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Thread: Parabolic SAR Indicator

Parabolic SAR (PSAR) indicator was developed by J. Welles Wilder.

#PSAR #Indicators #Definedge

 The calculation of this indicator is a bit complex, but the concept is extremely useful. I will try to simplify it and explain the logic. I will briefly explain the concept, calculation and reading.

Let us think about creating an indicator that shows the trend.
Using the indicator, we can identify & ride the trend using the trailing stop-loss method.

For trailing the stop in uptrend, indicator needs to be placed below the candle. Similarly, it should be placed above the candle for trailing in a downtrend. We will plot it using ‘dots’.
So, the indicator & stop-loss will be rising in uptrend & falling in downtrend.

Let us define the trend as:

If Low of the candle > Stop-loss level in bull market = Trend remains bullish.

If High of the candle < Stop-loss level in bear market = Trend is bearish
Imagine you are driving a car on highway; you would like to accelerate if the road is clear. You will slow down if the road is bumpy.
Same concept is applied here.

The indicator rises steadily if the trend is steady. If the trend is strong the indicator should accelerate, it should move faster and stop should get trailed aggressively.

What is strong trend?
Strong?
In a bullish trend if price makes a new high it is a strong bullish trend.
In a bearish trend, if price makes a new low it is a strong bearish trend.

Period?
Period for new high: since the indicator turned bullish
Period for new low: since the indicator turned bearish
Hope concept is clear.

Calculation of PSAR: EP, AF and PSAR

Extreme Price (EP) is calculated on every candle.

‘High’ price in bullish market and ‘Low’ price in bearish market is called as Extreme Price (EP).
If Bullish trend:

If new high is made -> EP = New High price
Else
EP = Prev High

If Bearish trend

If new low is made -> EP = New Low price
Else
EP = Prev Low

Period of new high or low is explained earlier.
Wilder created a method of calculating Acceleration Factor (AF) for the indicator:

> Accelerate it by 0.02 if trend is steady.
> Add 0.02 to previous speed if trend is strong.
> Maximum acceleration will be 0.20.
A = Different between extreme price and PSAR indicator price

Multiply Acceleration factor by A and add it to the previous stop-loss, you get new PSAR indicator reading.

PSAR = A x AF + Previous PSAR reading
Have a look at below image. Pink dots show PSAR indicator.

Phase A is when indicator moving at a steady speed. Phase B is when trend is strong (New high in bull market, new low in bear market) hence, PSAR is accelerating with a greater speed (0.02 being added) during B.
So, the basic reading of the indicator is:

Trend is bullish when price is above the PSAR, it is bearish when price is below PSAR. You can use it as a trend filtration method.

Indicator accelerates during strong trends. Hence, rising PSAR and Falling PSAR are also important.
The indicator is also used as a Stop & Reverse (SAR) trading system.

When trend changes, the length of the stop-loss depends on the previous high or low. Avoid the signal if initial stop-loss is not affordable. Wait for the pullback pattern that provides better risk-reward trade
I wouldn’t say PSAR is a good sup-res indicator because it’s a mathematical calc. But it offers pullback trade opportunity with better risk-reward when price comes near the indicator during strong trends.

It can be used alone or combined with other studies to design the system.
We discussed about AMA and Super trend indicator which uses similar concept. They go flat when trend is not strong. PSAR increases steadily if trend is not strong and moves fast when it is strong.

Below are some Important things about PSAR indictor:
Imp features:
• Unlike many other indicators, you do not have to define the look-back period, define the acceleration factor
• It does not use method of averaging
• It uses high, low prices to determine the trend and stop-loss level
• Indicator accelerates if trend is strong
Indicator is useful & applicable on different timeframes. 0.02 and 0.20 are recommended settings to being with. I like to explore it on Noiseless charts, objective price patterns are advantage there. Change max AF to 0.10 if you want to use it in Renko. I will talk more about it.
Is it a ‘leading’ or ‘best’ indicator? Its different & useful. ‘Leading’ comes at a cost, ‘Lagging’ can b useful as well. Major issue wid learning in d field of trading is that everything is associated wid trading it immediately. Focusing on concept would bring long-term success!

More from Prashant Shah

Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Pivot levels

Trading based on Pivot levels is one of the popular approaches. Both short-term and intraday traders track Pivot levels to identify support and resistance levels in any instrument.

Let’s discuss how these levels are calculated.


The pivot calculation method considers the previous day prices to calculate the support and resistance levels.

There are seven levels marked on the chart when we plot Pivot as a tool.

