Thursday, December 24, 2009

Big up move brings cheer to bulls

On Wednesday, the Nifty rallied below 5000 to a high of 5140+. This was a big trend day.

How did we trade?

On Tuesday, we were short 1 unit in the Nifty and long 1 unit in Tata Steel & Flat in Bank Nifty. On Wednesday, the short position was closed around 5010. Then we went long 3 units in the Nifty around 5050. Two units in the Bank Nifty went long. Towards close, we took profits in one Nifty and one Bank unit, carrying the remaining long trades. These are the same trades that are taken by Day-V subscribers.

What are units? Each trader may have different capital availability, so the relationship between different systems and different instruments can be defined by a ratio. For one trader, one unit may be 50 nifty, for another, it may be 200 nifty, and so on. This is the starting point of position sizing, which viewers should understand and research on. Volumes will differ at different times, so we were short one nifty but went long three, because of stronger momentum on the long side.

Why did we go long?
Probably all short term methods and systems should have been long by 5050. So, this was not rocket science.

Other signs of a Big Move

In our letter on tuesday evening, we did suggest that a big move in either direction could be coming, and, suggested levels for buying as well as selling. Therefore, the view was: a big move is coming, On the downside, if 4920 is taken out, we have a free fall. On the upside we face resistance at 5180 then probably 5400+.

We did not know where the Market was likely move. To my mind, only the market decides that.

Cheers.

3 comments:

Swingtradingideas said...

Dear Sir,

You are right , Mr Market has its own way of deciding. Nifty level 5036 on 60 min chart was the signal for me to go long and above 5080 ( above 20 Dma) was another lvl to add . This is what we have learnt from the masters like you. Follow the trend and dont stand opposite the trend.
Thanks

jay shah said...

Sudarshan sir, Thanks for ur comments on tv and this blog too i respect ur opinion a lot sir keep up the good work God bless u

Danish said...

Won't it be nice if we also share the trades where we lost money as I think we learn more from those trades.

Why I am saying this, is because occasionally coming out with profitable trades deludes readers. What you guys think?