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Showing posts with label Technical Analysis. Show all posts
Showing posts with label Technical Analysis. Show all posts

Sunday, March 24, 2013

A Story of Turtles; History of Trend Following


Richard J. Dennis, a man who made a history in the world of trend following. Many of us use trend following in their investments & trading practice. But most of the people are not aware of this person and his contribution to Trend and Trend analysis.
Richard Dennis


It was the year of 1970’s when a 17 year old student of philosophy Richard J. Dennis; started this career as a floor trader at Chicago Mercantile Exchange. Soon after his education he returned to trading. He borrowed $1,600 from his family, which after spending $1,200 on a seat at the Mid-American Exchange left him $400 in trading capital. In 1970, his trading increased this to $3,000, which he described as "compared to $400 ... a real grubstake", and in 1973 his capital was over $100,000. He made a profit of $500,000 trading soybeans in 1974, and by the end of that year was a millionaire, just short of twenty-six years of age. Today he is well known as a commodity speculator once known as the "Prince of the Pit".

The story of turtles
Dennis believed that successful trading could be taught. So, along with William Eckhardt, a friend and fellow trader, Dennis recruited and trained 21 men and 2 women, in two groups, one from December 1983, and the other from December 1984. In January 1984, after the two-week training period was ended, Dennis gave each of the Turtles a trading account and had them trade the systems they had been taught . During this one-month trading period, they were allowed to trade a maximum of 12 contracts per market. After the trial-period ended, he gave the few of them who had successfully traded the system during the one-month trial, accounts ranging from $250,000 to $2 million of his own money to manage.
An advertisement by Richard Dennis


Selection of Turtles
 Dennis placed an ad in The Wall Street Journal and thousands applied to learn trading at the feet of widely acknowledged masters in the world of commodity trading.
In the selection process he asked basic question like
1.     The big money in trading is made when one can get long at lows after a big downtrend.
2.     It is not helpful to watch every quote in the markets one trades.
3.     Others' opinions of the market are good to follow.
4.     If one has $10,000 to risk, one ought to risk $2,500 on every trade.
5.     On initiation one should know precisely where to liquidate if a loss occurs.

Trading Strategy
Dennis trained this group, known as Turtles, for only two weeks introduction about a simple trend-following system, trading a range of commodities, currencies, and bond markets, buying when prices increased above their recent range, and selling when they fell below their recent range. They were taught to cut position size during losing periods and to pyramid aggressively—up to a third or a half of total exposure, although only 24% of total capital would be exposed at any one time. This type of trading system will generate losses in periods when the market is range-bound, often for months at a time, and profits during large market moves.

In "The Complete TurtleTrader: The Legend, the Lessons, the Results" (2007), author Michael Covel offers some insights into the specific rules:

  • Look at prices rather than relying on information from television or newspaper commentators to make your trading decisions.
  • Have some flexibility in setting the parameters for your buy and sell signals. Test different parameters for different markets to find out what works best from your personal perspective.
  • Plan your exit as you plan your entry. Know when you will take profits and when you will cut losses.
  • Use the average true range (ATR-an indicator) to calculate volatility and use this to vary your position size. Take larger positions in less volatile markets and lessen your exposure to the most volatile markets.
  • Don't ever risk more than 2% of your account on a single trade.
  • If you want to make big returns, you need to get comfortable with large drawdowns.

Outcome of Turtles
The story of how a group of non-traders learned to trade for big profits is one of the great stock market legends. Dennis earned more than $175 million in only five years. He also proved that, beginners can learn to trade successfully. Number of turtles (e.g. Jerry Parker of Chesapeake Capital, Liz Cheval of EMC, Paul Rabar of  Rabar Market Research) began and continued careers as successful commodity trading managers, using techniques similar, but not identical, to the Turtle System.





Tuesday, February 19, 2013

Bajaj Auto Ltd, A Analysis

After a corrective wave from 2223 the stock fell upto 12% causing a bullish divergence. MADC is below 0 line and making the stock more attractive and RSI is showing a strong bullishness. The stock have a potential to go upto 2220. 

Monday, January 21, 2013

Success Story, A Analysis on Rel Cap

On 26th November 2012 I had told this stock will shoot up. And I was right, the stock gave nearly 30% return. Know I find this stock to be at a profit booking stock as we are seeing a bearish divergence.

Strategy: profit booking, can go with a fresh buy if it cross over 520 level.

