostly strategy oriented which just only touches above
mentioned factors while emphasizing mostly on strategy.

 Cardinal rule of scaling in is "Never end up scaling in more than your initial quantity"
When you add more quantity into your 'already in profit long position', what actually happens is that you are
raising your average buy price.

 Concentrate on variables you can control, Not news, where would mkt open etc. It's important that you are
in control of everything you can control. They are entry, exit, risk & position size. Rest are accidents means it
comes when least expected, treat it as it is. Don't anticipate an accident.

 Losing small is the first step to consistent success in trading. Controlling the size of the loser is risk
management. That's how big losers are avoided.
Practically speaking, "always keep SL in system, not in brain". This simple practise would lead to better risk
management

 Most popular subject in trading videos, articles, blogs etc are strategies. But more than strategies, success in
trading is all about risk management & position sizing. Specifically why it isn't talked about that much?
Retailers always lured into lesser critical parameters

Chapter 147: Compounding and Scaling In

 If you request a successful trader to rate the components in his #TradingProcess his strategy would score the
least while personal traits; mental fitness, perseverance, determination, focussed hard work &methods;
#Compounding, #ScalingIn ..... would top the list

 Two most impactful decisions I made in #trading is

1. Keeping #stoploss in system (Avoided big losses)
2. Scaling in Winners (Created big winners)

 If #trading is a war,
Your defense is your #stoploss
Your attacking force is #ScaleIn
149

If you are not scaling in, rather just holding your initial quantity, you are letting go a great opportunity to
force the enemy into submission
Hold your fort, fight to win, not to drift along

 Good Trading habits

Analysis
- choose the stocks based on structure & #priceaction
- identify trend, trade location & levels
Execution
-trade the stocks on their levels
-maintain entry, exit (target/SL) rules
-#scalein winners/cut losers
Recording
-journal the trades

 Secret behind long term #trading success in #StockMarket

1. #ScaleIn into favourable trades to convert it to bigger winner
2. #Compounding as the capital grows
Majority of the successful traders fails in both & Perishes themselves in long run

 Where amateurs acts to book profit, Pros acts to #ScaleIn

When amateurs concentrate on P&L screen, Pros are busy managing risk
While Pros are riding the trend till it ends, amateurs are busy looking for next scrip to trade
Process is the secret in #trading

 Do not trust a #backtest report which doesn't highlight #drawdowns

Do not trust a #TradingStrategy which doesn't emphasize on exit plans
Do not trust a #TradePlan which doesn't include #ScalingIn
Do not trust a performance review which doesn't recommend #compounding

 Your success rate is 50%

Your RR (min) is 1:2 (w/o commissions)
Take a sum of 100 #trades
50 in loss
25 winners enough to compensate loss (RR, min 1:2)
Rest, 25 solely your Net Profit
Now, scale in to winners. You can increase profit by 40-60%. #riskmanagement, #holigrail in #trading

 If you scale in into a winner (adding to existing position), invariably, your avg. buy price goes up, making your
holding further expensive. Remedy is your cumulative scale in quantity should be lesser than your first entry
quantity: - cardinal rule in scaling in

 Day trading is won or lost in the scrip you choose to trade. If you are able to pick a scrip which would trend
clearly in one direction throughout the day, your rest of the task is down to just punch entry, scale in, exit
orders.

 Growth of a successful trader depends on

1. ability to hold onto winner till trend lasts
2. scaling into winners to compound profit
3. minimising loss in failed trades
4. ability to identify area of highest weakness in trend before reversal to exit with maximum profit in trade
150

Chapter 148: How to do Multi Timeframe Analysis

Adaniports

Monthly TF - strong demand at support

Weekly TF - Multiple inside bar breakout

Daily TF - Retested the base of breakout zone and increased volume on reversal

Looking strong bullish. OI is building near to its 52-week high

Image 148-1: Monthly TF

Image 148-2: Weekly TF

151

Image 148-3: Daily TF

285-320, Moving well

(NB: I haven’t traded this. I don’t trade delivery trades)

