I am not a certified analyst. The charts shown and the content in the blog are for educational purpose only and in no way is a buy or sell recommendation. Readers are advised to use discretion.

Sunday, 12 July 2015

How to Locate Strong Setups !!

(SS) Strong Setups Series - 1

A lot of People ask me -"How to locate a Trade setup !!"  I always tell them, setups are everywhere, which can be traded also, but one should wait for a Strong trade Setup! That is more important !

Now the question is still Open - Which setups are Strong?

--This can't be put in a single post, so will try to explain in a series of posts.. Kindly have patience & go through with me in this whole journey, you will find it interesting & profitable too ! It will be written taking into consideration of novice traders with basic knowledge. I will try to analyze the live market setups (positional with the system). Lets see how it unfolds --

Lets start from a different angle-  Traders.
Every Trader is different. Each trader is unique with Unique personality, monetary needs, different trade size, risk capacities, Psychology, Fear levels, satisfaction levels, indicators & so on.
Remember, every damn indicator can work & works, if followed properly. But, every indicator has certain conditions to work. One needs to master few of them only, not over analyzing & paralyzing their decisions.. Look at the chart below with most important & trusted indicators (current Daily Chart of Nifty) if we can conclude the decision-
1) Nifty above all moving averages & EMAs (important ones) - means  UP/ Sideways (in case 1 MA is above)
2) MACD yet to cut down - means UP
3) RSI coming down from overbought zone - DOWN
4) Stochastic clearly DOWN
5) Trendlines - UP
6) Patterns - Rising Wedge - DOWN,  a small inverse H&S - UP & with a target
7) Price action - Higher Highs, higher lows - UP

so which will work & constitute Strong Setup ?  get off the screen & Think for a while below things-
1) Can all indicators/ patterns tells truth?
2) Are indicators really important?
3) Do they Lag?
4) Do we need 1 / 2 or 5 indicators along with PA, trendline...?

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I will come straight to the point -
1) Can all indicators/ patterns tells truth? - Yes, they need to get Interpreted properly. One should use indicators as per traders personality - Example - I  use & Love Bollinger Bands
2) Are indicators really important? - for Positional definitely need to see few & good tool for conformation in Intraday also
3) Do they Lag? - may or may not - like Bollingers & RSI - they don't lag as much as people says.
4) Do we need 1 / 2 or 5 indicators along with PA, trendline...? - One or at the max 2 are enough for use.
Remember, Indicators tell a lie, but they don't lie together!

Anybody can go ahead with any indicator/ without indicator, but i would like to continue this journey with Price action & Bollinger Bands !!

to be continued..


4 comments:

  1. Deven

    Good one. Looking forward to more such posts and further posts in the series.

    URD

    ReplyDelete
    Replies
    1. Thanks, URD.. Will be updating every weekend..

      Delete
  2. Absolutely looking forward to more .. :)

    ReplyDelete
  3. Thank you for the great articles. Love to reading them. Looking forward for the further post of this subject. God bless!

    ReplyDelete