Look for my previous article on Rel cap(on 26/11/12): Click Here




Tuesday, January 15, 2013

"Haven't I told you?" ITC Reversal

I repeatedly wrote 2 articles regarding ITC Ltd seeing a possible reversal. I gave an exact support when a guy  asked  me a query, on my Blog. The stock was in a corrective phase where I saw a bullish divergence and predicted well before it happened.
  • My article on ITC where I told it will go into a corrective Phase(Date:20/12/2012): Click Here
  • My article on ITC where I spotted a reversal (Date:8/1/2013):Click Here
  • My article on  ITC standing on my support(Date:7/1/2012):Click Here


Tuesday, January 8, 2013

ITC- Reversal

Yesterday at this time I wrote an article on wave analysis and and other factors in ITC. The wave seen in ITC Ltd is a Zig-Zag corrective wave along with it we are seeing a bullish divergence in this stocks. The stock have shown a reversal know.

Conclusion: can go with a good stop loss, it have a target of 10%.
Strategy: see for down-trend line, if it break today. Then bullish  
See yesterdays article on ITCClick here

Monday, January 7, 2013

ITC, wave analysis

After seeing a bearish divergence the stock went to a correction we are currently seeing last wave correction . ITC have started showing a bullish divergence,  stock is having a support around 270

Sunday, January 6, 2013

Tata Steel, Elliott Wave Analysis

It’s almost a year or more I have been observing that Tata Steel is more sentimental towards gaps theory. This phenomenon may be usual and may be seen in many stocks but we are seeing this "gap theory" again and again in tata steel.  Long ago I was speaking regarding "Magical support" of sensex. But Tata steel have too much of such SAR



The stock has started to correct and have a possible correction till around 417 and move in the bullish channel.



Elliot Wave Analysis
This is my 1st EWT analysis. Currently we are seeing Tata steel correcting. It has just started corrective wave A and may have a support as mentioned above (around 417). 



Thursday, December 20, 2012

ITC, How long to correct?

We have seen negative divergence due to which the stock have started its consolidation phase. 



Sunday, December 16, 2012

Technical Analysis on IVRCL Ltd

On 3rd December I had had told my opinion on my page Experiments With Stocks, The stocks went up to  +9% and gave a bearish engulfing. the price is currently ruling around 42. I was away from this stocks but a sudden Harami drew my attention.


According to me the stock have a potential to go upto 47. If it show a reversal know. If not the stock have a  support at 39.

Tuesday, December 11, 2012

DEC12, 2012


Know everyone are fantasied with today’s date but for me today stand as a milestone. Yes, I completed 2 year out in stock market. One thing that I always ask: what I learnt in this year, is there something new? How it might help me? Every days is a new day for me, learning something new different from others.

For many people Technical Analysis might be a piece of cake, they might have learnt by a relative, friend, college or any training program. But, a college guy who specialize himself in marketing. Take a weird step on 12th dec 2010 saying “I will enter Stock Market”. It might be a easy thing for many people whose parents, relative, friends are into this market and they just need to approaches their respective people. I was one guy who didn’t have any such source but had a determination for learning it. Trust me friends, determination is the only thing that is needed in life. I am not a motivational speaker but it is a myth of life.

How I actually learnt Technical Analysis?
Whenever people find me, they ask me one frequent question. Where you learnt Technical Analysis? You worked in any company? And such question. Today, I will let you my secret. How I learnt Technical Analysis?
It was on 8th dec I actually decided to enter market. On 12th dec I sent a request to join a group owned by a lady called Darpana Sharma. The group found to be resourceful. I found some potential guys who worth following. Then I sent them a friend request, added them and for 6 months or so. I just observed them. The way they place there stop-loss, the way they take their decisions, entry point, strategies and levels. I am a student of psychology (Cognitive Psychology), and it was a easy task for me to decode there thought process using reverse engineering. I classified my people into categories

AmitMalhotra-A perfect Strategist

Abhivandan Nagia- A Superhuman

Team Eaibs -Godfather of magical supports and resistance

Dilp Jain- Trading with NEWS

And there are number of people along with these people, I can’t name them all. But do have a great respect to call them my Dronacharya. These people were Brokers, Analysts, traders etc.
Simultaneously I started reading books suggested by CMT(MTA) for their examinations. I felt really easy to read them, I used to read them and look for pattern formation out in market. Till September 2011 I quietly decoded these people. Then to practical’s I started applying what I learnt. I personally felt some difficulty applying what I learnt.

