TWSM Trading With Smart Money, by Ratnakar [PDF]

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Trading With Smart Money By R. Ratnakar https://dotnettutorials.net/course/trading-with-smart-money/

Trading with Smart Money Trading with Smart Money(SM) Tutorials In this Trading with Smart Money tutorials series, we will cover all the features of Trading and Smart Money. You will learn from the basic to advance level features of Trading and Smart Money as we progress in these tutorials series.

How does the market really work? All financial markets work on the universal law of Supply and Demand. Law of Demand– The higher the price of an item, the fewer the demand (buyers don’t want to buy at a higher price), and the lower the price, the higher the demand (buyers want to buy at a low price) Law of Supply– The higher the price of an item, the higher the supply (sellers want to sell at a higher price) and lower the price, lower the supply (sellers don’t want to supply at a lower price So prices go up to find sellers and then go down to find buyers Let’s think from the perspective of a big player/smart money(SM). Smart Money (SM), what they do is remove the floating supply of stock by buying, this process is called accumulation. Now they have the power to move the stock up or down. When general market conditions appear favorable, the Smart Money can then mark up the price of the stock At some time in the future, a point will be reached when the SM will take advantage of the higher prices obtained in the rally to take profits by beginning to sell the stock back to the uninformed traders/investors. This is now called the distribution phase.

Why does the price move? What truly moves the price is AGGRESSION. If the price goes up, then the buyers are more aggressive. If it goes down, then sellers are more aggressive.

If you are aggressive, you want to buy or sell NOW. If you want something NOW and you want to be 100 % sure you will get it, you need to use MARKET ORDER. This type of order means that whatever the price is, your order will get filled. In other words: you place a MARKET ORDER to buy or sell immediately at the best available current price It is the aggressive market participants, who drive the price aggressively up or down with their market orders. This is the true reason why the price moves. After accumulation or distribution, the smart money AGGRESSIVELY move price higher or lower

Who they are? 1. They Actually move the market, they have the power 2. They have the ability to influence values and direction 3. They have the ability to pick against the trend or to pick top or bottom 4. They usually move the price at very low volume

How to spot Smart Money (SM)? Through analyzing 1. The Spread (i.e. range of the price bar) 2. The Close (the point where the price closes on the current bar) 3. The Volume (i.e. activity),

How to trade with Smart Money? So, TRADING WITH Smart Money IS ABOUT to GO WITH Smart Money IF THEY BUYING WE WILL BUY. We will discuss all topics with greater details in a step by step process About Me: I am R. Ratnakar and working as a day trader. Trading since 2015 in stock and future. I am a learner of the stock market and still, learning and updating my skills. I have decided to help aspiring traders by reducing their learning curve by giving what I learned. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney Disclaimer: Trading involves the risk of financial loss. The information provided here is for education purposes only. Note: If we missed any topics or if you want to learn any topics, then let us know by giving a comment in the comment box and we will definitely make a video as well as publish an article on the same as soon as possible.

Course Information Course Instructor

Dot Net Tutorials Author

Price Action How to Study Candlestick

1 of 14 FREE

Candlestick Analysis

2 of 14 FREE

Price Action Analysis

3 of 14 FREE

Advanced Price Action Analysis

4 of 14 FREE

Thrust Pullback and Measuring Move Analysis

5 of 14 FREE

How to Trade with Smart Money

6 of 14 FREE

Supply and Demand Zone Trading

7 of 14 FREE

How to Day Trade with Trend

8 of 14 FREE

Multiple Time Frame Analysis

9 of 14 FREE

Head and Shoulder Pattern

10 of 14 FREE

How to Trade with Support and Resistance

11 of 14 FREE

Advanced Candlestick Analysis

12 of 14 FREE

Trendline Trading Strategy

13 of 14 FREE

WRB Trading Strategy

14 of 14 FREE

Day Trading Strategies VWAP Trading Strategy

1 of 7 FREE

Gap Trading Strategy

2 of 7 FREE

Intraday Open High Open Low Trading Strategy

3 of 7 FREE

PIN BAR Trading Strategy

4 of 7 FREE

Trading with Sideways Price Action Area

5 of 7 FREE

Pullback Trading Strategy

6 of 7 FREE

Intraday Breakout Trading Strategy

7 of 7 FREE

Risk Management 3 Techniques for Risk Management in Trading

1 of 1 FREE

Stock Selection & Live Scanner How to make own Day Trading Scanner

1 of 2 FREE

Stock Selection for Intraday Trading

2 of 2 FREE

Intraday Trading Course 2020 Intraday Trading Course

1 of 5 FREE

Multiple Timeframe Analysis for Intraday Trading

2 of 5 FREE

VWAP Trading

3 of 5 FREE

Opening Range Trading Strategy

4 of 5 FREE

Opening Range Breakout

5 of 5 FREE

Volume Price Action Analysis Volume Analysis in Trading

1 of 7 FREE

Volume Price Action Analysis

2 of 7 FREE

Volume Spread Analysis in Trading

3 of 7 FREE

Candlestick Pattern Analysis

4 of 7 FREE

Finding Entry Opportunity using Volume Spread Analysis

5 of 7 FREE

Spring and Upthrust Trading Strategy

6 of 7 FREE

VSA Trading Strategy

7 of 7 FREE

Option Chain Analysis Option Chain Analysis

1 of 1 FREE

Indicator RSI Trading Strategy

1 of 1 FREE

BTST BTST Trading Strategy

1 of 1 FREE

TECHNICAL ANALYSIS MASTERCLASS Technical Analysis

1 of 5 FREE

Market Structure

2 of 5 FREE

Understanding Market Structure through Swing

3 of 5 FREE

Supply and Demand Trading (Part – 1)

4 of 5 FREE

Supply and Demand Trading (Part – 2)

5 of 5 FREE

Index and Video List YouTube Channel: https://www.youtube.com/c/LearnToTradeLTT/videos A. PRICE ACTION 1. How to Study Candlestick

No video

2. Candlestick Analysis

https://www.youtube.com/watch?v=MCfLAIbLYcE

3. Price Action Analysis

No video

4. Advanced Price Action Analysis

No video

5. Thrust Pullback and Measuring Move Analysis

No video

6. How to Trade with Smart Money

No video

7. Supply and Demand Zone Trading

No video

8. How to Day Trade with Trend

No video

9. Multiple Timeframe Analysis

No video

10. Head and Shoulder Pattern

No video

11. How to Trade with Support and Resistance

No video

12. Advanced Candlestick Analysis

No video

13. Trendline Trading Strategy

No video

14. WRB Trading Strategy

No video

B. DAY TRADING STRATEGIES 15. VWAP Trading Strategy

https://www.youtube.com/watch?v=nxwwbFpD58c

16. Gap Trading Strategy

No video

17. Intraday Open High Open Low Trading Strategy

https://www.youtube.com/watch?v=rHK0LHlmd5s

18. PIN BAR Trading Strategy

No video

19. Trading with Sideways Price Action Area

No video

20. Pullback Trading Strategy

No video

21. Intraday Breakout Trading Strategy

No video

C. RISK MANAGEMENT 22. Three Techniques for Risk Management in Trading

No video

D. STOCK SELECTION & LIVE SCANNER 23. How to Make Your Own Day Trading Scanner

https://www.youtube.com/watch?v=0i6IlZpEsao

24. Stock Selection for Intraday Trading

https://www.youtube.com/watch?v=Q1PQTqq9TGY

E. INTRADAY TRADING COURSE 25. Intraday Trading Course

https://www.youtube.com/watch?v=fjNJmPYH3S8

26. Multiple Timeframe Analysis for Intraday Trading

https://www.youtube.com/watch?v=TSX6fQIQ9kE

27. VWAP Trading

https://www.youtube.com/watch?v=nxwwbFpD58c

28. Opening Range Trading Strategy

https://www.youtube.com/watch?v=vBtTsP9aLOI

29. Opening Range Breakout

https://www.youtube.com/watch?v=MPjY5dn1IlI

F. VOLUME PRICE ACTION ANALYSIS 30. Volume Analysis in Trading

https://www.youtube.com/watch?v=o7GAgjWhIWI

31. Volume Price Action Analysis

https://www.youtube.com/watch?v=o7GAgjWhIWI

32. Volume Spread Analysis in Trading

https://www.youtube.com/watch?v=wdFvClkddo8

33. Candlestick Pattern Analysis

No video

34. Finding Entry Opportunity Using Volume Spread Analysis

https://www.youtube.com/watch?v=0oFmjPqLtpA

35. Spring and Upthrust Trading Strategy

No video

36. VSA Trading Strategy

https://www.youtube.com/watch?v=JpKiZz8fT-o

G. OPTION CHAIN ANALYSIS 37. Option Chain Analysis

https://www.youtube.com/watch?v=pZ_ucI0JvhM

H. INDICATOR 38. RSI Trading Strategy

No video

I. BTST 39. BTST Trading Strategy

https://www.youtube.com/watch?v=aR_IcP6w5Kg

J. TECHNICAL ANALYSIS MASTERCLASS 40. Technical Analysis

https://www.youtube.com/watch?v=t_0JOPRmadk

41. Market Structure

https://www.youtube.com/watch?v=0lyqH6HHAsI

42. Understanding Market Structure Through Swing

No video

43. Supply and Demand Trading, Part 1

https://www.youtube.com/watch?v=7YN_Bl-e-tk

44. Supply and Demand Trading, Part 2

https://www.youtube.com/watch?v=NgNEeVg5c6I

How to Study Candlestick Back to: Trading with Smart Money

How to Study Candlestick in Trading In this article, I am going to discuss How to Study Candlestick in Trading. As part of this article, we are going to discuss the following three important pointers in detail which are related to Candlestick in Trading. 1. What is a candlestick? 2. How to Study Candlestick? 3. The 6 principles for analyzing candlestick

What is a candlestick? The candlesticks are the reflections of what buyers and sellers are doing. What extent they move the price and the strength behind the move. CANDLES TELL YOU who is in control but do not tell you about the strength of buyer or sellers behind the move, candle with volume shows that

The Open: Open price tells us where the balance between buyers and sellers at the opening of that period, the opening value is the first trade of the day. After the traders have time to review the markets overnight, the open represents the desired position of investors to begin the day. The change from the previous close to the open is a reflection of new sentiments. Also, institutions looking to accumulate (or distribute) a position often place orders at the open because the open trade is often the largest, most liquid trade of the day. In this way, the open might be one of the best times to accumulate/ distribute a large volume of stock while minimizing the impact on the stock’s price.

The High: The high is the highest point the stock traded during the session. The high is the furthest point the bulls were able to push the stock higher before sellers regained control to push the stock back down. The high represents a stronghold for sellers and a resistance area to buyers. There is one exception when the stock closes on the high, it did not encounter any real resistance from the sellers. The buyers just ran out of time.

The Low: The low is the lowest point the stock traded during the session. The low is the furthest point the bears were able to force down the stock before buyers regained control to push the stock up. The low represents an area where enough demand existed to prevent the price from moving lower. The exception is when the security closes on the low. When the stock closes on the low, it did not encounter buying support. Rather, the bulls were saved by the closing bell of the session.

The Close:

Close price tells us where the balance point was at the end of the period. The close is the last price agreed between buyers and sellers ending the trading session. The close is the market’s final evaluation. A lot can happen between one close to the next close. The close represents investors’ sentiments and convictions of investors at the end of the day. It is the position investors desire to hold after-hours when investors are unable to trade with liquidity until the next session opens. The closing price is the first (and oftentimes, the only) price the majority of investors desire to know.

The Change: The change is the difference between close to close. The difference in the closing value one day versus the closing value the next day. When this difference is positive, it tells us that demand is outweighing supply. When this difference is negative, it tells us that supply is increasing beyond demand. The change is perhaps the most sought after piece of financial data on the planet.

The Range: The range is the spread of values within which the stock traded throughout the day. The range spans between the bar’s highest point and the same bar’s lowest point. It is measured from the top of the bar, where resistance set into low, where support came in. The size of the range gives us important information about how easily demand can move the s took up or supply force the price down. The wider the range, typically, the easier it is for the forces of supply and demand to move the stock price.

Bullish CANDLESTICK This is nothing but when CURRENT CANDLE close is ABOVE the previous candle close.

Bearish CANDLESTICK When CURRENT close is BELOW the previous candle close

With the proper understanding of CANDLESTICK, you can predict what about to happen in the near future #Pro tips, we (retailers) can’t move the market so every candle shows what smart money trying to shows. So their move trap or genuine is only validated by volume #Pro tips, CANDLESTICK shows half information, another half information shows by volume Example

WHAT IS TELLING US? SENIMATE= BULLISH, 2 consecutive higher close candle. Let’s add volume to this candle

2nd candle range smaller than 1st candle 2nd candle volume greater than 1st candle Think why volume is greater than 1st candle? Let me explain to you NARROW SPREAD CANDLE WITH HIGH VOLUME. Two possible explanations

If the volume had represented buying, how can the spread be narrow? Either the professional money is selling into the buying, possible reversal on near future There is a trading range to the left and the professional money is prepared to absorb the selling from traders locked into this old trading range. I mean break out may happen Let’s understand with chart

If the next bar is down closing near its lows this confirms the professional selling

Low volume down candle close middle or top, it shows that smart money testing supply and no more supply available 2nd candle was buyer’s volume if the next candle closes above the current candle

6 PRINCIPLE FOR CANDLESTICK ANALYSIS IN TRADING Principle Number One: The length of any wick, either to the top or bottom of the candle is ALWAYS the first point of focus because it instantly shows, strength, weakness, and indecision, and most important where SMART-MONEY enter Principle Number Two: If no wick is created, then this signals strong market sentiment in the direction of the closing price. SMART-MONEY active there Principle Number Three: A wide-body represents strong market sentiment and a narrow body present week market sentiment Narrow body with the heavy volume either Smart Money observing for continuous of move or Smart Money enter on the opposite direction Principle Number Four: A candle of the same type will have a completely different meaning depending on where it appears in a price trend. Start of trend or middle of the trend or end of the trend or at support or resistance or in the consolidation phase. Candlestick should analyze the context of the move. You should never try and read the market looking at one day’s action in isolation. Always read the market phase-by-phase and then read the latest day’s action into the phase Principle Number Five: Volume validates price. First, see what CANDLESTICK is telling then validated by volume, is It validating or not with the CANDLESTICK price action Principle Number SIX: When a particular timeframe DON’T make sense then move to the next higher time frame for the big picture or lower timeframe for the microstructure of move

What next? In the next article, I am going to discuss the Price Action Analysis in detail. Here, in this article, I try to give a brief introduction to candlestick and I hope you enjoy this article. Here, in this article, I try to explain How to Study Candlestick in Trading. I hope you enjoy this How to Study Candlestick in Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Candlestick Analysis

Candlestick Analysis Back to: Trading with Smart Money

Candlestick Analysis in Trading In this article, I am going to discuss Candlestick Analysis in Trading. Please read our previous article where we discussed How to study Candlestick in detail. The ultimate guide you will ever need to understand CANDLESTICK and its behaviors. After the study, you will no need to recognize any CANDLESTICK patterns. As part of this article, you will understand the following four things which are related to Candlestick Analysis in Trading. 1. Understanding candlestick 2. How to read candlestick

3. How to read a chart using candlestick

4. How to find opportunity using candlestick

Part1: Understanding Candlestick Analysis What is a candlestick? Candlesticks are a reflection of what buyers and sellers are doing. CANDLES TELL YOU who is in control in that specific time frame Candlesticks tell us the immediate information about the supply-demand relationship Multiple candles form patterns that tell us a story Understanding candlesticks is paramount to successfully day trade

Elements of candlestick The High The Open The Low The Close The Change(BODY) The Range

Part2: How to read candlestick STEP 1: The size of the body (open to close) Remember that in every bar, the same number of contracts/shares are sold and bought at that time frame The only reason for a bar to end up with a higher price is that the buyers were committed to one direction and more aggressive than the sellers. The reverse is true for a bear wide range bar So candle body shows, What extent they move the price and the strength behind the move

BODY: Generally, we have to consider 3 types of body 1. Narrow range candle 2. Average candle

3. Wide range candle

The candle body shows lots of information such as

Let us see some example

STEP 2: The length of wicks The length of any wick, either to the top or bottom of the candle is ALWAYS the first point of focus because it instantly shows, strength, weakness, and indecision, and most important where SMART-MONEY enter Larger wicks show that price has moved a lot during the duration of the candle but it got rejected, shows the presence of supply or demand Lower wick act as support and upper wick act as resistance

Let’s understand pin bar

What a pin bar telling us

When candles are not able to break through a zone 70-80% of the time they will go the opposite way

Part3: How to read a chart using candlestick? Step 1 First read DIRECTION OF current CANDLE with respect to the previous candle

That means, the relationship of each bar high/low relative to the previous bar. What it telling us

Step 2 Context (read the current bar sentiment with respect to the previous bar) Candlestick should analyze the context of the move. You should never try and read the market looking at one day’s action in isolation. A candlestick always must be analyzed in the context of what has happened in the past. Context is what current candlestick shows with respect to the previous candlestick The current candlestick larger or smaller than previous ones? Which shows momentum increases or decreases Is the size-changing meaningfully or not? Buying or selling pressure Is volatility increases or decreases Is the change happening during an active trading period or not? For example, candlesticks on midperiod generally dead or inactive.

Step 3 Testing (Read what it showing when testing key level (support or resistance)) The concept of testing refers to the market moving towards a price level to “test” if the price level will accept reject the market’s advances. Key levels are Previous candles high/low Last swing high/low Previous day’s high/low Major support or resistance The high and low of each price bar are natural support and resistance levels and the wick generally acts as a supply and demand zone. The test of these levels or zones shows the undercurrents of the market and is critical for reading price action.

Step 4 Expectation With a clear read of DIRECTION, CONTEXT, TESTING. we are able to form expectations of the market in the third candle. We would expect the market to move in a certain way in the third bar with our read of DIRECTION, CONTEXT, TESTING. The confirmation or failure of our expectations of the third bar reveals more about the market, and add to our candlestick analysis To form expectations, we need to make a very simple assumption about how the market should behave and should not behave. Essentially, the market has momentum and inertia. bearishness should follow bearishness and bullishness should follow bullishness. When it does not obey this assumption, we have to cautious, Maybe a possible change in market direction.

Part4: Finding Trading opportunity A candlestick pattern is useless if its location is not correct, where it happens is the most important variable. So we should analysis candlestick at support and resistance for opportunity either reversal or continuation of the trend AT resistance we expect the price to reverse or supply exceed demand confirms the supply or resistance level. Like at the support we expect the price to reverse for confirming demand overcome supply There are some key pointer should consider when trading reversal Means what candlestick action validates our support and resistance level Explained below

Point1: Momentum loss when approaching a key level(support resistance)

Below is the example of bullish reversal

Point2: Clear Rejection from resistance in the form of the pin bar multiple rejections In an established uptrend any Clear Rejection from resistance in the form of the pin bar confirm the resistance level, it indicates buyers tried had but failed to close above the resistance

MULTIPLE REJECTION SHOWS THAT BUYERS TRIED OVER AND OVER AGAIN TO PUSH THROUGH THE LEVEL BUT FAILED

Point3: Price Unable to close above the resistance level or below the support level

When Buyers trying hard each time to close above the resistance level, each time they failed shows supply coming and trying to dominate demand

Point4: Candle color change For bearish reversal. The price should breaks the previous candle low and close below the low at resistance. It shows bullish strength completely lost

Point5: REVERSAL MOMENTUM CANDLE FROM KEY LEVEL When a reversal momentum candle formed from the key level it confirms the strength of the level of the opposite party. When bullish strength candle formed from support it confirms the support level as strong

What candlestick action disconfirms the resistance? Opposite for support There is a certain point also consider when price approaching support or resistance. That validated or invalidated our support or resistance level

Candle spread increasing when approaching resistance level With a widespread up, while the price is getting close to the resistance, we would expect to see the resistance broken due to the extra effort by buyers

If price hug the support and hold it disconfirm the demand and shows the presence of supply If there is strong support or resistance level, price should immediately react within a few candles Price hold (unable to react) after a move down to support. Sellers overcoming buyers is the repeated inability of prices to REACT away from the danger point(support). Such hugging of the support usually leads to a breakout

What we learned

Summary of candlestick analysis Part1: Understanding candlestick Part2: How to read candlestick Wide range bar(show strength or momentum) Narrow range bar(momentum or strength decreases) A pin bar(shows rejection or either supply or demand came in) Doji(indecision ) Part3: How to read a chart using candlestick First, read the current candle direction with respect to the previous candle Second, read the current candle sentiment with respect to the previous candle Third, read the testing key level Expect what you fill

Part4: How to find opportunity using candlestick Step to find a trading opportunity for reversal Point1 Momentum loss when approaching resistance /support Point2 Clear Rejection from resistance in the form of the pin bar multiple rejections Point3 Price unable close above the resistance Point4 CANDLE COLOR CHANGE Point5 REVERSAL MOMENTUM CANDLE FROM KEY LEVEL What candlestick action disconfirms the resistance? Candle spread increasing when approaching resistance level If price hug the resistance and hold it disconfirm the demand and shows the presence of demand Please watch the following video if you want to learn and understand this concept in a better way.

In this article, I try to explain Candlestick Analysis in Trading. I hope you enjoy this article and understand the Candlestick Analysis in the Trading concept. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

Price Action Analysis Back to: Trading with Smart Money

Price Action Analysis in Trading In this article, I am going to discuss Price Action Analysis in Trading. Please read our previous article before proceeding to this article where we discussed Candlestick in detail. As part of this article, we are going to discuss the following pointers in detail which are related to Price Action Analysis in Trading. 1. What is Price Action Analysis?

2. Understanding the advance features of CANDLESTICK

The ultimate guide you will ever need to understand CANDLESTICK and its characteristics. Once you complete this article, then you will no need to recognize any CANDLESTICK patterns.

What is Price Action Analysis? The Price Action Analysis is the movement of price in the chart. Candlestick format shows clear price action, I mean what buyers and sellers are doing in that period. Their activity clearly shows in CANDLESTICK So to learn price action we have to learn all the basic and advanced feature of candlestick

5 steps to candlestick analysis Step1: The size of the body (high to low) BODY: 1. Narrow

2. Average 3. Wide

Find the body of your timeframe. The candle body shows a lot of information such as A long body is showing strength A narrow-body shows weakness When consecutive bodies become larger and larger, it shows an increase in momentum When consecutive bodies become smaller and smaller, it shows slowing momentum If up or down move with greater than average body candle it shows volatility high

How to compare? 1. current candlestick with respect to the previous candle

2. current candlestick with respect to the same swing

3. current candlestick with respect to the previous swing

Step2: The length of wicks Larger wicks show that price has moved a lot during the duration of the candle but it got rejected, shows the presence of supply or demand At major support and resistance levels. Candlewick becomes larger it indicates volatility. This generally happens after long trending phases before a reversal happen from support and resistance level One more thing: the longer the shadow, the more likely prices will move in the opposite direction of the shadow Long wick candles do not always signal a reversal if the wick of rejection candle engulf by subsequent move it fails, it called reverse rejection If it appears between the trend it shows trend cont. ( as a small pullback in smaller time frame) While a single long long wick indicates possible of prices moving in the opposite direction of the wick, a cluster of multiple wicks indicate that prices are likely to move in the same direction of the wick created and if the body closing the direction of the trend

Step3: The ratio between wicks and bodies Understanding the relationship between the open and close when compared to the high and the low of the present bar Open price tells us where the balance between buyers and sellers at the opening of that period Close price tells us where the balance point was at the end of the period

Etep4: Volume contains WYCKOFF BASIC LAW 1. THE LAW OF SUPPLY AND DEMAND: When demand is greater than supply then the price will

rise to meet this demand and conversely when supply is greater than demand then the price will fall 2. THE LAW OF CAUSE AND EFFECT: The effect will be indirectly proportional to the cause other words a small amount of volume action will only result in a small amount of price action. If the cause is large then the effect will be large vice a Versa 3. THE LAW OF EFFORT VS RESULT: Similar to newton’s third law. Every action must have an equal and opposite reaction, in other words, the price action on the chart must reflect the volume action below. Effort (volume) seen as the result (price), where validated and anomaly comes to consider Wide spared candle

Price action –

Strong BULLISH market sentiment. The price action has risen sharply higher and closed at or near the high of an up candle. Volume Action– The associated volume should, therefore, reflect this strong sentiment with a ‘strong’ volume. As we can see in the above example is, if the volume is above average(effort vs result), then this is what we should expect to see as it validates the price. The smart money is joining the move higher and everything is as it should be. If the volume is below average or low, this is a warning signal. The price is being marked higher, but with little effort. The move is not genuine. If we are in a position, we look to exit. If we are not in a position we stay out and wait for the next signal to see when and where the smart money is now taking this market. Narrow Spread Candles

Price action – weak market sentiment Volume Action– A narrow spread candle should have low volume – again effort vs result. NARROW SPREAD CANDLE WITH HIGH VOLUME. If the volume had represented buying, how can the spread be narrow? There are only two possible explanations for a narrow spread up candle on a very high volume. 1. Either the professional money is selling into the buying [see the end of a rising market]

2. There is a trading range to the left and the professional money is prepared to absorb the selling

from traders locked into this old trading range Step5: RELATIVE OR 2 CANDLE PRICE ACTION DIRECTION OF CANDLE The relationship of each bar high/low relative to the previous bar

1. An up bar starts an upswing and confirms the end of a downswing

2. A down bar starts a downswing and confirms the end of an upswing

3. The inside bar does not break the previous high low, hence they do not affect the direction of

the current swing 4. Outside bar breaks both the previous high and low, it introduces uncertainty in the market structure. Outside bar in the upswing cont the upswing and the outside bar in the downswing cont the downswing. Typically an outside bar not end or start a price swing without down bar or a break below the swing low an upswing will cont DIRECTION OF TREND WITH RESPECT TO CANDLE POSITION

Context or Background CANDLESTICk should not be analyzed in a vacuum. A candlestick always must be analyzed in the context of what has happened in the past. Context is what current candlestick shows with respect to the previous candlestick The current candlestick larger or smaller than previous ones? Which shows momentum increases or decreases Is the size-changing meaningfully or not? Buying or selling pressure Is volatility increases or decreases Is the change happening during an active trading period or not? For example, candlesticks in mid-period generally dead or inactive.

TESTING PRICE LEVELS The concept of testing refers to the market moving towards a price level to “test” if the price level will accept reject the market’s advances. The high and low of each price bar are natural support and resistance levels and the wick generally acts as a supply and demand zone. The test of these levels or zones show the undercurrents of the market and is critical for reading price action.

THREE PRICE BARS/expectation With a clear read of 2 BAR PRICE ACTION (DIRECTION, CONTEXT, TESTING), we are able to form an expectation of the market in the third candle. We would expect the market to move in a certain way in the third bar with our read of 2 bar price action. The confirmation or failure of our expectations of the third bar reveals more about the market and adds to our price action analysis. To form expectations, we need to make a very simple assumption about how the market should behave and should not behave. Essentially, the market has momentum and inertia. bearishness should follow bearishness and bullishness should follow bullishness. When it does not obey this assumption, we have to cautious, Maybe a possible change in market direction.

Some more examples

In the next article, I am going to continue the discussion of Price Action Analysis. Here, in this article, I try to explain Price Action Analysis in Trading i.e. the step by step process to study CANDLESTICK and how to find swing high and swing low and characteristics to find swing high and swing low. I hope you enjoy this Price Action Analysis in the Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney

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Candlestick Analysis

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Advanced Price Action Analysis

Advanced Price Action Analysis Back to: Trading with Smart Money

Advanced Price Action Analysis In this article, I am going to discuss the Advanced Price Action Analysis. This is a continuation part of our previous article, so please read our previous article before proceeding to this article. As part of this article, I am going to discuss the following pointers in detail. 1. What is high and low?

