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?
(2/n)
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?
(1/n)
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?
(2/n)
At supports and resistances marked by a trader (you), wait for market to show the stock is actually taking support/resistance at those levels.
(3/n)
Essentially, on a lower TF, check for bullish price action at support, bearish price action at resistance before you enter the trade.
(4/n)
If you are a price action based trader, the most important guiding principle for you is:
1. Higher the timeframe, more accurate and reliable the technical analysis
2. But big moves start on small timeframes first.
(6/n)
The key is to balance these two principles and have a structure where you analyze markets on a TF and trade on a TF which complement each other.
(7/n)
If you are a day trader, do not pick stocks on 15 mins TF and trade on 15 mins. Switch your analysis to hourly TF/daily TF.
It will help avoid choppiness in the markets to a large extent.
(8/n)
A divergence is a signal for a potential reversal which MAY occur, but not a confirmation.
Just taking reversal bets on divergence will sooner or later burn big holes in your pocket.
(9/n)
Every divergence does not mean reversal and every reversal does not come with divergence.
(10/n)
Some people use RSI, MACD, Stoch RSI all on one chart.
On a minute basis, even though these oscillators have their own differences, fundamentally on a broader perspective, they have the same purpose.
(11/n)
So, pick one oscillator and do not clutter your chart and minds in live markets.
(12/n)
This could get a bit unpopular but I like to put the truth out:
Bullish candle patterns work well in bull markets and bearish patterns work well in bear markets.
(13/n)
(14/n)
More from Killer Trader 📉📈
Nifty basic volume profile analysis for today:
Yesterday, shared about various types of volume profile analysis and how to prepare for next day. Read here
We had discussed that a "p" shaped profile and close at highs indicates longs are in control of the market.
It also indicates high chances of uptrend continuation next day.
But
(2/n)
How to trade a failure of trend continuation? Yesterday, we saw a "P" shape profile in Nifty and close at highs.
But we failed to continue upmove today.
(3/n)
We opened positive but the opening breakout not sustaining is first cue to understand that bulls are lacking initiative to push prices up further.
(4/n)
For confirmation, one can use orderflow as well to see real time supply demand flowing into the market.
At open today, we saw fresh sellers coming in a bullish opening.
(5/n)
Yesterday, shared about various types of volume profile analysis and how to prepare for next day. Read here
How to analyze Nifty using various types of volume profile:
— Trader Abhishek (@KillerTrader_) September 5, 2022
A thread \U0001f9f5
(1/n)
We had discussed that a "p" shaped profile and close at highs indicates longs are in control of the market.
It also indicates high chances of uptrend continuation next day.
But
(2/n)
How to trade a failure of trend continuation? Yesterday, we saw a "P" shape profile in Nifty and close at highs.
But we failed to continue upmove today.
(3/n)
We opened positive but the opening breakout not sustaining is first cue to understand that bulls are lacking initiative to push prices up further.
(4/n)
For confirmation, one can use orderflow as well to see real time supply demand flowing into the market.
At open today, we saw fresh sellers coming in a bullish opening.
(5/n)
