einfo demystify technical analysis reuters

7/31/2019 Einfo Demystify Technical Analysis REUTERS

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Techncial AnalysisTechncial Analysis

Demystify Technical Analysis

2 Technical Analysis

Agenda

Orientation Introduction to the course. Rules and Regulations.

Expectation etc.

Introduction to Technical Analysis. What is Fundamental Analysis. What is Technical Analysis, Comparison between Technical and Fundamental Analysis.

Some Basic Concepts. Line Chart Bar Chart Candlestick Chart

Trends Up Trend Down Trend Side Ways Trend

Trend lines and Properties. What is Valid Trend lines and Properties

Trading Technique for Trend lines.


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Human Emotions


Your forecasting toolki

Fundamental analysisA method of forecasting based on basic

economic, political and environmental

factorsTechnical AnalysisA method of predicting price

movements and future market trendsby studying charts of past market

action, price, volumes and openinterest.


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Fundamentally Strong Company Technically Strong Company.


Fundamentally Strong Company Technically Strong Company.


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Basics

A good graphics package with good data behind it.

Set aside some time every day to flick through thecharts of what you trade.

Dont get fixated on day-to-day, look at theweekly, monthly and yearly charts.

Dont get so focused on the near-term action that

you lose sight of the bigger picture.


Principles of Technical analysis

The current pricediscounts everything

Patterns exist

History repeats itself


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The current price discounts everything




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Strengths

Can be used on almost anyinstrument

Can be used to analyse data over a

wide range of time periods There are many charting tools and

techniques

The basic principle of charting iseasy to understand


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Trends


Basic Concepts of Trend

There are three trendsUPDOWNSIDEWAYS

There are three decisionsGO LONGGO SHORTSTAY OUT OF THE MARKET


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Dont buck the trend, because the trend is your friend


Up Trend


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Up Trend


UPTREND


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Down Trend


Down Trend


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Sideways Market


Sideways Market


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Short-term and Longer-term trends

A trend has three classificationsMAJORINTERMEDIATENEAR-TERM

Broadly three time horizonsLONGER THAN A YEARONE TO THREE MONTHS

ONE WEEK TO ONE MONTH


Short-term and Longer-term trends


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Three Stages of a Trend

Accumulation

Big Move

Excess

Distribution

Big Move

Despair

Bull Market Bear Market


Basic typesof charts


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Chart types

Line

Bar

Candlestick


Line charts

The line chart is the simplest form of chart joining a series of points forinstrument data on the vertical axis (Y-axis) and a timescale on thehorizontal axis (X-axis).

Line charts are not frequently used today.

Typically Bid, Ask, High, Low or Close prices are used for the vertical axisand timescales used can vary from tick (every price plotted consecutively)

to hourly, daily and weekly.


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Bar Charts

Open

Close

High

Low


Candlestick


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Very simple signals

Uptend Downtrend


Reversal days


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The two-day reversal


Properties of Trend Line

The greater the number of touches the more

important the trend line becomes.

The angle of Trendline

Extension of Trend line.

Trendline with Chart patterns

Spacing of the two points


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Number of Touches


Extension of Trendline


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Incorrect Angle


Trendline with Chart Patterns


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Spacing between 2 points


Trading Trendlines


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Trading the Trendline


Session 2

Identifying good Support and Resistance Level What is good Support ? What is good Resistance ? Properties of good Support and Resistance .

Fibonacci Number and Ratio. Fibonacci Numbers and Ratio Retracement Extension

Identifying Chart Patterns. Double Top

Double Bottom Tripple Top Tripple Bottom Head and Shoulder and Inverted Head and Shoulder Pattern. Triangles (Ascending , Descending Symmetrical Triangles) Cup and Handle Pattern Wedges and Flags and Pennants

Candelstick Patterns Doji Bullish and Bearish Engulfing Hanging Man , Hammer Morning Star evening star The Dark Cloud Cover Island Reversal The Kicker


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What is Support

Support is the price level at which demand is thought to be strong enough to prevent the pricefrom declining further. The logic dictates that as the price declines towards support and getscheaper, buyers become more inclined to buy and sellers become less inclined to sell. By thetime the price reaches the support level, it is believed that demand will overcome supply andprevent the price from falling below support.


