Sunday, May 10, 2009

IDFC Inside Days - Futures trading Strategy

A comment refers to multiple, back to back inside days in IDFC. What is the trading strategy ?

Given below is the end of day chart for IDFC Futures with annotations that explain the pattern and my suggested strategy.

IDFC Futures Trading Strategy


Tushar said...

I will be comfortable accumulating IDFC between 75-80 rather then shorting it now.
Because Like Nifty there are no bearish divergences in IDFC in various indicators I trace and there has been a good accumulation off late.
So if it has to come down with the market it would rather be a little correction, that can be used to accumulate.

And again I think shorting in uptrending market should rather be done by professionals like sudershanji rather then anybody else.
Because pros understand there risk better then anyone else.

Mind Without Fear said...

In a different context, Sudarshanji has spoken about making investment decisions on stocks - He said that he decides on a stock and waits for it to go down, down, down, and sometimes he waits for 6 months or a year or more.

I believe IDFC could be such a stock to watch out for. Also to note that it has hit lows of 45 on 27th Oct and 44 on 3 Dec 2008. Which means that we have a "reasonable support" at 45. Besides, it had hit 44 in July 2006, suggesting a very strong support at 44. Recently, the stock has broken through a double top resistance at 75 which is why so much exuberance in IDFC. Now is it possible that it can go back to 45-50-55-60 in the next six months? It is certainly possible and might be well worth waiting for as an investment decision. (And since it is an investment decision, there is no Stop Loss but a possible decision to buy it again at say 25 should it go down to that or lower.)

I also agree with Tushar that shorting an individual stock (rather than an index in an up trending market) is fraught with danger and should be left to professionals ( I would add , with a bit of humour, that not to just any professional but to well capitalized professionals - like Sudarshanji?)

Disclosure: I hold IDFC in my portfolio. I have bought it over a stretched period of time, last time when it was at 49.

solo said...

sudarshan ji,
I had a question regarding trading triangle patterns.
I usually observe these patterns especially in the intradaycharts of various stocks.My questions are:

-when shall we enter in this pattern?

-is there any indicator to identify correct and false breakouts out of this pattern?

-what should be the volume action?

-can tape reading be helpful to identify the breakouts?

-besides the above questions any extra comments and your opinion on these patterns?