technical analysis

Sharekhan Pattern Finder Alert

Sharekhan Pattern Finder Alert

Sharekhan Pattern Finder Alert

Technical Event® Alerts on August 02, 2018

The following alerts have been triggered. Each alert may produce a list of up to 50 Technical Event® opportunities matching the selected criteria. If you find that the list of matching Technical Event® opportunities is too long, try narrowing your alert criteria.
Alert Name: India, Bearish
Alert Criteria: Stocks (Any Indian Exchange) with a Columbine Capital Quant Rank of at least 6; Price at least 5.00; Volume at least 10,000; Market Capitalization at least 5 billion; Classic Patterns; Short-term Patterns; Bearish; Daily Events.
Close at Event
Target Price Range
Opportunity Type
500093BSECG Power & Industrial Solutions LtdContinuation Wedge (Bearish)
42.00 – 46.00
Intermediate-Term Bearish
500179BSEHCL Infosystems LtdInside Bar (Bearish)
Short-Term Bearish
500186BSEHindustan Oil Exploration Co LtdInside Bar (Bearish)
Short-Term Bearish
500300BSEGrasim Industries LtdEngulfing Line (Bearish)
Short-Term Bearish
500483BSETata Communications LtdInside Bar (Bearish)
Short-Term Bearish
500550BSESiemens LtdInside Bar (Bearish)
Short-Term Bearish
524715BSESun Pharmaceuticals Industries LtdShooting Star
Short-Term Bearish
532388BSEIndian Overseas BankEngulfing Line (Bearish)
Short-Term Bearish
532497BSERadico Khaitan LtdEngulfing Line (Bearish)
Short-Term Bearish
532500BSEMaruti Suzuki India LtdHead and Shoulders Top
8,490.00 – 8,621.00
Intermediate-Term Bearish
532748BSEPrime Focus LtdHanging Man
Short-Term Bearish
533477BSEEnkei Wheels (India) LtdTop Triangle
264.00 – 289.00
Intermediate-Term Bearish
540376BSEAvenue Supermarts LtdEngulfing Line (Bearish)
Short-Term Bearish
ABBNSEABB India LtdKey Reversal Bar (Bearish)
Short-Term Bearish
ASTECNSEAstec Lifesciences LtdHead and Shoulders Top
447.00 – 477.00
Intermediate-Term Bearish
CADILAHCNSECadila Healthcare LtdInside Bar (Bearish)
Short-Term Bearish
DPSCLTDNSEIndia Power Corporation LtdPennant (Bearish)
11.25 – 12.50
Short-Term Bearish
EIDPARRYNSEE I D Parry India LtdInside Bar (Bearish)
Short-Term Bearish
FORTISNSEFortis Healthcare LtdInside Bar (Bearish)
Short-Term Bearish
GABRIELNSEGabriel India LtdInside Bar (Bearish)
Short-Term Bearish
HCL-INSYSNSEHCL Infosystems LtdInside Bar (Bearish)
Short-Term Bearish
HINDOILEXPNSEHindustan Oil Exploration Co LtdInside Bar (Bearish)
Short-Term Bearish
MAHABANKNSEBank of MaharashtraHanging Man
Short-Term Bearish
MARUTINSEMaruti Suzuki India LtdHead and Shoulders Top
8,479.00 – 8,611.00
Intermediate-Term Bearish
NHNSENarayana Hrudayalaya LtdHanging Man
Short-Term Bearish
RUPANSERupa & Co LtdInside Bar (Bearish)
Short-Term Bearish
SYNGENENSESyngene International LtdHanging Man
Short-Term Bearish
TATAMOTORSNSETata Motors LtdFlag (Bearish)
234.00 – 240.00
Short-Term Bearish
THERMAXNSEThermax LtdInside Bar (Bearish)
Short-Term Bearish
TRITURBINENSETriveni Turbine LtdInside Bar (Bearish)
Short-Term Bearish

Alert Name: India, Bullish 

Sharekhan Pattern Finder Alert

Alert Criteria: Stocks (Any Indian Exchange) with a Columbine Capital Quant Rank of at most 5; Price at least 3.00; Volume at least 10,000; Market Capitalization at least 5 billion; Classic Patterns; Short-term Patterns; Bullish; Daily Events.

Close at Event
Target Price Range
Opportunity Type
509488BSEGraphite India LtdBottom Triangle
1,246.00 – 1,294.00
Intermediate-Term Bullish
515043BSESaint-Gobain Sekurit India LtdDouble Bottom
72.25 – 73.75
Intermediate-Term Bullish
523704BSEMastek LtdInside Bar (Bullish)
Short-Term Bullish
531213BSEManappuram Finance LtdDiamond Bottom
117.00 – 119.00
Intermediate-Term Bullish
532508BSEJindal Stainless LtdHammer
Short-Term Bullish
532856BSETime Technoplast LtdDiamond Bottom
182.00 – 191.00
Intermediate-Term Bullish
533296BSEFuture Market Networks LtdEngulfing Line (Bullish)
Short-Term Bullish
539448BSEInterGlobe Aviation LtdEngulfing Line (Bullish)
Short-Term Bullish
540047BSEDilip Buildcon LtdDouble Bottom
1,053.00 – 1,101.00
Intermediate-Term Bullish
570001BSETata Motors LtdInside Bar (Bullish)
Short-Term Bullish
DBLNSEDilip Buildcon LtdDouble Bottom
1,044.00 – 1,091.00
Intermediate-Term Bullish
DHAMPURSUGNSEDhampur Sugar Mills LtdMegaphone Bottom
106.00 – 110.00
Intermediate-Term Bullish
ESABINDIANSEEsab India LtdDouble Bottom
757.00 – 775.00
Intermediate-Term Bullish
HSCLNSEHimadri Speciality Chemical LtdDouble Bottom
177.00 – 184.00
Intermediate-Term Bullish
INDIGONSEInterGlobe Aviation LtdEngulfing Line (Bullish)
Short-Term Bullish
INDNIPPONNSEIndia Nippon Electricals LtdEngulfing Line (Bullish)
Short-Term Bullish
JSLNSEJindal Stainless LtdHammer
Short-Term Bullish
LAXMIMACHNSELakshmi Machine Works LtdHammer
Short-Term Bullish
MANAPPURAMNSEManappuram Finance LtdDiamond Bottom
117.00 – 119.00
Intermediate-Term Bullish
MASTEKNSEMastek LtdInside Bar (Bullish)
Short-Term Bullish
MIRCELECTRNSEMIRC Electronics LtdEngulfing Line (Bullish)
Short-Term Bullish
NHPCNSENHPC LtdEngulfing Line (Bullish)
Short-Term Bullish
RTNINFRANSERattanIndia Infrastructure LtdContinuation Wedge (Bullish)
11.25 – 12.75
Long-Term Bullish
TATAMTRDVRNSETata Motors LtdInside Bar (Bullish)
Short-Term Bullish
THOMASCOOKNSEThomas Cook India LtdOutside Bar (Bullish)
Short-Term Bullish
TIMETECHNONSETime Technoplast LtdDiamond Bottom
182.00 – 191.00
Intermediate-Term Bullish
ZENTECNSEZen Technologies LtdHammer
Short-Term Bullish