Image 148-4
152

Here is the update

285-365, 30% appreciation and still looking very strong

Image 148-5

Chapter 149: More on Scaling In

 2 approaches in managing profitable trades

1. stick to RR from entry once meet it, exit (No Big losers, no big winners)
2. scale into the winners; 30-40 of them becomes huge winners, others end up as exit at cost/minor loss
(No Big losers, big winners created)
Make your choice

 "risk management is the holy grail in trading"

*those who have excelled in it knows how crucial it is in sustained success.
+minimum risk at entry keeps trade to a potentially small loser in worst case
+scaling in once trend is sets in, upgrades the winner to big winner

 How do the big players stay big?

Suppose they are in profit of 2R/3R. Now scale in big in such way the additional risk is consumed completely
from the profit. Now if trend continues, it's a huge winner. If trend reverses, it would end up minor
profit/break even/minor loss.
153

 A successful trader takes pride about one thing and one thing only; his ability to manage the trade. He would
potentially minimise his actual loss to 70-80% of the theoretical risk/trade. He would scale in and see 40-70%
extra to what a theoretical profit figure/trade would be.

 Scale up is a complicated thing. It’s not easy as many claims it to be. it includes lot of maths in it. But if you
get a grip on that, then, it can make wonders in ROI. Am not sure if any proper material is available to
understand it. Upon scaling up, there would be only one result.
1. big huge winners
2. minor loss, exit at cost or minor profit.
If you take the strike rate as 1 v/s 2, it would come down to 10-15% max but ROI will increase big compared
to when there was no scaling.

Chapter 150: More on Mean Reversion

 On breakout price is always too far away from moving average; price usually revert to mean through which
most guy's SL taken out
Solution:
1. trade the retest of BO; MA would catch up by then
2. make sure price historically move farther away from MA so that BO can be traded

 CNX_Metal
tempted to post it since three weeks. But stopped myself from doing it. Big mean reversion potential in it
with strong structural accumulation at very strong demand zone which lead to a strong breakout

Image 150-1
154

 Ques: When a system is giving sell signal when there is extreme bullishness on the charts & it gives buy
signal whenever there is extreme bearishness on chart. What to do? Which type of system is this?
Confused.
Ans: when something is extremely bullish that you can’t find a single reason for that to move even a single
tick down, yet if its moving down, it’s simply mean reversion and you would get a clean counter trend quick
trade

 On a trending day, breakout in stocks works beautifully.

On a range bound day, #Fakeout is real holy grail Because, range bound market always give #MeanReversion
Fakeout, being at the extreme end of the range are best suited for furious move

 When the market is rangebound, "oscillators when its overbought would reverse and fall back" will work like
charm. rangebound market is for mean reversion strategies. Pick the ones at the extreme of the range,
simply use any momentum oscillators to gauge reversion

 Powerful approach for quick gains

1. Uptrend is confirmed with HH & HL
2. Increased volume in upmove
3. At present, stock moves sideways & MA catching up – mean reversion
4. Volatility reduced to minimum; can make quick move anytime soon
eg- Gati, Indo star, Coromandel

Chapter 151: More on Trend Reversals

 #TrendReversal is a process, not an event

Reversal takes place over a period of time, a single candle pattern doesn't reverse a trend at all
For a reversal #CandlePattern to be relevant, prior that there has to be
Fading #Momentum
Climatic volume
Volatility increase
Weak price etc

 Characteristics of #bearish reversal

Bear divergence
Huge volume at top
Volatility explode at top
Bars leading to top have long upper wicks
Bars leading to top has decreasing body size relative to total spread
Last rally has lesser angle of price
Slope of all MA flattens

 Absolutely all rallies start as #ShortCovering rally But not all #ShortCovering rallies end up in bullish trend
reversal
If OI build up follows during rally, its trend reversal - #BULLISH
If no OI built up during rally, Price will fall, lack of demand enough for that
155

 Those who are new to #trading usually find it tough to draw support & resistance
One practice which can be adopted is
"The entire price range of previous reversal candle pattern
which gave a strong move in quick time
can be considered as support/resistance (demand/supply zones)"

