Wednesday, August 24, 2011

My Charts Setup

I am sharing the setup which I use on my charts. I mainly use 5 minute, 60 minute charts for day/swing trading and daily, weekly,monthly charts for an intermediate/long term view. All my charts have the same setup - Candles and three technical tools. I am giving the Nifty EOD chart with the three tools which I will explain.



The Green and Black bars are candlesticks, which all users will recognise. If you do not know what candlesticks are, you should go a google search, now.
The deep blue line represents a 34 period zero lag moving average. The slope of this average gives me the intermediate trend. If the line is moving up, intermediate trend is up. If the line is moving down, the intermediate trend is down. 
The light black line is a linear regression line with 8 periods as lookback. I look at 'hooks' in the LR8 line - change of direction in LR.
The Oscillator in the lower pane is called TA-Insync. This oscillator is a proprietary indicator in Trend Analyser (available from www.s2analytics.com). But, similar results can be simulated with a stochastics using a long lookback. I have 55 as the lookback here, with 5 as the value for the trigger line - the red line. The trigger is simply a 5 period average of TA-Insync.

How do I use these tools? For analysis, mostly I look at the candlesticks and determine the trend, as well as identify any chart patterns that I can see. The tools are useful when I wish to take a trade. When trading, I need clear, well defined rules and indicators provide the rules. A crossover in the TA-Insync from oversold or overbought levels gives me a trading signal. So also does the 'hook' in the LR line. Once you want to go for disciplined trading, any number of rules can be created with any kind of indicators.

6 comments:

bkmm said...

Sudarshanhi,
Excellent simple way to teach.
I would like to know from you more about candle in simple your way teaching... like dozi, evening star, dark cloud, hammer etc.
Thanks for all your simple and easily understood knowledge sharing.

bkmmodi

Jay said...

Sudarshanbhai - I watch you regularly on ET now for getting trading knowledge/strategies. You are one of the few sharing core knowledge. God Bless You with tons of happiness, calmness and prosperity.

smit said...

sir earlier in your blog you showed control moving average. Have you stopped using that indicator or TA-INsync is better version of that??

Deepak Longani said...

Sudarshan ji me not been able to understand what is this "The deep blue line represents a 34 period zero lag moving average" can you please explain
regards

Sasi Uppuluri said...

Sir, This blog post shows your willingness and the extent you go to teach the subject to budding traders. Truly appreciate it and I sincerely admire you.

Talking about your strategy - I am quite surprised to see you not using volumes which I thought till date was the basic necessity.

Learning for me : You don't need 100 indicators and complicated trading plans. All you need is simple setup's with good DISCIPLINE - DISCIPLINE - DISCIPLINE.

Thank you.

Anup said...

Dear Sudarshanji, Though I have been following your blog for quite some time now. This is the first time I am writing a comment. I hold a high degree of respect for you and your knowledge. Your simple and straighforward approach is extremely appealing. Your content on this blog has kept my interest alive through the difficult times of my trading and I have started understanding the nuances of trading with the help of technical analysis. I wish to become a fulltime trader but also understand thats its still a long way to go. I am sure you will continute to be my inspiration and guide.

Regards,
Anup