There is a Pivot level, 3 support levels (S1, S2 & S3) & 3 resistance levels (R1, R2 & R3).


We have four prices for any trading session - Open, High, Low, Close.

They give us the important information about what happened during that session. Levels is calculated using the High, Low & Closing price of the previous day. Let’s understand Pivot calculation with an example


The difference between high and low is a range of the day.

High – Low = Range
In our example, range of the session is 10 points.

105 – 95 = 10

Mid-price of the session is average of high and low price.

The Mid-price in this case would be 100.
(105 + 95) / 2.


Mid-price is average of range of the session. How about including the closing price to this calculation?

If we calculate the average of High, Low and Closing price - we get the Pivot point.

(105 + 95 + 103) = 101 is the Pivot level in our example.
ALL
Prashant Shah
Prashant Shah
@Prashantshah267
Nifty and RSI divergence. It is all about knowing your indicator well. Quick video (Hindi) :-)
STOCKLEARNINGS
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Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Alligator indicator

#Alligator #Indicators #Definedge


Alligator indicator is created by Bill Williams. He was a popular trader and author.

Before we discuss the indicator, let us understand an important concept.

Here is a chart showing 10 day moving average at bar A. Price of the stock is 100, Moving average price is 90.


What if we shift this moving average to 5 bars further? See the chart below.

Moving average at bar B is moving average price of bar A (5 candles behind). This is shifting of moving average price. What does it mean?


Simple explanation is – shifting the moving average can help one compare current price with past period moving average easily. It results in smoothening instead of increasing the moving average parameter. This is also known as Forward Displaced moving average.
STOCKSLEARNINGS , ALL , MARKETLEARNINGS
Prashant Shah
Prashant Shah
@Prashantshah267
Thread: 5 Important bullish & bearish chart patterns in technical analysis.

Triangles, Broadenings and Rectangles.

#trading #investing

Many traders analyse and practice western chart patterns. There are many such patterns and enough is talked about them in various books and resources.
Long back, I read a book “Encyclopedia of Chart Patterns” by Thomas N. Bukowski. It’s a brilliant work (Must read).

He backtested many patterns & ranked them based on their performance. Most imp is that he separated the patterns based on their performance in uptrend & downtrend.
I read about those patterns at many other places & in different theories and I realised that most of them are-

-variations of broad category of patterns. I have bifurcated these patterns in various categories.

Triangles, Broadenings & Brackets or Rectangle patterns are most common & effective patterns. Below are 5 bullish & bearish proven, time-tested patterns of these categories.

Bullish Patterns:
Rectangle Breakout:
Horizontal pattern breakout. Price remains between two horizontal lines before upward brkout. Its a decent continuation breakout pattern when appears in uptrend. Reversal pattern when appear in downtrend (Decent Risk-reward). Tend to pullback
ALL
Prashant Shah
Prashant Shah
@Prashantshah267
Back-testing of some candlestick patterns 🧵

I hv back-tested patterns shown below on 500 stocks (Nifty 500 stock group as on today) since inception on daily timeframe charts.

Below is some interesting information.


I was doing to design multi-chart setups. But the information in the thread can be useful for people practicing candlestick chart patterns. There are many patterns & we keep coming across more. The data can give you a rough idea about the past performance of patterns.

Patterns are defined based on the popular rules of identifying them. I have also tested bearish patterns for bullish trades and vice versa (Contra approach).

Criteria: Hit ratio & returns of pattern giving 1:1 risk-reward if the entry is at the closing price of the pattern.

Some top bullish patterns have below hit ratio:

Inverted Hammer or Shooting Star – 74.72%
Multi-Harami breakout - 65.23%
Bullish Harami cross – 64.6%
Bullish Kicker – 63.53% (Got better returns)
Bullish separating line – 61.69% (It has got better returns)


Doji breakout hit ratio is decent (63.71%) but occurrences are v high so need more confirmation.

Engulfing and Harami patterns have got better returns when traded at next candle of confirmation.
ALL

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Aditya Todmal
Aditya Todmal
@AdityaTodmal
DJ @ITRADE191 multiple chart analysis for INTRADAY TRADING.

1. Core setup
2. Pivot points trades
3. PDH/PDL trades
4. Open interest addictions combined with rejections on charts.
5. Website to confirm bias

Very quick read.

Share if you liked for the benefit of everyone.

•Main setup of @ITRADE191
He used this setup daily for all trades.