Looking for Crucial Support


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Looking for Crucial Support


What is Resistance

Resistance is the price level at which selling is thought to be strong enough to preventthe price from rising further. The logic dictates that as the price advances towardsresistance, sellers become more inclined to sell and buyers become less inclined tobuy. By the time the price reaches the resistance level, it is believed that supply willovercome demand and prevent the price from rising above resistance.


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More Example on Resistance


Properties of Valid Support and Resistance

The Support and Resistance should not be broken for at

least for 1 month period.


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Number of Touches

The more number of touches the more the Valid Support/Resistance


Number of Touches


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Why Resistance becomes support

Trader 1 : Trader is going Short at Crude oil at MCX @

3870-3900 and was having fun seeing the prices fall down.


Resistance becoming Support

Trader 2 : Very Happy Buying MCX Crude @ 3400-3450 and

selling at 3900


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Resistance becomes the Support

Now the Market Break out of the Resistance Zone and AS

USUAL TRADERS WILL NOT PUT THEIR STOP LOSSE

IN PLACE and they will be worried and sad to cover their

position. Turns buyer at Break even.



Longs are happy but sad because they did not bought moreso after break out near Previous Resistance they add moreposition


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Then there were Guys like me who were just

waiting for breakout to happen once it is in place

we will try to Buy Market at Near new Support

Level


Support Becomes Resistance


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What is Fibonacci number

Na..


What is Fibonacci Number

The Fibonacci number sequence (1,2,3,5,8,13,21,34,55,89,144,...) is

constructed by adding the first two numbers to arrive at the third.

The ratio of any number to the next number is 61.8 percent, which is a

popular Fibonacci retracement number. The inverse of 61.8 percent is

38.2 percent, also used as a Fibonacci retracement number.


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Fibonacci Retracement

25%, 38.2% 50% 61.8% 100% are the commonly usedRetracements.


Fibonacci Retracement


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Fibbonacci Extension

100%, 138.2%, 161.8% and 261.8% are the commonlyused Extension


Patterns

Reversal Patterns Head and Shoulder and Inverted Head and

Shoulder.

Double and Tripple Top

Double Bottom and Triple Bottom

Cup and Handle

Continuation Patterns Traingles ( Ascending, Descending and

Symmetrical )

Flag and Pole

Wadges


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Head and Shoulder


Inverted Head and Shoulder


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Triple Top


Triple Bottom


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Double Top

ecember 2007 February March April May June July August September October November December 2008 February March

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Stochastic Oscillator (25.9664)

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AUDCHF (0.96250, 0.96830, 0.95890, 0.96750, +0.00500)


Double Bottom


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Double bottom (Contd)


Cup and Handle


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Cup and Handle (Contd)


Triangles

Symmetrical Triangle


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Ascending Triangle


Descending Triangle


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CandelSticks


Doji

A doji represents an equilibrium between supply and demand, a tug ofwar that neither the bulls nor bears are winning.


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Doji Star


Doji Star


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Gravestone Doji


Identify Long Legged Doji


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Identify Long Legged Doji


Bullish and Bearish Engulfing

Bullish Engulfing : A chart pattern that forms when a small black candlestick is followedby a large white candlestick that completely engulfs" the previous day's candlestick.The shadows or tails of the small candlestick are short, which enables the body of thelarge candlestick to cover the entire candlestick from the previous day.

Bearish Engulfing : A chart pattern that consists of a small white candlestick withshort shadows or tails followed by a large black candlestick that eclipses or "engulfs" thesmall white one.


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Bullish Engulfing


Bearish Engulfing Pattern


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Hammer and Hanging Man

Hammer : A price pattern in candlestick charting that occurs when a security trades significantly lowerthan its opening, but rallies later in the day to close either above or close to its opening price. Thispattern forms a hammer-shaped candlestick.

