MARKET SPEAKS...TRY TO LISTEN
It is found that, in the whole day, market gives 1-2 sure signals to buy/sell. All that what a perfect trader must have is only and only patience
IF BOTH 'MOVING AVERAGE STUDY' AND 'SLOW STOCHASTIC STUDY' GIVES BUY SIGNAL AT THE SAME TIME, BUY NIFTY. IF BOTH GIVES SELL SIGNAL AT THE SAME TIME, SELL NIFTY. PLACE 25-30 POINTS TARGET AND 25-30 POINTS STOP LOSS
IMP Note: This method can also be adapted between Slow stochastic and Fast stochastic studies for effective results
Note: It was practically
found that the above method delivers above 85-90% accuracy
In the above chart, both the studies have given jackpot Sell signal @ 5280. Place 25-30 points target and 25-30 points SL (1% target and 1% SL in case of stocks)
In the above chart, both the studies have given jackpot Buy signal @ 5220. Place 25-30 points target and 25-30 points SL (1% target and 1% SL in case of stocks)
How to find the trap/wrong signals.
Trap/wrong signals may generate 1-2 times a day which may lead to wrong direction
Many times, 5-min and 10-min (MA) or %k and %D (Stochastic) tends to cut each other but will not cut. So, make sure they cut completely over each other before buying/selling
Sometimes, it may not be possible to get the signals in both the studies (MA and stochastic) at the same time (in the above chart, buy signal generated with a small difference of around 3 min between MA and stochastic). Initiate the trade even if the difference is around 5-10 minutes in the graph (Horizontal axis - Time) Never initiate/take a trade if the difference between MA and stochastic is more than 10 minutes even if both the studies show the same signal
IMP NOTE: Never remember the COLOURS of the lines (as green line cutting the red line or blue line cutting the green line), instead remember the PARAMETERS (as 5 min MA cutting 10 min MA or %k cutting %D) as colours may change occasionally
In the first graph, 5 min MA takes green colour and 10 min MA takes red but vice versa in the second graph
DISCLAIMER: The theories made herein are for informational purposes and are not recommendations to any person to buy or sell any securities. The information is deemed to be reliable but its accuracy and completeness are not guaranteed. The above methods are based on the theory of technical analysis. The author does not accept any liability for the use of this column. Readers of this column who buy or sell securities based on the information in this column are solely responsible for their actions. Investors/traders are advised to satisfy themselves before making any investment. Nothing published on this site/ article should be considered as an investment advice. It's not an offer to buy or sell any security. Readers are solely responsible for their profits or losses.