 Image 151-1: Nifty along with its most of the sectorial indices have found demand from the last bearish
swing high pivot

 Image 151-2: strength is consolidating, price trending up, classic reversal of polarity
156

 Image 151-3: BHEL: complete trend reversal with a near perfect sequence of events

 Image 151-4: Cnx_auto

A serious dent in an otherwise so promising sector
2 bar reversal patterns at swing highs doesn’t go without making its impact till now
It wouldn’t be an almighty reversal, A minor dip might happen
157

 Short Term Trading

Momentum trading - recent trend has enough force that this move would continue
Range trading - within lines of support and resistance
Breakout trading - when price break out of a range
Reversal trading - when current trend is going to change direction

 When market makes a V shaped reversal, it tends to be short; but furious though
So how do you pick potential scrips for day trading? One logical way is find scrips which has too weak
momentum in falling.
Simply speaking, regular bullish divergence might look like holy grail for few days

Image 151-5

Image 151-6
158

 How would you relate RSI with

pullback in uptrend
or
deeper correction (bear reversal)?
Suppose the latest peak in RSI is above 70 & it fell straight to break below 30, potentially its mere pullback
If last peak is <60 & now it broke below 30, its more like bearish price trend

 Ques: Here is my doubt, in the monthly level, price kept rising and RSI kept falling, I also saw same in
HDFCBANK. Doubt here is I don't understand how to interpret divergence here, is there a correction still left
or no or am I totally wrong.

Image 151-7

Ans: Divergence shows a weakness in trend, it’s not a sign of reversal. if at all, at the top there isn’t any
obvious signs of reversal, divergence unlikely to make a big fall. That’s all I can say. If more correction
remains or not is beyond my capacity. May be/May be not

 QUIZ:
If all other influencing factors are constant,
which one is strongest candle pattern?

1. morning star
2. bullish engulfing

Which is stronger? and why?

ANS: In Morning star, first bar shows strong bearish momentum

which weakens in second bar
before complete momentum reversal in the third bar
Gradual and smooth
Engulfing is like a v shaped reversal. Trend has to weaken first before it reverses
Morning star is stronger than engulf
159

 Bullish divergence - measure at "Swing Lows"

regular bull divergence - signals reversal; so price has to make lower low in order to reverse
hidden bull divergence - signals continuation; naturally, price has to make higher low
It is this simple, do not complicate simple things.

 For a strong uptrending stock

Bear divergence is just a pause in trend
Shooting star pattern is just profit booking, not trend reversal
Fibonacci extension target is just a tentative level, not trend reversal
Feed it in your brain, You will be better equipped for trend following

 Types of Gaps
Break away gap - after very lengthy range bound move (Strong trending move ahead)
Run away gap - during minor correction after a strong trending move (Trend will continue)
Exhaustion gap - after extended trending move & no follow through (Trend reversal)

 Trading failed candle patterns give far quicker gains than successful patterns
Bullish engulf at bottom, if broke its low, makes quicker fall than a bear reversal pattern at top
Also, shorting failed bull engulf, tends to give quicker move than long in successful bull engulf

 For a trend reversal to happen, there must be huge volume to make that happen
In other words, whenever there is huge volume surge after a lengthy downtrend, it's sign of Bullish reversal.
Same is true in case of volume surge after a long rally; sign of bearish reversal

 If you follow the trend and trade in the direction of it, you can get wrong only once, that's when trend
reversal happens.
If you trade against trend, using techniques like divergence, you have higher odds of being wrong as more
often than not trend restarts after minor pull back

Chapter 152: Smart Money

 How to identify smart money using a chart?
Volume build up is cyclical process happens over period of time which lasts many days/weeks aiming to
accomplish certain move in price.
If it's accomplished, it's smart money. Identify such patterns in volume in correlation with price

 Whenever price makes a substantial move, smart money is already in and it needs only a small trigger to
start a big move. You can analyse yourself. Delivery volume always decreases after breakout. What soars is
trading volume. Delivery volume always reduces after.
Just think in this way
Does the smart money buy at higher prices?
Or would they accumulate the available stock at cheaper price and wipe off fickle supply from mkt. Then ride
the benefits of price upmove?
160

 If a heavily bullish scrip is gaps down at open, it simply means market makers want cheaper bids to fill
countering retailers shorting on gap down,
It doesn't mean that scrip turned bearish suddenly, & Bonus is later retailer's short covering will propel the
scrip further up.