1. EMA crossover 10/20
2. Supertrend 10/3
3. Vwap
4. RSI >


•Volume always greater than


•Candle Rejecting from


•Pivot settings
STOCKLEARNINGS , TRADING , DJ SETUP
Emperor\U0001f451
Emperor👑
@EmperorBTC
Technical Analysis Masterclass- Part 2

'Entering the trade'

Entering a trade without ascertaining a certain things is gambling.

In this masterclass we will learn the pre-requisites to enter a trade.

DON'T ENTER A TRADE WITHOUT DETERMINNG THE FOLLOWING.

Please share.

We understand what reward to risk (popularly called risk to reward) is.
It will be denoted by R:R.

We will also try to bust a few myths about R:R and how to avoid losing trades.

Before entering a trade, you need to determine 3 things.

1. Entry trigger
2. Stop loss
3. Target

1. Entry trigger = Reasons for entering a trade. There could be multiple reasons or a single reason for entry.

Generally a set of reasons AKA confluence is a higher probability trade and a generally a safer entry.

Example of an entry trigger.


2. Stop Loss.

The price in the opposite direction of the trade where the trade is exited, at a loss.

At this level, the reason for the entry becomes invalidated according to TA and the price can then move in the opposite direction, probabilistically.


3. Target is the possible price level that the asset might touch based on previous trends or confluence AND where a possible reversal could occur.

Target is the next path of least resistance from where the price might reverse.

We will always ONLY use TA to determine all 3.
TRADING
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Trader knight
Trader knight
@Traderknight007
A thread on SCALING IN - OUT METHOD -


What is scaling in - out?

1. Scaling in is adding on to the positions when they move in our favor (Pyramiding).

2. Scaling - out is exiting the portion of the position when the trade moves in our favor.

I have explained about pyramiding in previous tweets.

// Why use scaling out instead of exiting all position at once ?

When you are using ALL - out method where you exit positions at once, mostly you use wider Trail SL as you want to capture big moves and exit all when trail sl hits.

The problem with this method is that either you make too big or many times your medium size winners turns out to become Scratch trades.

So, when we use the scaling out method, we are trying to capture most of our medium size trades , so that they do not turn into scratch trades.

// How to use scaling out method -

Say we have to got a signal to enter in a trade, and we have to buy 1200 qty according to our Position sizing.

So, we have to divide this 1200 qty into parts, how much? It depends on you.

We can divide into 3 parts, each part 400 qty.
TRADING
Vikrant
Vikrant
@Trading0secrets
Trendline is basically use for majoring trend 📈 of any stock.

It is also useful for indentify demand & supply ....

Here it's applications 👇

➡️It is formed when a diagonal line can be drawn between a minimum of three or more price pivot points.

And that all three points must tested equally.

example 👇 #sis


➡️ Trendline is mainly useful for identifying trend 👇

⚡Uptrend - #happiestmind

⚡Downtrend - #bluedart


➡️ It is also useful for support & resistance.

Ex - ⚡ #happiestmind

⚡ #omaxe


➡️ If three point 📍have not be touched clearly then it is wrong ❌

Ex - ⚡ #bluedart

⚡#zeemedia
TRADING , TRENDLINE , ALL
Investment Books
Investment Books
@InvestmentBook1
As part of our Knowledge sharing initiative by @FinnacleAcademy and @Investmentbook1, here we are on our post 2 with some of the most important key takeaways of the book “Masterclass with super investors” by @vishalmittal22 & @basrars

Here we go! (1/n)


Masterclass with super investors is one of the best books covering the investment strategies & journey of renowned domestic investors. Our summary has been segregated in 2 parts, A) Common traits in investment ideologies of these stalwarts B) Investor specific key takeaways (2/n)

A)Let's look at a few common points in these Stalwarts' investment ideologies 1)Invest (higher % of portfolio) when you have conviction backed by sound logic 2)You need to be bullish on India to make investments in Indian cos. bcoz majority of Indian cos. are domestically focused

3. New Bull markets have new leaders when a bull markets ends the stocks which have gained the most falls the most 4. The entry price that you pay for a company should be very cheap so that even if your assumptions go wrong in future you don't end up losing money (4/n)

5. We get attached to stocks which have given us a lot of returns in past even though in current & future expected scenarios they seem overvalued 6. Focus on art of disciplined selling-it's imp. to have a sound selling mechanism just buying at right price wont create wealth.(5/n)
TRADING

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ArmaniTalks \U0001f399\U0001f525
ArmaniTalks 🎙🔥...
@ArmaniTalks
Manipulation Sign:

If you are compromising too much, there is a chance that you are getting manipulated.