Hanging man :A bearish candlestick pattern that forms at the end of an uptrend. It is created whenthere is a significant sell-off near the market open, but buyers are able to push this stock back up sothat it closes at or near the opening price. Generally the large sell-off is seen as an early indicationthat the bulls (buyers) are losing control and demand for the asset is waning.


Hanging Man


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Hammer


Morning Star and Evening Star

Morning Star : bullish candlestick pattern that consists of three candles that have demonstrated the followingcharacteristics:

1. The first bar is a large red candlestick located within a defined downtrend.2. The second bar is a small-bodied candle (either red or white) that closes below the first red bar.3. The last bar is a large white candle that opens above the middle candle and closes near the center of the first bar'sbody.

Evening Star : A bearish candlestick pattern consisting of three candles that have demonstrated the followingcharacteristics:

1. The first bar is a large white candlesticklocated within an uptrend.2. The middle bar is a small-bodied candle (red or white) that closes above the first white bar.3. The last bar is a large red candle that opens below the middle candle and closes near the center of the first bar's body.


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Kicker

Bullish Kicker : Previous days candle opens and regains its negative momentum in thesame direction of the market. After the Announcement, the alter its direction , openingat the same level as the previous days open range or with Gap and moving up.

Bearish Kicker : Previous days candle opens and regains its momentum in the samedirection of the market. After the Announcement, the alter its direction , opening at thesame level as the previous days opening range and sliding down


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Bullish Kicker


Bullish Kicker


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Bearish KKicker


Session 3

Different Kinds of Indicator. Leading Indicators Lagging Indicators

Moving Averages . What is moving averages ? Different Types of Moving Averages. Simple Exponential Weighted. Properties of good Moving Average Strategies of Moving Average .

Benefits and Drawback of Indicators

Lagging Indicators

Moving Averages MACD Average Directional Index

Leading Indicators Relative Strenth Index Stochastic Rate of Change.

Volatility Indicators. Bollinger Bands

GAPS- Common Gaps- Breakout Gaps- Runaway Gaps- Exhaustion Gaps

Money Management- Martingale System- Anti Martingale System


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What does a Technical Indicator Offer?

Technical indicator offers a different perspective from which to analyze the price action.Some, such as moving averages, are derived from simple formulas and the mechanicsare relatively easy to understand. Others, such as Stochastics, have complex formulasand require more study to fully understand and appreciate. Regardless of the complexityof the formula, technical indicators can provide unique perspective on the strength anddirection of the underlying price action.

A simple moving average is an indicator that calculates the average price of a securityover a specified number of periods. If a security is exceptionally volatile, then a movingaverage will help to smooth the data. A moving average filters out random noise and

offers a smoother perspective of the price action. When is market is in Trading rangezone RSI would tell you the condition of the market such as Overbought and Oversoldlevel.


Why Use Indicators?

Indicators serve three broad functions: to alert, to confirm and topredict.

An indicator can act as an alert to study price action a little moreclosely. If momentum is waning, it may be a signal to watch for a

break of support. Or, if there is a large positive divergence building, itmay serve as an alert to watch for a resistance breakout.

Indicators can be used to confirm other technical analysis tools. Ifthere is a breakout on the price chart, a corresponding movingaverage crossover could serve to confirm the breakout. Someinvestors and traders use indicators to predict the direction of futureprices.


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My Two Friends

Friend 1 : Tells me whatever you do I am with you. Right or

Wrong I am with you and I will follow you.

Lagging Indicator : Moving Averages, MACD , ADX

Friend 2 : Tells me Dont do this Dont do that.

Leading Indicator : Market is overbought dont buy , Market is

oversold dont sell it . RSI, Stochastic, ROC.


Lagging Indicator

As their name implies, lagging indicators follow the price action and are commonlyreferred to as trend-following indicators. Rarely, if ever, will these indicators lead theprice of a security. Trend-following indicators work best when markets or securitiesdevelop strong trends. They are designed to get traders in and keep them in as longas the trend is intact. As such, these indicators are not effective in trading orsideways markets. If used in trading markets, trend-following indicators will likely

lead to many false signals and whipsaws. Some popular trend-following indicatorsinclude moving averages (exponential, simple, weighted, variable) and MACD.