2. What is the swing high and swing low?

3. Criteria for drawing swing high and swing low 4. Types of swing high

5. Strength and Weakness of Trend through Analysis Swing. Before going forward let me know you that, This is the extension part of price action analysis. so I would suggest going through the previous article How to Study Candlestick Price Action Analysis Let’s begin

Understanding Market Structure through the swing It is similar to learning to read a new alphabet-once you understand the characters, you can read the words, and once you know the words you can read the story. The first letter to master tells you what market activity causes the formation of a short-term high or low. If you learn this basic point, the meaning of all market structures will begin to fall into place. The market moves in the up-down wave, what we call a market swing. In a healthy bull trend, the upswing generally exceeds the downswing in length, the reverse is true for the bear market. Hence by observing market swing, we are able to glimpse into the structure of the market and get clues on whether the market will move up or down

Swing high and swing low Criteria for drawing swing high and swing low SWING HIGH Or SWING LOW CONSIST OF MINIMUM 5 BAR. The middle bar must be higher high and higher low then the two proceeding bar and the two following bar

Restriction for drawing swing high and swing low 1. If bars high is parallel to the middle or high(LOW) bar, it does not count as one of the five bars in the swing HIGH (LOW) because it does not have a lower high(HIGHER LOW) than the middle bar

2. TWO ADJACENT swings high or swing low may share bars

1. A swing high

2. B both swing high and swing low, this happens because two proceeding bar and two following bar are inside bars, that fulfills the requirement of the middle bar must be the highest or lowest point of five bar sequence

3. C both up and downswing by sharing bar

4. D requires six-bar to form swing high as the fifth bar is equal high to the middle bar

Why important?

These points not random, they created by the market. they represent momentary changes and demand and supply forces. The bulls could not move the market above the swing high. This means that at that point in time, no one was willing to offer a price higher than the swing high. Traders saw no value above the swing high In a nutshell, there are two key skills in reading price action: 1. Evaluate how likely a swing pivot will hold up as support/resistance

2. Understand the implication of a swing pivot not holding up as support/resistance

Swing types There are two types of swing 1. High and low

2. Swing high and swing low Let me explain to you

Swing low(SL) The market tried to move down. Then, it stopped and the bullish trend resumed. The market broke all resistance(swing high) and made a new trend high. In other words, the market failed terribly in its attempt to move down. The lowest point it pushed to is called swing low

Tip: valid pivot makes sense only within the trending price action. To find a valid low, you need to know the start point of the trend and the last extreme trend high. Then what about point B. Point B called a LOW not swing low

Swing low Every major market has some pullback that is shallow and some last for one swing. The point where pullback goes deeper and lasts for more than one swing, forming a LOW. Eventually, this deeper pullback terminated and the trend resumed. A low becomes a swing low once price breaks out above the last extreme price high for the resumption of the bullish trend. Let me explain to you

All the concept are discussed above are applicable for a swing high and high

HOW TO KNOW WHEN LOW BECOME SWING LOW When the price cleared the above swing high level. To clear a price level, the market must form a price bar that is completely above the price level. This means if a bar low is higher than a price level, the market has cleared above the price level.

UNDERSTANDING MARKET SWINGS in Advanced Candlestick Analysis We have understood how to find out swing high and swing low Let understand STRENGTH AND WEAKNESS OR TREND THROUGH ANALYSIS OF swing Momentum Thrust and pullback Volume

What is Momentum? The rate at which price move with respect to time We are simply observing price action in order to compare the current speed and acceleration of price movement with historical speed and acceleration. Momentum is visible on a chart through observing the slope (angle) of price movement

The same concept applies to price action on charts. Changes in momentum are observed through changes in the slope (angle) of the price action Analysis of momentum is not about measuring any absolute value of momentum, but in making a comparison of current price action momentum with prior price action momentum. WE can compare through 1. Candle 2. Swing

Momentum through candle Compare the momentum of the current candle with the momentum of the previous candle

BAR COUNTING 1. Counting number of bars in a half cycle and comparing one-half cycle to another (previous half cycle) 2. Comparing each swing(relative strength of move)

3. How much time to get up or how much time to get down

Momentum through swing 1. Compare the momentum of the current price swing with the momentum of the previous price swing in the same direction?

2. Compare the momentum of the current price swing with the momentum of the previous price swing in the opposite direction?

3. Is the current price accelerating or decelerating? What does that mean? 1) Compare the momentum of the current price swing with the momentum of the previous price swing in the same direction?

Now let’s remove the downswing and study what it is showing Is price faster or slower than before?

Compare the slope of UP-swings (a), (c) (e) and (g). Note the decreased speed on each of these legs, indicating a reduction in bullish momentum. Weakness is appearing on the bullish side.

Clearly shows upward momentum decreasing Now putting the same chart with only downward momentum

Compare the slope of upswings (B) (D)(F) and (H). Note the increasing speed on each of these legs, indicating an increase in bearish momentum. bearish price swings are showing signs of strength. BY COMPARING THE SWING IT indicating an increase in bearish momentum. bearish price swings are showing signs of strength. The price movement is more likely to continue in the direction of strength and against the direction of weakness.

2) Compare the momentum of the current price swing with the momentum of the previous price swing in the opposite direction?

That is, comparing the current bullish swing with the previous bearish swing; or comparing the current bearish swing with the previous bullish swing. Note the slope of (a) is quite steep compared with the slope of (b). The latest upswing (b) has shown weakness compared with the previous downswing (a). Strength is still in the bearish direction. Bullish upswing (d) shows an increase in speed compared with the last downswing (c). While the strength is now to the bullish side. The shallow angle of downward momentum compared with the steep rise of upward momentum indicate Strength is now clearly on the bullish side. The price movement is expected in the direction of strength and against the direction of weakness.

3) Is the current price accelerating or decelerating? What does that mean?

The deceleration in this example is evidence of bullish momentum gradually weakening as bearish pressure overcomes any bullish pressure. In the next article, I am going to discuss Thrust Pullback and Measuring Move Analysis in Trading. Here, in this article, I try to explain the Advanced Price Action Analysis in Trading. I hope you enjoy this article and understand the Advanced Price Action Analysis concept. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Price Action Analysis

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Thrust Pullback and Measuring Move Analysis

Thrust Pullback and Measuring Move Analysis Back to: Trading with Smart Money

Thrust Pullback and Measuring Move Analysis In this article, I am going to discuss Thrust Pullback and Measuring Move Analysis in detail. This is a continuation part of our previous article, so please read our previous article before proceeding to this article. As part of this article, I am going to discuss the following pointers in detail which are related to Thrust Pullback and Measuring Move Analysis. 1. Thrust and pullback analysis 2. Measuring move

3. Volume and price analysis

Thrust, pullback and Measuring move Analysis Strengthening or weakening of a trend may also be observed through the analysis of thrust and pullback and measured move.

THRUST Analysis Thrust Refers to the distance between the current swing high to a previous swing high (in an uptrend) or swings low (in a downtrend). Increased thrust is a sign of potential trend strength. Shortening of Thrust is a sign of potential trend weakness.

The increased thrust of T2 when compared with T1 indicating greater strength within the trend. Also compared with T3 to T2 indicating strength on the upside.

Shortening of thrust, T2 when compared with T1 indicating weakness with the trend. T3 is then much shorter than T2, indicating weakness developing with the trend. T2 is unable to project to the same distance as T1 did. Something has shifted in the balance of supply and demand. The fact that the market was unable to do so indicates either a decrease in bullish pressure and/or an increase in bearish pressure.

The uptrend is showing signs of weakening

ALL REVERSE FOR DOWN TREND

DEPTH OF Pullback DEPTH Pullback refers to the distance with which a price retraces the previous up move or impulse move

Increased depth is a sign of potential weakness of a trend. Decreased depth is a sign of potential strength of a trend.

PULLBACK DP1 is the distance with which the pullback retraces IMPULSEMOVE IM1. DP2 is the depth with which the pullback retraces IM2. And DP3 is the depth with which the pullback retraces IME3 Note that DP2 is a much smaller percentage of its IMPULSE MOVE IM2 when compared to DP1. D2 has a smaller depth than D1, indicating a potential weakening of the bears, and therefore strength within the price trend.

Note that DP4 is significantly larger than DP3, indicating potential strength within the bears, and therefore potential weakness within the price trend. The increased depth of pullback DP3 indicates increasing bearish pressure and a potential weakening of the trend.

The same concept applies to the downtrend.

MEASURING MOVE (relative strength of move) Comparing impulse swing with the previous impulse swing in the same direction to find whether strength increasing or decreasing or equal

Volume and Price Analysis Before going forward, we have to identify a few terms: Swing: A high or low where the price changes direction. Leg: The distance between two swings

General Rules for Interpreting Volume to determine the health of a trend 1.) If the PRICE is rising and VOLUME is rising, it means the market is STRONGLY BULLISH. Volume helps us to determine the health of a trend. An uptrend is strong and healthy if volume increases as price moves with the trend and decreases when the price goes counter-trend (correction periods or ‘pullbacks’). 2.) If the PRICE is rising but VOLUME is falling, it means the market is WEAKLY BULLISH. When prices are rising and volume is decreasing, it tells that a trend is unlikely to continue. Price may still attempt to rise at a lesser pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall

3.) If the PRICE is falling, VOLUME is rising, the market is STRONGLY BEARISH. 4.) If the PRICE is falling and VOLUME is falling, the market is WEAKLY BEARISH.

Volume strength and weakness analysis Volume is always analyzed by comparing; it can be to previous legs or swings. The reason for volume analysis is to look for increases or decreases compared to previous swings or legs to identify whether there is an increase or decrease in strength. 1) Compare the volume of the current price swing with the volume of the previous price swing in the same direction? 2) Compare the volume of the current price swing with the volume of the previous price swing in the opposite direction? Compare the volume of the current price swing with the volume of the previous price swing in the same direction? Means compare the current impulse swing vs previous impulse swing. What it is telling? Volume increasing or decreasing or same volume

LEFT SIDE image 1 Compare the volume of UP-swings (A) and (B). Note the decreased VOLUME of the leg (B), indicating a reduction in bullish VOLUME. Weakness is appearing on the bullish side. When comparing the current up leg B volume with the previous up leg A volume. It shows volume decreasing. When prices are rising and volume is decreasing, it tells that the trend is unlikely to continue. Price may still attempt to rise at a slower pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall

RIGHT SIDE IMAGE 2 When comparing the current up B leg volume with the previous up leg A volume. Note the increasing VOLUME on A legs, indicating an increase in BULLISH STRENGTH. BULLISH price swings are showing signs of strength ALL CONCEPT REVERSE FOR DOWN TREND

Compare the volume of the current price swing with the volume of the previous price swing in the opposite direction? Means compare impulse volume vs retrace volume. In general, a healthy trend has increasing volume on impulse move and decreasing volume on retrace volume

LEFT SIDE IMAGE 1 When comparing the current up leg B volume with the previous up leg A volume. It shows volume decreasing. Strength is now clearly on the BEARISH side. The price movement is expected in the direction of strength. When prices are rising and volume is decreasing, it tells traders that the trend is unlikely to continue. Price may still attempt to rise at a slower pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall

RIGHT SIDE IMAGE 2 When comparing the current up B leg volume with previous up leg A volume IT SHOWS PRICE is rising and VOLUME is rising, it means BULLISH PRESSURE OVERCOME BEARISH PRESSURE. TREND CONTINUE IN UP DIRECTION

In the next article, I am going to discuss How to Trade with Smart Money. Here, in this article, I try to explain the Thrust Pullback and Measuring Move Analysis in Trading. I hope you enjoy this Thrust Pullback and Measuring Move Analysis article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Advanced Price Action Analysis

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How to Trade with Smart Money

How to Trade with Smart Money Back to: Trading with Smart Money

How to Trade with Smart Money In this article, I am going to discuss How to Trade with Smart Money with some examples. Please read our previous article where we discussed Thrust Pullback and Measuring Move Analysis in detail. As part of this article, we are going to discuss the following three important pointers in detail. 1. 3 sign of Smart Money activity 2. How to trade with them? 3. Odd enhancer of trading Before going forward let me remind you that, this is the 2nd part of how to trade with smart money. So please read the first part of how to trade with smart money article before proceeding to this article.

How to trade with Smart Money? There are three main signs of Smart Money activity which we can spot with Price Action and volume and can trade with them 1. Sideways price action area 2. Aggressive initiation activity 3. Strong rejection (of higher or lower prices)

Sideways Price Action Area Look for sideways price action areas. Those are very significant places because Smart Money are accumulating their positions there. Always watch for such areas, no matter which timeframe you use. FOR continuation of an existing trend these sideways price action areas should be low volume

Aggressive Initiation Activity Aggressive activity is basically a significant price movement. It is caused by aggressive buyers(SM) pushing the price higher or by aggressive sellers(SM) who are pushing the price lower. This sort of aggressive buying or selling often takes place after sideways price action activity. What happens is that Smart Money is building up their positions (in sideways areas), and when they are done with that, they start aggressive buying or selling to manipulate and to move the price in any direction they want. This is how they make money. They build up their positions slowly and unnoticed, and then they start a trend to make those positions profitable. When the price is moving in a fast trend, there isn’t much time to place any more big positions. For this reason, the Smart Money needs to accumulate their positions before the move. Below is an example of sideways price action areas followed by aggressive initiation activity:

Strong Rejection (of higher or lower prices) Strong rejection means sudden price reversal from either higher or lower price levels. This pattern is made when the price goes one way aggressively and then turns quickly and with the same aggression and speed goes the other way. An example would be a type of candle called the pin bar. But pin bar isn’t the only visual form of strong rejection. There are many ways a strong rejection can look like. A common sign for all strong rejections is aggression and sudden reversal (2 bar reversal) What happens is that one side of the market (for example buyers) is aggressive and moves the price in one way. Then it clashes with the other side (for example strong sellers) which suddenly becomes even stronger and even more aggressive. So the price turns quickly, and the stronger side takes over. The area where the other side took over is very significant because it marks a place where strong market participants rejected aggressively the current course of action and started a strong countermove. This place is significant for us because it will most likely be defended again if the price gets near again. It becomes a new support/resistance zone. Here are some examples of strong rejections:

Remember, places where price suddenly turned and changed direction are very significant. We should always watch out for them in our price action analysis

Odd enhancer for trading 1. Trading with the trend 2. Trading from supply and demand or support resistance level 3. Trading with the dominant pressure TASK Open the chart finds these three Smart Money activities and analyzes the behavior. These strategy works on all time frames i.e. from day trader to swing trader

In the next article, I am going to discuss How to Trade with Supply and Demand Zone in detail. Here, In this article, I try to explain How to Trade with Smart Money with some examples, I hope you enjoy this How to Trade with Smart Money article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Supply and Demand Zone Trading

Supply and Demand Zone Trading Back to: Trading with Smart Money

Supply and Demand Zone Trading In this article, I am going to discuss Supply and Demand Zone Trading in detail. Please read our previous article where we discussed How to Trade with Sideways Price Action Area. As part of this article, we are going to discuss the following pointers which are related to Supply and Demand Zone Trading. 1. Structure of the market 2. What is the supply-demand zone? 3. How to find a supply and demand zone? 4. Different types of zone 5. How to measure the strength of the zone? 6. When did the supply and demand zone break? 7. How to trade with the supply and demand zone? 8. Odd enhancer for trading with supply and demand zone

STRUCTURE OF MARKET The price goes through the following phases 1. ACCUMULATION 2. REACCUMULATION 3. UPTREND 4. DISTRIBUTION 5. REDISTRIBUTION 6. DOWNTREND

ACCUMULATION smart money is removed the floating supply of stock by buying, this process is called accumulation TREND UP smart money aggressively moving price up DISTRIBUTION SM will take advantage of the higher prices obtained in the rally to take profits by beginning to sell the stock back to the uninformed traders/investors

LAWS OF SUPPLY AND DEMAND Trading All financial markets work on the universal law of Supply and Demand.

Law of Demand– The higher the price of an item, the fewer the demand (buyers don’t want to buy at a higher price) and lower the price, higher the demand (buyers want to buy at a low price) Law of Supply-the higher the price, the higher the supply (sellers want to sell at a higher price) and lower the price, lower the supply(sellers don’t want to supply at a lower price

What are Supply and Demand Zones Supply-demand nothing but the border area of support or resistance Let analyze NIFTY 50 STOCK

In the chart above you can see a demand zone (broad support level) and a supply zone (broad area of resistance). What we want to find at the price zones where supply overwhelms demand and where demand overwhelms supply. The former is known as SUPPLY ZONES. When the market bumps into SUPPLY ZONES, the price will drop. Then, you can make money by shorting the market. The latter is market DEMAND ZONE. With the support of demand, the price will rise. Then, you can profit in a long position. IF the supply zone is broken it becomes a demand zone, pullback test from demand zone you can go long

How to Find Supply and Demand Zones in Trading Two steps in order to identify the supply and demand zones. 1. Look at the chart and try to spot successive large successive candles. It is important that price moves a lot 2. Establish the base (usually sideways price action area) from which price started the quick move

Different Types of Supply and Demand Formations There are different supply and demand zone patterns. Some of the more popular ones are shown below: TREND CONTINUOUS BASE 1. RALLY BASE RALLY(RBR) 2. DOWN BASE DOWN (DBD) TREND REVERSAL BASE 1. RALLY BASE DROP (RBD) 2. DOWN BASE RALLY (DBR) And FLIP ZONE

NOW PUTTING ALL THIS TO NIFTY 50CHART

STRENGTH OF SUPPLY AND DEMAND ZONE How did price leave the level? STRENGTH OF THE MOVE The Logic: The stronger the price moves away from a zone, the more out-of-balance supply and demand are at that zone. A heavy order is placed by smart money

How much time did the price spend at the zone? TIME AT LEVEL The Logic: The less time price spends at a zone, the more out-of-balance supply and demand are at the price level. Smart money aggressively entering At price levels with supply and demand zone more out of balance, the price will spend the least amount of time at the level

How far did the price move away from the zone before returning back to the zone? The Logic: The farther price moves away from a zone before returning to that zone, the greater the reward to risk and probability. When price comes back to that supply level for our short entry, we have a good idea of where the buyers are (the demand) and just as importantly, where they are not.

How many times is the price approaching the zone? FRESHNESS OF BASE First-time stock retrace to the base is the strongest to enter

When does Supply/Demand break? After a zone is tested many times or during a strong move, Supply and Demand levels eventually break. Due to the remaining orders being triggered and gradually removed, or an overwhelming amount of orders in the opposite direction breaking the level. Price action If the price stays near or at these zones & doesn’t fall much then there is a high probability that they will break the zone A strong move to the zone may break the zone low volume test confirm the zone

HOW TO ENTER DEMAND AND SUPPLY USING PRICE ACTION? 1. Find SD zone on HTF(HIGHER TIME FRAME) then wait for the price to come to this level 2. See any acceptance or rejection from this zone on trading time frame(TTF) 3. Any reversal price action signal on TTF 4. Entry in the direction of the dominant trend Suppose context downtrend, price rally to the supply zone on TTF, then any bearish reversal PA signal for an entry short Also, notice the volume on these reversals. A low volume test is a good sign & they are highly probable trades. TIPS for day trading previous day high and previous day low is the supply and demand zone. look price action around there for acceptance or rejection of these zones Let’s do an example

Find the supply and demand zone in a higher time frame IN hourly time frame we find the zone Big picture shows 1. whether trend up or down – determines which side we want to be on

2. Where the big picture support and demand levels? We don’t want to long below the supply zone

WHEN PRICE APPROACHING TO DEMAND ZONE WE WANT TO SEE SIGN OF STRENGTH PRICE ACTION FOR CONFIRMATION OF ZONE 1. MOMENTUM LOSS(DECREASING CANDLE RANGE AND BODY 2. LOWER WICK 3. MIX OF BIOTH RED AND GREEN CANDLE

Entry on the trading time frame

ENTRY SIGNAL CANDLE Candlesticks AT Supply and Demand 1. PIN BAR 2. ENGULFING 3. OUTSIDE CANDLE

Odds Enhancers example 1. Trade with the trend 2. If INDEX AND SECTOR SHOWS POSITIVE THEN GO LONG FROM DEMAND ZONE In the next article, I am going to discuss How to Day Trade with the Trend in detail. Here, in this article, I try to explain How to Trade with the Supply and Demand Trading in detail. I hope you enjoy this Supply and Demand Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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How to Day Trade with Trend

How to Day Trade with Trend Back to: Trading with Smart Money

How to Day Trade with Trend In this article, I am going to discuss How to Day Trade with Trend in detail. Please read our previous article where we discussed How to Trade with Supply and Demand Zone. As part of this article, we are going to discuss the following pointers which are related to How to Day Trade with Trend. 1. Why trend analyze required for day trading 2. Structure of the market in details

3. How to trade with uptrend and downtrend and sideways market 4. Characteristics of each trend 5. How to analyze each trend 6. When does trend end

I WOULD SUGGEST GO THROUGH THE Price Action Analysis article BEFORE GOING FORWARD.

Why Trend Analysis for Day Trading? Trading against the trend, without a trend, or poor quality trends are one of the most common reasons for trade fail. The quality or strong trends have more predictable success (edge). The controlled arrangement of price bars and pullbacks provide greater certainty that reverses at supply and demand happen. Poor or weak trends have lower predictability. Uncontrolled arrangement of price bars and pullbacks into supply and demand lessens chances of a reversal

STRUCTURE OF MARKET OF MARKET The price goes through 4 Phases 1. ACCUMULATION (sideways market) 2. UPTREND(trending up)

3. DISTRIBUTION (sideways market) 4. DOWNTREND (trending down)

ACCUMULATION (SIDEWAYS MARKET) Smart money is removed from the floating supply of stock by buying, this process is called accumulation. The accumulation phase looks like a range market after an extended downtrend. A market is in a range when trading between Support and Resistance. Price Stuck between Resistance and Support. Not move any direction. Generally in the accumulation stage, we will see Normal or narrow range candle Both mix of the green and red candle

Low volume Take more time Price in a tight range As time goes by, stops will gradually build up beyond the range as traders long near the lows and short near the highs of the range.

No guarantee that the market will reverse from here. But it should alert you to the possibility that the bears are getting weak and the bulls could take control and push the price higher above the highs of the range

How to enter from the accumulation 3 TYPES ENTRY FROM ACCUMULATION 1. Spring entry

2. Break out entry

3. Break out pullback(flat or test ) entry

If the lows of the range coincide with Support on the higher timeframe, it greatly increases the odds of the market breaking out higher. Let me explain to you, the big picture is bullish but the lower time frame has a down trend .lower time frame trend stop at higher timeframe resistance. Let me explain to you

UPDATED DAILY CHART

This means you wait for the price to come to an area of Support on the daily timeframe and then look for the break of accumulation on your trading timeframe

UPTREND Smart money aggressively moving price up. The advancing phase is essentially an uptrend with price making higher highs and lows. Market move in up and downswing In a healthy bull trend, the upswing generally exceed the downswing in length and making a higher high and higher low, the reverse is true for the bear market

Price Make Higher High (HH) and Higher Low (HL)

Generally in the advancing stage: 1. There’s more bullish than bearish candles

2. The bullish candles are larger than the bearish candles

3. Volume increases on the upswing and decreases on the downswing Bullish bar close on opposite extreme or at near high

Now… the advancing stage eventually will need to “take a break” because the early buyers will start taking profits and sellers will look to short the markets as prices are at attractive levels.

Different types of trends. They are: 1. Strong trend

2. Healthy trend 3. Weak trend

Strong uptrend In a strong uptrend, the buyers are in control with little selling pressure. You can expect this trend to have shallow pullbacks (flat sideways)with low volume Barely retracing beyond the 20 EMA. Bullish wide range bar is more than bearish This makes it difficult to enter on a pullback because the market hardly retraces and then continues trading higher. The best way to trade this trend is on a breakout

ANALYZE YOURSELF:

Healthy uptrend In a healthy uptrend, the buyers are still in control with the presence of selling pressure (possibly due to traders taking profits, or traders looking to take counter-trend setups). You can expect this trend to have a decent retracement usually towards the 20EMA, which provides an opportunity entry with the trend. Low volume pullback with narrow range or lower wick candle

Weak uptrend/choppy trend In a weak uptrend, both buyers and sellers are almost equal control, with the buyers having a slight advantage. You can expect the market to have steep pullbacks and trades beyond the 20EMA. Generally choppy price action The market breaks out of the highs only to retrace back much lower (which makes it prone to false breakout). Pullbacks often breakthrough areas of minor demand (uptrend) or minor supply (downtrend) Majority of open prices will be into 50% or more of the prior bar range Close may not move in direction of the previous bar New bar open and close not near extremes, meaning tails Display uncertainty The best way to enter this trend is at Support or Resistance.

Analyze yourself

Tick by Tick: Secrets to Day Trading Success Class 2: Technical Analysis

DISTRIBUTION SM will take advantage of the higher prices obtained in the rally to take profits by beginning to sell the stock back to the uninformed traders/investors ALL THE INFORMATION PROVIDED ABOVE ARE REVERSE FOR DISTRIBUTION AND DECLINE PHASE

DOWNTREND Price makes Lower High (LH) and Lower Low. (LL)

When does a trend end? An uptrend is officially over when the stock has put in two lower highs and two lower lows in a particular time frame. A downtrend is officially over when the stock has put in two higher lows and two higher highs in a particular time frame. In the next article, I am going to discuss Multiple Time Frame Analysis in detail. Here, in this article, I try to explain How to Day Trade with Trend in detail. I hope you enjoy this How to Day Trade with Trend article. Please

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Multiple Time Frame Analysis

Multiple Time Frame Analysis Back to: Trading with Smart Money

Multiple Time Frame Analysis in Trading In this article, I am going to discuss Multiple Time Frame Analysis in Trading. Please read our previous article where we discussed How to Day Trade with Trend in detail. If you identify level correctly and confluence across different time frames, you can actually increase your winning trade. So, as part of this article, we are going to discuss the following pointers which are related to multi time frame analysis. 1. What is multiple timeframe analysis?

2. Understanding the trend with multiple timeframe analysis 3. How to use multiple time frame in trading

4. Advantages of multiple timeframe analysis 5. Entry principle for multiple time frame

Trend Analysis Once we identify the current trend we need to anticipate what would have to occur to make the price fall into a sideways trend, or reverse. Some common reversal patterns are 1. 123 REVERSAL

2. Double Top/bottom 3. RANGE

4. Up THRUST/SPRING 5. Head and shoulder

WHAT IS FRACTAL? Fractals are just smaller things that combine to create bigger things. Each of the smaller things is identical in shape to the larger thing.

How do Fractals apply to Financial Markets? Markets do the same thing as what we see in nature, creating “patterns within patterns” from smaller timeframes to larger ones. Larger timeframe swings are comprised of several identical smaller-timeframe swings. We use a “Factor of Five” to break up the different timeframes. 1. A month is around 25 trading days so 25/5 = 5 weeks 2. Weak is 5 days trading day s 5/5=1 day

3. The day is around 6:30 active hours so 6:30/5=78 minutes 4. Even lower time frame 78/5=15 minutes for day trading

What is the Multiple Time Frame Analysis? The multi time frame analysis is nothing but analyzes multiple timeframe charts of a single instrument. Let’s understand in a chart

Let’s see an example with three timeframes

Understanding Trends with Multiple Time Frame There are two major rules for multiple timeframe analysis: 1. Larger Timeframes establish and dominate the trend.

