Tuesday, July 14, 2009

The first pullback - today is an example

Today morning before the Open, in my earlier post I explained how a trend day can be used to trade using the first pullback. Luckily, today's Nifty trading provides an excellent example of this concept. Here is the chart.

We must remember that real life trading is not perfect. In today's chart. the pullback went deeper than zero. But while it was going below zero, prices were flattening out. The first uptick in the Oscillator gave us a buying opportunity. Today's setup made money, but it is quite possible that another day, the market can keep on going down or up making the pullback into a new trend!

The way to successful trading is practice. Identify a few setups, then examine them every day and trade them. In the evening go back to your charts and try to learn what went right and what went wrong. Your practice will make you perfect.


Student Of Market said...

Hello Sir,

I am among many of your followers attempted the same thing. I tried using the slow stochastic provided in yahoo (even though I subscribe to ur technical trend service, I have not been able to figure out the stochastic there, but that is another story).
Using slow stochastic, there was a mini pull back before a deeper pullback like the one shown in ur chart. With trembling heart, I went long there, and lady market smiled on me - and of course I smiled and thanked her too. I finally exited around 4091.

I agree with you that another day, and the pull back could be a reversal of the trend which is why we have Stop Loss.

One question keeps coming back to me - if everyone is following the same method/criteria, will everyone make money? where is the edge then? Part of the answer I suspect is that there is a certain edge in executing with discipline that will distinguish one good trader from a bad one - but is that all?

Woudl you please elaborate on this asopect?


Anuj said...

hello Sudarshan ji

the above chart that you have presented is great ...if we consider it for buying ....

but i just want to point out that it also shows a divergence(oscillator at 10:30 and 1:40) with respect to price....now how do we trade this...whether we should buy on dips or sell out because of divergence?

in yesterdays chart that you had shown today morning in your blog post...we could have used the divergence to trade long ....but same divergence didn't worked today...

and can you explain how to exit out of trade...its always easy to find an entry but difficult to exit out of a trade ?

i would be really thankful to you if you can explain this...