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Lagging Indicators

Moving Averages

MACD

Average Directional Index


What is Moving Averages?

A simple moving average is formed by computing the average (mean) price of a security over a specifiednumber of periods. While it is possible to create moving averages from the Open, the High, and the Lowdata points, most moving averages are created using the closing price. For example: a 5-day simple movingaverage is calculated by adding the closing prices for the last 5 days and dividing the total by 5.


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Moving Averages


Different Kinds of Moving Averages

Simple Moving Average

Weighted Moving Average

Exponential Moving Average


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Simple Moving Average

A simple moving average is formed by computing the average (mean) price of a security over a specifiednumber of periods. While it is possible to create moving averages from the Open, the High, and the Lowdata points, most moving averages are created using the closing price. For example: a 5-day simple movingaverage is calculated by adding the closing prices for the last 5 days and dividing the total by 5.


Weighted Moving Average

A weighted moving average is simply a moving average that is

weighted so that more recent values are more heavily weighted

than values further in the past.

ne

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* BSE - SENSEX (15,467.39, 15,798.42, 15,331.35, 15,760.52, +403.170)


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Exponential Moving Average

In order to reduce the lag in simple moving averages, technicians

often use exponential moving averages (also called exponentially

weighted moving averages). EMA's reduce the lag by applying more

weight to recent prices relative to older prices. The weighting applied

to the most recent price depends on the specified period of the

moving average. The shorter the EMA's period, the more weight that

will be applied to the most recent price.

The formula for an exponential moving average is:

EMA(current) = ( (Price(current) - EMA(prev) ) x Multiplier) +

EMA(prev)

(2 / (Time periods + 1) ) = (2 / (10 + 1) ) = 0.1818 (18.18%)


Which one is better ?


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Properties of Good moving Average

Moving averages are portable trendline , So good

moving average should act as good Support levels.




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Properties of Moving Averages


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Moving Averages

When two moving averages are used the longer is fortrend identification and the shorter for timing

It is the interplay between the two which gives you thetiming

Classics are 5 and 20 day and 10 and 40 day

On stocks, 7 and 21 work well


Right Moving Average Period


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2 Moving Average Cross over

Market signalBullish When short term moving Average ( i.e 5 Day

) crosses Long term Moving Average (i.e 20 Day ) andgoes up . Its a Golden Coress

Bearish When short term moving Average (i.e 5 Day )crosses Long Term Moving Average (i.e 20 Day ) and

goes Down . Its Death Cross




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Guppy Moving Averages


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Benefits and Drawbacks of Moving Averages

Benefits :

As it is a lagging indicator you will always be able to capture the bigmoves when it come along.

It act as a good support and Resistance .

It also shows the underlying Trend

Drawback :

All the lagging indicator gives many whipsaws when it comes to sideways market.

Some time there is significant amount of money is left on the tableas it gives late signals. Although some lag can be removed by usingExponential MA


Moving Average Convergence Divergence

IntroductionDeveloped by Gerald Appel, Moving Average Convergence/Divergence (MACD) isone of the simplest and most reliable indicators available. MACD uses movingaverages, which are lagging indicators, to include some trend-followingcharacteristics. These lagging indicators are turned into a momentum oscillatorby subtracting the longer moving average from the shorter moving average.

