As you all know there are more than 100 trading indicators. The question is if they worked everybody would be rich.
The reality is THEY DO NOT WORK. What works in the market is your approach and your psychology. However you can use indicators to create and cultivate a discipline. Do not depend on them just keep them as guide for an extra confirmation.
PRICE itself is the most important indicator of future events. Secondly we will use moving averages to create a system.
Moving average will be use..
Simple moving average - 20 MA Simple moving average - 50 MA
20MA represents short term trend whereas 50 MA represents medium trend. Since we are trading on intraday basis it is to be noted that we do not need very larger time frame moving averages for example 200 MA.
RULE - 1.
IF PRICE IS ABOVE 20MA AND 50 MA - WE ARE BUYING/ we are only looking for buying opportunities.
90% trades fail if you are trading against these moving averages.
RULE - 2.
IF PRICE IS BELOW 20MA AND 50 MA - WE ARE SELLING / we are only looking for SELL opportunities.
A trend line must be drawn after a trend has been established.
MAKE YOU MILLIONS - WATCH CAREFULLY
RBO = RED BAR OUT and GBO = GREEN BAR OUT (SECRET TRICK-YOU WONT FIND IT ANYWHERE )
When there is one side momentum in the market. There will always be some weak traders who will try to pick the bottom or top. As soon as thode traders are gone. Market trend will continue & presents good opportunities to people who understands this concept.
The reality is THEY DO NOT WORK. What works in the market is your approach and your psychology. However you can use indicators to create and cultivate a discipline. Do not depend on them just keep them as guide for an extra confirmation.
PRICE itself is the most important indicator of future events. Secondly we will use moving averages to create a system.
Moving average will be use..
Simple moving average - 20 MA Simple moving average - 50 MA
20MA represents short term trend whereas 50 MA represents medium trend. Since we are trading on intraday basis it is to be noted that we do not need very larger time frame moving averages for example 200 MA.
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| Moving Average |
IMPORTANT RULES WHICH NEEDS TO BE TAKEN SERIOUSLY
HOW TO FIND HIGH PROFITABLE TRADESRULE - 1.
IF PRICE IS ABOVE 20MA AND 50 MA - WE ARE BUYING/ we are only looking for buying opportunities.
90% trades fail if you are trading against these moving averages.
RULE - 2.
IF PRICE IS BELOW 20MA AND 50 MA - WE ARE SELLING / we are only looking for SELL opportunities.
BUY SET UP
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BUY SET UP |
SELL SETUP
IF PRICE IS BELOW 20MA AND 50 MA - WE ARE SELLING / we are only looking for SELL opportunities.
HOW TO USE TREND LINE PROPERLY
Trend line is an important tool but often used in wrong manner like other indicators it can be faulty and most of the times it will result in losses. With given examples I will try to help you understand the concept of drawing proper trend line.IMPORTANT FACTORS TO CONSIDER
A proper trend line must have 3 touch points and then the breakout.A trend line must be drawn after a trend has been established.
FIRST LET'S WHAT ARE FAKE TREND LINES
THE MOST IMPORTANT TRADING TECHNIQUES WHICH CAN
MAKE YOU MILLIONS - WATCH CAREFULLY RBO = RED BAR OUT and GBO = GREEN BAR OUT (SECRET TRICK-YOU WONT FIND IT ANYWHERE )
When there is one side momentum in the market. There will always be some weak traders who will try to pick the bottom or top. As soon as thode traders are gone. Market trend will continue & presents good opportunities to people who understands this concept.
RED BAR OUT / BULLISH PATTERN
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RED BAR OUT / BULLISH PATTERN GREEN BAR OUT / BEARISH PATTERN GREEN BAR OUT AND RED BAR OUT ARE FOUND MOSTLY ON SMALL TIMEFRAME CHARTS HERE I WILL GIVE YOU SOME EXAMPLES FROM TODAYS MARKET. IF YOU CAN FOLLOW THIS STRATEGY DAILY YOU CAN MAXIMISE YOUR GAINS BY INCREASING YOUR LOT SIZE OT QUANTITY BECAUSE STOP LOSS WILL BE MINIMUM AND WHENEVER YOU WILL HIT THE TARGET YOUR PROFIT WILL BE MAXIMUM - LETS ANALYSE SOME CHARTS.... PLEASE NOTE - IF MARKET IS STRONG YOU WILL FIND RBO. Only trade RBO in strong markets & vice versa GBO in weak markets. Green Bar Out(GBO) Red Bar Out(RBO) RED BAR OUT ON FRIDAY'S MARKET - In bullish market RBO are everywhere -Please note - On 1 minute time frame RBO or GBO are very powerful but you can only spot them if you are following only few stocks or index.    BY USING RBO /GBO WE ARE CAPTURING MOMENTUM WHICH IS MOST IMPORTANT IN OPTIONS TRADING BECAUSE WE DON'T WANT TO LOSE TIME VALUE. IF YOUR TRADE TAKES TIME TO PERFORM THE PREMIUM WILL NOT INCREASE. WHAT WE HAVE LEARNT SO FAR - RULES WILL MAKE YOU PROFITABLE. TO BUY - PRICE MUST BE ABOVE 20/50 MA. ENTRY WITH CANDLE CONFIRMATION OR WITH RBO. TO SELL - PRICE MUST BE BELOW 20/50 MA. ENTRY WITH CANDLE CONFIRMATION OR WITH GBO. ENTRY EXIT TARGETENTRY - MUST BE ABOVE CONFIRMATION CANDLE OR YOU CAN USE THE CONFIRMATION FOR SETUP AND ENTER ON LOWER TIME FRAME FOR EXAMPLE IF YOU FIND BULLISH ENGULFING ON 15 MIN CHART THEN YOU CAN ENTER ON 1 MINUTE CHART WHENEVER PRICE COMES UNDER THAT 15 MIN BULLISH ENGULFING PATTERN. IT WILL HELP YOU GET CHEAPER PRICE. BUT SOMETIMES PRICE WILL NOT COME UNDER IT WILL JUST SHOOT UP. EXIT - STOP LOSS MUST BE SET BY LOOKING AT THE UNDERLYING NOT BY LOOKING AT THE PREMIUM. ALSO IT IS BEST TO TAKE STOP LOSS MANUALLY IF YOU CAN. BUT IF YOU LACK THAT DISCIPLINE YOU MUST ALWAYS PLACE STOP LOSS RIGHT AFTER ENTERING THE TRADE. TARGET-IN ORDER TO BE PROFITABLE YOU MUST ALWAYS KEEP TAKING PROFITS. ONCE THE TRADE IS IN PROFIT NEVER CONVERT IT IN LOSS. ALSO ONCE YOU HAVE 1:1 PROFIT YOU MUST TRAIL YOUR STOP LOSS AT ALL COSTS. YOU WILL ALWYAS NOT GET 1:2 RISK TO REWARD AS MOST PEOPLE WILL TELL YOU THAT YOU SHOULD ALWAYS GO FOR 1:2 RISK REWARD BUT THAT IS A FAILED APPROACH. IN ORDER TO BE PROFITABLE YOU SHOULD PROTECT YOUR PROFIT FIRST THEN ONLY GET GREEDY OTHERWISE YOU WILL LOSE BOTH. PROFIT + CAPITAL.    
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Option Trading