(W) denotes a weekly event.
(M) denotes a monthly event.

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Most Popular Trading Mistakes in Commodity And Equity Markets

Most Popular Trading Mistakes in Commodity And Equity Markets
1. Trading for excitement & thrill Not for profits.
Many traders consider the stock market as casino and trade for thrill and fun only. As soon as one has a losing trade, he wants to quickly make back the lost money. He thinks about the other things he could have done with the money, regret taking the trade and want to recover as quickly as possible. This, in turn, leads to further mistakes. Be patient and wait for the next high probability opportunity. Don’t rush back in.
2. Trading with a high ego.
Many individuals who have remained highly successful in other business ventures have failed miserably in the trading game. Because they have a fairly big ego and thought they couldn’t fail. Their egos become their downfall because they can not except that they would be wrong and refuse to get out of bad trades. Once again, whoever or wherever has anyone come from does not concern the markets. All the charm, powers of persuasion, number of degrees & diplomas of business management on the wall or business savvy will not budge the market when you are wrong.
3. Three 4-letter words that will kill you! HOPE–WISH–FEAR–PRAY
If you ever find yourself doing one or more of the above while in a trade then you are in big trouble! Markets have own system of moving up & down. All the hoping, wishing and praying or being fearful in the world is not going to turn a losing trade into a winning one. When you are wrong just use a simple 4-letter word to correct the situation-GET OUT!
4. Trading with money you can’t afford to lose.
One of the greatest obstacles to successful trading is using money that you really can’t afford to lose. Examples of this would be money that is supposed to be used in any other business, money to be paid for college/school fee, trading with borrowed money etc. Ultimately what happens is that when someone knows in the back of their mind that they are risking the money they can not afford to lose, they trade out of fear and emotion versus logic and no emotion. If you are in this situation It highly recommends that you stop trading until you earn enough to put into an account that you truly can afford to lose without causing major financial setbacks.
5. No Trading Plan
If you consider yourself a trader, ask yourself these questions: Do I have a set of rules that tell me what to buy, when to buy and how much to buy, not just for the next trade, but for the next 10 trades? Before I enter a trade, do I know when I will take profits? Do I know when I will get out if I am wrong? These questions form the first part of a trading strategy. There simply cannot be any expectation of success if we can’t answer these questions clearly and concisely.
6. Spending profits before you make them.
Nothing is more exciting than getting into a trade that blasts off and puts you into a highly profitable situation. This can cause major problems, however, because this type of trade puts you in a highly euphoric state and leads to daydreaming about the huge profits still to come. The real problem occurs as you get caught up in the daydream and expectations. This causes you to not be prepared to get out as the market reverses and wipes off all your profits because you have convinced yourself of the eventual outcome and will deny the reality of the situation. The simple remedy for this is to know where and how you will take profits once you enter the trade.
7. Not Cutting Losses or letting Profits run
One of the most common mistakes made by traders is that they let their losses grow too large. Nobody likes to take a loss, but failing to take a small loss early will often result in being forced to take a large loss later. A great trader is not someone who has never had a loss. Great traders have made many losses. But what makes them great is their ability to recover quickly from a string of losses.
Every trader needs to develop a method for getting out of losing trades quickly. Research and learn to apply the best methods for placing protective stoploss orders.
The only way to recover from many (small) losing trades is to make sure the winning trades are much larger. After a series of losing trades, it becomes difficult to hold a winning trade because we fear that it will also turn into a loss. Let your profitable trades run. Give them room to move and give them time to move.
8. Not Sticking to your plans & Changing strategies during market hours
If you find yourself changing your strategy during the day while the markets are still open, be mindful of the fact that you are likely to be subject to emotional reactions of fear and greed. With rare exception, the most prudent thing to do is to plan your trading strategy before the market opens and then strictly stick to it during trading hours.
9. Not knowing how to get out of a losing trade.
It’s amazing that most of the traders don’t have any clear escape plan for getting out of a bad trade. Once again they hope, pray wish and rationalize their position. It must be kept in mind that market does not care what you think. It does what it does and when you are wrong you are wrong! The easiest way to keep a bad trade from going really bad is to determine before you get in, where you will get out.
10. Falling in love with a stock (Just Flirt).
Many traders get fascinated by just a stock or two and look for opportunities to trade in those stocks only ignoring the other profitable trading opportunities. It is because they have simply fallen in love with a stock to trade with. Such tendencies can be suicidal as for as trading is concerned. It may cost any one dearly.