A Journey With ATMA
I was a great fan of MTA. I always used to dig MTA website, then I found Association of Technical Market Analyst which is a Indian chapter of MTA. I was in a huge dilemma to join into ATMA or carry my current psyco- reengineering process. I took an initiative to get into ATMA. I majorly used to explore MTA’s knowledge base during my initial days. But today association have its own library with number of books, website, and podcast for members. As I have told you I was having problem applying what I read. Because applying knowledge is different than what we actually read out in books.
One turning point came when ATMA started to conduct Regional meetings it was a golden opportunity for me to be there every time. The reason why because I was been surrounded with the people who can’t follow what I am speaking, whenever I used to take words like Head & shoulders, Triangles, indicators and all people saw me as if a I am alien. The people who surrounded me were from marketing, they knew brand management, advertising, sales etc. ATMA was the only option. People out in ATMA are really cooperative with open heart for everyone; few are at peak active all the time.

My personal words  
  • You make profit/ loss, keep an account.
  • Always have control on your emotions, never give a chance for your emotions
  •  Keep your ego at bay
  •  Love what you do, stock market is not mandatory for all
  • Marks and degrees are bullshit. Experience  and knowledge are the key factors
  •  Don’t hurry making money. 1st Back-test, at least work on knowledge aspect remember Abraham"If I had six hours to chop down a tree, I'd spend the first four hours sharpening the axe".
  • Determination and confidence are 2 phase of same coin.

Monday, November 26, 2012

Rel cap

Good Morning,
                        Rel cap is showing a bullish divergence along with a breakout. The stock is also about to make a Bullish crossover on MACD.

Have a nice day :)

Friday, November 2, 2012

An analysis on Pantaloon Re



The key things that are attractive for me are as follows:
  • MACD cross-over
  • Divergence in RSI
  • Breakout in price level
Conclusion:  If we see this stock crossing 196 we can see this stock heading towards 226 which will yield around  12% to 15% profit.

Monday, October 29, 2012

Common Misunderstanding of Stock Market


It’s over a year that I have been writing in this blog. I came across many people with many “FAQ”. I have been always writing articles on Technical Analysis. But this time I’m willing to share something regarding “common misunderstanding” that people are having regarding markets.

Stock market is an illusion, everyone enters will end-up in loss

It doesn’t mean that if you have made loss, then everyone will make loss. There are 100 reasons for going wrong out in market. Analysis sometime fail, but you need to have a backup plan. If your stops trigger you have look for things like what went wrong, which is the next support, dose it worth bottom fishing the stock? And so on. Let me take a small example assume that you are out to market to buy a soap/bread/biscuit or any other item such. What you will do? Hope you go out for a retail shop and buy. Isn’t it? What if you don’t get? Easy go to another shop. For this we always use a world “don’t marry your stocks”

The reason is every stock has a cycle, a phase and a trend. Everyone have to understand it then go for an investment you know you can’t sail against wind so you have to go according to the winds of market. It doesn’t mean we have to buy a stock at a high and wait for the stock to go high. This is something what most of the “Breakout traders” do. Breakout traders are professional traders they understand the breakout more than a common man.  See every breakout aren’t bullish, some are fake and the great way to understand it to check volumes during breakouts.

I see TV and made Profit/Loss

 I am a student I don’t want to fall into any controversy. Let me communicate what Larry Berman and other such traders and analyst say “SWITCH OFF THAT TV VOLUME AND TRADE” few even go to an extent saying switch off your TV. Recently I had a chance to sit a wonderful seminar held in Bangalore, speaker as Vishal Malkan . Do you know what he told? He told “I never see TV” this isn’t weird I have many people saying this even I do the same thing.  I never say PM/President rule this world I say Media rule this world with psychological gimmicks, mind control and NLP.
I am a psychology guy hold a special interest in cognitive psychology and neuro linguists, I am not matured to speak things but can only say “ It’s your money, don’t make someone to take your investment decisions”. If you take their advice don’t blame them. If you get poor marks in an exam you can’t blame your pen, isn’t it?

I want to invest so and so, what will be the return after so many years

 Believe me even god find difficult to answer it. There are few concept involved like range, current price, policy, economics etc. many media say Sensex will touch 20k/30k etc but there is some T&C*. The best way to do money is to buy at a low and sell at high. It is very hard to specify time.

How can I become a very good trader?

 Everyone wants to be a Rakesh Jhunjhunwala. I have seen people who are trading for show-offs. When people ask this question I normally question them asking. What you do for leaving? Many answer mobile shop, owner of petrol pump, jewellery shop, hardware shop etc . Time, emotions, analysis and capital are some key pillars of trading. And trading is a different game. Everyone can play but there are few who are good at it, like Sachin in cricket.