MACD Formula The most popular formula for the "standard" MACD is the

difference between a security's 26-day and 12-day exponentialmoving averages. Using shorter moving averages will produce aquicker, more responsive indicator, while using longer movingaverages will produce a slower indicator, less prone to whipsaws.Of the two moving averages that make up MACD, the 12-day EMAis the faster and the 26-day EMA is the slower. Closing prices areused to form the moving averages. Usually, a 9-day EMA of MACDis plotted along side to act as a trigger line. A bullish crossoveroccurs when MACD moves above its 9-day EMA and a bearishcrossover occurs when MACD moves below its 9-day EMA


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Calculation of MACD


MACD Signals

MACD generates bullish or Bearish signals from three

main sources:

Positive divergence

Bullish moving average crossover

Bullish centerline crossover


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Bullish Divergence

When Prices are falling on remain same but the Indicatormoves up then it is called Bullish Divergence


What is Positive Divergence and Negative Divergence

When Prices are going up or remaining same but

Indicator is coming down is called Negative Divergence.


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MACD Cross Over

Buy : When MACD Crosses above its Average .

Sell : When MACD Crosses below its Average.


Centerline Crossover


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MACD Benefits

One of the primary benefits of MACD is that it incorporates aspects ofboth momentum and trend in one indicator. As a trend-followingindicator, it will not be wrong for very long. The use of moving averagesensures that the indicator will eventually follow the movements of theunderlying security.

MACD can be applied to daily, weekly or monthly charts. MACDrepresents the convergence and divergence of two moving averages.The standard setting for MACD is the difference between the 12 and26-period EMA. However, any combination of moving averages can beused. The set of moving averages used in MACD can be tailored foreach individual security. For weekly charts, a faster set of movingaverages may be appropriate. For volatile stocks, slower moving

averages may be needed to help smooth the data. No matter what thecharacteristics of the underlying security, each individual can set MACDto suit his or her own trading style, objectives and risk tolerance.


MACD Drwaback

Can Be Applied on Any Time Frame : MACD can be applied to daily, weekly or monthlycharts. MACD represents the convergence and divergence of two moving averages. Thestandard setting for MACD is the difference between the 12 and 26-period EMA. However,any combination of moving averages can be used. The set of moving averages used inMACD can be tailored for each individual security. For weekly charts, a faster set ofmoving averages may be appropriate. For volatile stocks, slower moving averages may beneeded to help smooth the data. No matter what the characteristics of the underlyingsecurity, each individual can set MACD to suit his or her own trading style, objectives and

risk tolerance.

Can not be applied to see historical levels : MACD calculates the absolute differencebetween two moving averages and not the percentage difference. MACD is calculated bysubtracting one moving average from the other. As a security increases in price, thedifference (both positive and negative) between the two moving averages is destined togrow. This makes its difficult to compare MACD levels over a long period of time,especially for stocks that have grown exponentially.


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Average Directional Index

Wells Wilder introduced this revolutionary concept in New Concept inTechnical Trading System .

+ DI is greater then DI add that Amount to +DI and Deduct the sameamount from DI ,

If DI is greater than + DI then add to DI and deduct that amount from DI


Trading using +DI and DI

Buy : When + DI crosses above DI

Sell : When DI crosses above + DI


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Is the Market is Trading or Trending ???????????????

Average Directional Index is nothing but the Absolute difference between + DIand DI .

When ADX is above 25 it is considered to be Trending Market . When it is below25 it is considered Trading . ( Note : Threshold value may vary fromCommodity to Security ) .


Trending and Trading Market


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Average Directional Index (ADX)


Benefits and Drawbacks of Lagging Indicators

One of the main benefits of trend-following indicators is the ability to catch amove and remain in a move. Provided the market or security in questiondevelops a sustained move, trend-following indicators can be enormouslyprofitable and easy to use. The longer the trend, the fewer the signals and lesstrading involved.

The benefits of trend-following indicators are lost when a security moves in atrading range. Another drawback of trend-following indicators is that signals tendto be late. By the time a moving average crossover occurs, a significant portionof the move has already occurred.


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Leading Indicator

Many leading indicators come in the form of momentum oscillators. Generallyspeaking, momentum measures the rate-of-change of a security's price. As theprice of a security rises, price momentum increases. The faster the securityrises (the greater the period-over-period price change), the larger the increasein momentum. Once this rise begins to slow, momentum will also slow. As asecurity begins to trade flat, momentum starts to actually decline from previoushigh levels. However, declining momentum in the face of sideways trading is notalways a bearish signal. It simply means that momentum is returning to a moremedian level.