Why are you the one that's always compromising?

How come the other person always gets their way?

Be more curious.

If something seems off, stick up for yourself.

'Wait, you sure I am being manipulated?'

I have no clue, that is only something that you can decide for yourself.

'Dang is there anything I need to look out for?'

Plenty..

But let me give you a few things to look out for.

👇

I see manipulation as skillfully controlling someone's behavior for egotistical or unethical purposes.

'How come people don't leave when it's happening to them?'

Because most people have 0 clue that they are being manipulated.

1. Guilt Trip

You ever made a mistake around someone, only for them to hold it over your head?

The will always bring up the mistake when you 2 are not seeing eye to eye.

These people will use that mistake as leverage to get what they want from you in the future.

Look out.

2. The Rationalizer

This person will commit the worst acts & find a way to rationalize it.

Example: cheaters when they get caught.

They have every excuse in the book for why they did it.

Heck, they are so good at rationalizing, they will make it seem like your fault.
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A thread of images from a Japanese illustrated history of America from 1861.

Here is George Washington (with bow and arrow) pictured alongside the Goddess of America. 1/


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So far, kinda normal, but wait for it.... 2/


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And here is Washington's "second-in-command" John Adams battling an enormous snake. 4/


Here is Washington and his wife "Carol" meeting an extremely youthful Benjamin Franklin, who has an impressive squat. 5/
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STEALTH JEFF
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Here is Editor-in-Chief of the @EpochTimes, @JasperFakkert's response to the slanted hit piece that @Buzzfeed's @HayesBrown put up 2 days ago:

Brown's article at Buzzfeed starts off pretending it's some kind of really off-the-wall notion that Hillary Clinton paid for the creation of the Steele Dossier that was then used to justify the FBI's spying on the Trump campaign & transition team.


After that awful start, he swerves to making accusations that the Epoch Times is connected to the 'cult' Falon Gong.

You can read the article here:

Brown insinuates with no real evidence whatsoever that the Epoch Times is 'Falon Gong-linked'.

The 'evidence' he supplies in his article to 'prove' @EpochTimes is 'Falon Gong-linked is this:

1) the Epoch Times' extensive *news coverage* of China's attempts to wipe out Falon Gong with intense persecution directed at the group since 1999.

2) a reporter *shouting a question in 2006* at then-President George W. Bush about China's persecution of Falon Gong members.
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Jaya_Upadhyaya
@Jayalko1
SRI VARAHA NARSIMHA, SIMHACHALAM, VIZAG (AP)
#bharatmandir

One of the 32 Narsimha Kshetram of Andhra. It has a unique form of Narsimha, appearing like a shivlingam

It is said that Narsimha’s fierce nature is soothed by worshipping him with Varaha, considered a peaceful deity


The shrine is believed to have been constructed by Prahlada. With time, it crumbled.
In Treta yuga, King Pururava was passing from here in his vimana. The vimana was attracted to this place by a mystic power.
When the place was unearthed, the deity was found.
@GunduHuDuGa


Pururava’s wife, Urvashi, had a dream that the deity should remain covered in sandalwood paste for the whole year except on Akshaya Tritiya.
This practice has continued till date.
The mukhya mandap here, has a pillar kappam stambham believed to possess curative powers.


Chandanotsava/ Chandan Yatra is the most important festival celebrated on Akshaya Tritiya. The sandalwood paste is removed from the moolavar deity and nijarupa darshan (original form of deity) for twelve hours of the day are done by devotees.
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Thread on
"Intraday Banknifty Strangle based on OI data"

(System already shared, today just share few examples)
(1/n)

-Trade timing after 9:45

-Check Banknifty change in OI data at 9:45, and identify the highest OI built up in call side and put side

-We will sell both strikes with combined premium as SL on both legs.
(2/n)

28th June 2021

BN open-35440
At 9:45 trading at 35350
Highest OI in call side at 35500 CE and 35000 at put side
Strike selection 35500 CE- 35000 PE
(3/n)


29th June 2021

BN open-35323

At 9:45 trading at 35112

Highest OI in call side at 35300 CE and 35000 at put side

Strike selection 35300 CE (232) - 35000 PE (150) Combined premium 382 , Both legs SL 382
(4/n)


30th June 2021

BN open-35030

At 9:45 trading at 35002

Highest OI in call side at 35000 CE and 35000 at put side

Strike selection 35000 CE(176)- 35000 PE(213) Combined premium 389 , Both legs SL 389
(5/n)
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