I am not a trader but would like to call myself an analyst. I don’t spend 24*7 out seeing market. Yet I made around 12% to 51% profit out of 10 stocks in September. You can be a investor can do handsome money.
Do you know in ancient time there used to be a percentage of farmers, a percentage of carpenters, a percentage of blacksmith etc etc. every city was balanced that time son of a carpenter will be  a carpenter.  If your family /your business is doing well. Then, why you need trading? Investment is smartly a good decision compared to trading.

“Hope this article bring some change, in you”

ALL THE BEST

Friday, October 19, 2012

Analysis on Biocon

I need to be back by 8th October. But there was some delay in my college admission due to which I was not able to keep on updating markets. I had a constant eye over markets movement and everything went on as per my calculation. September was a good time. Most of my stock gave a 12-50% return and it was pretty good compared to last time (Nov2011) which gave 12& 35% return from 2 stocks.

It’s over a couple of days that Biocon is looking potentially good and the reason are as follows:

  • Candle-Stick Analysis: As per know we are not seeing any bullish stick forming but from last 2 days there is a positive action from market side.
  • Indicators: Both the indicators MACD as well as RSI is showing some divergence. Along with it we are seeing MACD very near to 0 line. And I personally feel that it may show some bounce.





  • Moving Average:

  1. 7DMA-Bearish
  2. 20DMA-Bearish
  3. 50DMA-Bullish
  4. 100DMA-Bullish
  5. 200DMA-Bullish
Crossovers: we have seen Golden Crossover along with that we are about to see a crossover of 100&200DMA. Most of all MA are bullish except 7&20DMA which  can be ruled out.


















  • SAR:




Conclusion: The stock is has shown a good support for 50DMA. Indicators like MACD and RSI are showing some bullish divergence. MACD is very near to its zero level and I expect some bounce. if we witness a reversal, the swing that we see will be not much more that 16%.  If the stock continue to fall  257 will stand as a good support, if not 243.

Strategy: Can take a risk to grab with a good stop-loss  



H&S Pattern in Axis Bank


Sunday, September 23, 2012

Analysis on PVR Ltd




PVR Ltd is a technically sound company. It is on a bullish trend since June 2011. In spite markets ups and lows the stock had performed well with respect to market.

 The reasons are as follows:
  •              Candle-Stick Pattern: we have seen a Morning Star on last Friday.
  •       Indicators & Divergence: MACD is about to give a Bullish Cross-over. Along with that we are seeing a Bullish divergence. And RSI is neutral.
  •       Moving Averages: All the moving averages are giving a clean way for this stock to sore high. We have seen a golden crossover in September 2011.
  •        SAR: we have seen a recent resistance turning as a support @188. The next resistance is at 203 and so on.
  •      Chart Pattern: From July 2012 we have been seeing this stock making a Bump and Run Continuation. According to me we are expected to see a 2nd Bump and Run Continuation.


·         Conclusion: This stock was bullish for a year and it is showing a continuation. The stock is on a bullish run will continue not more that 3-6 months. The stock is at high and expected to make a higher high.

Saturday, September 22, 2012

Technical view on ABB Ltd

It is a long time that I left ABB Ltd, I thought it is not having any upside potential. The stock is near to its high and I was looking for a better pattern to form in this stock. During a recent analysis I found some positive potential things which can kick this stock high, and they are as follows:
  • Candle-Stick Pattern: On Friday, we witnessed a  engulfing pattern in this stock.

  • Indicator&Divergence: The stock price has been making a LH and we are seeing RSI making HH along with that we have seen RSI being sentimental to 30&70% buy and sell levels. Which is an indication that the stock may fall in further days. On other hand we are about to see a MACD zero-line crossover. If we see this happening we may find this stock on bullish side.

  • Trend-line and SAR: The stock is having a resistance around 767/823/873 and the stock is having a recent support between 700-710. The trend-line is also posing a hurdle for this stock.

  • Fibonacci levels:

  • Conclusion: if we seen this stock crossing above 770 we can surly make a profit of 10-12% with a span of 2-3 months. A caution is recommended as this stock is sentimental with RSI's 30&70% levels. we have recently seen this stock above 70%. Have an eye on divergence





Wednesday, September 19, 2012

ACC Ltd

Since June we have seen ACC Ltd souring high giving a profit around 23%. It is very recent that I saw some unhealthy pattern forming in ACC Ltd as follows

1.      Rising wedge: we are seeing a rising wedge pattern forming in ACC Ltd. We saw a bearish breakout in this stock on August. After which we saw a bounce back at 1290. As per know the stock is in a bearish condition.

2.      Divergence: In spite the stock is making a HH, but MACD as well as RSI is not able to form HH and we are seeing a HL thus forming a divergence in this stock.


Some important supports



Conclusion: The stock is not looking bullish, we may see a consolidation within few days