2. Reversals start from the smaller timeframes first and propagate upwards.

Let’s go back to our two main price action rules.

Larger Timeframes establish and dominate the trend. This means when a larger timeframe trend is in play, you will see pullbacks on the smaller timeframes.

Reversals start from the smaller timeframes first and propagate upwards This means that we’ll see this changing structure show up on the shorter timeframe charts first.

HOW TO USE MULTIPLE TIME FRAME? Use 1: We will be able to differentiate a “pullback” on the smaller time frame chart vs. the beginning of a correction in the larger time frame. Let me explain to you

Use 2: We will be able to read the “smaller” timeframes to see when that pullback is about to reverse.

Use 3: We will also be able to spot potential reversals before the structure change

Advantages of using multiple time frames that we cover include: Allowing the trader to get a micro view of larger time frames, which can, in turn, confirm the trader’s original analysis of trade. It is like using a backup pattern and fine-tuning an entry. An example would be having a pattern on a 60-minute chart and using a 5-minute chart to confirm the entry. (See Figures 8.12 through 8.14 an example.) Risk can be managed more effectively by combining time frames. A trader can learn to move stops on smaller time frames for patterns that complete on larger time frames. Using multiple time frames from larger to smaller can help the trader to be aware of contrary or opposing patterns that form on smaller time frames that are against the longer-term time frame.

MULTIPLE TIME FRAME ENTRY PRINCIPLE 1. Define what your “signal” chart is. For swing traders, this will generally be a Daily chart. For Day traders, this will be a smaller timeframe like 2/5/10/15 minutes chart

2. Add a higher time frame chart that is either 5x or 25x larger than your signal chart.

3. Trade your signal chart as before, but trade in the direction of the swings on that higher timeframe chart! Let me explain to you While the bigger frame like daily is trending and in impulse, you would have CYCLES of impulses and correction in the hourly frame. This is the most important phase. You have to find the conjunction when the hourly comes in the impulse.

Let’s take day trading example Daily time frame market overview (uptrend) Hourly time frame strategy development (price reverse after a pullback ) 5minute timeframe execution Day Trade when the long-term structure, daily swing structure, and intraday structure are all in synchronizing TAX Open chart and start the top-down analysis, from monthly chart to 15b minute chart In the next article, I am going to discuss the Head and Shoulder Pattern in detail. Here, in this article, I try to explain the Multiple Time Frame Analysis in Trading. I hope you enjoy this Multiple Time Frame Analysis in the Trading article and understand multi time frame analysis in trading. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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How to Day Trade with Trend

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Head and Shoulder Pattern

Head and Shoulder Pattern Back to: Trading with Smart Money

Head and Shoulder Pattern in Trading In this article, I am going to discuss Head and Shoulder Pattern in Trading. Please read our previous article where we discussed Multiple Time Frame Analysis in detail. As part of this article, we are going to discuss the following pointers in detail which are related to Head and Shoulder Pattern in Trading. What is the head and shoulder pattern Types of head and shoulder pattern Failed head and shoulder pattern How to enter a head and shoulder pattern

Head and Shoulder Pattern: The Head and Shoulders pattern signals a possible trend reversal from bullish to the bearish trend. And the opposite of it is called the Inverse Head and Shoulders pattern which signals a possible trend reversal from bearish to the bullish trend. It consists of four parts: 1. The left shoulder 2. The head 3. The right shoulder 4. The neckline  

Here’s what I mean: Left Shoulder: The market does a pullback. At this point, there’s no way to tell if the market will reverse because a pullback occurs regularly in a trending market. The left shoulder moves up on big volume, retrace on lower volume

Head: The market breaks and trades above the previous high. However, the sellers took control and drive the price lower towards the previous swing low (forming the Neckline). Higher high (head) on lower volume than left shoulder, then retrace that goes below the left shoulder. Right Shoulder:

The buyers make a final attempt to push the price higher, but it failed to even break above the previous high (the head). Then, the sellers take control and push the price towards the Neckline. Then forms first lower high (right shoulder) on lower volume than the head. Sellers take control and drive the price down on more volume than previous upswing volume not confirmed until breaks neckline. Neckline: This is the last line of defense for the buyers. If the price breaks below it with heavy volume, the market could head lower and begin the start of a downtrend.

Head and Shoulder Pattern Type  

The Failed Head And Shoulders Pattern Once prices have moved through the neckline and completed a head and shoulders pattern. Once the neckline has been broken on the downside, any close back above the neckline is a serious warning that the initial breakdown was probably a bad signal, and creates what is often called, for obvious reasons, a failed head and shoulders and prices resume their original trend WHEN HEAD AND SHOULDER PATTERN FAILED IF 1. The pattern appeared in a strong trend 2. The duration of the pattern is small Let me explain to you

  1. The pattern appeared in a strong trend The preceding trend before the head and shoulders pattern. If the market is in a strong uptrend, it’s unlikely that a simple chart pattern can reverse the entire move. 2. The duration of the pattern is small If the pattern takes the small time it less likely to reverse a trend, its just a complex pullback Here’s the thing: A Head and Shoulders that takes more to form are MORE significant than a Head and Shoulders that takes less to form.

Why? Because if the market breaks the more time pattern Neckline, more traders will get “trapped” and their rush for exit will increase the selling pressure.

HOW TO ENTER A TRADE For head and shoulder pattern entry condition 1. The higher timeframe is in a downtrend 2. The Head and Shoulders pattern formed at Resistance on the higher timeframe 3. Volume confirmation

Entry method 1. The tight range at neckline break out 2. The breakout test of the neckline 3. The first pullback 4. Professional entry

1. The tight range at neckline break out PRICE drives down to the neckline and forming a tight range. enter when price breaks down from NECKLINE and place stop loss above the tight range.

2. The breakout test of the neckline Often, the Head and Shoulders pattern may break down without forming a TIGHT RANGE.U MISSED THE OPPORTUNITY. If the market breaks down without forming a TIGHT RANGE, then wait for a pullback to occur. Price breakdown from the neckline and low volume test (PULLBACK) of the neckline is high probability short opportunity What you want to pay attention to is to this previous support (neckline) that could act as resistance. If the market comes into this area (neckline) and it gets rejected, this now is a favorable trade location to look for short trading setups. And your stops can just go above the neckline. So, here’s an example:

3. The first pullback 1. If the market breaks down without forming a TIGHT RANGE, then wait for a pullback to occur 2. If the market does a pullback(flag or tight range )with low volume and narrow range candle with upper wick, then go short on the break of the lows 3. Set your stop loss above the highs of the pullback So, this is what I mean by the first pullback, and here’s an example:

4. PROFESSIONAL ENTRY Here’s how… 1. Wait for the market to form the Left Shoulder and Head 2. After it’s formed, let the price rally higher back towards the Head with low volume and narrow candle 3. Go short when you get a price rejection (like Shooting Star, Bearish Engulfing pattern, outside reversal bar) Here’s an example: Ahead of the Crowd.

In the next article, I am going to discuss How to Trade with Support and Resistance in detail. Here, in this article, I try to explain the Head and Shoulder Pattern in Trading. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Multiple Time Frame Analysis

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How to Trade with Support and Resistance

How to Trade with Support and Resistance Back to: Trading with Smart Money

How to Trade with Support and Resistance In this article, I am going to discuss How to Trade with Support and Resistance in Trading. Please read the How to Trade with Supply and Demand Zone article before proceeding to this article. As part of this article, we are going to discuss the following pointers in detail which are related to How to Trade with Support and Resistance. 1. What are support and resistance

2. How to Trade with Support and Resistance

3. The psychology behind support and resistance 4. Support resistance level vs zone 5. Types of support and resistance

6. Multi time frame support and resistance 7. Where support and resistance formed 8. Strength of support and resistance

9. When support and resistance break

What are SUPPORT AND RESISTANCE? SUPPORT Support, as the “buying, actual or potential, sufficient in DEMAND to halt a downtrend in prices for an appreciable period.” and possibly reverse it, start prices moving up again. Fair price for buyers and risk to reward is more

RESISTANCE Resistance, as the selling, actual or potential, insufficient supply to keep prices from rising for a time, and possibly turn back its uptrend. Fair price for sellers and risk to reward is more

FLIPPING These price levels constantly switch their roles from support to resistance and from resistance to support. A former resistance, once it has been surpassed, becomes a support zone in a subsequent downtrend; and old support, once it has been penetrated, becomes are resistance zone in a later advancing phase.”

Why Support and Resistance important? These points are not random, they created by the market. They represent momentary changed of demand and supply forces The bulls could not move the market above the swing high. This means that at that point in time, no one was willing to offer a price higher than the swing high. Traders saw no value above the swing high Hence, subsequently, when price moves close to or near or above a wing high, we must remember that traders saw no value in buying above that point previously. Assuming that most traders have not changed their opinions, prices are unlikely to move above the swing high. Effectively the swing high mark a price area that resists the market from moving up this is what we call a resistance area. Reverse for support area

Once the structure of market know, then find which phase the market is currently (accumulation or distribution or up or down)

The Psychology of Support and Resistance To illustrate, let’s divide the market participants into three categories the longs, the shorts, and the uncommitted. When price comes to the support level 1. The longs are those traders who have already purchased contracts;

2. The shorts are those who have already committed themselves to the sell-side;

3. The uncommitted are those who have out of the market or remain undecided as to which side to enter. Traders with the fear of missing out would enter their trades the moment the price comes close to Support to get at cheap price. And if there’s enough buying pressure; the market would reverse at that location. Let’s assume that a market starts to move higher from a support area where prices have been fluctuating OR accumulating for some time. The longs are delighted but regret not having bought more. If the market would retrace back near that support area again, they could add to their long positions. The shorts now that they are on the wrong side of the market. The shorts are hoping (and praying) for a dip back to that area where they went short so they can get out of the market where they got in (their break-even point). The final uncommitted group, now realize that prices are going higher and resolve to enter the market on the long side on the next good buying opportunity. All four groups are resolved to “buy the next dip.” They all have a “vested interest” in that support area under the market. If prices decline near to support, renewed buying by all four groups will push the prices up Now let’s turn the tables and imagine that, instead of moving higher, prices move lower. In the previous situation, because prices advanced, the combined reaction of the market participants caused each downside reaction to being met with additional buying (thereby creating new support). However, if prices start to drop and move below the previous support zone, the reaction becomes just the opposite. All those who bought in the support zone now realize that they made a mistake.

All of the factors that created support by the three categories of participants—the longs, the shorts, and the uncommitted—will now function to put a ceiling over prices on subsequent rallies or bounces. As all of the previous buy orders under the market have become sell orders over the market. Support zone has become a resistance zone

Support and Resistance Level and Zone Support and Resistance Level is more detailed and different levels with the zone. The level is one line and Zone is Zone. In practice, support and resistance and supply and demand zones are formed from the same origin Support and Resistance are areas and not lines Why? Because you’ll face these two problems: Price “undershoot” and you miss the trade Price “overshoot” and you assume support and resistance is broken Let me explain… Price “undershoot” and you missed the trade. This occurs when the market comes close to the support and resistance line, but not closes enough. Then, it reverses back in the opposite direction. And you miss the trade because you were waiting for the market to test your exact SR level. This price reversal also called 123 reversals. Or holding a higher level of support or lower level of resistance, THIS IS GENERALLY OCCURS DUE TO THE AGGRESSIVE BUYERS AND SELLERS An example: OF PRICE UNDERSHOOT

Price “overshoots” and assume support and resistance is broken This happens when the market breaks support and resistance level and you assume it’s broken. Thus, we trade the breakout but only to realize it’s a false breakout. THIS TYPE OF PRICE ACTION CALLED UPTHUST AND SPRING Let’s DO AN EXAMPLE OF PRICE OVERSHOOT

So, how do you solve these two problems? Simple, Support, and Resistance are areas on the chart, not lines.

How to draw support and resistance zone A two-step process to fins SR ZONE 1. Step 1 switch to a line chart and mark the line with the rejections.

2. Step 2 again switch to the candlestick chart, mark the high or low of the candle near the marked line and make the zone Let’s do an example of drawing SR zone

TYPES OF SUPPORT AND RESISTANCE

Horizontal Dynamic(moving average) Trend line LET’S FIND ALL THE ABOVE SUPPORT AND RESISTANCE IN A SINGLE CHART

Multi timeframe SUPPORT AND RESISTANCE The power of support and resistance depends on the time frame we are looking at, the higher the time frame the higher the probability of it to work Through all the timeframe support and resistance work but the rewards grow with the higher the timeframe it is The noise in lower time frame chart is more Using the higher time frame and top-down analysis, put more weight on higher time frame SR level. To focus on major support and resistance levels, first, find them on higher time-frames before applying them to your trading time-frame for analysis.

For example, you can note down the support and resistance levels from the weekly chart. Then, plot them on the daily chart to find trading opportunities. This method keeps you focused on important support and resistance levels instead of flooding your chart with dozens of potential support and resistance levels.

WHERE SUPPORT AND RESISTANCE are DEVELOPED? The first point of support in any time frame is prior bar’s high The first point of resistance in any time frame is prior bar’s low Second points of support and resistance are pivot points(swing high and swing low) Consolidation area Rejection from an area Previous has acted as both support and resistance Gap(invisible tail), EMOTIONAL POINT Fibo retracement Trend line and MA Rejection from an area

LAST SWING HIGH AND LAST SWING LOW

Swing highs and swing lows are market turning points. They are natural choices for projecting support and resistance zones CONGESTION AREAS

The smart money has spent a prolonged time in the congestion area. They have established actual trading interests within that price range. Hence, earlier market congestion areas are reliable support and resistance zones

MA AND FIBO RETRACEMENT

You can also derive support and resistance from the moving average. They work best in trending markets.

Fibonacci retracement is a popular method for projecting support and resistance. We can mark out retracement levels easily. Hence Identify major market swings and focus on the retracement of the move by a Fibonacci ratio. Generally Fibonacci ratios include 23.6%, 38.2%, 50%, 61.8% and 100%.

FLIPPING OF SUPPORT/RESISTANCE

Flipping act as both support and resistance. Support turned into resistance or resistance turned into support. When price breaks through a resistance level, it shows a shift of power from sellers to buyers. The resistance level then becomes support.

How strong support and resistance There are a number of factors that should be considered in determining how significant or strong the support or resistance level will be. These factors are as follows: 1. The number of occurrences. The first-time retrace to the area is strong

2. Volume. The higher the relative volume is at a particular price level, the more likely it is that the price level will become significant support or resistance.

3. How did price leave the level? The stronger the price moves away from a zone, the more out-ofbalance supply and demand are at that zone. A heavy order is placed by smart money

4. How much time did the price spend at the zone? The less time the price spends at a zone, the more out-of-balance supply and demand are at the price level. Smart money aggressively entering When price retrace and test the level in future

5. How far did the price move away from the zone before returning back to the zone? The farther price moves away from a zone before returning to that zone, the greater the reward to risk and probability.

When support and resistance break And even when prices start to falter in the higher region of the chart, bulls are technically still in control as long as they manage to keep the market up in levels higher than or equal to a former significant low. But the stronger the earlier dominance, the less likely the market will turn on any first reversal attempt. Support tends to break in a downtrend Resistance tends to break in an uptrend Support and Resistance tend to break when there is a tight range at SR level The more/frequently test of support resistance is weakening this level and break the level The more times Support or Resistance (SR) is tested, the weaker it becomes and breaks the level

Here’s why… The market reverses at RESISTANCE because there is selling pressure to push the price lower. The selling pressure could be from Institutions, banks, or smart money that trades in large orders. Imagine this: If the market keeps re-testing resistance, these orders will eventually be filled. And when all the orders are filled, who’s left to sell? It shows that participants are more aggressive to push /pull the price to break the resistance/support. While the higher low towards resistance indicate aggressive by the buyers LET’S DO AN EXAMPLE

Higher lows into Resistance usually result in a breakout (formed ascending triangle). Lower highs into Support usually results in a breakdown (formed descending triangle).

Resistance tends to break in an uptrend For an uptrend to continue, it has to consistently break new highs. So, shorting at resistance is a low probability trade in an uptrend. Instead, going long at Support is a better trade or break out from last high

Support tends to break in a downtrend For a downtrend to continue, it has to consistently break new lows. So, going long at support isn’t a good idea in the downtrend. But, going short at Resistance is a great idea or breakout from last swing low

Support and Resistance tend to break when there’s a tight range Resistance is an area with potential selling pressure. So, the price should move up quickly, right? Now… what if price didn’t move down and instead, consolidates at resistance?

What does it mean? A sign of strength as the bears couldn’t push the price lower. Perhaps there’s no selling pressure or, there’s strong buying pressure. Either way, it doesn’t look good for the bears and resistances likely to break. An example:

And the opposite for Resistance: In the next article, I am going to discuss Pullback Trading Strategy in detail. Here, in this article, I try to explain How to Trade with Support and Resistance in detail. I hope you enjoy this How to Trade with Support and Resistance article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Head and Shoulder Pattern

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Advanced Candlestick Analysis

Advanced Candlestick Analysis Back to: Trading with Smart Money

Advanced Candlestick Analysis in Trading In this article, I am going to discuss Advanced Candlestick Analysis in Trading. Please read the Price Action Analysis article before proceeding to this article. As part of this article, I am going to discuss the following pointers in detail. 1. Advanced Candlestick Analysis

2. What price action validates the resistance/support level?

3. What price action disconfirms the resistance/support level?

Candlestick Analysis in Trading: Each candlestick tells a story as they are a reflection of what buyers and sellers are doing or what the market is telling you. Use candlestick with support and resistance area 1. Support tends to break in a downtrend

2. Resistance tends to break in an uptrend

3. Support and Resistance tend to break when there is a tight range at SR level

4. The more/frequently test of support resistance is weakening this level and break the level Then how to know whether the price will reverse from support or resistance or break level. I mean whether price confirms or disconfirm as support or resistance.

DISCONFIRMATION AND CONFIRMATION At resistance we expect the price to reverse or supply exceed demand confirms the supply.

What price action validates the resistance level? 1. Clear Rejection from resistance in the form of the pin bar or outside bar or engulfing bar 2. Momentum loss when approaching resistance 3. Unable to close above the resistance level

4. Low volume candle when approaching resistance

CANDLE REJECTION Single candle rejection (pin bar) In an established downtrend any Clear Rejection from resistance in the form of the pin bar or outside bar or engulfing bar confirm the resistance level

MULTIPLE CANDLE REJECTION Better if multiple candlesticks are rejecting an area as this shows that price tried over and over but failed When multiple candles refuse to go UP or rejection from resistance they ultimately go down Below are some example of multiple rejection candle from an area

REJECTION CANDLE SHOULD CONFIRM BY FOLLOW THROUGH CANDLE The next candle should follow-through candle for validation of rejection candle

Momentum loss is the key to reversal when approaching a key level 1. Candle getting smaller and multiple colors with wicks signal that buyers or sellers are losing strength

2. Even better when it finishes with long wick candles (for bullish reversal lower ling wick and fro bearish reversal upper long wick) Below is the example of bullish reversal

Price unable close above the resistance Buyers trying hard to close above the resistance level, each time they failed shows supply coming and trying to dominate demand

Volume In an up-move, where the price is getting close to the upper trend line (resistance Line), and low volume appearing will tell you that the trend line is likely to hold for that moment in time because there is no effort to change the trend (you need buying to push through resistance). The resistance area which needs demand pressure to penetrate it. Low volume tells us there is little demand and thus the line is likely to hold.

What price action disconfirms the resistance? 1. Candle spread and volume increasing when approaching the resistance level

2. If price hug the resistance and hold it disconfirm the supply and shows the presence of

Candle spread and volume increasing when approaching the resistance level In an up-move, where the price is getting close to the upper trend line (resistance Line), and low volume appearing will tell you that the trend line is likely to hold for that moment in time because there is no effort to change the trend (you need buying to push through resistance). If the volume is high, with a widespread up, whilst the price is getting close to the upper trend line, we would expect to see the trend line broken due to the extra effort and the next day is level or even higher, then you would now be expecting higher prices. Any low volume down-day (potential test) will confirm this view

If price hug the resistance and hold it disconfirm the supply and shows the presence of demand 1. Price hold (unable to react) after a drive up

2. The price will move up at resistance price form a tight trading range. Nevermore than 50% of the previous drive up. Tighter the better The main characteristic of BUYERS overcoming SELLERS is the repeated inability of prices to REACT away from the danger point(resistance). Such hugging of the HIGH usually leads to a breakout. Persistently heavy volume hammering the HIGH usually says a break is Imminent

In the next article, I am going to discuss the Trendline Trading Strategy in detail. Here, in this article, I try to explain the Advanced Candlestick Analysis in Trading. I hope you enjoy this Advanced Candlestick Analysis in Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Trendline Trading Strategy

Trendline Trading Strategy Back to: Trading with Smart Money

Trendline Trading Strategy in Detail In this article, I am going to discuss the Trendline Trading Strategy in detail. Before proceeding to this article please read the How to Day Trade with Trend article. As part of this article, I am going to discuss the following pointers in detail which are related to Trendline Trading Strategy. 1. The importance of drawing lines over your charts. 2. TRENDLINE

3. Rules for DRAWING TREND LINES

4. How to Determine the Significance of a Trendline Trading Strategy 5. The trend channel

6. Use of trendlines Trading Strategy 7. How to entry based on trend line

Importance of drawing lines over your charts: They tell a story. They showing the angle of advance or angle of decline within a price trend, alert when a market has reached an overbought or oversold point within a trend, showing trading ranges, indicate the point of equilibrium (apex), and help forecast where to expect support or resistance on corrections. Never undertake to draw conclusive deductions from trend lines alone taking care to weigh all of the factors (three) involved in a complete diagnosis of market action. The three factors are Price Movement, Volume, and Price Movement-Volume Relationships determine when and where trend lines may logically be applied} and when it is inadvisable to attempt to apply them

What is the Trendline Trading Strategy? The momentum of an upward movement is reflected in the angular upward climb of the vertical bars on our charts and the pace of a downward movement by their angular downward pitch. The eye may not always see the pitch of these angular swings clearly because of the confusing effect of minor irregularities of the price movement as recorded on charts. Therefore, it is frequently helpful to employ Trend Lines for this purpose. Thus, the examination of the accompanying charts will show how the angle of ascent or descent of prices may often be visualized more clearly by drawing straight lines through the successive tops or bottoms of the price path established during the minor, intermediate, and major moves

A support or demand Line is that line that identifies the angle of the advance of a bull swing by passing through two successive points of support. Example:- Lines A-C, D-1 in above IMAGE 1 A resistance or Supply Line is that line that identifies the angle of the decline of a bear swing by passing through two successive points of resistance (top of rallies). Example:- Line I-K, and I-6 in above image 2. An Oversold Position Line is that line that is drawn parallel to a supply or resistance line and passes through the first point of support (reaction low) which intervenes between two successive rally tops in a downtrend. Example:- Line J-L, Note that J is the first point of support intervening between the two successive tops, I and K. IN IMAGE 2 An Overbought Position Line is that line that is drawn parallel to a support line and passes through the first point of resistance (rally top) intervening between two successive points of support in an uptrend. Example: Lines B-E, in above image 1

Rules for Drawing Trendline Trading Strategy RULES 1. DRAW a new trend line by connecting the stat of the trend with a valid swing point. 2. Adjust the trend line as price action unfold

DRAW a new trendline by connecting the stat of the trend with a valid swing point This means that we cannot draw a new trendline without a valid swing. First of all, there must be evidence of a trend. This means that for an up trendline to be drawn there must be at least two reaction lows with the second low higher than the first HOW TO FIND VALID SWING HIGH AND SWING LOW? Click here

ADJUSTING New trendlines For instance, in the case of an advance, the angle of ascent may be leisurely for a time and then become pitched more sharply upward as the original force of demand is renewed by fresh buying from the sponsors of the move and the public, and perhaps by expanding enthusiasm of bullishly inclined traders and investors. Under these conditions, we have to relocate our trend lines to conform to the newly established stride

If a steep trend line is broken, a slower trend line might have to be drawn

Trendline analysis on a chart

It will be seen that after the reaction to (B), we are able to distinguish two well-defined rally tops, the first at (A) and the second at (C). Accordingly, if we draw a straight line through the extreme tops of these two rallies we find that the extension of this supply line to the right, across the page, helps to define the approximate limits of subsequent rallies. If, however, it is able to rise through the supply line with some degree of strength by either with increasing volume, or by a material gain in price, or both. Finally price swing E-F successful break the supply line, as both candle and volume increases The upswing from G enables us to establish the trend support line E-G which represents the angle, or rate of acceleration, of the first phase of the bull campaign in this stock. Extending this line to the right, we find that after the rise is temporarily accelerated by a sharp run-up from G, then price recedes toward this line of support in what we conclude is a normal corrective reaction. We reason that if it recedes further, we may expect the price to hold on or around this line of support (H). It does hold, for on the quick further rally from G POINT, marked by closing at the high, as the price almost touches our established trend line. Thus our trend line has given us a helpful hint, in advance, as to the point at which we might reasonably look for new demand (support) and the probable place where this particular reaction should end. After the mark-up from H POINT, we must readjust our trend support line because of the increasing momentum of the rise. PONIT (1) brings a new phase of the advance. This new line, of course, runs from 12, price getting support from the support line.

How to Determine the Significance of a Trendline Trading Strategy 1. The number of times the trendline has been touched or approached. The larger the number, the greater the significance. A trendline that has been successfully tested five times is obviously a more significant trendline than one that has only been touched three times

2. Time factor, a trendline that has been in effect for nine months is of more importance than one that has been in effect for nine weeks or nine days.

3. Angel of ascent and descent, a very sharp trend is difficult to maintain and it’s liable to be broken, the steep trend is not more important as that of a more gradual one a large angle on a lower trendline in an uptrend means that the lows are rising significantly fast and that the momentum is high.

THE TREND CHANNEL Occasionally, the momentum produced by the forces of demand and supply will become so plainly marked as to develop a well-defined zone of activity; that is, the alternating buying and selling waves form a price path or channel whose upper and lower limits are easily identified by a series of tops and bottoms confined within parallel, or nearly parallel, lines. The drawing of the channel line is very simple. In an uptrend, first, draw the support or demand line along with the lows (A-C). Then draw a line from the first prominent peak (point B), which is parallel to the support or demand trend line. Both lines move up to the right, forming a channel If the next rally reaches and backs off from the channel line (at point D), then a channel may exist. If prices drop back to the original trendline (at point E), then a channel probably does exist. The same holds true for a downtrend, but of course in the opposite direction

In the uptrend supply line act as overbought, the price will be reverse from the supply line. Support line act as oversold

Use of Trendline in Trading: Use of trend lines is frequently helpful in judging the points at which you may expect the price:1. To be supported on reactions;

2. To meet resistance on rallies; and

3. Overbought and oversold condition sowing in channel

4. To approach a critical position in its travel from one level to another. Trend line l also help you to foresee the possibilities of an impending change of trend before it actually takes place The violation of a trend line often (but by no means always) may signify that the force of demand or supply which was formerly in effect is now becoming exhausted. This may either mean that the price movement is changing its rate of progress, or it may mean that the trend is definitely in danger of being reversed.