 RBL bank
price at all time low
OI at all time high
How do u see its trend?
ANS: OI increased from 1Cr-3Cr (april) while price traded in range
Around 30% OI in May series
Option chain in May has 3 times stronger support at 100 than any other strikes & its stronger than all call
strikes
Smart Money building position in May - potentially bull side

 Option Chain analysis confuse many people

It’s quite simple actually
For example,
If OI increased in ATM or near OTM CE,
Check when OI added, if premium was low & it increased while OI addition.
Smart money buy in that case,
They won’t write if premium is less
Expect strong uptrend

Chapter 153: On Demand Zone

 When a stock pulls back with lesser volume after a strong rally & volume fall again as price moves further
It's always a signal that soon trend would continue &
1. Previous high from which price broke out
2. Last demand zone
are the Areas where from rally would restart again

 Demand zone strength if last rally

-from the zone made HH
-Slope of price action > previous rally
-Strong volume through out
-First red bar made well above the zone
-started with increase in volatility
-Many strong gap ups & O=L bars
-Red with lower volume & less in number

 If a stock in correcting & price is falling to cluster of back to back demand zones
You go long only when price bounce of a lower demand zone, that too only after u see any Stop hunting bar
from any of the previous zones
161

Chapter 154: My Favourite 10 Price Action Setups

Complete Write Up Explaining logic & structure on
My Favourite 10 Price Action Setups To Shortlist Scrips From NSE
For Daily #Watchlist Preparation: https://drive.google.com/file/d/1ufmYRjro2SSc_bt4vi_V5KUarmy9s22a/view

Its Released Through Telegram Channel: 'ProdigalTrader'

http://t.me/prodigaltrader

Chapter 155: More on Divergence

 At times, there appears questions from newbies

"Can u explain y stock XYZ has fell?"
Some experts come up & say
it had bear divergence/bearish moving average cross over/ RSI was at resistance etc
Dear friends, They are just tools to track & confirm the fall, Not the reasons for it

 Divergence:
-In regular bullish divergence, RSI should be >30, for strong signal
-In bearish one, RSI should be <70
-Difference between RSI peaks should be >20
-Consider consecutive peaks/troughs in RSI
-Use line chart of price
-Hidden divergence stronger; signals trend continuation

 Difference in knowing v/s understanding

Knowing: use candlestick/bar chart in RSI divergence
Understanding: line chart for RSI divergence
RSI is constructed with only closing price, Doesn't consider price spread or candle wicks.
How many of u practise this?

 Regular divergence signals a weakness in existing trend. It doesn’t point to a reversal in trend
If the trend weakens, it signals better exit the position if you are already riding the trend
Divergence alone is not enough to confirm a reversal and trade opposite side

 How does momentum divergence occur?

RSI is an oscillator set to oscillate between 0 and 100. It measures the “ratio of average gain/average loss”
based on closing price.

Here gain = closed above previous close

Loss = closed below previous close

162

Image 155-1

Simply putting RSI will increase if price has higher close. But here its “average” gain/loss.

That simply means there is a time factor at the denominator. Putting it simply, if price going up after a
correction, yet price goes up only slowly, means price closing above previous close in decreasing percentage,
this “average gain” will decrease.

RSI will get only lesser value even though price has made a higher high.

Difference was second rally was slow and it took more time. “Rate of gain” was lesser compared to last rally
showing falling momentum. Its divergence.

NB: it was inspired from a quiz I conducted. It was very scary to see that majority of the exponents of RSI has
no idea what leads to divergence.

Study deep dear friends

Your money is at stake here.

163

Thankyou