A Simple introduction to Future & Option

A Simple introduction to Future & Option

What are Derivatives A Simple introduction to Future & Option
Derivatives are financial instruments which derive their value from the underlying assets or securities. For example, if a Buyer enters into a contract with a Seller to buy a specified number of shares (or Index/ Commodity) of a particular company at a specified price after a specified period, the buyer is said to have entered into a Futures contract.
It is interesting to note that Buyer has bought the contract and not the stock of shares(or Index/ Commodity) under reference. This type of Future contract is called Derivative. There are many another type of Derivatives commonly used all over the world like Options, Convertibles and Warrants etc.
What are Futures
It is an Agreement between the Buyer and the Seller for the Purchase or Sells of a Particular Asset ( like Equity Stock/ Index etc) at a Specified Price and on a specified future date (1 Month/ 2 Months/ 3 Months). It conveys an OBLIGATION on both Buyer and Seller to Fulfill the Terms of the Agreement. Futures are Settled on Last Thursday of the Specified Month and both buyer and seller have to pay minimum Initial Margin as per the requirement of the stock exchange and account between buyer and seller is settled Everyday till the expiry of the Futures contract.
Nifty Future contract have a multiplier of 200 whereas, in case of BSE Sensex, the multiplier is 50 that means Nifty Futures contract gives rise to an obligation to deliver at settlement cash payment equal to 200 times ( 50 times in case of BSE Sensex Futures) the difference between the Nifty Index value at the close of the last trading day of the contract and the price at which the Futures Contract was negotiated.
Suppose ‘A’ enters (Buys) a Nifty futures contract at 1225 for July (expiring on last Thursday of July) with ‘B’. Both ‘A’ & ‘B’ will deposit the required margin with the Stock exchange. On last Thursday of July, Nifty closes at 1267. Now ‘A’ will get Rs. 8400/- {( 1267-1225) x 200 = 8400} from ‘B’. In case Nifty closes at 1157, ‘B’ will get Rs. 13600/- {(1225-1157) x 200 = 13600 } from ‘A’. ( BSE Sensex contract will carry a multiplier of 50 instead of 200 as in case of Nifty.)
But their account will be credited or debited from their Margin Account and their position will be ‘marked to market’ at the end of the session each day. In case the Margin account falls below the maintenance level, cash is sought from the customer to replenish the margin account back to the original level. Either of the customers having surplus margin beyond the original margin can withdraw the funds.
What are the Options
An option is a contract, which gives the Buyer of Option (holder) the right, but not the obligation, to Buy or Sell specified quantity of the underlying assets, at a Specific (Strike) Price on or before a Specified Time (expiration date) i.e 1 Month/ 2 Months/ 3 Months etc. The underlying may be physical commodities like wheat/ rice/ cotton/ gold/ oil or financial instruments like equity stocks/ stock index/ bonds etc.
There are 2 types of Options i.e. Call Options and Put Options.
A Call Option gives the holder (buyer/ one who is long call), the right (No obligation) to buy a specified quantity of the underlying asset at the strike price on or before the expiration date. The seller (one who is short call) however, has the obligation to sell the underlying asset if the buyer of the call option decides to exercise his option to buy.
Option buyer or option holder – Buys the right (No obligation) to buy the underlying asset at the specified price
Option seller or option writer – Has the obligation to sell the underlying asset (to the option holder) at the specified price
A Put Option gives the holder (buyer/ one who is long Put), the right (No obligation) to sell a specified quantity of the underlying asset at the strike price on or before a expiry date. The seller of the put option (one who is short Put) however, has the obligation to buy the underlying asset at the strike price if the buyer decides to exercise his option to sell.
Option buyer or option holder – Buys (No obligation) the right to sell the underlying asset at the specified price
Option seller or option writer – Has the obligation to buy the underlying asset (from the option holder) at the specified price.

When to Buy a Call Option.