Trendline Trading Strategy It is bad practice to take entry on a stock simply because it has penetrated an established. Trendline or broken out of an extended congestion area. The significant thing is HOW the line is broken; the conditions under which the change of stride occurs. The quality of the buying or the selling at and around the point of penetration determines whether the violation of an established trendline may be regarded as evidence of a further price movement in the direction of the breakthrough, or whether it means the only temporary change of false breakout. For breakout, the price needs to close above or below the trendline An opposite trade to be taken on the retest of the trendline

In the next article, I am going to discuss the WRB Trading Strategy in detail. Here, in this article, I try to explain Trendline Trading Strategy in detail. I hope you enjoy this Trendline Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Advanced Candlestick Analysis

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WRB Trading Strategy

WRB Trading Strategy Back to: Trading with Smart Money

WRB Trading Strategy in Detail In this article, I am going to discuss the WRB Trading Strategy in detail. Please read our Support and Resistance article before proceeding to this article. The WRB stands for Wide Range Bar. As part of this article, we are going to discuss the following pointers in detail. 1. What is the WRB Trading Strategy?

2. Criteria for finding a wide range bar 3. What does a wide range bar mean

4. Uses of wide range bar in you trading NOTE: Don’t confuse with wide range bar, trend bar, both are the same. In the following paragraph and image, I used both the wide range bar and trend bar

What is the WRB Trading Strategy? A wide range bar is one that represents a trend within a smaller time-frame. A bull wide range bar opens near its low and closes near its high. A bear wide range bar opens near its high and closes near its low.

Criteria for WRB Trading It’s basically a candlestick that has a longer body than the surrounding candlesticks

What does a Wide Range Bar (WRB) mean? Remember that in every bar, the same number of contracts are sold and bought.

1. The only reason for a bar to end up with a higher price is that the buyers were committed to one direction and more aggressive than the sellers. The reverse is true for a bear WRB.

2. THE importance of wide range candles is that they are one of the few places a chart where supply and demand can be both identified and measure i.e. wide range bars are occur from supply and demand zone. I mean you can easily identify supply and demand zone observing trend candle

Let me explain to you Did you know that a single candlestick (on its own) is by its nature, an area of supply/demand (support/resistance)? Let’s take the example of a bull wide range candle: A bullish candle tells us there is a larger volume of buyers than sellers (nothing new here). But this information is based on something that had already happened. How does this help us make trading decisions in the future?

Answer A bull candle tells us at what price there is a pool of sellers in the future (long exit). Does this make sense? Let’s imagine you’ve just entered a BUY trade, and prices start moving up. Your trade is making money. Soon, however, you notice that prices are starting to move back down close to your trade entry point. What would you do? You’ll hang on to the trade. And wait for it to move back up again. But what happens next when prices continue to move down and down even closer to your entry point? They will think of getting out of the trade at breakeven or most traders would have already moved their stop loss to breakeven, or if not, they will manually get out of their BUY trades as soon as the market moves towards the breakeven price. And so, all the traders who entered a BUY trade along this wide range bull candle are now looking to SELL to close the trade. A wide range bull candle thus represents the range of prices where the previous buyers are now looking to sell to close their previous (buy) trade. Reverse for wide range bear candle

How to use WRB in your trading 1. BREAKOUT 2. CLIMAX

3. ChCo candle (change of character candle )

Breakout When trend candlestick occurs as a breakout candle in a sideways market or as a beginning of a new trend. It represents strength. Here I will explain in-depth about breakout trading strategy

CLIMAX PATTERN Whenever it occurs at the end of an established trend, it is a sign of climax. It represents the end of the move, possible trend change in the near future or trend become a trading range.

ChCo candle (CHANGE OF CHARACTER CANDLE) Use of ChCo candle 1. For identifying swing (The distance between the highest and lowest points is a swing) 2. For placement of stop loss

Identifying swing using ChCo candle Identify the last wide range bar. Look for a reversal bar that closes below/above of the last wide range bar

For placing stop-loss using chco candle In a very rare situation, where prices will reverse without forming a clear reversal pattern. Then, how do we know whether a counter-trend move is going to be a temporary retracement or reversal? Here’s the trick. You’ll first have to identify what I call a wide range of candlestick. When a candlestick closes past the opening price of the wide range candle, a reversal is likely to happen. If not, it’s just a retracement.

Why? When traders don’t take into account profit-taking behavior, they’ll often be tricked into placing low winningprobability trades. Here’s what I mean:

If you noticed, the close price of the last bull candle did not go above the open price of the last wide range bear candle. This means it’s entirely possible for most of the buying activity, to be coming from the sellers who are exiting their positions. We’ll need to see more commitment from the buyers before we can say that prices are likely to reverse. Let’s see what happens next.

.Here’s an example:

The market moved up with a strong wide range candle and then dropped back down again. This looks like a reversal… but is it really? Let’s see what happened next:

If you look closely, prices did not close past the opening price of the wide range candlestick. So it was a strong retracement. Here another example.

As you already got the idea for placing a stop loss below or above the wide-range candle for avoiding unexpected reversal. Let me show you in an example

In the next article, I am going to discuss the VWAP Trading Strategy in Detail. Here, in this article, I try to explain in WRB Trading Strategy in detail. I hope you enjoy this WRB Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Trendline Trading Strategy

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VWAP Trading Strategy

VWAP Trading Strategy Back to: Trading with Smart Money

VWAP Trading Strategy in Detail In this article, I am going to discuss the VWAP Trading Strategy in detail. Please read our previous article where we discussed Breakout Trading Strategy. As part of this article, we are going to discuss the following VWAP Trading Strategy concepts in detail. 1. What is the VWAP Trading Strategy? 2. Uses of VWAP

3. Limitation of VWAP 4. VWAP Strategies

What is the VWAP Trading Strategy? VWAP stands for Volume Weighted Average Price. These tools are used mostly by short-term traders and in algorithm-based trading programs. VWAP is often used to measure the trading performance of smart money. Professional traders who work for investment banks or hedge funds and need to trade large numbers of shares each day and cannot enter or exit the market by buying or selling a large position in stock during the day, institutional traders compare their price to VWAP values. A buy order executed below the VWAP would be considered a good fill for them because the stock was bought at a below-average price (meaning that the trader has bought their large position at a relatively discounted price compared to the market). Opposite for sell Therefore, VWAP is used by institutional traders to identify good entry and exit points. Conversely, when a professional trader has to get rid of a large position, they try to sell at the VWAP or higher .VWAP has the big advantages of the timeframe you chose, VWAP is the same.

Use of VWAP Trading Strategy VWAP shows who is in control VWAP can determine the market trend at opening VWAP act as support and resistance

VWAP shows who is in control VWAP is an indicator, it indicates who is in control of the price (the buyers or the sellers). When a stock is traded above the VWAP, it means that the buyers are in overall control of the price and there is a buying demand on the stock. When a stock price breaks and close below the VWAP, it is safe to assume that the sellers are gaining control over the price. 1. If VWAP is rising then it shows buyers in control 2. If VWAP is falling it shows sellers in control

3. If VWAP is flat then it indicates no one is controlling the market, price in a trading range

Used as Support and Resistance Smart Money Buy below vwap and sell above the vwap if a large order came to market then they buy from VWAP, so when price unable to close below vwap and getting rejected from vwap and create a shadow or engulfing or outside bar this confirms the support and resistance

Price action and volume confirm the support and resistance

VWAP Trading Strategy USED TO DETERMINE THE MARKET TREND Observations 1. For bullish trend days, the market stays above the VWAP.

2. For bearish trend days, the market stays below the VWAP.

3. For ranging sessions, the market stays around the VWAP which remains more or less flat. These observations show that the VWAP has great potential for helping traders identify the market trend Note: on avoid trading at the opening of a trading session: After the market opens, the price bars tend to overlap with the VWAP. In the first five minutes, unknown heavy trading is happening between the overnight shareholders and the new investors and institutional traders. According to our method here, you cannot judge the market bias until the market tries to move away from it.

After volatility decreases around ten to fifteen minutes into the Open, the stock will move toward or away from the VWAP. This is a test to see if there is a large investment bank waiting to buy or sell. If there is a large institutional trader(smart money) aiming to buy a significant position, the stock will pop over the VWAP and move even higher. This is a good opportunity for us to go long. Opposite for short selling. If there is no interest in the stock from market makers or institutions or smart money, the price may trade sideways near VWAP. The best option would stay away from that stock. Here, you’ll learn a price action method that you can apply immediately to your intraday trading to determine the market trend with the use of VWAP

TRENDING SESSION Step1: Look for at least 2/3 candle in the same direction Step2: When first-time price approaching VWAP, Look for a push away from the VWAP(the price should not stall at vwap) Step3: Observe if that push enjoys follow-through or is rejected back to the VWAP level from the last swing high for an uptrend or last swing low for a downtrend If they push away from the VWAP has good follow-through, assume a trending session. You can then consider momentum trades in the direction of the trend. If the market rejects the push away back to the VWAP, assume a sideways session. Consider taking mean-reversion trades in this case.

RANGING SESSION A quote from James Dalton’s Mind over Markets: “Many knowledgeable professionals estimate that markets trend only 20 to 30 percent of the time. Failure to recognize this fact is one of the main reasons why a large number of traders don’t make money”. It is very important not to trade if there is no trend or no movements. Trading in a range only works if the range is large enough. Smart money buys below vwap and pushes above vwap, then when price retrace to vwap see PA around vwap for continuous of existing trend or range market, If the market rejects the push away back to the VWAP, assume a sideways session.

The characteristics of sideways markets are Price often near VWAP, Point of Control, or other equilibrium prices Price stays the whole day in the opening range (the span of the first hourly candle) Inside- and outside-candles near each other Many crossings of VWAP High and low of the day hold though out the day

LIMITATION OF VWAP Trading Strategy 1. VWAP Trading Strategy Lags tend to increase as the day passes 2. Cannot be used at the opening of the day 3. Require supporting price action for entry

VWAP Trading Strategy PRINCIPLES Two words are used here( PVWAP and VWAP). PVWAP is the end of vwap value of the previous day. VWAP is the current day VWAP. PVWAP can be obtained by plotting a straight horizontal line on the chart and looking where it was plotted at 3:30 pm. VWAP is obviously current day VWAP which can be obtained by plotting the VWAP indicator.

CONDITION Do not play stock long that is below the VWAP Do not play stock short if above the VWAP If way extended from VWAP, then a play reversal is okay but the target has to be the VWAP If the price is trading above PVWAP, it is bullish and we look for a buy entry If the price is trading below PVWAP, it is bearish and we look for a sell entry CONFLUENCE: USE VWAP indicator with price action and volume

ENTRY 1. Buy Entry – any 5-minute candle that completely above both vwap and pvwap, buys entry will be above high of that candle.

2. Sell Entry – any 5-minute candle that completely below both pvwap and vwap, sell entry will be below low of that candle NOTE:- Strategy doesn’t work on range-bound days

VWAP STRATEGY VWAP REVERSAL ENTRY VWAP REVERSAL FOR UPTREND Rule The previous day should be a trend UP day Price should not close below last swing low Price should close above the VWAP Look weakness for morning move into previous days VWAP (PVWAP) level Faster the better The volume also important(prefer low volume move) Current day(ONE FIVE MINUTE) price should not close below the previous day VWAP(PVWAP) Take the trade only if I can get a good entry and a good risk/reward ratio. Reverse for downtrend

ENTRY PROCESS Step1: find the stock in a clear trend up (HH/HL) or trend down(LH/LL) Step2: Weak retracement move towards PVWAP Step3: When the first time price approaches VWAP, Look for a push away from the PVWAP (the price should not stall at pvwap) Step4: Observe if that push enjoys follow-through or is rejected back to the VWAP level from the last swing high for an uptrend or last swing low for the downtrend

Price open and drive down with less volume shows sign of strength and stall at P VWAP and unable to close below the PVWAP

VWAP False Breakout (TRAP) Strong Stock will stay and trade above VWAP if there is buying pressure from institutional traders. If a large investment bank is interested in taking the position, a stock will often stay above VWAP and keep moving above VWAP. But if there are no large institutions behind the stock, or if they fill all of their orders, then the stock will move back to VWAP and often “lose it”, meaning it will drop and trade below the VWAP. This is a sign for short sellers to start shorting it. On the other hand, when a stock below the VWAP is bounces back and breaks out above the VWAP, it means the buyers are gaining control and short-sellers desperately have to cover. Smart day traders chase the fleeing shorts by going long to ride the momentum and “squeeze the shorts”. Price action and volume play a major role

VWAP First Pullback Step1: find the stock in a clear trend up (HH/HL) or trend down(LH/LL) Step2: Look for at least 2/3 candle in the same direction Step3: When first-time price approaching VWAP, Look for a push away from the VWAP (the price should not stall at vwap). Also, look for rejection from the vwap Step4: Observe if that push enjoys follow-through or is rejected back to the VWAP level from the last swing high for an uptrend or last swing low for the downtrend

This is not a holy grail strategy.no strategy will give you a 100% win rate. This strategy works 60-80% for me .so open chart and do practice before entry in the live market I would suggest going through the below link for more clarification on DISCONFIRMATION AND CONFIRMATION of support and resistance Here, In this article, I try to explain in VWAP Trading Strategy detail. I hope you enjoy this article. If you still have any doubt then please watch the below YouTube video where I explain this concept step by step in detail.

Here, in this article, I try to explain VWAP Trading Strategy in detail and I hope you enjoy this VWAP Trading Strategy article. Please join my Telegram Channel to learn

more

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clear

your

doubts. https://t.me/tradingwithsmartmoney. You can also join My Facebook Group to learn more and clear your doubts.

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WRB Trading Strategy

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Gap Trading Strategy

Gap Trading Strategy Back to: Trading with Smart Money

GAP Trading Strategy In this article, I am going to discuss How to Day Trade with 5 simple GAP Trading Strategy. Please read our previous article, where we discussed VWAP Trading Strategy in detail. At the end of this article, you will understand the following pointers in detail. 1. What are the gaps? 2. Why the price gap?

3. 5 simple day trading gap strategy

What is Gap Trading Strategy? The difference between two consecutive candles closing price and opening price is called the gap. A gap occurs when price skip between two trading periods, skipping over certain prices. A gap creates a void on a price chart. Price gaps are simply areas on the chart where no trading has taken place.

Why do prices gap up? Gaps Greatest imbalance between demand and supply. The gap up because of aggressiveness by buyers, I mean there are more buy orders at the open than there is available supply at the prior day’s closing price. The gap down because of the aggressiveness by the sellers, I mean there are more sell orders at the open than willing demand at the prior day’s close. Therefore, gaps are almost always at price levels where there is a supply and demand imbalance at the open. Gaps also occur due to the overnight sentiment of the participant or any big news Smart money trying to skip important support and resistance level, i.e. If they are bullish they gap-up price above the supply zone

GAP act as Support and Resistance The Up gap act as a support zone and the down gap act as a resistance zone. The chart below of RELIANCE stock shows the gap up acting as support for prices.

The Gap fill The gap-fill refers to the price retrace and close the level where the origin of the gap occurs. The closure rate (gap-fill) for up gaps increases if the prior day’s open to close price trend was also up. The closure rate (gapfill) for down gaps increases if the prior day’s open to close move was downward. After the gap price tries to fill the gap. Another occurrence with gaps is that once gaps are filled by price, the gap tends to reverse direction and continue its way in the direction of the gap (for example, in the chart BELOW of RELIANCE, back upwards).

Types of Gap Trading Strategy Gaps are divided based on the context in which they appear. 1. Breakaway (or Breakout) Gaps 2. Runaway (or Measuring) Gaps 3. Exhaustion Gaps 4. Professional gap 5. Inside gap

What is the breakaway GAP? The breakaway gap means breaking the important support or resistance or significant trend line in the form of the gap. Generally appears after completion of important patterns like price in consolidation range or any continuation or reversal pattern. Maximum time this gap does not fill quickly or the same day. The most important volume should be high

Why the breakaway gap occur? The smart money knows exactly where these resistance areas are. If the smart money is bullish, and higher prices are anticipated, the smart money will certainly want a rally. The problem now is how to avoid the old resistance Gapping up through an old area of supply as quickly as possible is an old and trusted method – a way of avoiding the resistance. We now have a clear sign of strength. Smart money does not want to have to buy the stock at high prices. They are already bought their main holding at lower levels. Smart money knows that a breakout above an old trading resistance area will create a new wave of buying. How? Many traders who have shorted the market will now be forced to cover their poor positions by buying as well. Many traders are looking for breakouts will buy. All those traders who are not in the market may feel they are missing out and will be encouraged to start buying. Here you can see that prices have been quickly up moved by smart money, whose opinion of the market at that moment is bullish. We know this because the volume has increased. It cannot be a trap up move, because the high volume is supporting the move

The chart study above shows breakaway gaps through important support and resistance levels. Every breakaway gap leads to a trend continuation as well.

Runaway (or Measuring) Gap: After the move has been underway for a while, somewhere around the middle of the move, prices will gap, this gap called the runaway gap. In an uptrend, it’s a sign of continuation of trend; in a downtrend, a sign of continuation of the trend.

Exhaustion Gap: You will find that weak gap-ups are always Gap up to resistance or gap down to support. This price action is usually designed to trap you into a potentially weak market and into a poor trade, catching stoplosses on the short side, and generally panicking traders to do the wrong thing. Near the end of an uptrend, the exhaustion gap occurred. However, that upward gap quickly fades and prices turn lower. When prices close under that last gap (exhaustion gap), it is usually a dead giveaway that the exhaustion gap has made its appearance. An exhaustion gap occurs with extremely high volume.

Professional GAP Trading Strategy: These gaps appear at the beginning of the moves. Generally occur at the supply or demand zone. (Gap up from demand zone and gap down from supply zone) when price approaching the quality supply and demand zone

.

Inside GAP Trading Strategy Inside gaps are gaps happening inside the prior day’s range. 1. Week market gap up

2. Strong market gap down However, low volume warns you of a trap up-move (which is indicative of a lack of demand in the market) after a gap up resistance

Gap Trading Strategy: There are three factors to monitor to determine whether the gap is real or trap. The three factors are volume, opening price, and pullback

Opening Price and Pullback After a gap up, the pullback to be watched Flat pullback (price consolidate high of the day). Strong buy signal The weak pullback was unable to close below the previous day’s high. buy signal Strong pullback closes below the previous day’s high. sell signal

If the stock gaps up and then sell off and remains beneath its opening price after the morning pullback has stabilized, it’s possible that the stock has reached its high of the day. however, if a stock gaps up and pulls back during the morning pullback, but then rallies to break above its opening price, the mark-up was probably not trapped gap and the stock should make new intraday highs

Volume It is important to watch the volume carefully when determining if a gap is valid. If the stock gap up high and the volume also high and also the price remains above its opening price after the early morning pullback, it is an excellent sign that the stock has further to go on the upside. All reverse for a trap gap up If high volume appear after a gap up and the stock immediately comes under selling pressure, chances are that this volume was a seller If a large volume paper in a gap up the situation and if the stock runs higher, then chances are that it was a buyer, probably the reason for the gap up in the first place. The smart money will support the stock if he has the buyer, or he will sell stock in a hurry if he has the sellers. Smart money do not generally chase the stock in the direction of the gap in the early morning unless there is a fundamental reason for doing so

Our entry based on two types of gap 1. Outside gap(market open outside of the previous day range) 2. Inside gap(market open inside of the previous day range)

Outside gap 1. Gap and GO Trading Strategy All gaps are not filled in that day Gap and GO Trading Strategy criteria 1. Price gap up above previous day high 2. Wait for the first candle to complete

3. Volume should be high and supporting in the direction of the gap 4. Mark opening range

5. Entry on breakout of high of the day 6. Price should above vwap

2. Gap-fill reversal Trading Strategy When a market gaps up, then the gap act as a support level for any pullback. Pullback Tests of gaps on lighter volume tells that the issue does not have enough energy to get through the gap; instead, the gap becomes support and any bullish signal is triggered our buy entry 1. Wait for price gap up

2. Wait for a stock to pull back to its prior days close and fill the gap.

Two types of Pullback 1. Price gap up just above the previous day high or below previous day low, and then strong pin bar formed which fill the gap. volume should be high on the pin bar

2. Second price gap up and then retrace and fill the gap. it takes more than 2 candles and volume should be decreasing

3. You then wait to see a sign of strength and enter the position on that move. 4. Price should not close inside the previous day in any five-minute candle 5. You then place a stop below the low of the candlestick.

3. Open Gap Reversal Trading Strategy These patterns generally appear at the top or bottom or any strong supply or demand zone The open gap reversal process 1. There needs to be an existing extended uptrend on the chart for at least a few trading sessions to the supply zone. A gap up in price to quality supply zone is a VERY high odds shorting opportunity.

2. Or a gap up in price to quality supply zone in the context of a downtrend is a VERY high odds shorting opportunity.

3. After a gap up the price starts falling and crosses yesterdays. This generates the sell 4. The Stop-Loss is the low of the same day.

NOTE:-As we are trading against the gap more confirmation required confirmation either from price action or volume action

4 & 5. Inside GAP Trading Strategy Let’s analyze a downtrend and the previous day was a down day. Today’s price gap up but close within the range of the previous day. Our entry opportunity will be

Gap up short Gap up long A gap up in price, in the context of a downtrend, is a VERY high odds shorting opportunity if any bearish reversal signal given. A gap up in price, in the context of a downtrend, is a lower odds buying opportunity If the stock gaps up and then sell off and remains beneath its opening price after the morning pullback has stabilized, it’s possible that the stock has reached its high of the day. however, if a stock gaps up and pulls back during the morning pullback, but then rallies to break above its opening price, the mark-up was probably not trapped gap and the stock should make new intraday highs In an uptrend, entry opportunity will be 1. Gap down long

2. Gap down short

Gap up short in a downtrend Context downtrend Wait for at least 5 minutes. Or mark opening range After the 5 minutes, wait for a reversal price signal to provide you with short term confirmation that the mark-up was a trap by smart money and the short term trend is pointing downward. Then short below of the first candle Volume should below. If the stock has gapped up high; volume should be high for confirmation of the real gap. However, if price closes below the opening price with no large volume, chances are that the mark-up was a trap by smart money

Let’s analyze the gap down long in an uptrend

Gap up long in a downtrend How to know, whether the gap up is real or trap by smart money Market when gap up opening, the volume should be heavy to go higher. if smart money is active they supported by volume Wait and see if the market trades above its opening prices after the morning pullback. It indicates the gap was real Then go long Or you can enter from a previous day low when price retrace test of the previous day low Note: – This entry technique is very risky as we are going against the trend and momentums so double confirmation is required

It is very useful for this trading strategy if you combine our Pullback Trading Strategy and Advance CANDLESTICK Analysis article. Here, in this article, I try to explain, How to Day Trade with GAP Trading Strategies in detail and I hope you enjoy this GAP Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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VWAP Trading Strategy

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Intraday Open High Open Low Trading Strategy

Intraday Open High Open Low Trading Strategy Back to: Trading with Smart Money

Intraday Open High Open Low Trading Strategy In this article, I am going to discuss Intraday Open High Open Low Trading Strategy in detail. Please read our previous article where we discussed VWAP Trading Strategy. As part of this article, we are going to discuss the following Open High Open Low Trading Strategy pointers in detail. 1. Here you will learn 2. The logic behind the open high open low strategy 3. Where it occurs in the big picture 4. Rules for trading OPEN HIGH LOW STRATEGY 5. With live example

Intraday Open high Open Low Trading Strategy The original name of the strategy is open deive. From a buy-sell perspective, we called it open high and open low. Open high= sell Open low= buy So open rive and open high open low both the same.

The logic behind the strategy These are the directional move with strong hand participation and conviction.

Where it occurs? Location 1. It occurs most of the time after a sideways price action (tight price channel), or 2. You can also spot it at the start of a trading session. 3. From strong supply or demand zone If open-drive occurs after a sideways price action, it indicates that either strong buyers or sellers were accumulating their positions in the sideways price action, or afterward, they started aggressive buying or selling activity to move the price If at the start of a trading session. An Open-Drive is generally caused by participants who have made their market decisions before the opening bell. The market opens and moves aggressively in one direction. Fueled by strong smart money activity, the price never returns to trade back through the opening range

The rule for sell open drive or open high strategy Where is the action playing out? (location in the big picture). Reason to take the trade. Best work if breakout from any sideways price action is or gap from strong supply or demand zone First, 5 min candle(opening candle) should be a big red candle Open = High, For easy reference 2-3 points buffer will be considered as equal not carrying much weight First candle open to close around lower of the candle (preferably) Volume must be high Minimum Risk: Reward(R: R)=1:2(next support area) Breakout entry after opening range or first candle low(for open high set up) The price must be below vwap for sell Let’s do it an example

Open high strategy for entry 1. Wait for the first candle to complete. should be a big red candle 2. Volume should be high.

3. The 2nd inside candle be a Doji or narrow candle 4. low of second candle equal to low of 1st candle 5. Declining or lower volume on 2nd candle 6. 2nd candle range stays within the bottom 2/3rd’s of 1st candle 7. The price must be below vwap 8. Stop-loss above your entry candle or day high as per your risk

Let’s do an example

Today I took this trade On a daily time, frame price increases with volume decreasing and closing near resistance. I clearly indicate me this move will not break the resistance.

Today price gap up to resistance. Then wait for 1st candle to complete

What first candle told me? A big red candle Open = High First candle open to close around the lower of the candle Volume very high All these indicate bearishness. So sold in next candle. As shown in the below image

Please watch the complete video here for a better understanding https://youtu.be/rHK0LHlmd5s You can find open low or open high in our scanner

https://docs.google.com/spreadsheets/d/1v02Aq9B6xTa7WZ8OP6NUO0d3dKMKFGrxXVv5kMjF6k/edit#gid=0

You can create your above scanner here https://dotnettutorials.net/lesson/how-to-make-own-day-trading-scanner/ You can also watch the complete video of this Intraday Open High Open Low Trading Strategy article here.

Here, in this article, I try to explain Intraday Open High Open Low Trading Strategy in detail. I hope you enjoy this Intraday Open High Open Low Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. You can also join My Facebook Group to learn more and clear your doubts.

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Gap Trading Strategy

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PIN BAR Trading Strategy

PIN BAR Trading Strategy Back to: Trading with Smart Money

PIN BAR Trading Strategy In this article, I am going to discuss the PIN BAR Trading Strategy in Detail. Please read our previous article where we discuss WRB Trading Strategy in Detail. At the end of this article, you will understand the following pointers in detail which are related to bullish pin bar and bearish pin bar trading strategy. 1. What is a pin bar?

2. Structure of pin bar

3. The psychology behind pin bar

4. How to use the pin bar in our trading?

5. One day trading strategy based on the pin bar

Pin Bar Structure Let’s understand a bearish pin bar. How it formed? Phase1: After a strong extended up-trend has been in effect, the atmosphere is bullish. Phase2: The price opens and trades higher. The bulls are in control. Phase3: But before the end of the day, the bears step in and take the price back down to the lower end of the trading range, creating a small body for the day. The long upper wick represents that sellers had started coming in at these levels. A lower open or a red candle the next day reinforces the fact that selling is going on and sellers have now taken control

So basically pin bar is a reversal pattern. There are two types of pin (1) bearish pin bar, explained above, and (2) bullish pin bar

Criteria to Identify Pin Bars 1. First Requires old support or resistance in the background

2. Price rallies above resistance only to fall back below. Price closes below resistance and on or near its lows. reverse for support

3. The “wick” (or tail) should be at least 2 – 3 times the length of the body.

4. The body should be completely contained within the previous day’s range. The body either red or black

5. The body should be present towards either the upper or lower extreme of the Pin Bar.

6. The wick should stand out when compared to surrounding bars. The wick of the Pin Bar should be larger than the previous day’s trading range

7. The following day needs to confirm

8. The volume can be either low ( no demand above the resistance ) or high (supply overcoming the demand above resistance ), reverse for support

THE CONTINUOUS PIN BAR Trading Strategy Pin bar does not always signal a reversal, so you’ll need to know how to tell when a pin bar has failed, and how to react accordingly. The significance of the pin bar trading strategy depends on (1)location, where it appears in the trend, (2)length of the wick If the Pin Bar wick is more than 4 times larger than the average trading range of the preceding bars. Then it will most likely become a (1)continuation pattern or (2)the wick will be tested again for reversal. When presented with a massive Pin Bar my advice is to stay on the sidelines and wait for a better opportunity to present itself as you have to risk too much capital in hopes of being profitable. Let me explain this through an example

PSYCHOLOGY OF PIN BAR Trading Strategy Let me tell you very important information. Smart Money only targets places with higher Volumes are and he collects them. Generally, the places (reference points) are 1. support and resistance

2. area on consolidation/accumulations on yesterday high/low .weekly high/low etc. and 3. At the beginning of the day 4. At the end of the day 5. Daily High and low.