Leading Indicator

Relative Strenth Index ( RSI )

Stochastic

Rate of Change


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Relative Strength Index

Developed by J. Welles Wilder and introduced in his 1978 book, NewConcepts in Technical Trading Systems, the Relative Strength Index

(RSI) is an extremely useful and popular momentum oscillator. The RSI

compares the magnitude of a stock's recent gains to the magnitude of its

recent losses and turns that information into a number that ranges from 0

to 100. It takes a single parameter, the number of time periods to use in

the calculation. In his book, Wilder recommends using 14 periods.


Divergence

Bearish Divergence- when prices are making higher highs but the indicatoris making lower highs. Upmove is weakening.

Bullish Divergence- when prices are making lower lows but the indicator ismaking higher lows. Downmove is weakening.


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RSI Bullish/Bearish Divergence


RSI Bearish Divergence


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RSI Overbought and Oversold

Overbought : RSI when enters 70 level the market is considered to beoverbought .

Oversold : RSI when enters 0 level the market is considered to be oversold

Important point :Only trade when trade when they are exiting Overbought andOversold levels.


Properties of RSI

Normal Technical Analysis can aslo be applied to RSI like Trendline,

Fibonacci Retracement or Projection etc.


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Stochastic

Developed by George C. Lane in the late 1950s, the Stochastic Oscillator is amomentum indicator that shows the location of the current close relative to thehigh/low range over a set number of periods. Closing levels that are consistentlynear the top of the range indicate accumulation (buying pressure) and those nearthe bottom of the range indicate distribution (selling pressure).


Stochastic Buying and Selling

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Stochastic strategy


Rate of Change

ROC is a momentum indicator that measures velocity and also leads the price action.

Rate of Change, ROC, can be very useful, because it is a leading indicator (ROC changes directionbefore the underlying price).

Divergences

Divergences can provide warnings or alerts of weaknesses in market trends, but do notrepresent actual buy or sell signals. It is essential to wait for a confirmation from the price

itself that the overall trend has reversed.Zero-line crossings

Although the long-term price trend is still the overriding consideration, a crossing upwardthrough the zero line can confirm a buy signal and a crossing downward through the zero

line, a sell signal.

Trendline Violations

The trendlines on the ROC chart are broken sooner than those on the price chart. Thevalue of the momentum indicators is that it turns sooner than the market itself, making it a

leading indicator.


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Rate of Change ( ROC )

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TATA POW ER COMP (1,163.00, 1,188.00, 1,100.50, 1,160.45, -3.10010)


Benefits and Drawbacks of Leading Indicators

There are clearly many benefits to using leading indicators. Earlysignaling for entry and exit is the main benefit. Leading indicatorsgenerate more signals and allow more opportunities to trade. Earlysignals can also act to forewarn against a potential strength orweakness. Because they generate more signals, leading indicatorsare best used in trading markets. These indicators can be used intrending markets, but usually with the major trend, not against it. In a

market trending up, the best use is to help identify oversold conditionsfor buying opportunities. In a market that is trending down, leadingindicators can help identify overbought situations for sellingopportunities.

With early signals comes the prospect of higher returns and withhigher returns comes the reality of greater risk. More signals andearlier signals mean that the chances of false signals and whipsawsincrease. False signals will increase the potential for losses.Whipsaws can generate commissions that can eat away profits andtest trading stamina.


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Bollinger Bands

Introduction

Developed by John Bollinger, Bollinger Bands are an indicator that allows users to compare volatility andrelative price levels over a period time. The indicator consists of three bands designed to encompass themajority of a security's price action.

A simple moving average in the middle

An upper band (SMA plus 2 standard deviations)

A lower band (SMA minus 2 standard deviations)

Standard deviation is a statistical term that provides a good indication of volatility. Using the standard

deviation ensures that the bands will react quickly to price movements and reflect periods of high andlow volatility. Sharp price increases (or decreases), and hence volatility, will lead to a widening of thebands.