If you are Bullish on a particular Scrip/Index. For example, you are Bullish on Tata global (CMP- Rs.350/-) and expecting it to touch 450 in a month’s time (or any particular period say 2/3 months). So you will Buy Reliance Call Option for 1 month (or any particular period) by paying a premium of Rs.10/share (Say). During the course of a month, you will get Right to exercise your Call Option to Buy Reliance at 350 from the seller of Call Option. Suppose it does not move up, you are free NOT to exercise your option to Buy and your loss is limited to the Premium you have paid.
When to Buy a Put Option.
If you are Bearish on a particular Scrip/Index. For example, you are Bearish on ACC (CMP -Rs.150/-) and expecting it to touch 100/- in a month’s time. So you will Buy ACC Put Option for 1 month by paying a premium of Rs.5/share (Say). During the course of a month (you are Free to Buy ACC from the market any time at a lower price) you will get Right to exercise your Put Option to Sell ACC at 150/- to the seller of Put Option. Suppose it does not decline, you are free NOT to exercise your option to Sell and your loss is limited to the Premium you have paid.
When to Sell a Call Option.
If you are Bearish on a particular Scrip/Index. For example, you are Bearish on Infosys (CMP- Rs.3800/-) and expect that it will not move up significantly(or rather decline) in a month’s time. So you will Sell Infosys Call Option at a strike rate of Rs.3900/- (say) for 1 month and Receive the Premium. (Say Rs.100/share). During the course of month Buyer of Call Option will have Right (Not the Obligation) to take Infosys at 3900/- from you and you are obliged to honor your commitment. Remember that you are Holding risk of unlimited loss if Price of Infosys moves up significantly just at the cost of Premium you have received.(you should sell Call Option Only if you are sure that Price of Share will Fall/or not move up or you are holding shares with you to part with, if required)
When to Sell a Put Option.
If you are Bullish on a particular Scrip/Index. For example, you are Bullish on Satyam (CMP – Rs.200/-) and expect that it will not Decline significantly (or rather move up) in a month’s time. So you will Sell Satyam Put Option at a strike rate Rs.215/- (say) for 1 month and Receive the Premium. (Say Rs.12/share). During the course of month Buyer of Put Option will have Right (Not the Obligation) to Sell Satyam at 215/- to you and you are obliged to honor your commitment. Remember that you are Holding risk of unlimited loss if Price of Satyam goes down at the cost of Premium you have received. (you should Sell Put Option Only if you are sure that Price of Share will Move up or you will take Delivery of shares if required)
How are Options different from Futures
The significant differences in Futures and Options are as under:
1. Futures are agreements/contracts to buy or sell a specified quantity of the underlying assets at a price agreed upon by the buyer & seller, on or before a specified time.
Both the buyer and seller are obligated to buy/sell the underlying asset.
2. In case of Options, the buyer enjoys the right & not the obligation, to buy or sell the underlying asset.
3. Futures Contracts have asymmetric risk profile for both the buyer as well as the seller, whereas options have asymmetric risk profile. In case of Options, for a buyer (or holder of the option), the downside is limited to the premium (option price) he has paid while the profits may be unlimited. For a seller or writer of an Options, however, the downside is unlimited while profits are limited to the premium he has received from the buyer.
4. The Futures contracts prices are affected mainly by the prices of the underlying asset. The prices of Options are, however, affected by prices of the underlying asset, time remaining for the expiry of the contract & volatility of the underlying asset.
5. It costs nothing to enter into a Futures contract whereas there is a cost of entering into an Options contract, termed as Premium.
What is Assignment
When the holder of an option exercises his right to buy/ sell, a randomly selected option seller is assigned the obligation to honor the underlying contract, and this process is termed as Assignment.
What are European & American Style of options
An American style option is the one which can be exercised by the buyer on or before the expiration date, i.e. anytime between the day of purchase of the option and the day of its expiry. The European kind of option is the one which can be exercised by the buyer on the expiration day only & not anytime before that.

What is an Option Calculator

An option calculator is a tool to calculate the price of an Option on the basis of various influencing factors like the price of the underlying and its volatility, time to expiry, risk-free interest rate etc. It also helps the user to understand how a change in any one of the factors or more, will affect the option price.

Who are the likely players in the Options Market

Financial institutions, Mutual Funds, Domestic & Foreign Institutional Investors, Brokers, Retail Participants are the likely players in the Options Market.
What are Stock Index Options
The Stock Index Options are options where the underlying asset is a Stock Index for e.g. Options on S&P 500 Index/ Options on BSE Sensex etc. Index Options were first introduced by Chicago Board of Options Exchange (CBOE) in 1983 on its Index ‘S&P 100’. As opposed to options on Individual stocks, index options give an investor the right to buy or sell the value of an index which represents a group of stocks.
What are the uses of Index Options
Index options enable investors to gain exposure to a broad market, with one trading decision and frequently with one transaction. To obtain the same level of diversification using individual stocks or individual equity options, numerous decisions and trades would be necessary. Since broad exposure can be gained with one trade, transaction cost is also reduced by using Index Options. As a percentage of the underlying value, premiums of index options are usually lower than those of equity options as equity options are more volatile than the Index.
Who would use index options
Index Options are effective enough to appeal to a broad spectrum of users, from conservative investors to more aggressive stock market traders. Individual investors might wish to capitalize on market opinions (bullish, bearish or neutral) by acting on their views of the broad market or one of its many sectors. The more sophisticated market professionals might find the variety of index option contracts excellent tools for enhancing market timing decisions and adjusting asset mixes for asset allocation. To a market professional, managing the risk associated with large equity positions may mean using index options to either reduce their risk or to increase market exposure.
What are Options on individual stocks
Options contracts where the underlying asset is an equity stock, are termed as Options on stocks. They are mostly American style options cash settled or settled by physical delivery. Prices are normally quoted in terms of the premium per share, although each contract is invariably for a larger number of shares, e.g. 100.

What are Over the Counter Options

OTC (“over the counter”) options are those dealt with directly between counter-parties and are completely flexible & customized. There is some standardization for ease of trading in the busiest markets, but the precise details of each transaction are freely negotiable between buyer and seller.
What is the underlying in case of Options being introduced by BSE
The underlying for the index options is the BSE 30 Sensex, which is the benchmark index of Indian Capital markets, comprising of 30 scrips.
What will be the new margining system in the case of Options and futures
A portfolio based margining model (SPAN), would be adopted which will take an integrated view of the risk involved in the portfolio of each individual client comprising of his positions in all the derivatives contract traded on the Derivatives Segment. The Initial Margin would be based on worst-case loss of the portfolio of a client to cover 99% VaR over two days horizon. The Initial Margin would be netted at the client level and shall be on a gross basis at the Trading/Clearing member level. The Portfolio will be marked to market on a daily basis.
Underlying – The specific security/asset on which an options contract is based.
Option Premium – Premium is the price paid by the buyer to the seller to acquire the right to buy or sell
Strike Price or Exercise Price – The strike or exercise price of an option is the specified/ pre-determined price of the underlying asset at which the same can be bought or sold if the option buyer exercises his right to buy/ sell on or before the expiration day.
Expiration date -The date on which the option expires is known as Expiration Date. On the Expiration date, either the option is exercised or it expires worthless.
Exercise Date – is the date on which the option is actually exercised. In case of European Options the exercise date is same as the expiration date while in case of American Options, the options contract may be exercised any day between the purchase of the contract & its expiration date (see European/ American Option)
Open Interest – The total number of options contracts outstanding in the market at any given point in time.
Option Holder – is the one who buys an option which can be a call or a put option. He enjoys the right to buy or sell the underlying asset at a specified price on or before the specified time. His upside potential is unlimited while losses are limited to the Premium paid by him to the option writer.
Option seller/ writer – is the one who is obligated to buy (in case of a Put option) or to sell (in case of call option), the underlying asset in case the buyer of the option decides to exercise his option. His profits are limited to the premium received from the buyer while his downside is unlimited.
Options Class – All listed options of a particular type (i.e., call or put) on a particular underlying instrument, e.g., all Sensex Call Options (or) all Sensex Put Options
Option Series – An option series consists of all the options of a given class with the same expiration date and strike price. E.g. BSXCMAY3600 is an options series which includes all Sensex Call options that are traded with Strike Price of 3600 & Expiry in May. (BSX Stands for BSE Sensex (the underlying index), C is for Call Option, May is expiry date & strike Price is 3600)