Why do they do? The main objectives are: 1. To get volume

2. Avoid Slippage due to big order

3. Smart money testing demand above old resistance before moving down or testing supply below support before moving up

How did they do? They move the price above or below any reference point hitting the stop losses of either buyers or sellers, while same time Encourage traders to commit to positions in the wrong direction. Smart money induce traders to take the wrong direction by using sharp and aggressive moves near the high or low of the day Let me explain when the price reverse from resistance. As the early price is marked up, 1. Premature short traders are liable to panic and cover with buy orders.(stop hunts)

2. However, those traders looking for breakouts will buy, but their stop-loss orders are usually triggered as the price move back down.

3. All those traders who are not in the market may feel they are missing out and will feel pressured to start buying. Let understand through an example

What happens next, price move down words? After trapping breakout long trader

Pin bar act as support and resistance Low of bullish act as support and high of the bearish pin bar act as resistance

Pin Bar and market context To be able to trade Pin Bars effectively you need to be able to gauge the direction of the Trend and trade with it. Here are some key principles for trading pin bar

Pin bar work best in trending conditions Ideally, a Pin Bar should close in favor of the prevailing trend, for example, if the trend is up then the Pin Bar should have a close higher than the open and should be a bullish Pin Bar. The opposite applies to a downtrend.

A retracement to a prior resistance now- support area is a typically excellent trade

A retracement to a prior resistance now- support area is a typically excellent trade

A choppy, range-bound market should not be traded Pin Bars that are in heavy traffic or choppy, range-bound markets should not be traded. The reason for this is that there is no clear trend and there are too many areas of interest for the price to stall at.

A pin bar should immediately follow-through If a bullish pin bar fails to rally away from the danger point and the price hangs near the bullish pin bar low, then something is likely wrong.

Opening Pin Bar Trading Strategy 1. Price gap up above previous day’s high(PDH)

2. Opening candle close above PDH. (bullish pin bar)

3. If low of the candle touches PDH and leaves a wick below then a very high probability trade 4. Entry above the high of the bullish pin bar candle

5. Ensure that there is no resistance overhead like big support/resistance 6. SL below PDH or below entry candle

NOTE:- REVERSE FOR BEARISH PIN BAR

Stop-loss placements The simplest and most likely method that you will profit from is to place your stop a certain distance beyond the high/low of the Pin Bar.

What next For better understanding read the support and resistance article. As we explained above Pin bar best work from support and resistance level The best way to learn about Pin Bars is to open up some charts and try and find some for yourself. Once you have found a selection of Pin Bars, try and figure out whether or not they are good or bad Pin Bars with respect to their form and the candles that precede them. Here, In this article, I try to explain the PIN BAR Trading Strategy in Detail and I Hope you enjoy this PIN BAR Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Intraday Open High Open Low Trading Strategy

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Trading with Sideways Price Action Area

Trading with Sideways Price Action Area Back to: Trading with Smart Money

Trading with Sideways Price Action Area In this article, I am going to discuss the two approaches to Trading with Sideways Price Action Area in detail. Please read our previous article where we discussed how to trade with smart money before proceeding to this article as it is a continuation part of how to trade with smart money. As part of this article, we are going to discuss the following pointers. 1. Two approaches to trading with a sideways price action area 2. How enter? 3. How to exit? 4. Odd enhancer

How to trade with SIDEWAYS Price Action Area Break Out? Minimum three candles are required for sideways price action area break out.

Here are two approaches to trading the breakout designed to minimize risk: 1. Buy the initial breakout when the conditions are right 2. Buy the retracement to the breakout when you need confirmation

Break Out Condition Now that you know TWO tactical approaches to trade the breakout, let’s look at how to recognize which OR breakouts are the best to trade. Again, I’ve created a quick checklist for evaluating a stock’s price and volume action. Remember these criteria are used not only to find stocks that are likely to lead to a successful breakout but also to define good risk points based on the stock’s price and volume action. For bullish breakouts. look for price to hug the top of the range The quicker you enter a range breakout trade, the better. Trade with the trend. In a bear market, downward breakouts tend to make more money than upward breakouts in intraday trading. In bull markets, upward breakouts make more money. For upward breakouts, trade only those situations where price closes above the middle of the opening range most of the time. Downward breakouts from the opening range do best when price resides below the range’s midpoint most often There is no resistance above breakout of bullish breakout Break out with volume After the breakout, the stock exhibit bullish price action for up break out

Trade set up 1: For Opening Sideways Price Action Breakout Logic: 1st candle of the day should be heavy volume

Why heavy volume on the first candle of the day? We are trying to identify what the SM sentiment is for the day? If Smart Money wants to buy stock, we would see that on the open with heavy volume and strong directional move. Stock may gape at the opening. Which shows that stock may trend up the rest of the day? Open = low of the first candle indicate SM strongly bullish 1st candle having lower wick indicate price tray to move down but Smart Money enter drive price higher 1st 5-minute candle be a wide range candle with a low wick or no wick with volume Stock in an uptrend with price above new demand

The next candle/candles should be inside candle be a doji or a shooting star or narrow range candle with less volume The range stays within top 2/3rd’s of 1st candle

Odd Enhancer Avoid if Price extended from 20ma on entry time frame ( I am using 5 minutes) Sideways pa area volume almost equal or more relative to the first candle Entry time frame not trading just above demand or supply on a higher time frame Less than a 3 to 1 reward to risk ratio to target on the chart

3 action steps: ➡ Buy 1-2 cents above the second candle, preferably a Doji or shooting star if playing long. Opposite for playing short. ➡ Upon entering you place stop loss 2 cents below 1st candle or low of the last swing low ➡ Target is 2R

Trade set up 2: Pull back Break Out SEE THE PULLBACK FOR CONFIRMATION SMART-MONEY ALWAYS BUY FROM VWAP OR AROUND VWAP, IF THEY WANT TO BUY See the pullback to VWAP OR 20 EMA. If price pullback to VWAP EMA, but unable to push and hold below VWAP, indicating that buyers strength Pullback condition 1. Low volume 2. Lower wick 3. NARROW RANGE CANDLE

ODD ENHANCER Avoid if Already traded to target on a bigger time frame Sideways pa area volume almost equal or more relative to the first candle Less than a 2 to 1 reward to risk ratio to target on the chart

Let’s do an example Big picture ON DAILY TIME FRAME On daily in the uptrend

HIGHER TIME FRAME ANALYSIS

ON 30MINUES OR HOURLY TIME FRAME

TRADING TIME FRAME I am using entry-exit for a 5-minute time frame

That’s it for today. In the next article, I am going to discuss How to Trade with Supply and Demand Zone in detail. Here, in this article, I try to explain the two approaches to Trading with Sideways Price Action Area in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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PIN BAR Trading Strategy

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Pullback Trading Strategy

Pullback Trading Strategy Back to: Trading with Smart Money

Pullback Trading Strategy In this article, I am going to discuss Pullback Trading Strategy in detail. Please read our previous article where we discussed how to trade with support and resistance. As part of this article, we are going to discuss the following pullback trading strategy concepts in detail. 1. What is a pullback and the psychology behind a pullback trading strategy? 2. Benefits of Pullback Trading 3. Characteristics of pullback 4. Pullback Trading types

5. Where does pullback end?

6. Conservative vs aggressive entry

What is pullback and the psychology behind pullback? A pullback is a price movement that moves in against the trend. It is a temporary price movement before it resumes back into the main market direction. Pullbacks are sometimes referred to as price Correction or retracement. Pullback occurs when price moves at least one bar against the opposite direction of the trend. 1. The hope of comparison to find top or bottom on find weakness in price move by the novice.

2. If the pullback is sluggish contra traders will lose hope while bullish traders will regain confidence.

3. If he pullback down is strong and signals bearish conviction, the bar will get more aggressive and the bulls will start to doubt their position

Benefits of Pullback Trading Strategy There are several benefits of the Pullback Trading Strategy. Some of them are as follows: 1. Trading pullback lets you have a tighter stop loss as your trade location is good and this gives you a better risk to reward

2. From a psychological standpoint, it’s easier to pull the trigger as you’re buying high and selling low

Characteristics CHARACTERISTICS of WEAK PULLBACK 1. Correction (depth of pullback) must be small and without strong momentum candlestick 2. Volume decreases / low volume correction

3. Great mix between red and green candle with light volume 4. Closes towards the middle with wicks

5. How pullback came (should not come after consolidation) Week pullback leads to continuous of an existing trend

CHARACTERISTICS of STRONG PULLBACK (leads to TR/REVERSAL) Trading In a bull trend, the strong pullback key features are as follows: 1. First is a series of consecutive bearish bars(LH/LL)

2. Second is the presence of a strong bearish bar( trend bar) 3. The third VOLUME DOES NOT REDUCE on a pullback 4. Fourth Depth of pullback (deep)

5. Fifth How pullback came (after consolidation) 6. When pullback fails to bounce back quickly

Hence, a weak pullback is one that lacks all these features. Strong pullback leads to TRADING RANGE OR reversal of trend or serious attempt to reverse the trend

Pullback Trading Strategy

PULLBACK Trading Strategy TYPES These corrective moves either are the time or price correction but they denote a change in the order flow and participation depend upon the types of trend. There are TWO TYPES of Pullback Trading Strategy. They are as follows: 1. TIME CORRECTION

2. PRICE CORRECTION A strong trend: (Time correction) In strong trending markets, you’ll have pullbacks that usually stock move in horizontal, low volatility trendless manner. Because the pullback is shallow, it’s difficult to time your entry on a pullback. Instead, you can look to trade the breakout, or find an entry on the lower timeframe. Healthy trend: (PRICE CORRECTION) A healthy trend is between a strong and a weak trend. You can expect a pullback towards the SR level. Weak trend (TRENDING RANGE TYPE): In weak trending markets, you’ll have steeper pullbacks that usually retrace towards major Support and Resistance TIME CORRECTION

TIME CORRECTION (Stock to digest the directional move is through a time correction). In time correction the stock moves in horizontal, low volatility trendless manner. Generally, a strong trend has time correction. A strong trend: (Time correction) In strong trending markets, you’ll have pullbacks that usually stock move in horizontal, low volatility trendless manner. Because the pullback is shallow, it’s difficult to time your entry on a pullback. Instead, you can look to trade the breakout, or find an entry on the lower timeframe. What happening here is as follows? As the trend continues, it gets far from the stop loss point; retailer’s taking profit to reduce risk .market pulls back and goes sideways. Once bulls confident that the bears will fail to reverse the trend, bulls buy again with tighter stop loss

The diagram above shows a time correction pullback example.

PRICE CORRECTION PRICE CORRECTION, CORRECT as price moves in the opposite direction of the primary trend, this correction occurs by price and move towards SR level. Healthy trend: (PRICE CORRECTION) A healthy trend is between a strong and a weak trend. You can expect pullback towards the SR level

The above diagram shows that the bears are usually trying to show their dominants, but not realizing that the bulls are still strong, the bulls usually come back into the market just before the bears managed to build confidence

Complex Pullbacks Complex pullbacks happen when price steps into a consolidating phase in the form of any pattern. It then remains consolidated for a while before it resumes into the trend No one really knows how long it remains consolidated before it moves again. Generally forming a continuous pattern like 1. Rising / Falling Wedge Pullback 2. Rising / Falling Flag Pullback 3. Pennants Pullback

4. Widening Wedge Pullback

Where does the pullback end? Here are some of the guidelines to find 1. Towards previous resistance turned support

2. Towards previous support turned resistance. 3. Towards dynamic support.

4. Towards a dynamic resistance.

5. Towards a Fibonacci retracement

Now you have an idea where price could potentially retrace to.

Conservative vs aggressive entry at technical test point or end of the pullback Should one insist on playing a reversal without waiting for build-up, firing into a technical test (where pullback end) is certainly superior over firing into a void. But there is still a large degree of aggression and risk involved with respect to the stop-loss point. Let me explain to you.

Pullback D-E represents a test in the level of B, which was a function of the earlier sideways activity within a bull trend

It can safely be stated that the level of B plays a crucial role in this chart:

1. Resistance turned into support

2. It provided a level for a technical test in a Fibonacci 50/61.8 percent correction;

3. It offered a platform for bulls and bears to fight it out in order to determine the lows of the correction, By waiting for consolidation at support, it is inevitable to occasionally miss a turn. In fact, it is quite a frequent occurrence. But it will save us also from many a quick shake. It is important to note that the higher entry above F does not necessarily compare unfavorably to the more economical entry at E. First of all, the consolidation below F shows more confirmation on the likelihood of the reversal, which is already a plus. But there is another issue to take into account that will affect the clinical odds on both wagers. The levels for protection and target in relation to the level of entry.

The above chart with a small variation The above diagram demonstrates what exactly it is that we aim to avoid when waiting for consolidation. This time the pullback D-E reversal played itself out a little differently. Technically seen, the level of B once again presented itself as the most likely candidate for a possible turnaround (a 50/60 percent retracement in an area of former support, now resistance), but an immediate short at point e would have put an aggressive bull in serious trouble before the actual turn set in. Take note of the fact that in this situation, prices once again put in a technical test before reversing, but instead of using a former level of support to bounce away from (B), the market opted for a former level of resistance to turning around in if matches (C). Both E and F are valid technical tests and equally common in occurrence. since we have no way of knowing beforehand which level the market will pick in any one situation, the idea is to remain on the sidelines until more clarity comes along. BUT Not always will the market offer us this extra information, but it will do so often enough to consider patience as a vital ingredient in operating tactics. As to the conservative long, an entry above the level of G and a tight stop below the level of F will certainly have suited many BULLS just fine

How to enter your trades on a pullback There are many ways to enter your trades via a pullback. Here are some entry techniques you can us 1. Reversal candlestick patterns break out 2. Continuous pattern TL breakout

Reversal patterns Reversal patterns represent a rejection of higher/lower prices, which are useful for entry triggers. Some of these patterns can be the pin bar, engulfing pattern, and outside bar

Continuous pattern TL break

PULLBACK SETUP FOR DAY TRADING Trade set up cannot have the following: Already traded to target on bigger time frame after the initial morning move

In this article, I try to explain the Pullback Trading Strategy in detail. I hope you enjoy this article and understand the Pullback Trading Strategy. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Trading with Sideways Price Action Area

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Intraday Breakout Trading Strategy

Intraday Breakout Trading Strategy Back to: Trading with Smart Money

Intraday Breakout Trading Strategy In this article, I am going to discuss Intraday Breakout Trading Strategy in detail. Please read our previous article where we discussed How to Trade with Support and Resistance in detail. As part of this article, the following pointers are going to be discussed in detail. 1. What is the Intraday Breakout Trading Strategy? 2. Merit and demerit of breakout trading 3. When should void breakout trade?

4. How to find high probability breakout trading? 5. Price action for the breakout bar 6. How to enter a breakout?

What is Intraday Breakout Trading Strategy? Break out means moves below any support or above any resistance. Price breakout from 1. First support and resistance is a break of previous candle high or low 2. Last swing high or low (shorter-term support and resistance) 3. Major support and resistance

4. Trend line or moving average

Benefits of Intraday Breakout Trading Strategy: There are several benefits to trading breakouts. For example 1. Momentum is with you – Trading breakouts allow you to enter your trade with momentum at your back

2. Catch big trends – If you were to trade pullbacks, sometimes it may never come. But with breakouts, you never have to worry about missing another move in the markets

The demerit of Breakout Trading Strategy: False breakout or trap

When should we avoid trading breakouts?

1. Don’t trade breakouts when the market is far from Support/Resistance (S/R) and Are there obstacles overhead or underfoot that could possibly obstruct an advance or decline

2. Don’t trade breakouts without TIGHT TRADING RANGE (consolidation) before the breakout 3. Don’t trade breakout when the break set against the dominant pressure

Don’t trade breakouts when the market is far from Support or Resistance (S/R) Why? Because you don’t have a logical level to place your stop loss. Even if you do, it usually results in a poor risk to reward profile Based on the stop loss placement we can divide the break out into three types

False Breaks, Tease Breaks, and Proper Breaks Whether to take a position or not on a break is always a function of how well the technical credentials of the chart back up the prospects for follow-through.

The difference in consolidation prior to a breakout not only affects the likelihood of follow-through but the level for protection as well. An excellent way to play a break is shown in Situation 3. Now we can truly see the virtues of proper consolidation up. The breakout may still fail soon after, but technically seen, this is the more favorable scenario

Don’t trade breakouts without consolidation

Why is this so? Traders in profit will exit their positions at the nearest swing high (to protect their profits). And traders looking to short will do so at the swing high. So here’s what happens… You get a double dose of selling pressure. From traders exiting their long trades (by selling), and traders looking to short the markets. With so much selling pressure in the same area, chances are, the breakout would fail if the breakout happens without consolidation.

DON’T TRADE AGAINST THE Higher Time Frame Support and Resistance

How to find high probability breakout trades Based on my experience, these are the best times to trade breakout: 1. When the market is trending strongly

2. When there’s no Support/Resistance nearby

3. When the market is forming consolidation at Support and Resistance area 4. When there are higher lows into Resistance or lower highs into Support Let me explain you above four points in details

1. When the market is trending strongly If the market is trending strongly, you’re unlikely to catch the trend on a pullback. So, what can you do? Well… you can trade the breakout, right?

You can get long when the price trades above the swing high, and place your stops below the last swing low

2. When there’s no Support/Resistance nearby Think about this. If you’re short the market, where would buyers come in? If you’re long the market, where would sellers come in? Support and Resistance, right?

3. When the market is forming consolidation at the Support and Resistance area Why do you want to trade breakouts with consolidation? Here’s why: A consolidation would attract stops in the market as traders place their stop-loss beyond the highs/lows of the consolidation. It could be to protect their existing positions or to trade the breakout in either direction. So, when the market breaks out of consolidation, you get a double dose of pressure. And it’s caused by traders looking to protect their positions and traders looking to trade the breakout. An example:

CONSOLIDATION

4. When there are higher lows into Resistance or lower highs into Support Higher lows into Resistance is a sign of strength by the buyers and there’s a good chance the market will break out higher. Why?

Because if there were strong selling pressure at resistance, the price should have fallen quickly. The fact it didn’t tell you that buyers are willing to buy at higher prices and thus forming higher lows into Resistance. Visually, it looks like an ascending triangle. Here’s an example:

And when you get lower highs into Support, it’s a sign of strength by the sellers. Because if there were strong buying pressure at Support, the price should have risen quickly. The fact it didn’t tell you that sellers are willing to sell at lower prices and thus forming lower highs. Visually, it looks like a descending triangle. An example:

Breakout bars for upside 1. The bar that breaks structure (resistance line) 2. Volume should dramatically increase

3. If the follow-through bar is large, the odds of the trend continuing are greater

4. The first pullback occurs after 3or more bar of a breakout with low volume and lower tail

Breakout and breakout bar

The bar has a full trend body and small tails or no tails, the larger the body, the more likely breakout will succeed. A widespread up bar closing on the highs pushing up and through an old top to the left. It is an effort to go up as it is showing demand. After this event the market usually rests or starts to react, you are now looking for indications of strength to confirm the strength

Breakout and volume If you observe a wide spread up, on high volume, punching through the top of a resistance (supply line), and the next day is level or even higher, then you would now be expecting higher prices. Any low volume downday (potential test) will confirm this view

BREAK OUT bar NEEDS FOLLOWTHROUGH Traders like to see a confirmation after the breakout. One more trend bar after breakout bar. A bull break followed by a bull break is a sign of follow-through and thus an indication of bullish enthusiasm, for as long as it lasts. Should we see the market respond to a bull break with a bearish bar and this bar then gets broken at the bottom by another that gives us valuable information also: technically seen, we are dealing with a false break. It shows false as the bull break failed to follow through and was followed by a bear break-in turn.

BREAKOUT AND PULLBACK Any low volume pullback shows successful of breakout

How do I enter breakout trades? Well, there are usually 3 ways you can trade a breakout. You wait for a candle to close: 1. It’s easier to execute the trade psychologically as the candle has closed in your favor 2. You may get a poorer risk-to-reward (as the market has already moved in your favor) You trade breakout using a stop order: 1. It’s harder to execute the trade psychologically because there are no signs of “confirmation” 2. You usually get a better risk-to-reward (as you’re entering near the breakout level) You trade test of the breakout After the breakout, any low volume test is a high probability entry with low risk and high reward In the next article, I am going to discuss the Wide Range Bar (WRB) Trading Strategy in detail. Here, In this article, I try to explain in Intraday Breakout Trading Strategy detail. I hope you enjoy this Intraday Breakout Trading Strategy article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Pullback Trading Strategy

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3 Techniques for Risk Management in Trading

3 Techniques for Risk Management in Trading Back to: Trading with Smart Money

3 Techniques for Risk Management in Trading In this article, I am going to discuss 3 techniques for Risk Management in Trading. Please read my previous article where I discussed How to Day Trade with 5 simple GAP Trading Strategies. Here I will discuss my trading secret to success 1. Risk protection 2. Risk profile 3. Active trade management

Introduction to Risk Management in Trading Trading knowledge including technical analysis, good strategies and chart reading are all necessary but alone are not enough to make you a successful trader Today’s post is going to be one of the most important you’ll ever read. Here I will discuss risk management. Because if you apply the risk management strategies, I can guarantee you’ll never blow up another trading account and you might even become a profitable trader Risk management is the foundation of a successful trading system. We can basically break risk management into 3 categories: 1. Risk protection 2. Risk profile 3. Active Trade management Let’s discuss all these in details

Risk Protection In order to protect against something it is necessary to begin with an understanding of what it is that you are protecting against. It is fine to say that protection is being taken against potential loss. Losses are inevitable part of the trading game. We need to accept losses as cost of doing this business. World’s best traders too lose a lot. The underlying root cause of a loss in any particular trading situation is the trader’s own fear and greed. Let’s start with fear

Fear Fear warns you that something doesn’t feel right about a trade that you took; you have to try to figure out what exactly is going wrong Any fear that does exist works in two ways. There is the fear of missing an opportunity (FOMO) There is also the fear of incurring a major loss The protection against each is somewhat different. Let’s discuss each in depth

Protection against Fear of missing an opportunity (FOMO)

How it affect our trading The fear of a missed opportunity may result in a premature trade. What most of us do We’re so afraid of missing a profit that we tend to constantly trade too early. The common mistake made here is to conclude that a little bit of a wait is no problem because the eventual result will justify it. How do you know it’s going to be just a short wait? That’s an assumption. A much bigger problem, however, is that the judgment (upon) which the trade is based may be invalid. Because that opportunity has not had a chance to fully develop. That means something could go wrong. If it does, the position will probably be stopped out.

HOW TO PREVENT Fear of missing an opportunity (FOMO) Unfortunately there is no mechanical tool that will invariably keep you from trading too early. Protection against the fear of missing an opportunity is discipline and confidence on your method

4 Steps for Disciplined Trading: 1. Take direction from the market, not from your hopes, greed or fear. Most traders do not see the market clearly. Control your beliefs about the market 2. Predefine your risk before taking a trade 3. Cut your losses without hesitation 4. Use a systematic money management plan

Confidence Confidence in your method makes all the difference in trading. You will not be able to make money unless you have total confidence in your methods. But the problem is that you will not have confidence in your methods if you are not making money with it. To become a consistently profitable trader, you need to develop a method that suits your personality. When developing a trading plan, you should know and understand the logic behind each step. This will boost your confidence and will give you the discipline to follow the plan. Confidence believes in your ability to do something. To be successful in trading, we must have a method with an edge. We need to trade the method long enough Ignoring the results of individual trades to win. This is not possible without total trust in your methods. If you have Confidence in your trading method, losses shouldn’t worry you at all. Just take it and move on. Successful trading is not totally avoiding losses but winning more than what you lose. For every trade we enter, there could be four outcomes. a) Big Loss, b) Small Loss, c) Small Win and d) Big Win. Let us remove the Big Loss from this. Small Wins will take care of Small losses and Big wins will remain with us. Ensure that your trading plan eliminates the possibility of losing big. “You can’t make money if you are not willing to lose. It’s like breathing in, but not willing to breathe out” Ed Seykota

Fear is of incurring a major loss The other type of fear is of incurring a major loss. It is done with a stop order. The stop order lets the investor take comfort in the fact that if his appraisal is badly flawed, his loss will be cut short before it turns into a disaster. If a trade has been made too early (FOMO), the stop may be too close to survive the remaining and unknown action of the trading range. In these cases the position may be lost to a stop resulting in a loss even though the eventual outcome has been properly diagnosed market. Using a stop correctly means maintaining a profit – risk ratio that is in your favour. Be careful however, that you don’t end up using this idea in a way that unduly restricts the stock’s ability to move. Over the years we have found that the most generally acceptable profit – risk ration is 3 to 1. First of all, it prevents a major loss it also gives the stock some breathing room. It is unreasonable to assume that every stock will be caught exactly at its turn. A long position may move somewhat lower before it turns up and a short position may move somewhat higher before it turns down. You have got to allow some margin for error.

Stop loss order How to place a proper stop loss order?

Step 1 =Identify the structure of the markets Step 2 = Place your stop loss beyond the structure Let me explain…

Identify the structure of the markets The structure of the market refers to Support & Resistance, swing high, swing low, higher highs and lows, lower highs and lows, and etc.

Step 2 = Place your stop loss beyond the structure These are important points in the market because that’s where most traders will place their stop loss.

Why? Because if price trades beyond it, it will invalidate their trading setup as they know they are wrong on their trade. But, the problem with placing your stop loss near these levels is, it gets triggered easily by smart money Why they do this? Smart Money paid to collect VOLUME (where Liquidity is found). He only targets places with higher Volumes are and he collects them. How they do? They spikes in one direction or the other hitting the stop losses of either sellers or buyers

Protection against greed Greed is perhaps more basic. When it is responsible for a loss it is a loss of already realized profits From an objective standpoint you would think that when a reasonable profit has been developed in a position there would be a great deal of satisfaction in taking of that profit. Unfortunately, it doesn’t always work that way. Let’s analysis the situation After market given a certain level of profit there is a tendency to want more (greed) instead of being satisfied. The desire to have more profit causes the situation to be analysed from that standpoint (greed) and not from the standpoint of things as they really are. At that point greed has taken control and the profit already gained is put in jeopardy Consider these examples. A stock is in an uptrend and has been for quite some time with good upside progress being the result. There are two good reasons here for selling this stock .The stock becomes overbought, reaches its upside objective or key resistance Here’s an example for Risk Management in Trading: You go long on a breakout and the trade goes in your favor immediately. Shortly, you have open profits of 3R and your trading strategy tells you to exit your trade (because the market has reached a key Resistance). But, you tell yourself: “This chart is looking so bullish, I should hold this trade longer for bigger profits”. So, you hold onto the trade. Slowly, the market starts to reverse and wiped out a portion of your open profits. Now you’re feeling anxious but you tell yourself: “Never mind, I’ll exit the trade if the market goes up a little more”. Unfortunately, the market didn’t go higher and retrace all the way and hit your stop loss.

