Indicators that do well in one market condition may fall in other market condition.

Constantly study
the market and update your strategy. You cannot have a bunch of indicators and apply them in every
single situation. You need to understand the

1) Market sentiment.
2) Sector analysis.
3) Stock strength.
4) Change & Adapt and
5) Create a strategy that works effectively in a desired environment.

Trading is not gambling; it’s about taking calculated risks based on reading charts and analysing what
the market wants to do. The goal of trading is to make money consistently, you are not risking money
each trade to hit a home run.

You need to stay long in the market and consistently pull money from market. It can only be done by
becoming an expert in risk management. Lose small and earn big, that’s the scope of trading.

Buy at pullback, at trendline or moving average support, so that you have an edge in your trade.

Things you find on the higher time frames, weekly or monthly, hold more weight. Because long term
time frames take time, as a result it gives a very accurate depiction of where market is heading. Don’t
trade on monthly time frames, you as guidance to trade on shorter time frames.
WE REACT TO WHAT THE MARKET IS DOING, WE DON’T GUESS WHERE THE MARKET WOULD GO
NEXT. As retail traders we don’t have the power to move the market, we react to what we analyse
on the charts and trade in the direction of FIIs.

How to enter a trade.

The market always shows its hands, it always reveals what it wants to de next.

Confluence of many factors such as

a) Key area. (Demand zone and supply zone on higher time frame.)
b) Candle stick pattern supporting our view at Support / Resistance.
c) Trend change pattern. (Breakthrough, Breakdown, higher high or higher low).
d) Multi time frame analysis. (Daily, hourly, minutes)
e) Momentum indicators – RSI
f) Volatility indicator – Bollinger band.
g) Volume and Volume indicator.
h) Moving average strategy (10 EMA / 20 EMA / 50 EMA).
i) Fib level.
j) Divergence – Price vs Indicator.
k) Market breadth, Open Interest analysis, Sentiment analysis.

Dynamic support and resistance zones – Area where price reacted in the past and can possibly react
to in the future. Trade opportunities can arise at these areas in the future.

1) Swing high and swing lows.

2) Price has moved drastically from the area.
3) Acted as both support and resistance.
4) Multiple rejections in the area.
5) Recently respected.

Wait for Price action and confirmation before entering the trade at these areas.

You need to understand Swing trading – bigger picture before you can start Day trading. It helps to
understand True market direction. Spot the key levels on weekly, confirm these levels on the daily
charts and enter through “key price action patterns” on 4hrs time frame for swing trading. S&R
levels will look imperfect as the market is imperfect. Trade with these imperfections.

Imperfections with support and resistances.

1) Wide zone with multiple candles

2) False breakout.
3) Candles fail to touch support / Resistance.
4) Traders also take action at levels with round or whole numbers- 4500 / 500 etc.

Supply and Demand is the market psychology and driving market force behind what creates
support and resistance. FIIs want to get in at the best price and get out of the best price. They will
not get in or out at a low quality area.
Follow FIIs for two objectives.

1) Find the market direction to have a directional view.

2) Momentum behind the trade – If trade without momentum, we would go sideways and
stoploss would get hit.

Accumulation and Distribution followed by Re-Accumulation and Re-Distribution at value areas. It is

done at best value zones.

Two key signs that indicate a possible reversal-

1) Shrinking candles as they reach support / Reversal. Even better if they start developing long
wick candles near Support / Resistance.
2) Followed by tight price movement, there are wide swings, which indicate that bears are no
longer in control. (Cyient).
3) Change in the colour of candle.
4) Break of Trend line or chart pattern.
5) Higher high & higher low formation.
6) Add indicators for extra confirmation.

(Need price action that shows loss of momentum, showing buyers/ sellers are loosing stream
and no longer have control over price movement.

Read news and try to check it’s impact on the stock you wish to trade.

What is Price Action?

Making trading decisions based on price formations and price patterns that materialise in real.

1) Market structure & Key levels – MS involves identifying key levels of support and
resistance, because these levels provide high quality trade entries. A
2) Supply and Demand zones and multiple reversals of price. Once it is broken enter the trade
with momentum.
3) Extreme swing highs and swing lows. Stock is considered cheap or expensive at these
levels.
4) Higher time frames key levels – Monthly / weekly are major key levels have very high
probability of reversals.
5) Long wick candle – When price reaches a resistance level, long wick candles show that the
buyers tried to push the price but fails to break the resistance, same with support.
6) Take trade in the direction of the trend. In ranging market on both sides. The criteria for
trend formation and reversal is the formation of higher highs and higher lows. Enter trade
on dynamic support – key levels, support & resistance and moving averages. Trade can also
be taken in area where the support turns resistance or vice versa. ( Breakout / Breakdown)
7) Key levels with trend change price action – At support / Resistance level the formation of
higher high or higher low pattern followed by break in trendline gives a long setup.
8) Fresh trend vs Trend exhaustion – At the start of the trend price has fresh legs and space to
move. At the top, if the traders feel potential risk coming, they will lock their profits. It
could lead to trend exhaustion. High quality trades are close to the start of the trend.
9) Momentum gain Vs Momentum loss – Price moving up or down very closely, trade with
the trend. The length of the candles are increasing in size as price moves, it shows strong
trend. Momentum loss - After tight price movement, wide swings follow showing that
indicate change in trend. After trend, consolidation / sideways price moment is also an
 indication that the price has lost momentum. Shrinking candles and wicks at key levels is
an indication that price is losing momentum. Colour of candle changes from red to green
and vide versa depending upon the trend.
10) Deep pullback Vs Shallow pullback – Deep pullback occurs at 50% - 68% levels and are the
best place in terms of value to take a trade. Shallow pullbacks occur at 25% - 30% levels
and indicate a strong trend upwards.
11) Chart patterns – Also called consolidation patterns help determine continuation or reversal
of a trend. Chart patterns indicate indecision and infighting between buyers and sellers.
The side that wins is the side the pattern breaks on.
12) Look at where the price is coming from – if price has broken a resistance it might come
back to retest the level, shouldn’t be considered for a short position.
13) Stacking high quality traits in a trade – Example below.
 14) Trigger event and continuation entry – Identify a trade setup or a trigger event to give you
a confirmed directional bias to trade in and momentum for the trade. Then look for
intraday trade setup.
15) Time frame confluence – Three core time frames that tell to trade in the same direction.
Weekly time frames for support and resistance and trend direction. Daily for intraday
support and resistance. 25 mins for intraday support and resistance, 5 mins for trade setup
and 1 min for entry and exit.
16) Asset corelation – Check assets that have positive corelation with the assets you are
trading. If one asset goes up, there are chances that the other would also go up.

Trade quality – Any attribute that helps determine the chance of success. Trades are not right or
wrong, but good quality and bad quality trades. As a trader you should identify high quality trades.

How to identify good quality trades –

1) Learn about Price action.

2) Trade with momentum so that the trade goes a long way.
3) The more you learn, the more you see. The more you see, the more opportunities will
arise.
4)