Technical Analysis

Technical Analysis

Technical Analysis most important in trading for intraday and long-term hold we can identify to find what is next movement and get profitable trading in stock and commodity 

In the science of Technical Analysis, Volume plays a role which is as important as any other basic indicator. An increase in the volume in conjunction with Stock price moves adds strength and momentum in the direction of the move. It reflects the market’s confidence that the uptrend will continue in force or its pessimism that the downtrend will.
For the market, declining volumes as the market rises are supposed to warn the end of a BULL MARKET.
Likewise, a sharp increase in volumes resulting in Selling Climax signals the end of a BEAR MARKET. 

An increase in abnormal volume can alert investors to coming price movements, Up or Down before it becomes obvious to the overall market. Therefore, the market axiom “Volumes Precedes Price.”
Historically, the majority of BULL MARKETS have originated with at least two days within the two-month period where upside volume is at least nine times greater than the downside volume. Investors who track volume and spot the two-day Exceptional Upside Indicator can out-maneuver other investors and earn excess returns by positioning themselves for the coming Bull Market.
Basic Volume theory includes the following maxims:
* Increasing Volume with an advance is Bullish
* Decreasing Volume with a decline is Bullish
* Increasing Volume with a decline is Bearish
* Decreasing Volume with an advance is Bearish
* A Market Top is imminent when heavy volumes occur with little or No Gain in the averages.
* Heavy Volume confirms the direction of price breakouts from a Support or Resistance Zones.
* An increase on heavy volumes after a previous substantial rally signals a “Blow Off” with an impending top and
Reversal approaching.
* Heavy Volumes accompanied by an accelerating drop in prices confirms a “Selling Climax” and impending price
reversal after the panic selling subsides.
* Low volume periods after upward price reversals reflect a Consolidation Phase before the resumption of the Upward
The Daily Volume Indicator measures extremes in the Supply/ Demand relationship. If a Stock closes at the midpoint of its trading range for the day, the indicator reflects no change. Closing Price above or below the trading range midpoint show an increase or decrease in the Daily Volume Indicator, respectively.
In constructing the Daily Volume Indicators, Technical Analysts take into account the day’s volume, closing price, Distance between closing Price and the midpoint, and the Trading Range.
These are just the basic characteristics of the Volumes, these must be read in conjunction with other commonly used indicators before drawing up any conclusion.

General Market Advice For Trading

Trading at the breaking of Chart Patterns 

Trading at the breaking of Chart Pattern<>

Patterns play a very important role in Technical Analysis of stocks along with key support and resistance Levels. Patterns are of 2 types i.e. Bullish and Bearish. Further classification of patterns can be done in 2 parts i.e. Reversal Patterns or Continuation Patterns

Bullish Patterns
Bearish Patterns

Reversal Patterns

Reversal Patterns
Head & Shoulder (Inverted)Head & Shoulder
Rounding Bottoms (Saucer)Rounding Tops
Descending TriangleAscending Triangle
Double/ Triple BottomsDouble/ Triple Tops
Falling Wedge/ ChannelRising Wedge/ Channel
V- FormationsV- Formations
Continuation PatternsContinuation Patterns
Flags & PennantsFlags & Pennants
Head & Shoulder (Continuation)Head & Shoulder (Continuation)

Many Traders are taking position for Intra-Day / Short Term or Medium Term depending upon the periodicity of charts if it is 5 Min/ 30 Min/ 60 Min/ Daily/ Weekly or Monthly Charts on confirmation of Breakout from any important pattern or Support or Resistance but often traders/ investors are faced with a dilemma of taking a position in

1. anticipation of a breakout,
2. taking a position on breakout itself, or
3. Waiting for the pullback or reaction after the break out occurs.
Although the arguments can be in favor of each approach or all combined, If a trader buys in anticipation of an upside break out, the profits are better if break out takes place. But at the same time, the chances of losing increase if the break out fails to materialize.
If the trader waits for the actual breaks out, the chances of success increase but at the cost of entry at a higher price. Waiting for a pullback after the break out may be a sensible approach provided the pullback occurs. Unfortunately, in many bull markets, traders don’t get a second chance. The risk involved in waiting for the pullback is an increased chance of missing the move.

The best strategy under the circumstances of a trader is to trade multiple positions. The traders should take a small position in anticipation of a break out buy some more on the breakout and add a little more on the pullback move after the breakout.

Trading at the breaking of trend lines
This is one of the most useful early entries of exit signals. If the trader is looking to enter a new position on a technical sign of a trend change or a reason to exist an old position, the break of the tight trend line is often an excellent action signal. Other technical factors must, of course, also be considered to arrive at a conclusive approach. Trend lines can also be used as entry and exit points when they are made to act as support and resistance levels.
Trading at support and resistance level

Support and resistance are the most effective chart rules to use for entry and exit points. The breaking of resistance can be a good signal. Enter into a buy position and the stop loss can be placed under the nearest support point. Rallies to resistance in a downtrend or declines to support in an uptrend can be used to initiate new positions or add to old profitable ones. For purpose of placing stop losses support and resistance levels are most valuable.

