Tuesday, November 4, 2008

Smart Rally, but careful as Nifty comes near resistance

How much higher can this rally go ? This is an important question for those (a) who remain short in some form or the other (b) who missed buying last week, and, (c) traders looking to exit their long positions.

Now, momentum has its own logic. Traders do not question why a move is coming. Their task is to identify the move, then go along with it. Currently, momentum favors the bulls. Therefore, the appraoch should be: we will remain buyers on dips while bullish momentum continues. We cannot predict the turning points in a market.

Traders with existing long positions should pay attention to signs of weakening momentum, spccially when such signs occur near resistance levels. The Nifty is now near the 3200 - 3300 resistance zone. As the Index comes close to this zone, traders should tighten their stops. I have a blog post which explains how you can actually tighten your stops.You can read it Here .

4 comments:

Ashish said...

sir,
Just very new to TA,i have seen people using all values of MA, any particular reason of choosing 8 and 13 ma in ur example of stops???

Mind Without Fear said...

Dear Sir,

would you please comment on how to trade on a day like today ( Nov. 5 ) in which the day's trend was completely opposite to the short term trend? The approach of buying at every dip ( because of short term trend being up ) could lead to getting stopped out repeatedly.

What safeguards could a day trader adopt to avoid this?

I appreciate your thoughtful comments on this issue.

Regards.

Jatin Soni said...

Plz tell us more abt day trading, what methods one should adopt for day trading stocks and indexes futures ??

manipayal said...

Dear Sir,
I have bought a 2900 Nifty put option at 110 which has moved up to 169 today.Can I run it further? If so how long or upto what level? I have also bought a 440 put of ICICI Bk@29? pl. advise that also