How to overcome greed Pre-establish a sell or cover order in the area of the anticipated objective Or once price is reached in the anticipated objective , tighten your stop loss(trailing stop order)

Pre-establish a sell or cover order in the area of the anticipated objective The only way to totally protect oneself from greed is to take steps against it at the time a position is one of the best ways to do this is to predetermine and preestablish a sell or cover order in the area of the anticipated objective. When the stock reaches that level the established. Position will be automatically eliminated and the profit protected.” Greed won’t even have a chance.

TRAILING STOP ORDER We identify zones in which we’re happy to trade, and then work the best entry we can within that area. Stops should be placed in a location that invalidates the trade Not every position is going to make it to its indicated objective. I mean not every position hit the target. In those cases where the ultimate objective is not met, how to protect the position? The stop order can be used very effectively for this type of protection providing. If it is used correctly throughout the life of the position.

That means re positioning it as the move progresses. The first objective in re positioning a stop is to get up to or down to the trade price as quickly as possible. One this is accomplished, the investor’s funds are protected against loss and he can breathe a little easier. This re positioning, or any to follow, cannot be done in a careless fashion. If it is, initial capital may be protected, but profits will likely be scarce. The rest periods between the periods of progress are extremely important. They will indicate when a stop can be moved and more importantly to what level it can be moved. A resting period will either come as a normal correction or as a horizontal consolidation. The stop should be re positioned just above or below the extremes of these periods just as soon as there is an indication that the prior progress is being renewed. Don’t be in too much of a hurry on this. If you cannot point to some action that clearly indicates the prior move is about to be renewed, you may be setting yourself up to be stopped out by a correction that goes a little farther than you had expected or by the consolidation that ends with an unexpected shakeout or up thrust action.

Risk profile X is an aggressive trader and he risks 20% of his account on each trade. Y is a conservative trader and she risks 2% of her account on each trade. Both adopt a trading strategy that wins 50% of the time with an average of 1:2 risk to reward. Over the next 10 trades, the outcomes are Lose Lose Lose Lose Lose Lose Win Win Win Win Win. Here’s the outcome for X : -20% -20% – 20% – 20% -20%= BLOW UP Here’s the outcome for Y: -2% -2% -2% -2% +4% +4% +4% +4% = +8% Risk Management in Trading could be a deciding factor whether you’re a consistently profitable trader or, losing trader. Remember, you can have the best trading strategy in the world. But without proper risk management, you won’t be success in trading.

What do we include in Risk Profile? What is the level of Risk: Reward ratio will we be working in each trade? Profile What is the maximum percentage of our account we are willing to risk on each trade or day or week? What is the maximum position size we can use per trade?

Risk Reward Ratio Risk Defined as The amount a trader is willing to lose on a trade if it hits his or her stop. Calculate risk on trade (size of stop) by measuring the distance between entry and stop loss The reward is simply defined as the price distance between our entry and our profit point. The trading riskreward ratio simply determines the potential loss (risk) versus the potential profit (reward) on any given trade. How to measure the risk-reward ratio? Risk Reward Ratio(R: R) = Total Risk on each trade / Total Reward on that trade

What’s the maximum percentage of our account we are willing to risk on any one or more trade/s? Only risk a small amount of your total account per trade , you want to keep your risk low, perhaps 0.5 to 1 percent Only risk a small amount of total account per day. This is called a daily stop. Perhaps set a rule that if you lose 3 or 4 percent of our total account in a given day, you will stop trading for that day Only risk a small amount per week. This is called a weekly stop. Perhaps set a rule that if you lose 5 percent of your total account in a given week. you will stop trading for that week

Position sizing 4 Step to determine maximum position size Step1 = Establish maximum Risk amount per day based on a percentage of account size Step2 = Divide maximum Risk amount per day with average number of trades per day to calculate risk amount per trade Step3 = Calculate risk on trade (size of stop) by measuring the distance between entry and stop loss Step4 = Divide the maximum risk amount per trade by risk on trade to determine the maximum position size Let’s do it in an example Account size=100000 Maximum Risk percentage per day=2% Maximum Risk amount per day= Account size* Maximum Risk percentage per day =10000*2%=2000 Number of trades per day =2 Risk amount per trade= Maximum Risk amount per day/ Number of trades per day =2000/2=1000 Calculate risk on trade (size of stop) =5 Maximum position size= 1000/5=200 shares The larger the size of your stop loss (risk), the smaller your position size (and vice versa). Visually, it looks like this:

As long as we can stick to the above risk profile defined, we can enter 10 trades, have 5 looser and only 5 winners but still end up with profit overall.

Active Trade management

Most traders focus too much on their entries as that’s the most hopeful stage of a trade. But the fact is, your exit determines your profit and loss (P&L), not your entry. You can have a good trading entry, but if you manage your trade poorly and exit at the worst possible time, you can still end up with a loss. In the next article, I am going to discus Active Trade Management. I mean after taking trade how to manage the trade to prevent losses. Here, in this article, I try to explain the 3 techniques for Risk Management in Trading and I hope you understand the Risk Management in Trading. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Intraday Breakout Trading Strategy

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How to make own Day Trading Scanner

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How to make own Day Trading Scanner In this article, I am going to discuss how to make own day trading scanner step by step. So, here, you will learn how to get the stock market data such as price, volume and open interest data using Google spread sheet and how to analyse it. After reading this, you will be able to: 1. Analyse end of data

2. How to create your own Google spread sheet for data analysis? 3. How to use this sheet? What is end of data in stock? Means what price did in that day .it shows open, close high, low, open interest, option chain data etc. Where to get this data? After market closed. NSEINDIA published this report in bhavcopy file What to down load? Download capital market bhavcopy file and Derivatives market bhavcopy file. Link is given below https://www1.nseindia.com/products/content/all_daily_reports.htm

How to make your own Google spread sheet scanner? All the step by step are described in below video.

Use of scanner 1. We can predict the stock trend by analysing end of data? 2. We can find stock for next day?

What contains in this sheet? Buy / sell column So for long stock should have high volume , high OI, PCR>1. So, we make our buy column by giving above condition

Change in Volume and Change in open interest column If ultra-high volume we find. Then something unusual happening. by checking chart we can determine whether the stock for tradable or not. Whether it break out from any support or resistance leve with high volume . then we must keep it in our watch list

Change in price Here we will find top gainer or top looser stock. Check in chart why top gainer and top looser? Change in PCR column

Gap up and gap down column This column update aftermarket open. Have a look at this sheet

How to use this scanner? Let me tell you some basic information For trading purpose, avoid stocks with lower volumes and lower open interest

Why? The analogy of volume and open interest to the market is like that of fuel to a fire. If the fuels removed from a fire, the fire will go out. If fuel (volume and open interest) is removed from a price trend, the trend will change or move will stop. When open interest and volume declines, fuel is being removed and the prevailing price trend is running on borrowed time. For a healthy, strong price trend (either up or down) to continue, open interest and volume ideally should increase, or at least not decline.

Option chain analysis PCR=put to call ratio Buy Rule: 1. Change in PCR(OI) is positive. Sell Rule: 1. Change PCR(OI) is negative In the video i did explain in live how to select stock for next day based in end of day data analysis. Here the list of stock that showing buys condition

Even our scanner shows buy condition. After market open if our trading setup didn’t tells then I am happy to avoid trading. Tips :-if index and sector bullish trade with strong stock on bullish side. In the next article, I am going to discuss How to Select Stocks for Intraday Trading with lice examples. Here, in this article, I try to explain how to make own day trading scanner and I hope you enjoy this article. Please

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Stock Selection for Intraday Trading

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How to Select Stocks for Intraday Trading In this article, I am going to discuss Stock Selection for Intraday Trading i.e. How to Select Stocks for Intraday Trading in detail. Please read our previous article before where we discussed how to make our own day trading scanner step by step. As part of this article, we are going to discuss the following pointers in detail which are related to stock selection for intraday. 1. Rules for stock selection

2. 3 stock selection methods 3. With live example

Why do most traders fail to pick the right stock? 1. They pick randomly on tips from social media or news 2. They don’t prepare before the market open

Rules for Stock Selection in Intraday Trading Price Structure = Trend (avoid ranging market) Trade active stock=high volume and high open interest build up (smart money active on these stock) The momentum of stock = Strength & Continuity of the move (previous day candle)

Stock Selection for Intraday Trading types 1. Breakout trading

2. Momentum trading

3. Pullback reversal trading

How to select stocks for intraday trading? Generally three methods of stock selection for intraday trading 1. Aftermarket closed

2. Live market stock selection

3. News or result based stock selection

Aftermarket closed Aftermarket closed stock selection 1. Based on the end of the day (EOD) data 2. Based on breakout

Based on EOD data Here we have to select stocks based on 1. High volume

2. High Open interest

3. Top gainer and top looser

Step to find high volume, high open interest, or top gainer/loser stock Step1 We have to find out stock that showing increasing in open interest with increasing volume at the end of the day (EOD). Suppose we find some 10 stock both bullish and bearish data from our scanner How to make own Day Trading Scanner

Step2 then we check where the action happening in the chart Step3 if price action also indicates bullish or bearish behaviors then we keep it on our watch list. If the index and sector indicate positive. we prefer only bullish stock Step4 aftermarket open if our system tells us to buy then we will go long in that stock Let’s do with an example

Based on breakout

Time frame hourly or daily The breakout means price breakout from any 1. Support or resistance 2. Trend line

3. Chart pattern This method takes time. As we have to find out manually in our chart

Chart Patterns like Rectangle Wedge Triangle Flag Cup & Handle Tight trading range

Live market Stock Selection For Intraday Trading There are two methods to select stocks from the live market 1. Pre-market stock selection for intraday trading 2. After 15 of the market open

Premarket Stock Selection For Intraday Trading First, select FO stock Check market sentiment(Check advance-decline ratio ) Generally, I trade only gap up or gap down stock from pre-market stock selection Pick a stock and check-in chart

Let’s do it with an example

Live Market Stock Selection After 15 market open find Step1 find Top gainer /looser from the NSE site Step2 check the premarket volume Step3 see the last 2/3 days activity and draw the support and resistance line Step4 wait for the pullback to entry(pullback entry strategy)

News based /result based(no technical analysis work) We get the news from the MONEY CONTROL APP 1. WHAT CHANGES WHILE YOU ARE SLEEPING 2. STOCK IN NEWS

Here, in this article, I try to explain, How to Select Stocks for Intraday Trading with examples. e-mini contracts. I hope you enjoy this Stock Selection for Intraday Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. Please watch the following video if you want to learn and understand this concept in a better way.

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Intraday Trading Course

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Intraday Trading Course This is the first part of Intraday Trading Course for Beginners as well as Professional Traders. I strongly recommended you to follow this and our upcoming articles to gain more knowledge about Intraday Trading. Here, in this article, you will learn, how to prepare for day trading before market open. These are the factors, we should study 1. Index

2. Context

3. Previous day activity

4. Next support and resistance 5. Area of opportunity

6. Possible entry price action

7. Index (if you trade in index stock)

1. Context Where price is with respect to major trend Up/down/range(trend) Pullback /impulse swing

2. Previous day activity Price what did last day? Studying previous days profile to get clues for today is one of the essential step a trader has to perform daily. When a trader starts tracking this regularly, when it becomes a habit, he will always be in sync with the Short Term moves in the markets. We will study following parameters to understand the previous day Attempted Direction (Up, Dn, Sideways) Volume Generated (High, Low, Unchanged) Position of Close (STRONG/WEEK/neutral) Last swing high/last swing low By studying the above factors we can get a tight grip on what the SM was trying to achieve the previous day and was that attempt successful. And Possible of trend for next day

LAST HIGH AND LOW If the previous day has had a trending day in which price was marked up to a new levels, the previous day’s high or low will not be as important. For example, in the case of a trend day UP, the previous day’s low is not likely to test. Instead, the last swing low becomes the important support level. This support level is most important in the morning session of trading. After a trend day up , expect that last swing low to provide initial support

Position of close If the market strong closes(either near to the previous day high or near to the previous day low), it is giving the trader a very loud and clear signal that continuation is likely the next day. The last hour often tells the truth about how strong a trend truly is. Smart money or strong hand shows their hand in the last hour, continuing to mark positions in their favor Neutral CLOSE MEANS. Price close middle of the day .previous day was a range day. If neutral closing in previous day we expect price will reverse from either previous day low or previous day high in next day. If trend up then we expect price will reverse from previous day low

Volume and attempted direction High volume on the closing hours indicate continuation the next morning in the direction of the last half-hour. If the market makes a trending move in the last hour after a lifeless opening session , be positioned in the direction of that move by the close. There are very high odds of an opening gap in your favor the next morning.

3. Next support and resistance level 1. Where is immediate support and resistance or supply and demand zone 2. This is decide our risk to reward

4. DEFINING AREA OF OPPORTUNITY Trading is all about Location. Define a location where a decisive group of traders act and fight it out is the key. Wait for the market to hit the identified price level, watch which side takes control, buyers or sellers. Go with the winning team and enter where the losers start exiting and allow their order flow to take our position to profit. Location for area of opportunity are Previous day High, previous day Low Last swing high and last swing low Major Swing Pivots. Big Round Numbers The previous days high and low are two very important “pivot” points, because where buyers or sellers came in the day before. Look for price action at these point for either continuation or reversal.These are markets own levels and market is going to respect its own levels.

5. INDEX AND SECTOR First Identify the support (demand) and resistance (supply) levels in the NF and any sector. If markets closed near demand, I would know to look for opportunities to buy the next day as price was likely to rally from that demand level The next step was to look at charts of a few of the large sectors to find some that are also trading near demand as those sectors would likely rally from that demand level with the broad (NF and BNF) market the following day. Out of the few sectors, I would always find one or two that were setting up very well with the broad market. The final step was to look at a handful of high volume stocks within that sector and that is always where I would find a VERY quality trading opportunity

6. ENTRY PRICE ACTION There are three price action trade setups when price encounters an area of opportunity. Breakout failure Breakout pullback Test Reversal

Trading these three price action patterns blindly is a recipe for disaster. There are other factors to be considered while trading these price action setups like Strength of Trend, volume , price action etc.

Please watch the following video if you want to learn and understand this concept in a more better way.

This is the part of our Intraday Trading Course and I hope you enjoy this article. In the next article, I am going to discuss Multiple TimeFrame Analysis for Intraday Trading in detail. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Stock Selection for Intraday Trading

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Multiple Timeframe Analysis for Intraday Trading

Multiple Timeframe Analysis for Intraday Trading Back to: Trading with Smart Money

Multiple Timeframe Analysis for Intraday Trading In this article, I am going to discuss Multiple TimeFrame Analysis for Intraday Trading in detail. Please read our previous article where we discussed how to prepare for day trading before market open. As part of this article, we are going to discuss the following pointers in detail. 1. What is multiple timeframe analysis?

2. Understanding the trend with multiple timeframe analysis 3. How to use multiple time frame in trading

4. Advantages of multiple timeframe analysis

Multiple timeframe analysis for intraday trading Tunnel Vision Have you ever found yourself taking a picture perfect setup on your primary timeframe chart only to see if not work and stop you out? Traders should always understand the overall market environment and no just one time frame

Advantages of using multiple time frames that we cover include: Allowing the trader to get a micro view of larger time frames, which can, in turn, confirm the trader’s original analysis of trade. It is like using a backup pattern and fine-tuning an entry. An example would be having a pattern on a 60-minute chart and using a 5-minute chart to confirm the entry. Risk can be managed more effectively by combining time frames. A trader can learn to move stops on smaller time frames for patterns that complete on larger time frames. Using multiple time frames from larger to smaller can help the trader to be aware of contrary or opposing patterns that form on smaller time frames that are against the longer-term time frame.

Let’s take day trading example We will use 3 time frames for our decision making 1. Higher Time Frame (HTF) DAILY

2. Intermediate Time Frame(ITF) HOURLY 3. Trading Time Frame(TTF) 5MINUTES

Higher Time Frame (HTF) DAILY Daily time frame for market overview and stock selection FOR STOCK selection based on HTF support and resistance Or SUPPLY AND DEMAND ZONE HTF trend channel(demand and supply line) HTF SENTIMENT HTF SOS AND HTS SOW

Let’s analyse in chart We have taken three stock based on above three stock selection method

Intermediate Time Frame (ITF) HOURLY In this time frame we will define the structural framework within which our trading timeframe (TTF)price action will move. In this time frame we will 1. Indemnifying trend and

2. Marking the nearest supply and demand zone Let’s analyse the above three chart in intermediate time frame in above three chart

Trading Time Frame (TTF) 5 MINUTES We will use trading time frame(TTF) FOR Used for zone selection Used for entry ,exit and stop loss placement

How to select zone? Step 1 Marking the nearest supply and demand zone Watch below video for better understanding Step 2

Find where we are with respect to zone 1. If trend up and we are at supply zone avoids long trend, we become sellers as price at supply zone or wait for clear breakout from supply zone.

2. If trend up we are at the demand zone look opportunity for long

3. If we are middle of the trend ,we can go with the intermediate trend Let’s go to trading time frame

Axis bank case study

Sunpharma case study

HDFC bank case study

Please watch the following video if you want to learn and understand Multiple Timeframe Analysis for Intraday Trading concept in a more better way.

Here, in this article, I try to explain the Multiple TimeFrame Analysis for Intraday Trading in detail. I hope you enjoy

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VWAP Trading

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VWAP Trading In this article, I am going to discuss the VWAP Trading in detail. Please read our previous article where we discussed Multiple TimeFrame Analysis for Intraday Trading. At the end of this article, you will understand the following pointers in detail. 1. What is VWAP Trading?

2. A complete VWAP Trading system 3. 2 VWAP Strategies

WHAT IS VWAP Trading? Volume weighted average price (VWAP). These Tools are used mostly by short-term traders and in algorithm-based trading programs. VWAP is often used to measure the trading performance of smart money. Professional traders who work for investment banks or hedge funds and need to trade large numbers of shares each day and cannot enter or exit the market by buying or selling a large position in a stock during the day, institutional traders compare their price to VWAP values.

Two words are used here (PVWAP and VWAP) PVWAP is end of vwap value of previous day VWAP is current day VWAP PVWAP can be obtained by plotting straight horizontal line on chart and looking where it was plotted at 3:30 pm. VWAP is obviously current day VWAP which can be obtained by plotting VWAP indicator.

VWAP day Trading system Step1: location (refer out multiple time frame trading video) 1. define trading range(NEAREST SUPPLY AND DEMNAD ZONE)

2. where price open, where wants to go(with respect to nearest supply and demand zone) Step2: relative strength and weakness compare to sector and index(refer to intraday trading course part 1) If respective sector negative choose weak stock for sell. If index (nifty) negative. Choose weak sector Step3: MARK OPENING RANGE Mark opening range (first high and low of the day) Step4: condition and entry type Rules for entry Do not play stock long that is below the VWAP Do not play stock short if above the VWAP If price above both PVWAP AND VWAP look for long If price below both PVWAP AND VWAP look for short A five minute candle should no closed below vwap for long entry . reverse for short entry(why that shows day going to be a range day)

1st candle of the day should be heavy volume .Why heavy volume on first candle of the day? We are trying to identify what the SM sentiment is for the day? If SM want to buy stock, we would see that on the open with heavy volume and strong directional move. Stock may gaped at opening. Which shows that stock may trend up rest of the

VWAP PULLBACK entry type 1. VWAP PRICE CORRECTION 2. VWAP TIME CORRECTION Step5: Entry If conditions are valid Step6: Active trade management Exit method 1. Target exit

2. Reversal development exit

WHAT IS VWAP PULLBACK STRATEGY FIRST UNDERSTAND WHAT IS PULLBACK A pullback is a price movement that moves in against the trend. It is a temporarily price movement before it resumes back into the main market direction. Pullbacks are sometimes referred to as price Corrections or retracement.

VWAP PRICE PULLBACK ENTRY CHARACTERISTICS of WEAK PULLBACK 1. Correction(depth of pullback) must be small and without strong momentum candlestick 2. Volume decreases / low volume correction

3. Great mix between red and green candle with light volume 4. Closes towards the middle with wicks

LOGIC OF VWAP PRICE PULLBACK ENTRY If a stock move strongly in the morning supported by smart money , then it respect vwap. When a stock is traded above the VWAP .If VWAP is rising then it shows buyers in control. When a stock is traded below the VWAP. If VWAP is falling it shows sellers in control

Step to follow 1. Find the stock in a clear trend up (HH/HL) or trend down(LH/LL). Look for at least 2/3 candle in same direction with high volume

2. THEN wait for price to pullback(WEAK) towards vwap

3. Check whether price rejected from vwap or not. (look for rejection from vwap) 4. If rejected go with the initial move

5. Don’t buy aggressively until this stock heads towards initial direction. 6. Check price action around opening range high or opening range low

7. Those stocks that trade back above the opening range price are likely to go even higher. This is because of new bulls entry plus short cover buy order .so after the reaction period market set the tone of the morning trend

TIME PULLBACK TIME CORRECTION(Stock to digest the directional move is through a time correction. In a time correction the stock move in horizontal, low volatility trendless manner. Generally strong trend has time correction Because the pullback is shallow, it’s difficult to time your entry on a pullback. Instead, you can look to trade the breakout

What happening here is 1. Initial upward movement shows the direction of major interest. Then a stock meets resistance and consolidates under this level .If the stock is strong enough to stay close to the resistance level without sharp retracement, it means that the path of least resistance is still upward and that the stock is likely to continue in the same direction as soon as it digests the distribution

2. Smart money slowly and discreetly accumulate their positions is in sideways price action. There they can hide their activity perfectly. A sideways price action is a place where big institutions are getting ready for action

3. Once bulls confident that the bears will fail to reverse the trend ,bulls buy again with tighter stop loss 4. We prefer the range of the consolidation to be narrow

Step to follow 1. Find the stock in a clear initial move with high volume.

2. For bullish breakouts, look for price to hug the top of the range. For upward breakouts, trade only those situations where price closes above the middle of the opening range most of the time. Downward breakouts from the opening range do best when price resides below the range’s midpoint most often

3. Price should above both PVWAP and VWAP

4. Trade with the trend. In a bear market, downward breakouts tend to make more money than upward breakouts in intraday trading. In bull markets, upward breakouts make more money.

5. Look Break out with volume and clean candle

6. After the breakout the stock exhibit bullish price action. I mean breakout should follow through

What invalidate our setup 1. Price take too much time during consolidation

2. Price should not break initial move high(for long entry)during consolidation for upside breakout 3. First candle have both upper and lower long wick

Please watch the following video if you want to learn and understand VWAP Trading concept in a more better way.

In the next article, I am going to discuss Opening Range Trading Strategy in detail. Here, in this article, I try to explain the VWAP Trading in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Opening Range Trading Strategy

Opening Range Trading Strategy Back to: Trading with Smart Money

Opening Range Trading Strategy In this article, I am going to discuss the Opening Range Trading Strategy in detail. Please read our previous article where we discussed VWAP Trading with examples. At the end of this article, you will understand the following pointers in detail. 1. Understanding market sentiment 2. Understanding opening range

3. Opening range comparative analysis 4. Opening range trading strategy

UNDERSTANDING MARKET SENTIMENT 1. Different market sentiment is like related to the prospects of a specific company. There is also sentiment based on the company’s industry group, and there is sentiment regarding the condition of the whole market(corona effect)

2. The force behind any price move is market’s mood or sentiment. Not news or earning, there are already happen. I mean old.in good news price fall why?

3. Sentiment represents bullish or bearish feelings for the future prospects of a stock. This means the current movements of a stock’s price are dictated by what the market expects will happen in the future, not what has already taken place. Any news is old; any reported earnings data is old information.

How to find out market sentiment in chart? Through Principle of Opening Range (OR) trading approach You should look at a stock’s price action and volume. And find out what it demonstrates that its sentiment is bullish, bearish or undecided?

Opening price The Opening Price is the first trade of the day. Balance point of current day. Daily open price act as support and resistance. The Importance rules 1. Don’t try to buy below the open on expected up close days.

2. Don’t try to sell above the opening on expected large down days.

What we study at opening?

1. Where price open relative to previous day high and low 2. Where the next support or resistance level ?

OPENING CANDLE in Opening Range Trading Strategy OPENING CANDLE SUGGEST THE SENTIMENT FOR THE DAY. IF FORMED AT KEY SR LEVEL(PDL/PDH/LSL/LSH) Clean ,Strong wide range candle with volume indicate strong market sentiment PIN BAR FROM PDH/PDL also suggest strong sentiment The proper knowledge of opening candle and the price action around a reference point very crucial for successful trades. Follow the trend

Initial move Two types of player Smart money Retailer Market always looks to handle the current business first. So the initial move will usually tell us about, Who were the trapped traders from yesterday scampering for an exit today? Who missed an entry yesterday and are rushing into the morning markets? Who is driving the price? once the current business is taken care of, we can then start looking for the serious traders trying to give market a direction.

How to know above point?

By analyzing direction of move and volume and where price is? Lets analyse an initial up move 1. short covering rallies(discussed in volume price action analysis video 2. Actually buying up move 3. Morning trap

Why should avoid initial move for entry (morning rap) The “Morning Specials” is composed with two scenarios which can trap novice traders to believe market is moving in one direction, but in fact, reversal is just around the corner. 1. Often you see price is moving in one direction very strongly from the opening bell. The momentum is so strong, it creates a parabolic curve. It makes you regret not entering early. But don’t get trapped, this parabolic move often get reversed. The psychology behind this is that trend is healthy when it’s made of average trend bars closing near the extremes, consecutiveness and small corrections. But when the momentum gets out of control, such as a parabolic curve with gigantic bars without pullbacks, control has to be restored. Too fast too big is a problem because there is no consistency. Market is balanced, where both bulls and bears can profit. If price is only favoring one side, resistance will be met. Keep this in mind when you see volatile movement in the early morning. When you see clear signs of failure or exhaustion, counter it.

2. Operator will run the price down fast from opening and or below any reference point this action creates interest among the traders and brings in selling .Smart money objective are To test the selling power of public also who long now wind and exit The stock of which in turn is demand by the operator and gives him a chance to buy a little long stock and put out some long orders.

Initial indication of trend change Down opening from strong close or up opening from week close indicate may be the beginning of the change of the trend either way(or type 2) When the pullback is deeper and stronger than expected, let it roll over. Wait for test Low volume move

Opening Range(OR) and initial range(IR) Opening range is defined as the difference between the previous day close to today high or low ,as shown in left side of image Initial range defines as the difference between the firs high and low of the day. So assume opening range and initial range has same meaning. So next onward opening range means initial range

Why you should study Opening Range? Stocks at opening usually experience violent price action that arises from heavy buy and sell orders that come into the market. This heavy trading in the first five minutes is the result of the profit or loss taking of the overnight position holders as well as new investors and traders Wise traders sit on their hands and watch for the opening ranges to develop and allow the other traders to fight against each other until one side wins. Then develop a trade plan in the direction of the opening range breakout

What is the Opening Range (OR)? The Opening Range Trading Strategy is consisting of price and volume as inputs to determining the current bias ( bullish, bearish or neutral of the stock’s trading activity) The Opening Range Trading Strategy is the difference between the first high and low of the day. How to find high and low? At least one candle should be completely against the trend. If that candle has low volume it suggests more strength on trend cont.