Do and don'ts for Stock Market Investments

Do and don'ts for Stock Market Investments

Do and don'ts for Stock Market Investments

What must I do now?
This is the question probably every equity investor would have asked himself a number of times in the past few months.
With the stock market moving to dizzying heights before succumbing to gravity, it’s easy to get nervous or over-excited.
Here’s what we suggest you do when the bulls and bears kick up a lot of dust.
What you must NOT do
1. Don’t panic
The market is volatile. Accept that. It will keep fluctuating. Don’t panic.
If the prices of your shares have plummeted, there is no reason to want to get rid of them in a hurry. Stay invested if nothing fundamental about your company has changed.
Ditto with your mutual fund. Does the Net Asset Value deep dipping and then rising slightly? Hold on. Don’t sell unnecessarily.
2. Don’t make huge investments
When the market dips, go ahead and buy some stocks. But don’t invest huge amounts. Pick up the shares in stages.
Keep some money aside and zero in on a few companies you believe in.
When the market dips –buy them. When the market dips again, , you can pick up some more. Keep buying the shares periodically.
Everyone knows that they should buy when the market has reached its lowest and sell the shares when the market peaks. But the fact remains, no one can time the market.
It is impossible for an individual to state when the share price has reached rock bottom. Instead, buy shares over a period of time; this way, you will average your costs.
Pick a few stocks and invest in them gradually.
Ditto with a mutual fund. Invest small amounts gradually via a Systematic Investment Plan. Here, you invest a fixed amount every month into your fund and you get units allocated to you.
3. Don’t chase performance
A stock does not become a good buy simply because its price has been rising phenomenally. Once investors start selling, the price will drop drastically.
Ditto with a mutual fund. Every fund will show a great return in the current bull run. That does not make it a good fund. Track the performance of the fund over a bull and bear market; only then make your choice.
4. Don’t ignore expenses
When you buy and sell shares, you will have to pay a brokerage fee and a Securities Transaction Tax. This could nip into your profits especially if you are selling for small gains (where the price of the stock has risen by a few rupees).
With mutual funds, if you have already paid an entry load, then you most probably won’t have to pay an exit load. Entry loads and exit loads are fees levied on the Net Asset Value (price of a unit of a fund). Entry load is levied when you buy units and an exit load when you sell them.
If you sell your shares of equity funds within a year of buying, you end up paying a short-term capital gains tax of 10% on your profit. If you sell after a year, you pay no tax (long-term capital gains tax is nil).
What you MUST do
1. Get rid of the junk
Any shares you bought but no longer want to keep? If they are showing a profit, you could consider selling them. Even if they are not going to give you a substantial profit, it is time to dump them and utilize the money elsewhere if you no longer believe in them.
Similarly with a dud fund; sell the units and deploy the money in a more fruitful investment.
2. Diversify
Don’t just buy stocks in one sector. Make sure you are invested in stocks of various sectors.
Also, when you look at your total equity investments, don’t just look at stocks. Look at equity funds as well.
To balance your equity investments, put a portion of your investments in fixed income instruments like the Public Provident Fund, post office deposits, bonds and National Savings Certificates.
If you have none of these or very little investment in these, consider a balanced fund or a debt fund.
3. Believe in your investment
Don’t invest in shares based on a tip, no matter who gives it to you.
Tread cautiously. Invest in stocks you truly believe in. Look at the fundamentals. Analyse the company and ask yourself if you want to be part of it.
Are you happy with the way a particular fund manager manages his fund and the objective of the fund? If yes, consider investing in it.
4. Stick to your strategy
If you decided you only want 60% of all your investments in equity, don’t over-exceed that limit because the stock market has been delivering great returns.
Stick to your allocation.


