Thread on fibs:

Part 1 - Fib extensions:

The way I use fibs and extensions differ from conventional textbook methods.

Fib extensions are ratios beyond 1 used to project targets for profit booking.

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The main purpose of fib extensions is to forecast probable (emphasis on both words) areas of profit booking/correction in a script trading in unchartered waters (ATHs and lifetime lows)

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Basically, they are used to find Ghost supports/resistances.

Fibonacci is a price based and a relative time based tool.

Meaning, the proper way to use this tool largely depends on the swing markers you use relative to the TF of your analysis and trading.

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The primary ratios I use as part of extensions are 1.382 and 1.618.

Example 1 for broader price range swing:

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Example for minor swing:
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Thread on sideways market:

Sideways price action or consolidation is a phase where institutional players are silently building their positions transacting in smaller quantities.

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What we need to understand is that big players have huge amounts of money and one major disadvantage of having such large cap is that they cannot transact in big quantities without being spotted (aka volumes)

In order to minimize this disadvantage to an extent, they will begin building their positions with many smaller blocks of orders to look like multiple small players and to not alert other market participants much.

This kind of price action does not result in major market moves since moving markets requires aggressive buying/selling at market prices.

Instead it results in a sideways price action.

When their positions are built, aggressive activity begins which results in markets moving in a trend. First positions are built slowly and then markets are moved aggressively in the favorable direction to get profitable.

I am planning on hosting a free webinar series on positional and intra trading using a few of my RSI and fibs techniques.

Proven and tested methods, not your average YT video.

But before that, I would like to hit 10k followers.

Are you interested?

#StockMarket #trading

Common price action trading mistakes that cost me lakhs of rupees:

A thread 🧵

1. Front running the market based on my analysis:

Any analysis we do should be proved by market as correct before we jump into a trade.

How?

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Example:

Mr. X marked 1500 as a strong support in HDFC Bank. Next day, stock opened at 1510, came down and hit 1500.

ABC went long in the stock. A few minutes later, stop got triggered. What went wrong here?

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1500 is support for HDFC bank as per Mr. X but he did not wait to check if market validated his opinion.

At supports and resistances marked by a trader (you), wait for market to show the stock is actually taking support/resistance at those levels.

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For your analysis to be correct, market buying>selling at support, market selling>buying at resistance.

Essentially, on a lower TF, check for bullish price action at support, bearish price action at resistance before you enter the trade.

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Remember that no support is too low to be broken and no resistance is too high to be broken.

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How I understand the strength of a trend:

For many day traders, the issue is not with identifying the direction but being afraid of when the move will end or reverse.

It is a challenge to identify when a move can continue and convert to a big move n when it can reverse

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Reading orderflow data at important levels like previous day low and high (intra low and high are not that reliable levels), one can understand if a move can continue or not.

In the above chart, previous day low broke and market fell before giving a pullback.

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Orderflow indicated that large sellers continued to sell when PDL (previous day low) was breaking.

See below chart where sellers sold huge around PDL.

We pulled back to same level and they defended their positions.

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OF helps know the strength of a move and the probability of it continuing or not and helps me decide whether to stay in a trade for bigger profits or book out.

If you liked the content, follow me at @KillerTrader_ for more such knowledge.

Charts by @gocharting

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#nifty

Improve your volume analysis using volume profile.

A thread on volume profile 🧵

Traditional volume indicator is widely used by almost every trader.

But it has a handicap: It shows volumes transacted from a time POV but not the price POV.

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This is what traditional volume analysis states. But in reality, how effective it is?

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It simply shows volume from a timeframe basis. 5 mins volumes on 5 mins TF and so on.

But, is there a different way to read volumes from a price basis? Like, where did largest buying or selling by big players come in?

Read to find more.

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This is where volume profile comes in. To put it in the simplest way, volume profile shows volume from a price perspective thus enabling a trader to identify where largest trading has occurred.

But how does this help a trader?

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If you can spot the areas where large volumes are being traded, you can spot areas of interest and effectively find areas of support and resistance.

Of course, it is volume that drives the price.

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Introduction to imbalance charts (orderflow trading):

A 🧵

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Orderflow charts essentially show the real time buying and selling happening in the markets.

In below chart, you can see how market sell orders are shown to the bid side and market buy orders are shown to the ask side.

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Using this, one can identify big buying and selling happening at various prices.

Imbalance charts takes this one step forward. How so? Read on to find out.

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Imbalance charts shows buying and selling imbalances at various price points. How does it matter?

Imbalance here implies to what extent is buying more than selling and vice versa.

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Why is that important? As a trader, if we know that buying at a particular level is x times more than selling or vice versa, it would help us understand the strength of supply or demand coming into the market.

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What is orderflow trading and how to develop an edge using orderflow:
A thread 🧵
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#StockMarket

As the name suggests, orderflow is the flow of orders in a stock or index which are being executed in live market.

Normal candlestick shows the candle open, high, low and close but not the actual buyer and seller activity which is happening at every price point.

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Orderflow chart shows a deeper insight into a candle's price action by showing the volumes that are coming in at every price level.

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Why is this information important?
1. As a retail trader, we would like to follow the steps of large players and institutions and see whether they are more inclined towards longs or shorts.
2. OF data shows us the real time supply demand which is flowing into the market

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How to build a successful trading mindset?

A thread 🧵

There is a lot of talk about trading mindset or psychology. But what exactly is trading mindset?

#StockMarket #trading

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Trading mindset is the state your mind is in, the thoughts that flow through you and the basis on which you take make various decisions about trading.

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More often than not, we know there are certain rules to this business, we know the rules we are supposed to follow to stand a chance to be successful in this business, but we are not able to.

Why?

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The problems most traders face are more or less similar but the methods or approach to solve it is different.

Because though the problems are similar, what triggers an individual to go down the wrong way or repeat the same mistake is different.

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So in this case, inward reflection to identify the key triggers and working on them with positive affirmations is required.

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