Depend open the Opening Range, we can predict what types of day may occur There are various types of day pattern, but generally these four types day pattern are occur again and again Trend Day Double-Distribution Trend Day Typical Day Trading Range Day

Trend day Small opening range usually opens with an wide range candle or pin bar candle sharp move at opening with high volume. Consucative healthy candle each period will have a higher high and higher low

Double distribution trend day

relatively inactive during the opening range narrow opening range(accumulation or distribution going on) when price break out from opening range give trending move either direction

RANGE DAY WIDE opening range High and low of the day hold though out the day(BOF at both end) Price rotated up and down without any clear directional conviction during the day

Typical day Very wide opening range usually opens with an open drive or open test drive

sharp move at opening with high volume with very big candle candle price generally trading around either day high or day low

How to analyse Opening Range We will ask five questions for analyzing opening range .The answers to these questions will give your insight into the stock’s current condition. These are explain below BIG PICTURE What price did yesterday ? What types of day?

Where it occur with respect to previous day range? Inside or outside of previous day range. Identify the opening range and see where the opening range stands, above or below the previous day range (PDR) Is market structure change Identify the opening range and see whether the opening range low at support or opening range high at resistance. Why is it important to establish whether or not the low (high) represents significant support (resistance)? When you are trading using the OR you will approach each day assuming that the OR high and low are likely to be important price levels If you knew that a particular price level was likely to be either the high for the day or a significant breakout point, wouldn’t you want to focus on that stock and that price level? You don’t need to know anything about the OR to understand that. Where was the last SR crack, on upside or downside, successful crack or failure

Bias of the day(bullish ,bearish,neutral) Opening range represents the bulls and bears establishing their initial positions for the day. The most basic application of the opening range principle is that, when a stock move away from the opening range indicates that one side is stronger than the other. When a stock moves above the opening range the bulls are in control. This means the prevailing sentiment in the stock is bullish. The manner in which the stock breaks above and trades above the opening range will indicate the strength of the bullish sentiment. Don’t buy aggressively until this stock heads upward. Those stocks that trade back above the opening price are likely to go even higher. This is because of new bulls entry plus short cover buy order .so after the reaction period market set the tone of the morning trend Check bias with trend

#Tips what I am following Don’t buy below opening range. buy above opening range Don’t sell above opening range , sell below opening range This technique does not work all of the time

How to find bias of the day Identify how much a stock retraces in relative to how much initial move in the opening range. And pay attention to the reaction and how stocks tend to act during this period Flat pullback (price consolidate high of the day). Look to see if most of the trading is near one end of the range. Has the stock spent most of its OR period near the highs of the OR? If so, this is bullish Strong buy signal. If a stock goes from an up opening and then sells off and remains beneath its opening price after the morning pullback has stabilized, it’s possible that the stock has reached its high of the day. however , if a stock gaps up and pulls back during the morning pullback , but then rallies to break above its opening price , the mark-up was probably not trap gap and the stock should make new intraday highs

Volume activity for the entire Opening Range? Big volume during the OR means there is something unusual going on and that is exactly what you want if you are looking for a big breakout day

Note: Volume it is important to watch the volume carefully, when determining if price will continue with the direction of opening range If stock up and the volume also high and also the price remain above its opening price after the early morning pullback, it is an excellent sign that the stock has further to go on the upside. If high volume appear after a up move and the stock immediately comes under selling pressure ,chances are that this volume was a seller

Opening range relative strength with respect to sector and index Let’s understand with a bullish relative strength with respect to index or sector When the market takes out it’s OR swing low most stocks will follow suit and take out their respective Opening Range low Relative to parent index, 1. If Stock hold the open or goes sideways when index down. The stocks that do not trade below their OR low are demonstrating bullish intraday relative strength. If the market does not follow through in its breakdown the strong relative strength stocks are the best candidates for an immediate rise in price

2. If the Stock up

These are the sign of strength show in the stock relative to index, don’t short these stock , but patiently wait for the index to show some strength or turn from down to up , then go long

1 SECTOR TEST OPENING RANGE LOW M&M -higher low(indicate bullish) MARUTI- also test opening range low AMARAJABAT- break opening range low(bearish)

2 sector making higher low but near opening range low M&M- stalling at opening range high (bullish) MARUTI-making lower low (bearish) AMARAJABAT- price below opening range low(bearish) Sector is indicating some strength on upside as price struggling to close below opening range low and making higher low .so want bullish stock for long entry M&M Only showing bullish signal compare to other two stock

The Opening Range Provides Price Points for Identifying Opportunity and Risk Entry 1. Breakout 2. Pullback

3. Reversal Please watch the following video if you want to learn and understand Opening Range Trading Strategy concept in a more better way.

In the next article, I am going to discuss Opening Range Breakout in detail. Here, in this article, I try to explain the Opening Range Trading Strategy in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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VWAP Trading

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Opening Range Breakout

Opening Range Breakout Back to: Trading with Smart Money

Opening Range Breakout In this article, I am going to discuss the Opening Range Breakout in detail. Please read our previous article where we discussed Opening Range Trading Strategy with examples. At the end of this article, you will understand the following pointers in detail. 1. What is opening range?

2. What is opening range breakout? 3. Opening range breakout types

4. Breakout entry for volume and price action 5. After entry volume and price action

What is the Opening Range (OR)? The Opening Range is the difference between the first high and low of the day. How to find high and low? At least one candle should be completely against the initial move

The benefits of Opening Range Breakout Trading There are several benefits to trading breakouts. For example… Momentum is with you – Trading breakouts allow you to enter your trade with momentum at your back Catch big trends – If you were to trade pullbacks, sometimes it may never come. But with breakouts, you never have to worry about missing another move in the markets

It gives us defined entry and exit (stop loss) points.

Demerit Opening Range Breakout Trading False breakout or smart money trap Maximum time breakout failed So breakout should be trade in a proper time. Here are two approaches to trading the breakout designed to minimize risk: 1. Buy the initial breakout when the conditions are right

2. Buy the retracement to the breakout when you need confirmation Tips :-When opening range is not clear ,stay away from opening range trading market

Opening Range Breakout Note-Now onwards we will discuss only bullish breakout. Exact opposite for bear breakout

Opening Range Breakout players 1. professional

2. Those traders who have shorted the market will now be forced to cover their poor positions by buying as well. Short covering buy order above the opening range high

3. those traders not in the market may feel they are missing out and will be encouraged to start buying

Principle for opening range breakout Identify how much a stock retraces in relative to how much initial move in the opening range. Pay attention to the reaction and how stocks tend to act during this period And the volume activity during the opening range period Based on above three pointers we have divide opening range breakout into 3 types. These are 1. Opening range breakout

2. Opening range Accumulation breakout 3. Opening range Absorption breakout

What is Opening Range Breakout? Opening Range Breakout means price moves below well-defined support (opening range low) or above resistance (opening range high)

Logic Opening range breakout depend open 3 factors 1. Strong initial move (1 or more than one candle)

2. Price consolidate at opening range high(Flat pullback) 3. Unusual volume in opening range

Strong initial move These are the directional move with smart money participation and conviction. If at the start of a trading session. An Open-Drive is generally caused participants who have made their market decisions before the opening bell. The market opens and move aggressively in one direction.

Price consolidate AT opening range high In strong trending markets, you’ll have Flat pullback (price consolidate high of the day).that usually stock move in horizontal, low volatility trendless manner. Most of the trading is near one end of the range. A Structural Feature Sign of Strength Price holds gains after an up move “Eating through” residual supply OVERLAPPING BAR hugs the level. It shows his level is no longer a strong reference point, The price will move with the current pressure. If the level is strong then price should react immediately retailer’s taking profit to reduce risk .market pulls back and goes sideways. Once bulls confident that the bears will fail to reverse the trend, bulls buy again with tighter stop loss(if find this pattern find middle of the trend) Price should above vwap Price should not break opening range high Price consolidate within a tight trading range

Volume Initial move volume should be clearly expansion than previous day volume

Why high volume on the initial move of the day? We are trying to identify what the SM sentiment is for the day? If Smart Money wants to buy stock, we would see that on the open with high volume and strong directional move.

Rules for opening range breakout 1. Wait for the first initial move to complete. should be strong candle 2. Volume should be clearly expansion than previous day 3. Price consolidating at high of the day(flat pullback) 4. High of the opening range should not break

5. Declining or lower volume on retracement candle 6. Price must be above vwap

7. Entry above opening range high

8. Stop loss below opening range low

BELOW ARE SOME MORE EXAMPLE GIVEN ANALYSIS YOURSELF

Opening Range Accumulation Breakout Strategy logic

The big institutions who move and manipulate the market build up their massive trading positions in a welldefined trading range .After they fully enter their positions, then they initiate strong and aggressive buying or selling activity to move the price. They strive to move the price in the direction of their newly accumulated positions. May be happen at opening range high or above opening range

Characteristic of re accumulation Immediate background must have strength. Strong move Re accumulation areas are generally in well-defined range. Reaction volume remains low and volume increases at support Upthust and spring can be appear Springs at lows are the best indications of ACCUMULATION. Failure of price to break support after basing above it Stronger BULL candles in range Price Above vwap

Opening range Absorption breakout

Smart money obserbing supply at resistance. Means smart money obserping supply coming from ,long liquidation, profit taking, and new short selling.

Characteristic of Opening range Absorption breakout Immediate background must have strength. Evidence of demand overcoming supply When viewed as a correction, absorption areas are generally shallow.. The main characteristic of BUYERS overcoming SELLERS is the repeated inability of prices to REACT away from opening range high.

Reaction volume remains low rising supports and expanding volume on up‐swings AFTER upthrust(breakout failure) , price unable to move down and unable to break last swing low

After entry breakout candle Clean wide range candle close above the opening range high

Breakout volume Should be high or above high. Why?

If you see high volume accompanying wide spreads up, this shows that the smart money was prepared to absorb any selling from those locked-in traders who decided to sell In this situation, the market-makers anticipate higher prices and are bullish. High volume breakout should follow through The danger sign to watch for at the breakout is the opposite price pattern. If the stock breaks out on good volume but immediately reverses and trades below the breakout point on continued big volume it means that there is too much supply at the new high price. This is a major warning sign. The big volume at the breakout will now represent significant resistance if the stock is below it. This pattern of a big-volume reversal at the top of the OR usually leads to a failed breakout and a selloff.

Average volume breakout Often the breakout will occur on light volume but as the stock climbs the volume will increase. This is also a positive sign.

BREAK OUT NEEDS FOLLOW THROUGH Why breakout needs follow-through? For confirmation for successful breakout Avoiding smart money trap (stop loss hunting)

Smart money trap Hunting the stops is a phrase that describes a situation where smart money push the stock to trade above (resistance) a certain price because they expect that there are a lot of resting orders to buy the stock if it trades above that particular level. The motive for doing this is that if the trader buys the stock to trigger an advance through the price then the flurry of stop orders will push the price even higher, at which point the trader would sell the stock to the stop orders being executed. If a breakout is created by a large number of stop orders being executed, the subsequent price action will usually be an immediate reversal back into the range. An immediate reversal is therefore a warning sign that the breakout is not going to be clean!

For confirmation for successful breakout Traders like to see confirmation after breakout. One more bullish candle after breakout candle. A bull break followed by bull break is a sign of follow through and thus an indication of bullish enthusiasm, for as long as it lasts. If price up and the volume also high and also the price remain above its opening price after the early morning pullback, it is an excellent sign that the stock has further to go on the upside.

Please watch the following video if you want to learn and understand Opening Range Breakout concept in a more better way.

In the next article we will discuss about two more price action opening range entry. Here, in this article, I try to explain the Opening Range Breakout in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Volume Analysis in Trading

Volume Analysis in Trading Back to: Trading with Smart Money

Volume Analysis in Trading In this article, I am going to discuss 3 Rules for Stock Volume Analysis in Trading. Please read our previous article, where we discussed Opening Range Breakout Trading Strategy in detail. At the end of this article, you will understand the following pointers which are related to Volume Analysis in Trading. 1. What is Volume in Trading?

2. What is Stock Volume Analysis in Trading? 3. Understanding Volume Analysis in Trading 4. 3 fundamental Rules of volume analysis

What does volume mean in trading? Volume, or trading volume, is the amount (total number) of shares or contracts that were traded during a given period of time. Generally, the volume shows the interest of buyers and sellers. In above example volume clearly shows buyers more interested than sellers Let me explain to you

3 rules for Volume Analysis in Trading These are the 3 rules that based our volume analysis 1. THE LAW OF SUPPLY AND DEMAND 2. THE LAW OF CAUSE AND EFFECT 3. THE LAW OF EFFORT VS RESULT

These rules are popularly known as WYCKOFF BASIC LAW. Now let’s understand the 3 fundamental rules of RD Wyckoff

THE LAW OF SUPPLY AND DEMAND When demand is greater than supply then the price will rise to meet this demand and conversely when supply is greater than demand then the price will fall 4 fundamental principle of supply and demand 1. Price = direction of the trend

2. Volume =strength of the trend

3. Price and volume confirms the market direction

4. Divergence leads to market weakness

THE LAW OF CAUSE AND EFFECT The law of cause and effect, basically, tells us that we cannot get something from anything. When the market enters a period where demand exceeds supply or, where there is an excess of supply over demand, it is not just a freak occurrence. Each of these comes out of a period of preparation and the extent of that preparation has a direct and inseparable effect on the final result. If there is no preparation, there will be no move. THE LAW OF CAUSE AND EFFECT: The effect will be directly proportional to the cause other words a small amount of volume action will only result in a small amount of price action. If the cause is large then the effect will be large vice a versa

Different types of causes that occur are Trading range(accumulation/distribution) Chart pattern

THE LAW OF EFFORT VS RESULT The market, or a stock, is continually attempting to go one way or the other. These attempts may be very short in duration or quite lengthy. Either way, they represent an effort generally expressed in terms of volume. When the price responds to the effort, an important price movement is likely. When the effort and result are contrary(divergence) in nature, there is likely to be an important change in the direction of the price.

THE LAW OF EFFORT VS RESULT: Similar to newton’s third law. Every action must have an equal and opposite reaction in other words the price action on the chart must reflect the volume action below. Effort (volume) seen as the result (price), where validated and divergence comes to consider

How to trade with price and volume 1. As discussed in multiple time frame analysis. define the nearest supply and demand zone

2. Let the price comes to the zone and analyses the candle associate with volume at the zone 3. See either reversal or continuous volume and price action

In the next article, I am going to discuss Volume Price Action Analysis in detail. Please watch the following video if you want to learn and understand the Volume Analysis in Trading concept in a better way.

Here, in this article, I try to explain the 3 Rules for Volume Analysis in Intraday Trading in detail. I hope you enjoy this Volume Analysis in Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Volume Price Action Analysis

Volume Price Action Analysis Back to: Trading with Smart Money

Volume Price Action Analysis in Trading In this article, I am going to discuss Volume Price Action Analysis in Trading. Please read our previous article where we discussed 3 Rules for Volume Analysis in Trading. At the end of this article, you will understand the following. 1. Understanding Market Structure through Volume Swing Analysis 2. Strength and weakness of swing through volume price action analysis 3. How to analysis volume in trading

Understanding Market Structure through volume analysis In the first part we have studied 3 law of volume analysis. These are 1. THE LAW OF SUPPLY AND DEMAND 2. THE LAW OF CAUSE AND EFFECT 3. THE LAW OF EFFORT VS RESULT Based on these laws we know analysis the big picture that is market structure analysis using volume. Because our the final decision making depend open the market structure

Market Structure It is similar to learning to read a new alphabet-once you understand the characters, you can read the words, and once you know the words you can read the story. So market structure consist of short term swing Market move in up down swing, what we call a market swing. In a healthy bull trend, the upswing generally exceed the downswing in length, the reverse is true for the bear market Hence by observing market swing , we are able to glimpse into the structure of the market and get clues on whether the market will move up or down So basically price move in uptrend or down trend 1. In a healthy bull trend Price Make Higher High (HH) and Higher Low (HL) 2. In a healthy bear trend Price make Lower High (LH) and Lower Low (LL)

Let’s understand the rally (opposite for decline)

What happening during the rally? Daring the rally, what has been going on? Two things 1. First the buying of stock by those who are covering their previous short sales(after knowing that they are in wrong direction) and 2. Second ,actual new buying by those who expect the advance to continue

What happen after rally? 1. If the rally is due to more short covers than long buyers then , it is likely to be decline in future 2. If the rally is due to actual new buying , the trend is likely to continue

How can I tell which type rally is? (Short covering or long buying) Watch the volume and momentum of price changes If PRICE is rising with momentum and VOLUME is rising, it means market is STRONGLY BULLISH. The move is by long buyers. HARMONEY

If PRICE is rising but VOLUME is falling and momentum also falling, it means market is WEAKLY BULLISH. The move is by short covering. DIVERGENCE

Why PRICE is rising and VOLUME is rising in rally? For price to overcome selling pressure created by 1. Profit taking selling order 2. New selling order at market top

What indicate HARMONEY & DIVERGENCE? It should be noted that the price movement will be in direct proportion to the amount of effort expended. If the effort is in harmony with the result it is a sign of strength of the movement and suggests its continuation. If the effort is in divergence with the result it is a sign of weakness of the movement and suggests a reversal. The result tends to be in direct proportion to harmony or divergence. If divergence is suggested, a smaller divergence tends to generate a smaller result and a larger divergence, a larger result. On the other hand, If harmony is suggested, a greater effort will cause a movement of long duration; while a slight effort will be reflected in a movement of shorter duration

General Rules for Interpreting Volume to determine the health of a trend 1.If PRICE is rising and VOLUME is rising, it means market is STRONGLY BULLISH. Volume helps us to determine the health of a trend. An uptrend is strong and healthy if volume increases as price moves with the trend and decreases when price goes counter trend (correction periods or ‘pull backs’). 2.If PRICE is rising but VOLUME is falling, it means market is WEAKLY BULLISH. Uptrend weakening When prices are rising and volume is decreasing, it tells that a trend is unlikely to continue. Price may still attempt to rise at a lesser pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall 1. If PRICE is falling, VOLUME is rising, market is STRONGLY BEARISH. 2. If PRICE is falling and VOLUME is falling, market is WEAKLY BEARISH. Downtrend weakening

Understanding Market Structure through Volume Swing Analysis The movements of the price do not develop in periods of time of equal duration, but that they do it in swing of different sizes, for this reason we have to study the relation between the upward and downward swings The swing of the market furnishes a clear insight into changes in supply and demand. By learning to judge all sizes (both up and down swings) of market swings, you will gradually learn to spot the time when a rally, and the time when a reaction has stopped and is about to reverse. These are the turning points.

Here we have to find out 1. Strength and weakness of swing through volume analysis or find out harmony and divergence 2. volume analysis at key level for decision making

Strength and weakness of swing through volume analysis There are two methods to find out strength and weakness in swing through volume analysis

A Compare the volume of the current price swing with the volume of the previous price swing in the same direction? Means compare the current impulse swing vs. previous impulse swing. What it is telling? Volume increasing or decreasing or same volume Let’s understand divergence

Compare the volume of UP-swings (A) and upswing (B). Note the decreased VOLUME of the swing (B), indicating a reduction in bullish VOLUME. Weakness is appearing on the bullish side. When prices are rising and volume is decreasing, it tells that the trend is unlikely to continue. Price may still attempt to rise at a slower pace, and once sellers take control (which is usually signified by an increase in volume on a down bar or candle), prices will fall The move is by short covering RALLY A low volume up swing as the market attempts to rally above these old top is telling you clearly that the market is not going anywhere High volume up bars in the same areas is certainly indicating that there is supply in the market. If the market makers and specialist are still bullish they will have to absorb any supply that appears, this will allow prices to continue up.

Let’s understand harmony

When comparing current upswing B volume with previous up swing a volume. Note the increasing VOLUME on A swing, indicating an increase in BULLISH STREANGTH. BULLISH price swings are showing signs of strength RISING PRICE IS ACCOMPIED BY RISING VOLUME. It means market is STRONGLY BULLISH. Price will continue the trend High volume up bars in the same areas is certainly indicating that there is supply in the market. If the market makers and specialist are still bullish they will have to absorb any supply that appears, this will allow prices to continue up

Compare the volume of the current price swing with the volume of the previous price swing in the opposite direction? Means compare impulse volume vs. retrace (pullback) volume. In general a healthy trend has increasing volume on impulse move and decreasing volume on retrace volume

Let’s understand harmony

When comparing current down swing B volume with previous up swing A volume . it shows volume decreasing . Strength is now clearly on the bullish side. Price movement is expected in the direction of strength .When prices are falling and volume is decreasing, it tells traders that the trend is unlikely to continue in the down direction. Price may still

attempt to fall at a slower pace, and once buyers take control (which is usually signified by an increase in volume on a up bar or candle), prices will move up

Let’s understand divergence

When comparing current upswing B volume with previous up swing A volume IT SHOWS PRICE is falling and VOLUME is rising, it means bearish PRESSURE OVERCOME bullish PRESSURE . TREND CONTINUE IN down DIRECTION In the next article, I am going to discuss Volume Spread Analysis in Trading in detail. Please watch the following video if you want to learn and understand Volume Price Action Analysis concept in a more better way.

Here, in this article, I try to explain the Volume Price Action Analysis in detail. I hope you enjoy this article. Please

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Volume Analysis in Trading

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Volume Spread Analysis in Trading

Volume Spread Analysis in Trading Back to: Trading with Smart Money

Volume Spread Analysis in Trading In this article, I am going to discuss Volume Spread Analysis in Trading. Please read our previous article, where we discussed Volume Price Action Analysis in detail. At the end of this article, you will understand the following pointers. 1. What is volume spread analysis?

2. How to use volume spread analysis in trading?

3. Market structure with respect to volume spread analysis 4. Volume spread analysis 5. Selling climax

6. Stopping volume

7. How to trade based on selling climax and stopping volume?

MARKET STRUCTURE With Respect To Volume Spread Analysis Lets understand bullish trend formation. Bearish trend turned to bullish trend Price goes through 4 phases. These are Phase A. Stopping the previous bearish trend Phase B. Construction of the cause.(accumulation) Phase C. Test for confirmation (testing supply after accumulation) Phase D. Bullish Trend out of range.

We will come this market structure later. Just understand the overall concept

How to analysis volume activity in chart 1. Through volume price action(VPA) (discussed in previous article)

2. Through volume spread analysis(VSA) (we will discussed in this article) Let’s understand how to differentiate different types of volume like 1. Average volume

2. Below average volume 3. High volume

4. Ultra high volume Now we have four type of volume. Let’s find out in chart

Volume always moves in cycle. Rule -: You can visually compare Mountain Peaks to identify volume peaks structure. The key is to understand the structure of the peak clearly. Volume peak has following characteristics: Rising Volume — Peak (Highest Point)— Falling Volume

Average and Above Average Volume: Above Average Volume is the Highest Volume in the current session which is higher than the average volume but it is lower than the previous peak Volume. Average Volume is the volume that coincides with Moving Average 20 of the volume indicator High volume and Ultra high volume: high volume is volume equal to previous pick volume. Ultra High Volume is the Highest Volume in the current session. It is higher than the previous peak volume.

Bearish and Bullish Volume Bearish Volume is marked in Red and it shows bearish activity. Bullish Volume is marked in green and it shows bullish activity. If demand volume greater than supply volume then overall bullish volume

VOLUME SPREAD ANALYSIS (VSA) in Trading In volume spread analysis few facts which we are required for chart analysis. These facts are: 1. price movement,

2. volume(the intensity of the trading)

3. the relationships between price movement and volume (harmony or divergence) 4. the time required for all the movements to run their respective action

Components of volume Spread Analysis: 1. The Volume (i.e. activity),

2. The Spread (i.e. range of the price bar)

3. The Close (the closing price of current bar) Spread: Spread is the difference between Opening and closing of the price. See the diagram below for further illustration. Volume: Volume is the activity of the frequency of transaction of the price change during a specified period of time. Close: Close price tells us where the balance point at the end of the period.

Upside move with respected to volume 1. Smart money has no interest in the upside – Low volume.

2. Smart money are selling into the public buying – Higher volume.

Read part1 and part2 for better understanding

SIGN OF STRENGTH BASED ON VOLUME SPREAD ANALYSIS Re call the market structure that we have discussed above

Sign of strength means. The stopping action of down trend Phase A. Stopping the previous bearish trend (sign of strength) Again recall the volume interpretation • Smart money has no interest in the upside – Low volume. • Smart money are selling into the public buying – Higher volume. Ultra high volume-the classic trap of “Smart Money Now we have found two important rules for volume spread analysis Rule Number 1-‐ Weakness appears on an Up candle. Supply when it comes, it comes on an up candle. Rule Number 2-‐ Strength Appears on a Down candle. Demand when it comes, it comes on a down candle. Some volume spread analysis that suggests the end of down trend. These are 1. Selling climax

2. Stopping volume

3. End of falling market Now we will discussed these 3 pointer

What is selling climax?

This condition marks the end or the approaching end of a particular downtrend. This panic selling by retailers (or public) creates an extreme expansion of the price spread and an expansion of the volume, this action may occur over one day or over several days.which is matched by buying (demand) of: 1. experienced smart money 2. large interests

The classic characteristics of a selling climax: There must be trend to reverse. (after a significant extended down move on the time frame of interest ) Trend will accelerate to downside with wide spreads down closing in the middle or high Volume expands dramatically Often occurs one more than one bar Must be tested for entry

A selling climax is generally followed by a secondary reaction why? Two possible outcome after selling climax 1. Either the professional money is BUYING into the SELLING [see end of a DOWN market]. 2. There is a trading range OR technical support level to the left and .(trend continuation) Let’s first understand for trend continuation after selling climax If buying during the Selling Climax was principally for the purpose of supporting prices temporarily and checking a panic, or relieving a panicky situation, this support stock will be continue after a technical bounce from support .if price supply sufficiently to drive prices through the lows of the climax day and bring about a new decline, that is, a resumption of liquidation.

Trend reversal after selling climax After a technical rally, if prices test climax low with volume decreasing and hold around or above the climax lows, then we have an indication of support and the completion of liquidation. This tells us that there is no selling pressure or no Supply, (i.e. no more sellers) an obvious conclusion that the market is going to rally as shown in the right side of image If the ‘test’ is successful, we can expect higher prices, especially if the test is on low volume and narrow spread down bar into the same area where you first saw the very high volume. This is a strong BUY signal.

Time To Buy The Market AFTER TEST 1. Look for selling climax

2. Wait for successful test(lower volume and narrower spread)OF selling climax day low 3. Any reversal candlestick pattern(like engulfing or outside bar or pin bar) 4. Buy above that candle

5. STOP LOSS below the low

Stopping volume What is stopping volume? To stop a down move and demand has to overcome the supply It is the volume of the smart money coming into the market and stopping it falling further What is happening is that the weight of the selling pressure has become so great at this point, that even the smart money moving into the market have insufficient muscle to stop the market falling in one session. It takes two or three sessions for the brakes to be applied and is like our tanker.

Characteristics of stopping volume Demand overcoming supply Occur after an extended down move Volume expand significantly Bar close mid or high and body narrow (lower shadow) Often occurs one more than one bar . first bar close may low 2nd bar close mid or high

Two possible outcome after seeing stopping volume If the volume had represented SELLING, how can the spread be narrow? There are only two possible outcome for a narrow spread DOWN-day on very high volume. 1. Either the professional money is BUYING into the SELLING [see end of a DOWN market].