How to read and act on Daily Newsletters

How to read and act on Daily Newsletters
In the following paragraphs, we shall explain you as to how to read the figures to arrive at any Trading/ Investment Strategies.
First of all, be clear that we believe in Charts and figures than long stories with tens of ‘ifs’ and ‘buts’. With little knowledge of Technical Analysis, one can see the Basic Trend, Patterns, Support/ Resistance Levels, Breakouts, Gaps, Overbought/ Oversold Zones, Short/Long Term Moving averages crossovers and much more. Just a glance at any chart can give you a hint of possible market action in near to long term.
1. Support/ Resistance Levels (Daily/ Weekly/ Monthly Trading Strategy)
As the name suggests, there are many traders who trade only on support & Resistance levels. The table contains following details i.e. Name of Scrip/ Last Close/ 5-Period Low/ Support 2/ Support 1/ Trend Level/ Resistance 1/ Resistance 2/ 5-Period High.
In Conjunction with other indicators & tools, this table can use for:
1. Fresh Longs or Shorts on Trend Change Levels.
2. Booking Part/ Full Profit in Long/ Short Positions
3. For Quick gains of 1 to 5 Rupees on breaking of previous High or Low
Every Newsletter (i.e. Daily/ Weekly and Monthly) has a similar table to decide Daily/ Weekly/ Monthly Trading Strategy. The Support / Resistance levels are different in every table based on the Open / High/ Low / Closing of price in Daily/ Weekly/ Monthly Charts.
The table is in order of Bullish to Bearish on the basis of last closing Price vis a vis Trend Level. If the Scrip price is trading Higher than Trend Level, it is a positive sign for bulls and vice a versa. Traders can hunt for the scrips, which are on verge of crossovers to bullish to bearish or otherwise. Above Trend Level, scrip is likely to face resistance at ‘Res-1’ then ‘Res-2’. High of last 5-Periods also acts as resistance. Traders can make an entry for few Quick Bucks if scrip breaks 5-Period high to make a new High. The same rule shall apply on Downside below Trend Level.
2. Overbought/ Oversold Scrips in (5-ROC/ 12-ROC/ 9-RSI/ 14-RSI/ William%14R)
Similar to Support/ Resistance Table, this can also be used by Daily/ Weekly and Monthly Traders and Investors to decide their strategy. The figures 5/ 12/ 9/ 14/ 14, are the Period of Charts like in Hourly Charts it is 5-Hour ROC/ 12-Hour ROC/ 9-Hour RSI/ 14-Hours RSI etc. In Table of Daily/ Weekly/ Monthly, this Period will change to Days/ Week & Months respectively.
In Conjunction with other indicators & tools, this table can use for:
a. Profit Booking (in Full or Part)
b. Fresh Entry in full or part
c. Extending Trailing Stop Loss
d. Sign of Caution in Long or Short Positions
The table contains 8-10 most Highly Overbought/ Oversold scrips in each category. Suppose a Scrip is overbought in more than 2 tables, it warrants caution in Long Positions through any script can continue to remain in Overbought Zones for many periods part profit booking is always advisable. Similarly, Highly Oversold scrips in more than 2 tables suggest that trend is likely to change from bearish to bullish. If other indicators support, gradual buying can be started but with Stop Loss.
3. Bar Reversal (Up/Down), Candlestick Engulfing Patterns (Bullish / Bearish), Doji Pattern, Volatile 
a. Bar Reversal (Up/ Down): It is a very good indicator for Day & Swing Trading particularly after a significant rise or fall over a number of periods. Bar Reversal in Weekly/ Monthly Charts is very useful as ‘Advance Indicators’ to catch short-term moves on either side. For Example in the case of Upward Weekly Bar-Reversal, Investor can buy gradually on declines or Panic selling for an impending short-term up move. Same equation applies in case of Downward Bar reversal. Weekly/ Monthly Bar Reversals after a reasonably long Bull/ Bear phase indicate Trend Reversal if supported by other indicators. (IMP: This indicator should be used in conjunction with other indicators with use of Stop Loss mechanism)
b. Japanese Candlestick Engulfing Bullish/ Bearish Pattern: It is a Japanese Candlestick Reversal which is refined and more powerful form of Bar Reversal. When a ‘White’ candle engulfs a preceding ‘Black Candle’ it is called Bullish Engulfing and when a long Black Candle engulfs preceding ‘White’ candle it is termed as the Bearish Engulfing pattern. It can be used for Quick Trading if a stock is moving up/down for many periods and other indicators like Overbought/ Oversold Zones are in favor of decline/ recovery. Weekly/ Monthly Engulfing Patterns after a reasonably long Bull/ Bear phase indicate Trend Reversal if supported by other indicators
c. Doji Star (Japanese Candlestick Pattern): It is again a Japanese Candlestick Pattern in which Stock Price closes near its opening level after a reasonable High/ Low. A Doji Pattern gaps above or below a While or Black Candlestick. It is a Reversal signal, confirmation of which comes during next Trading Day. ‘Smart Traders can keep a watch on such stocks and trade Long/ Short on confirmation with the help of other indicators like Overbought/ Oversold, market sentiments etc.
d. Volatile Stocks: As commonly known volatile stocks provide the better opportunity for Day and Swing Trading. This column gives the list of stock in which the gap between High & Low of the last 3 periods in comparison to close is too high. This is just for guidance purpose. Traders must see support/ resistance and other tools before entering any trade on the basis of this table.
4. Gaps (Upward/ Downward > 0.50%): 
Gaps are spaces left on the Bar Chart where no trading has taken place. An Upward Gap is formed when the Lowest price of the day is higher than the highest of the previous day.
Downward gap is formed when the Highest Price of the day is lower than the lowest price of the previous day. There are 3 type of Gaps i.e. Breakout Gap (When price moves out of any important Pattern), Continuation Gap and Exhaustion Gap (indicating termination of an upward or downward move). We have given a filter of 0.5% of the stock price to avoid any whipsaw movements.
5. Bullish & Bearish Stocks (For Intra-Day):
Based on Technical Analysis of Extreme Short Term Charts i.e. 5 Min/ 30 Min & 60 Min, we short list a few stocks which are on verge of Bullish/ Bearish breakouts, at Crucial Support /Resistance or in highly Overbought/Oversold zones or stocks which have broken any chart pattern The Stocks can be put under ‘Watch List’ during Market hours for possible move on either side for Quick Profits by Day traders.
6. What the Charts Foretell Now : (In Detailed Newsletter, Part – B, Only)
Based on Technical Analysis of Extreme Short Term/ Medium Term Charts i.e. 60 Min/ Daily & Weekly, in short, we give our views about certain Stocks (15 to 25). Targets of such observations are generally achieved in next few days until and unless stated otherwise.
7. Bulls & Bears (Technical Charts): (In Detailed Newsletter, Part – B, Only)
One Charts can say much more than words. We give minmum 2 Charts on week days and 4 charts in weekly Newsletters, about select stocks with important chart patterns with other indicators like Volume, RSI, ROC, Momentum, MACD, OBV, Moving Averages etc, with tentative targets for Short or Medium or Long Term. Very Useful for those having little knowledge about Technical Analysis or for experts who need confirmation of their opinion.
8. General Buy/ Sell Recommendations: (In Detailed Newsletter, Part – B, Only)
Based on Daily/ Weekly Charts, we prepare a list of Bullish and Bearish stocks with their tentative targets for Extreme Short Term, Short Term or Medium Term. Investors and Traders can create their positions or Book profit gradually for the recommended time frame. For Example, If any stock is giving bullish indications for medium term, investors can gradually pick up this stock on every decline with major support as Stop Loss Level. Similarly, if any stock is giving bearish indications for extreme Short Term, one can book part profit on every rise and wait for the decline to re-enter the stock.
9. If I were a Trader (Similar to Rs10 Lac Portfolio): (In Detailed Newsletter, Part – B, Only)
This is just a Model Portfolio for the guidance of investors who do not want to put their efforts or time to decide their Short Term Portfolio, we suggest the stocks under ‘If I were a Trader’. It is not necessary to follow this Model Portfolio. Investors/ Traders can use their own research and arrive at trading decisions by taking help of our Newsletters.


