INTELLECTUAL TRADING

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 patter...

  If we collect last 52 bars and combine them to make one candle from it, the high of the combined candle will be highest high of those 52-bars and Low of the combined candle will be lowest low of the last 52-bars.     We now have a 52-bar candle. Eg – highest high of the pattern is 1000 and lowest los is 700. Its average price would be 850, that is (high price + low price) divided by 2. This 52-bar average price plotted after 26-bars typically acts as an important support or resistance line     In other words, for today, the 52-bar average range of the price bar printed 26-bars...

Invented by Donald Lambert, CCI stands for Commodity Channel Index. There are three parts of CCI Indicator: You can remember it as TMC.  While analysing the trend of the price, we can consider closing price, high price or low price. What if we calculate the average of High, Low and Closing price - It is known as a Typical price. Typical price = (High + Low + Close) / 3 If closing price is exactly at mid-range of candle, Typical price would be equal to closing price. Understood Typical price? T in TMC stands for Typical Price. If there are 5 members in a family. We can calculate the average weig...

 “Plan your trade and trade your plan”.    Many experienced traders, authors and analysts keep saying trade as per your plan. You must write your plan of taking trades and focus on the execution. But you will not see many people really doing that - even many experienced traders. Possible reasons:   1. Lack of awareness – What’s Trading plan?  2. Do not know how to do that or need guidance.  3. We keep learning new things, making it difficult to stick to a plan.  4. Like to rely on other’s studies and recommendations, no need of plan.  5. Trading is art, not science. 6. Technical analysis does not work.  7. Don't believe in process because of the belief that market is a game of speculation, you need good judgement & info to make money.  8. Lot of people share their studies & showcase their talent to predict. Hence plans do not...

 CPR is another popular tool. Three lines are plotted on the chart when we plot CPR. The three lines are: CPR, TC and BC. Let’s understand the calculation. You may recall that I explained the calculation of Pivot levels in an earlier thread. CPR stands for Central Pivot Range. It is always a center line of the three lines that gets plotted in the chart. CPR is a Pivot price. Pivot is average of HLC as explained in the prev thread. We also discussed about Mid-range of the session. Mid-range is average of High and low price of the session. The mid-range of the bar is known as BC in the CPR calculation. BC stands for Bottom central pivot. ...

 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 ...