Formula


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Signaling System

Buy : After Prolonged Selling the Candel gives closing outside the band and next candel isinside band than amove above highes high is Buying signal .

Sell : After Prolonged Buying spree candelstick move above BB and Next Daxt Day candelcomes in BB then A move below Lowest Low of Candel is your Short Signal.


Bollinger Bands

Sideways consolidation Breakouts.


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Bollinger Band Breakout


Band Envelop and Bollinger Bands


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Conclusion

To identify periods of high and low volatility

To identify periods when prices are at extreme,and possibly unsustainable, levels.

As stated above, securities can fluctuatebetween periods of high volatility and lowvolatility. Being able to identify a period of lowvolatility can serve as an alert to monitor theprice action of a security. Other aspects oftechnical analysis, such as momentum, movingaverages and retracements, can then be

employed to help determine the direction of thepotential breakout


GAPS

Gaps are nothing but the vacuum left by the Prices.

Upside Gap : when Todays low is higher than previous Days High .

Down Side Gap : When Todays High is Lower than Previous Days

Low .


79/83

79


Mind the Gap

Common gap occur in low volume caused by lack ofinterest. (sometimes filled but be careful)

Breakaway gap occur in heavy volume when trendlinesbreak or patterns complete. (often filled)

Runaway gap occur in moderate volume during a trend.(generally filled and will provide support on reversal)

Exhaustion gap occurs in heavy volume near the end of

a market move. (pretty much always filled)


Mind the Gap


80/83

80

NAS NAS/NMS COMPSITE, Last Trade [Hi/Lo/Cl Bar] Daily

16Nov00 - 08Feb01

21Nov00 28Nov 05Dec 12Dec 19Dec 26Dec 02Jan 09Jan 16Jan 23Jan 30Jan 06Feb

Pr

USD

2300

2400

2500

2600

2700

2800

2900

3000

3100

NAS NAS/NMS COMPSITE, Last Trade, Hi/Lo/Cl Bar

19Jan01 2841.25 2752.06 2770.38


.BSESN, Last Trade [O/H/L/C Bar] Daily FREEZE

11Feb05 - 30Jun05

11Feb05 18Feb 25Feb 04Mar 11Mar 18Mar 25Mar 01Apr 08Apr 15Apr 22Apr 29Apr 06May 13May 20May 27May 03Jun 10Jun 17Jun 24Jun

Pr

INR

6150

6200

6250

6300

6350

6400

6450

6500

6550

6600

6650

6700

6750

6800

6850

6900

.BSESN , Last Trade, O/H/L/C Bar

01Jun05 6729.39 6763.28 6721.22 6745.83


81/83

81


Gaps


Money Management

The most Important part of your Trading Career.

Two Types of Money Management Systems Martingle System

Anti Martingle System

Martingale System

Anti Martingale System


82/83

82


TABLE OF TRADES

No of Lossing

Trades

Amt of Lossing

Trades

No of Winning

Trades

Amt of

Winning

Trades

Total Inflow/

Outflow

10 (10) 0 0 (10)

9 (9) 1 2 (7)

8 (8) 2 4 (4)

7 (7) 3 6 (1)

6 (6) 4 8 2

5 (5) 5 10 5

4 (4) 6 12 8

3 (3) 7 14 112 (2) 8 16 14

1 (1) 9 18 17

0 0 10 20 20


Martingale System

You make a bet and if you lose you double your bet. If you lose again

you double your bet. You keep doing this until you win and then go back

to your original bet.

You bet Rs 5 and you lose.

Your next bet is Rs. 10. If you lose:

Your next bet is Rs 20. If you lose:Your next bet is Rs 40. If you lose:

Your next bet is Rs 80. If you lose:

Your next bet is Rs 160. If you lose:

If you win you will get back 320 so net inflow is your original Rs 5

Is it a Good bet.


83/83


Anti Martinalge System

Anti Martingale System tells to Invest double in a winning

streak and either slow down or remain constant on your

bets during the losing periods.

End of Session

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