Investment Rules

‘Investments’ is a sacred term for individuals. For many, investing means a kind of ‘compulsory’ savings from one’s earnings and getting lumpsum money later.
However, there is a lot more to investing than just that. Investing falls within a broader gamut of financial planning. It requires considerable thought and groundwork. Here, we have outlined some important guidelines to be borne in mind while planning your finances.
1. Do your homework
Before investing your money, ensure that you have done your homework well. It is ‘normal’ for sales pitches to be aggressive. Most sales executives are mainly interested in ‘commission earned’ or ‘business garnered’, which reflects in their monthly targets. That is why one only gets to hear the ‘best case scenario’ from agents/sales executives.
A lot of sales agents/consultants try to exploit the individual’s vulnerability and lack of knowledge while making a sales pitch. For instance, how else can you explain so many individuals in the low-risk category investing in high-risk ULIPs?
Or why term plans, in spite of being the cheapest form of insurance, are still not bought by most individuals? Or why mutual fund IPOs find so much favor with investors even when there is no fit in their portfolios?
One should understand his own profile in terms of income, risk appetite, and future plans and only then, make investments in tune with the same. Individuals need to know what benefits different products offer and how they fit into their financial portfolios before taking a call on investing in them.
You must listen to advise from different quarters but the final decision should rest with you alone after a careful analysis. After all, it’s your own hard-earned money.
2. Keep your eyes and ears open
Keep your eyes and ears open at all times for any investment opportunity that comes your way. The opportunity could be by way of changing market scenario or new product launches. Individuals shouldn’t lose out on any opportunity just because they didn’t know it existed.
Of course, this involves a bit of updating yourself with latest product trends, market conditions and changing economic scenario. This way, you will not be completely at the mercy of the consultant/agent to provide you with investment-related information and solutions.
3. Involve yourself
While buying any financial product, ensure that you have involved yourself at critical stages. For example, while taking life insurance, see to it that you personally fill all the details in the proposal form.
Insurance agents many times used to, themselves, fill up details like the height and weight of the insured, his age and medical history among other things, based solely on their own judgment. They merely asked the individual to sign on the form at the end.
What individuals don’t realise is that this can lead to rejection of claims at a later stage if discrepancies are found in the proposal form. The insurance company cannot be faulted for rejecting such a claim. It is a shortcoming on the agent’s part who should have requested you to fill the form yourself, else fill it himself after verifying your details.
All the necessary medical tests should also be diligently given. As mentioned earlier, any ‘false claims’ might lead to rejections at a later date.
4. Inform your near and dear ones
This is especially true in case of life insurance. Inform your near and dear ones as soon as the policy is bought. If your spouse and/or parents know that you have a life insurance cover wherein he/they are nominees, they will be better placed to follow up with the life insurance company for the claim proceeds should something happen to you.
Typically, life insurance should not be so sacred that you don’t broach the topic in the family. All related (and affected) parties must know exactly what needs to be done in your absence.
5. Maintain a logbook
Always maintain a logbook of your life insurance policies/investments. Individuals can and do have a variety of investments ranging from life insurance (endowment, term plan, ULIPs) to mutual funds and PPF/NSCs. A logbook should contain details about the same.
Over an extended period of time, it becomes difficult for one to remember or track investment details like maturity date, maturity value and rate of interest. This logbook will take care of that problem. Of course, it goes without saying that for the logbook to be really effective and useful, it should be updated periodically to reflect investments and redemptions.
This logbook should also include details of an individual’s liabilities like home loans, personal loans, the amount outstanding on such loans, the EMI and business liabilities (in case the individual runs a business) among others.

Details of the logbook should also be shared with your dependents (spouse, children, parents). An important reason for making a copy is, in case of an unfortunate eventuality, the spouse knows his/her exact financial status. Also, one wouldn’t want someone to come out of nowhere one fine day and stake a claim on the family’s assets based on some ‘fictitious’ liability.

Technical Analysis When to Trade

Technical Analysis When to Trade

Technical Analysis When to Trade

The keys to successful Trading or Investing in the Stock Market are knowledge, discipline, and patience. Assuming that, you have some knowledge, the best way to achieve discipline and patience is doing your homework and having a plan of action ready before putting that plan to work. Though it may not guarantee success it will definitely increase the odds of winning in any financial market. When it comes to applying those technical principles, the most difficult part of the process is the actual purchase or sale in the trading.  The final decision as to when to trade, how to trade and how much to trade and the type of trading orders to imply.
Day Trading has also the same principles of any financial market. The only real difference is the timing as it covers the very short term. The time frame that concerns us here is measured in hours, minutes and seconds as opposed to days, weeks and months but the technical tools implied remains the same.
(i) Trading on the break out from Patterns
(ii) Trading in overbought/ oversold zone
(iii) Trading at support and resistance level
(iv) Trading at the breaking of trend lines
(v) Trading at the percentage replacement
(vi) Trading while making the use of gaps
(vii) Trading on negative and positive divergences 

The most effective way to formulate a trading strategy is to combine all of them. After the initial decision to buy or sell has already been made the above concepts can be used to fine-tune entry or exit points. Use of Stop Loss and applying of strict discipline will definitely help one become a successful trader.