Friday, October 30, 2009

A market correction

The Nifty finally gave us the much awaited correction. Traders should find out as much as possible about corrections in a primary trend. There will be a lot of writings available in the web on this topic.

Trading is not easy, but it sure is fun

Saket writes:
Analysis and trading are different. recently i had bought balrampur chini as it had broken out of 128-130 zone i bought at 131.20 with a stop of 122 it went up to 143 and as per my rules i shifted the stop to breakeven 131.5 the stock came down to 130.6 stop was trigerred and the stock then agian went up.my analysis here was correct but trade did not work in my favour

My Notes:
Yes, they are. That is why trading is the only way to become a trader, armchair analysis fails when you enter the market. What you have described with Balrampur is a common occurence. There is nothing wrong with the analysis. It is also possible that Balrampur may have lifted off to highs without coming back to 131.5. My suggestion is: do not try to devise a strategy in which such events will not happen. That is a futile exercise. Believe me! Understand that sometimes the markets reward us, sometimes they do not. If you are consistent in your approach, you make money. However, you must revisit and upgrade your analysis continuously. But do not blame yourself for what the market does.

Maneesh041 says:

"i am reading a H&S figure on charts of maruti which is giving some bearish signals "

My Notes: Maruti has made a classic head and shoulder pattern, suggesting lower levels. What does that mean for the Nifty??

Anant has different views on trading hours. What's wrong, he asks. I am just wondering on the value addition that will emerge from speculating from 9 to 5. Frankly, I can find no gains. Now, if we start trading Asian and Eurpoean indices, then having extended hours for those indices is essential, bu trading Indian stocks for 8 hours a day??

Have fun!

12 comments:

afzala.com said...

sir
ur blog is doing wonderful job one can learn much regarding trading
two days ago you described about stoplosses
as per that i bought cropmton at 337 putting stop loss below 330 that was 2 weeks low . my stoploss triggered and at the same time it shoot up now at 375
pls quide me where to put stoploss

VIKAS said...

Sudarshanji Namaskar..I have posted earler also. I am Vikas from ludhiana..learning tecnicals on software..I have one query i.e. the default settings for MACD is 12,26,9..Suppose i use EMA crossovers of 5 & 40..then
1. Shud i change the settings of MACD for my purpose?
2. Wat shall be the substitute number for 9.( for 5/40).& how do you arrive at ? Pl explain so that settings can be altered for different set of EMA combinations.

Regards,
Vikas Sharma,
vikas2659@gmail.com

men said...

Today you said buy nifty @4820 sl 4790, here i am ASSUMING it was for intraday, and knowing fully well that the movement has been rather sluggish was the sl of 30 points too large for the reward which would at best be 30-40 points on the up side.
Secondly a 50% retracement of the recent fall gives us a target of 4961, what should a positional person do.? Thanks,

Shazia said...

Sir,
When we were going up 4700 acted as strong resistance thrice, would it not act as support now?
Shazia

NITIN DAMLE said...

Sir,
It appears that nifty is oversold @ currant level.It's near to it's strong support zone near 4670 levelon weekly charts.I think it will bounce from this level and a retracement level of 50% will be achived it comes around 4934
Going short at this level is not at all a good trade but can we go long? pl. comment
Nitin Damle

men said...

Mr. Sudarshan, would it be possible to put up how your trading system was set up for Friday, I am requesting this as the market was very volatile, kindly ignore if this is not possible at your end.
Friday's low was one Fiboancci level if drawn FOR some recent low to high. Also in such volatile conditions how should a positional person trade, this is beginning to hurt now. Thanking you,

dineshrishi said...

, , Sir any Article on Arbitrage, ,

Pi said...

I had a few questions, would be great if you could address a few of them.


a. As a trader I have a short in Nifty from 5070 levels. I haven't booked profits yet, having expectations of a sharp correction from the time of taking position last week. Where should i look to book profits ?

Monday should be another gap down; it might seem that a 400 point move in my one's favour would be enough, but only now the nifty has gone below significant support levels for a lot of traders to start playing sell on rally kind of plays like we saw on Friday.


b. As an investor where should I enter. Pertinent to this question is also whether we have started a bull mkt again ? Or is this post 2008 phase going to be just like that of 1991 - a sharp rally off bear mkt lows, failure to take out bull mkt highs and then a multi year range with many rallies and many falls? Its not possibl to see the future, but just your take on it?


As in when i ask when to enter, I am not looking for a level, but rather a method to enter in direction of primary trend after corrections. There will be short pullbacks of 3-5% many times, and deeper falls like in 2003/2006 which are great to put large chunks of money to use.


c. Also, one of your posts recently had mentioned that you were witnessing the kind of chart patterns which implied to you that smart money was selling out.. can you please explain this in more detail as it seems very interesting..

regards..
pi

mbansalicy said...

sudarshan ji namaskar,
manoj bansal from pitampura.
on friday morning news has just come that bajaj hindustan can take over balrampur chini.
but share prices fall.
i don't understand this.what will be fundamentally change & what impact give on share prices.
bajaj hind in gain or not from this takeover?

kk said...

I AM 18yrs OLD AND HAVE BEEN TRADING AND INVESTING ACTIVELY IN STOCKS FOR THE LAST 2 YEARS. YOU HAVE BEEN LIKE GURU DRONACHARYA FOR ME . I AM VERY MUCH INTERESTED IN CeTA BUT THE ELIGIBILITY FOR DOING IT IS GRADUATION LAST YEAR AND I AM VERY MUCH KEEN TO DO IT .SIR PLEASE ALLOW ME

Krishna said...

Sir,
you had highlited the importance of 4550 in your previous write up..Keeping in mind we are in a bull market and this is a corrective phase of the bull market,higher highs and lower troughs will be made,can a medium term trader who can rollover the nifty for 2 months with appropriate cushion as to margin money is considered,buck the short term trend, buy at those levels,hoping the correction to get over soon for targets above recent peak??in such a case what should be the stoploss to believe the long term trend is still intact..
Is this strategy correct??.Had this strategy in mind after repeatedly hearing from you,the primary trend is up,more money can be made being on long side of market rather than short..Eagerly waiting for your reply..

monujnu said...

is this correction is continue or for very short time