2. There is a trading range to the left and the professional money is prepared to absorb the buying from traders from support region.

Trend continuation after seeing stopping volume This topic will covered in next separate article

Trend reversal after seeing stopping volume After seeing stopping volume .If the ‘test’ is successful, we can expect higher prices, especially if the test is on low volume and narrow spread down bar into the same area where you first saw the very high volume. This is a strong BUY signal.

How to trade after see stopping volume? Time To Buy The Market AFTER TEST 1. If the day closes on the lows, you now have to wait to see what happens on the next day. 2. If the next day is level or up, this must surely show buying on the previous day as well.

3. wait for the market to come back down into the area of stopping volume on LOW VOLUME narrower spread

4. The time to buy the market is when we begin to trend up As the trend begins .Any reversal candlestick pattern (like engulfing or outside bar or pin bar). This shows us that there is no sellers or no Supply

5. Buy above that candle

6. STOP LOSS below the low

In the next article I am going to discuss the followings, 1. How testing is down and different types of testing

2. Finding support and resistance based on volume spread analysis method Please watch the following video if you want to learn and understand Volume Spread Analysis in Trading concept in a more better way.

Here, in this article, I try to explain Volume Spread Analysis in Trading. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Volume Price Action Analysis

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Candlestick Pattern Analysis

Candlestick Pattern Analysis Back to: Trading with Smart Money

CANDLESTICK Pattern Analysis In this article, I am going to cover all Reversal Candlestick Pattern Analysis in detail. In previous article we have discussed Candlestick Analysis in Trading, PIN BAR Trading Strategy, Wide range candle analysis. And in this article we will cover 2 candle reversal patterns

Outside Reversal Pattern BULLISH OUTSIDE REVERSAL PATTERN STRUCTURE 1. First candle is a narrow range candle or doji 2. The second candle completely engulf first candle and close above the first candle high. 3. The second candle low below of the first candle low ,but the close must be above the first candle close and high above previous candle high 4. The second candle should be accompanied by high volume

OUTSIDE REVERSAL PATTERN PSYCHOLOGY

What exactly is going on at these levels? Lets understand he two candlestick pattern psychology. First candle should be narrow or doji. A Doji represent either one of two things: Buyers and sellers are equally strong Indecision in the market if appear after an extended move Basically, smart money testing the selling pressure below support to make sure there is no new business to be done at these levels. When no selling pressure below low of previous candle, smart money start drive price up

How Reversal candlestick Patterns Work? Reversal candlestick psychology is one of the reasons why reversal patterns are such effective predictors of price reversals. Here’s an example:

LOW OF BULLISH OUTSIDE REVERSAL PATTERN As support

BULLISH OUTSIDE REVERSAL PATTERN should followed by bullish price action. One more bull candle should formed to confirm the bullish reversal or validated the bullish engulfing candle

They will work best in trending conditions. Trade with the trend. In an uptrend bullish outside reversal pattern work better.

Trade from support or resistance level

How do we trade it? 1. Buy above the bullish Engulfing pattern 2. Stop loss below of the pattern

Stay tuned I will add remaining reversal pattern to this article. Here in this article, I try to explain Reversal Candlestick Pattern Analysis in detail. I hope you enjoy this article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. Any doubt or question please ask happy to help you.

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Volume Spread Analysis in Trading

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Finding Entry Opportunity using Volume Spread Analysis

Finding Entry Opportunity using Volume Spread Analysis Back to: Trading with Smart Money

Finding Entry Opportunity using Volume Spread Analysis in Trading In this article, I am going to discuss Finding Entry Opportunity using Volume Spread Analysis in Trading. Please read our previous article, where we discussed Volume Spread Analysis in detail. At the end of this article, you will understand the following pointers. 1. Finding support and resistance based on volume spread analysis 2. Testing (most important concept of volume spread analysis) 3. Entry opportunity based on testing

Finding Support and Resistance Risk to reward is favour when we trade from support or resistance level. Generally trade entry types are 1. Reversal from support or resistance zone 2. Pullback entry after some retracement 3. Breakout of support and resistance

SUPPORT Support as the “buying, actual or potential, sufficient in DEMAND to halt a downtrend in prices for an appreciable period.” and possibly reverse it , start prices moving up again

RESISTANCE Resistance, as the selling, actual or potential, in sufficient supply to keep prices from rising for a time. and possibly turn back, its uptrend

How to find support and resistance zone? Rejection from an area Flipping zone Fibonacci retracement These are the Support and Resistance zone from where we have to find opportunity for trading. Generally trade entry types are 1. Reversal from support or resistance zone 2. Pullback entry after some retracement 3. Breakout of support and resistance

So the support and resistance for day trading is Weak Highs/Lows. Previous Day’s High/Low Day high or low

Testing Most important concept of volume spread analysis

What is testing? Test is required to confirm a trend Usually, a successful test tells you that the market is ready to move immediately, while a higher volume test usually results in a temporary move, and will be re-test of the same price area again at a later time. Important support and resistance point for testing include Weak Highs/Lows.Previous Days High/Low and day high / low

Why do we place such importance on this action? Lets discussed for an uptrend (all concept opposite for down trend) Test is employed to make sure that all the selling (supply) pressure has been absorbed in the accumulation phase, and this is done with a test of supply. Many times the smart money is just testing the strength of either buyers or sellers. Usually above or below important reference points. As smart money don’t want 2 things to happen 1. If they don’t find any supply below or demand above an important reference then they are confident to move the prices in the opposite direction of the test.

2. But if they do find it, then they usually follow-through and test the next reference for the same

Our entry decision is depend open the test So our entry decision is depend open the test from this support and resistance zone Rejection from an area Flipping zone Fibonacci retracement

TESTING SUPPLY (opposite for demand) Rule: Too much supply the market will fall, if there is no more supply the market must go up

Testing types (DEPEND OPEN THE SUPPORT AND RESITACE ZONE TYPE) 1. Test in a Rising Market – Test in an up trending market (trending )

2. Test after Temporary Weakness – Also seen in an up trending market –(PULLBACK)

3. Test into an area of High Supply – Testing into the area of Stopping Volume or Selling Climax (reversal or absorption)

Test variation Single candle test Swing test

SINGLE CANDLE TEST Testing supply in uptrend Characteristics In a bullish trending market A down bar, on reduced volume and narrow spread The key is the volume. It should be less than the previous candle Closes can be on the highs, but better when in the middle or near the high A successful low volume test tells you that the market is ready to rise immediately

Entry after seeing no supply candle in a uptrend No Supply candle means that there is lack of supply and demand is overpowering supply causing price to rise in future. Please note that No Supply candle is a continuation signal not a reversal signal. The background is important here, this is only an entry to the long side if you have strength in the background, not weakness means if it is appears after bullish momentum 1. Since we have the Bullish momentum. We can go long during uptrend whenever no Supply Signal appears

2. When you see No Supply with climactic action in the background this indicates higher prices so enter a buy order above the high of the no supply candle

SWING TEST FOR REVERSAL When the market is testing supply any down-move dipping into an area or price range where there was previous high volume (previous selling), which then returns to close on, or near the high, on lower volume, is a clear signal to expect higher prices immediately. This is a successful test. Lower volume depicts that the amount of trading that took place on the mark-down was reduced, that now there is less selling, when previously there had been a lot of selling. At this point, it is now important to see how the market- reacts to the strength seen in the testing.

Characteristic of SWING testing candle 1. A down bar, on reduced volume and narrow spread

2. The key is the volume. It should be less than the previous two bars

3. Closes can be on the lows, but better when in the middle or near the high 4. Follows a Sign of Strength (selling climax or stopping volume)

ENTRY AFTER SEEING SWING TEST YOU MUST have strength in the background, such as stopping volume or selling cliamx. Place a stop under the low of the climactic bar and place a buy order above the test bar. A test can fail and you can re-test an area several times before the market moves up, so placing an order above the test lets the market come to you. If the test fails you are not in the position.

Result based on testing volume LOW VOLUME TEST HIGH VOLUME TEST If there is still too much supply a test can fail and if you see a failed test in a weak market it confirms that the market will continue to fall. If the stock recovers towards the high and the volume is low it would mean that there was no supply. If the volume is high and if the price fails to recover it would mean that there still supply present.

Low volume test When the market is testing supply any down move dipping into an area or price range where there was previous high volume (previous selling ), which then returns to close on, or near the high, on lower volume, is a clear signal to expect higher prices immediately. This is a successful test. Lower volume depicts that the amount of trading that took place on the mark-down was reduced, that now there is less selling, when previously there had been a lot of selling. At this point, it is now important to see how the market- reacts to the strength seen in the testing. With the test now confirmed the insiders can move the market higher to the target distribution level, confident that all the old selling has now been absorbed

What price action should follow after successful test ? If you are in a bearish market, you may see at times, what appears to be a successful test? However, if the market does not respond to what is normally an indication of strength after a successful test , then this shows further weakness. Any testing that does not respond immediately with higher prices, or certainly during the next candle or so, can be considered an indication of weakness. If it were a true sign of strength, the smart money would have stepped in and would be buying the market – the result of this smart money support would be the beginnings of an upward trending market .The specialist or smart money is never going to fight the market. If, in smart money view, the market is still weak on these days, he will withdraw from trading. The market will then be reluctant to go up, even if it looks as if it should go up, because there was little or no selling on the ‘test’ candle

High volume test However, what if the test fails and instead of low volume appearing there is high volume, which is a problem. This has resulted in sellers returning in large numbers and forcing the price lower.

While a higher volume test usually results in a temporary move, and will be re-test of the same price area again at a later time. This action sometimes results in a “W/M” pattern. This volume price action is sometimes referred to as a “double bottom (W)/double top (M)”. The “W” shape volume price action results from the action of re-testing an area that had too much supply before. Vice a versa for “M” pattern

Please watch the following video if you want to learn and understand How to Finding the Entry Opportunity using Volume Spread Analysis in Trading concept in a more better way.

In the next article, I am going to discuss Spring and Upthrust Trading Strategy. Here, in this article, I try to explain Finding Entry Opportunity using Volume Spread Analysis in Trading. I hope you enjoy this

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Candlestick Pattern Analysis

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Spring and Upthrust Trading Strategy

Spring and Upthrust Trading Strategy Back to: Trading with Smart Money

Spring and Upthrust Trading Strategy In this article, I am going to discuss one volume trading strategy that is spring and upthrust trading strategy. Please read our previous article Finding Entry Opportunity using Volume Spread Analysis for better understanding of this article. As part of this article, I am going to discuss the following pointers in detail. 1.What is spring 2.Logic behind spring 3.Some element for determining spring Spring and trend Spring and volume Spring and follow-through 5.When should avoid trading spring 6.My trading setup using spring

Spring (opposite upthrust(UT)) Price dips below support and rallies to close on or near its high and back above support, so there should be a clear minor or major support zone Failure to follow-through after breaking below support or recent swing low All bullish pin bar is not spring but all spring is a bullish pin bar

Logic A spring is an example of a “bear trap”. WHY? Because price drop below support appears to signal resumption of the downtrend. But In reality, the drop marks the end of the downtrend, thus “trapping” the late sellers, or bears. The strength of the sellers can be judged by the depth of the price drive to new lows below the support and the relative level of volume on that penetration. A spring involves the penetration of a well-defined support level on low or moderate volume .think if a stock going to break the support, it must break with high volume .the spring action shows that the stock trying to break down and failed. It is an important sign of strength

Spring and Trend During an uptrend Pullback 1. They will work best in trending conditions. During an uptrend when bullish signal appears, we go long. 2. A retracement to a prior resistance now- support area is a typically excellent trade 3. Fibonacci retracement level also worked well

During a downtrend During a downtrend when spring signal appears then we need a retest of that spring before we can go long. Condition Be sure that prior trends are over Background:The background is extremely important. You should see strength in the background with stopping volume or a selling climax or end of falling market Then appearing spring and Spring is Tested

Spring and Volume Low volume spring Volume should be lower than the original anchor(where support first occurred ) candle at support, when price retrace first time to support the candle should have low volume than the anchor candle The shallow price penetration and low volume indicate sellers are exhausted. springs should be bought immediately.

High volume spring High volume indicates demand coming in, as we trade with the trend , springs should be bought immediately. If we want to trade for trend reversal. High volume indicates presence of sellers more likely to test immediately or after some rally. In order to justify buying on the test of the spring, two criteria must be met. 1. First of all, the volume on the test must be lower than on the spring itself. If it is not, nothing is proven and no buying should be done.

2. Secondly, the price should hold at a higher level on the test than on the spring, It is especially positive if the price supports at or above the support level on the test. If these two criteria are met, the stock can be bought on the test of the spring. Immediately after the test, the stock should begin a rally.

Spring and Follow-through WHAT PRICE ACTION SHOULD HAPPEN AFTER SPRING If a spring fails to rally away from the SUPPORT and price hangs near the Spring low, then Something is likely wrong

WHEN SHOULD AVOID TRADING SPRING Context or background move Supply dominated In a Downtrend where supply is dominated. the swing down to Spring has supply(price decreasing and volume increasing) compare to demand swing, the odds of success are low Momentum should be loss when approaching support and the spring indicate strength this is good context. If momentum increases when approaching support and the next is a spring ,the context is not showing strength and the spring should be see in suspect

Last demand swing

Shortening of thrust. Thrust Refers to the distance between the current swing high to a previous swing high (in an uptrend) or swings low (in a downtrend). Increased thrust is a sign of potential trend strength. Shortening of Thrust is a sign of potential trend weakness. If last swing high is characterized by diminishing demand(price increasing and volume decreasing ) odds for success are lower

My SPRING SETUP(opposite for upthrust) Trend continuous setup ELEMENT REQUIRED SPRING WELL DEIFINED SUPPORT VWAP Support Last swing low or resistance turned into support Fibonacci retracement level (50-61.8%) Time frame: 5 minutes Applicable

Both stock and index Context or background Market in a defined uptrend Cleared support level Low volume when approaching support level Set up condition Price retrace towards support on low volume Spring at confluence of support plus vwap (strong signal) or spring at support Entry Buy above the spring Or Test of spring Stop loss Below the spring Target Next resistance Or any bearish reversal price action

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Finding Entry Opportunity using Volume Spread Analysis

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VSA Trading Strategy

VSA Trading Strategy Back to: Trading with Smart Money

VSA (Volume Spread Analysis) Trading Strategy In this article, I am going to discuss VSA (Volume Spread Analysis) Trading Strategy in detail. Please read our previous article, where we discussed spring and upthrust trading strategy. At the end of this article, you will understand the following three VSA Trading strategies. 1. The Shakeout 2. Stop hunting

3. Outside Reversal Pattern

Introduction to VSA trading strategy Today we will discuss volume spread analysis intraday trading strategy. Basically, volume spread analysis entry strategy based on reversal trading. That means finding a turning point in a trend either Trend reversal or Pullback reversal Today will discuss pullback reversal. I mean how to make a trade based on volume spread analysis in an existing trend Note: – today we will discuss only finding an entry in an uptrend. Exact opposite for downtrend Volume spread analysis that suggests a sign of the end of downtrend or end of the pullback in an exiting uptrend these are 1. Selling climax

2. sopping out volume

3. End of a falling market The above points are discussed in this article Volume Spread Analysis

4 step Process for Volume Spread Analysis (VSA Trading) Entry 1. Identify the trend

2. identify the sign of weakness in an exiting uptrend

3. Wait for test the weakness for confirmation for the continuation of the uptrend 4. Look for any bullish reversal candlestick pattern for entry In the previous article, we have discussed 1. First, identify the sign of weakness

2. Wait for test the weakness for confirmation of trend cont… Today we will discuss 1. Look for any reversal candlestick pattern for entry

Bullish VOLUME PRICE SIGNAL CANDLESTICK PATTERN FOR ENTRY 1. OUTSIDE/ ENGULFING 2. STOP HUNTING 3. SHAKEOUT

Outside Reversal Pattern We have discussed this article here .so please go through this article for more information

Outside Reversal Pattern

BULLISH OUTSIDE REVERSAL PATTERN STRUCTURE 1. The first candle is a narrow range candle or Doji

2. The second candle completely engulfs the first candle and closes above the first candle high.

3. The second candle low below the first candle low, but the close must be above the first candle close and high above the previous candle high

4. The second candle should be accompanied by a high volume

Background: The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR end of a falling market

Stop hunting Also called pin bar or spring or upthrust Go through the below article for more information Spring and Upthrust Trading Strategy PIN BAR Trading Strategy

Logic Smart money placed limit sell order above resistance and limit buy order below support to absorb panic buying or selling by retailers for breakout trading entry by placing stop loss buy order above resistance or stop loss sell order below support

Why do they do? The main objectives are: 1. To get volume

2. Avoid Slippage due to big order

3. Smart money testing demand above old resistance before moving down or testing supply below support before moving up Spring is an example of a “bear trap”. WHY? Because price drop below support appears to signal resumption of the downtrend. But In reality, the drop marks the end of the downtrend, thus “trapping” the late sellers or bears. The strength of the sellers can be judged by the depth of the price drive to new lows below the support and the relative level of volume on that penetration.

A spring involves the penetration of a well-defined support level on low or moderate volume .think if a stock going to break the support, it must break with high volume .the spring action shows that the stock trying to break down and failed. It is an important sign of strength

Background: The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR end of a falling market

The Shakeout As the name suggests shaking out weak holder’s .in an existing uptrend shaking out week buyers

CRITERIA for shakeout for long FAILURE TO FOLLOW THROUGH AFTER BREAKING a well-defined SUPPORT or resistance Widespread down closing on the middle or low of the candle Volume can be high or low. Engineered to catch stops and induce selling

WHY shakeout? FORM OF MANIPULATION Let’s discuss an uptrend If this is seen in an uptrend it is a very strong buy opportunity. Think of Smart Money, they have to buy at lower prices and will do anything to get the price down to buy more of the instrument they are

accumulating. Design to lock in weak shorts and shakeout early longs SHAKEOUT is a maneuver used to catch stops and trap breakout traders. It is often observed right before the market is about to take off in a particular direction. SHAKEOUT can be a sign of strength or a sign of weakness depending on the direction of the SHAKEOUT

Background: The background is extremely important. You should see strength in the background. You should see strength in the background with stopping volume or a selling climax OR end of a falling market

Future DIRECTION A ‘Shakeout’ on low volume is really a violent test and has the same effect. It shows supply has disappeared and you would expect higher prices. A ‘Shakeout’ on high volume shows demand was prepared to absorb the supply on that bar but they would likely want to test that supply in the future. Any low volume testing back into the area of the Shakeout would be a strong SOS.

Where appear shakeout 1. In a clear support or resistance level or 2. In a Well-defined trading range

Shorting AFTER you see a shakeout pattern In an existing uptrend, you can buy above the shakeout candle For trend reversal wait for no demand candle then buy above the candle

Please watch the following video if you want to learn and understand the VSA Trading Strategy concept in a better way.

Here, in this article, I try to explain VSA (Volume Spread Analysis) Trading Strategy. I hope you enjoy this VSA (Volume Spread Analysis) Trading Strategies article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. Any doubt or question please ask happy to help you.

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Option Chain Analysis

Option Chain Analysis Back to: Trading with Smart Money

Option Chain Analysis in Trading In this article, I am going to discuss the Option Chain Analysis in Trading. Please read our previous article where we discussed Opening Range Breakout with examples. At the end of this article, you will understand the following pointers in detail which are related to Option Chain Analysis. 1. What is open interest?

2. How to study option chain table

3. The element of the option chain table 4. How to interpret option open interest 5. Use of open interest

Market Structure Principles Price moves within a structural framework of the supply and demand zone. A breakout of the structural framework supply and demand zone will lead to price movement in the next area of the framework of the supply and demand zone

OPTION CHAIN COMPONENT

WHAT are ITM (IN THE MONEY) OPTIONS?

1. A call option is said to be in ITM if the strike price is less than the current spot price of the security. 2. A put option is said to be ITM if the strike price is more than the current spot price of the security. WHAT are ATM (AT THE MONEY) OPTIONS? 1. A call option is said to be in ATM if the strike price is equal to the current spot price of the security. 2. A put option is said to be ATM if the strike price is equal to the current spot price of the security. WHAT are OTM (OUT OF THE MONEY) OPTIONS? 1. A call option is said to be in OTM if the strike price is more than the current spot price of the security. 2. A put option is said to be OTM if the strike price is less to the current spot price of the security.

Open interest How Changes in Open Interest Occur If both participants in trade are initiating a new position, the open interest will increase. If both participants are liquidating an old position, the open interest will decline. If, however, one participant is initiating a new trade while the other is liquidating an old trade, open interest will remain unchanged.

Misconception about open interest Never think that since PRICE is rising, more LONGS are being created than SHORTS. LONGS will always be equal to SHORTS just that LONGS are dominating SHORTS in the transaction, that is why PRICE is rising The number of shares bought is ALWAYS EQUAL to the number of shares sold. Then why PRICE rises or falls? because of buying pressure or selling pressure. So, if buyers of a contract are dominating the sellers, PRICE will rise and if sellers are dominating the buyers, PRICE will fall. But BUYERS will always be equal to SELLERS. So, open interest is rising, which means new contracts are being added. But since PRICE is rising with it, it means that LONGS are DOMINATING the transactions. Thus, market/share is STRONGLY BULLISH. Opposite for bearish trend

WRITING/Selling(Sellers) is more important here….. Why…? It takes conviction to sell as there is Unlimited risk and more money required Sellers are usually someone with Big money like Big Institutions Buyers are usually retail traders as it is convenient with the less required capital Institutions are usually right Large option open interest means massive bet against that strike price

Use of open interest data To identify support and resistance To find out when support resistance will break Direction of trend

Identifying Support and Resistance based on option chain open interest

How to identify support and resistance level or zone? STEP 1 find the highest OI column on both sides (call and put side) STEP 2 note the corresponding change in OI SUPPORT (PE) biggest open interest number + positive change in open interest RESISTANCE(CE) biggest open interest number + positive change in open interest

How to know where is the resistance in an all-time high price? By analyzing the option chain data

PARTICULAR STRIKE PRICE in Option Chain Analysis Now we will study what is a particular strike price showing us? CALLS

PUTS

+ve change in OI implies that call writers are

+ve change in OI implies that put writers are

selling because they feel the stock will not

selling because they feel the stock will not

rise above the respective level

fall below the respective level

-ve change in OI implies that call writers are

-ve change in OI implies that put writers are

squaring up because they feel the stock will

squaring up because they feel the stock will

rise above the respective level

fall below the respective level

“STRIKE PRICE” will show any of the following: 1. LONG BUILDUP

2. LONG LIQUIDATION 3. SHORT BUILDUP

4. SHORT COVERING

LONG BUILDUP in Option Chain Analysis If PRICE is rising and open interest is rising, it means the market is STRONGLY BULLISH. LONG BUILDUP If PRICE and OI both are rising, it means that the new contract that is being added is dominated by bulls, that’s why PRICE is rising with every new contract addition.

Short-covering in Option Chain Analysis If PRICE is rising but open interest is falling, it means the market is WEAKLY BULLISH. Short covering If PRICE is rising but open interest is falling, it means that the rise in price is due to SHORT COVERING and not bullishness. See why is OI falling? It’s falling because positions are being squared off and the number of open contracts in the market is reducing. But since PRICE is rising with it, it means that SHORTS are SQUARING OFF and dominating LONGS in the transaction. See, how would SHORTS square off? They will square off by BUYING. That is why PRICE is rising. So, PRICE is not rising because LONGS are dominating. It is rising because SHORTS are dominating the squaring off process. Thus, it can not be called BULLISH. It is WEAKLY BULLISH. It can be a TRAP for new LONGS. Rally Extrapolating from the general rule, price up with high volume is bullish. However, if open interest drops during this same trading session, a bearish reading of that variable results. The internal condition of the market during such a trading session would be that of short covering. A short-covering rally is a very weak technical situation. The technician can state that the decline in open interest is more bearish than the high volume is bullish. In fact, if the volume is so high that it can be considered to be of blowoff proportion, the volume reading would also be bearish-signaling at least a temporary reversal of the price uptrend

SHORT BUILDUP in Option Chain Analysis If PRICE is falling, open interest is rising, the market is STRONGLY BEARISH. If the price is falling and open interest is rising, it means that SHORTS are dominating the LONGS. And since open interest is rising, it means that new contracts are being added. But, since the price is falling, it means the new contracts which are being added are dominated by SHORTS, not LONGS. Hence, it is STRONGLY BEARISH.

LONG LIQUIDATION in Option Chain Analysis If PRICE is falling and open interest is falling, the market is WEAKLY BEARISH. If PRICE is falling and open interest is falling, it means that the fall in price is due to LONG COVERING or also called LONG UNWINDING. See why is open interest falling? It’s falling because positions are being squared off and the number of open contracts in the market is reducing. But since PRICE is falling with it, it means that LONGS are SQUARING OFF & dominating SHORTS in the transaction. how would LONGS square off? They will square off by SELLING. That is why PRICE is falling. So, PRICE is not falling because SHORTS are dominating and creating new positions. It is falling because LONGS are dominating the squaring off process. Thus, it can not be called BEARISH. It is WEAKLY BEARISH. It can be a TRAP for new SHORTS.

MARKET DIRECTION BASED ON OPTION OI In which direction both support and resistance are shifting. if both shiftings higher is indicate bullishly

HOW TO KNOW? BY CHANGE IN OPEN INTEREST IN PARTICULAR STRIKE PRICE

Let’s study call open interest (CE OI)

Let’s discuss put open interest (PE OI)

Let’s combine both calls and put Call writer adding(increasing) and put writer exiting(decreasing)=bearish Put buyers adding(increasing) and call buyers exiting(decreasing) = bearish Call writer decreasing(exiting)and put writer adding(increasing)=bullish. Call buyers increasing(adding) and put buyers decreasing (exiting )=bullish

OPTION CHAIN TABLE FOR ABOVE CHART

WHAT HAPPEN NEXT

Let’s see the option chain data for this chart

BREAKOUT/REVERSAL Let’s study bullish breakout and Bull to bear reversal

REVERSAL STUDY If near CE OTM strike price has the highest open interest and positive change in open interest, then the price will not break that level. means call writers feel that price will not move above that level PUT WRITER exiting means open interest decreasing in ATM and ITM PE, THEY FEEL THA PRICE WILL MOVE BELOW THAT LEVEL

BREAKOUT STUDY If near CE OTM strike price has changed in negative open interest, then the price will break that level. call writer is exiting means they are feeling price will move up Addition in ATM AND ITM PE means put writers are bullish

Put Call Ratio (PCR) HIGH PCR =BULLISH More puts than calls Big sellers are selling puts, more than calls This means they are saying the market won’t go down much

Please watch the following video if you want to learn and understand the Option Chain Analysis concept in a better way.

Here, in this article, I try to explain the Option Chain Analysis in Trading. I hope you enjoy this Option Chain Analysis in Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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RSI Trading Strategy

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RSI Trading Strategy (Relative Strength Index) In this article, I am going to discuss RSI indicator also known as the Relative Strength Index Trading Strategy. Please read our previous article, where we discussed Option Chain Analysis in detail. As part of this article, you will learn the following. 1. What is RSI? 2. How RSI indicator works? 3. 4 uses of RSI

What is Relative Strength Index? The Relative Strength Index (RSI), developed by J. Welles Wilder. Relative Strength Index (RSI) is a momentum oscillator that measures the speed and change of price movements. The RSI oscillates between zero and 100

How RSI indicator works? Let’s understand the formula .how it works? The logic behind the RSI. RSI indicator is calculated on closing price. We can define bullish and bearish price on a closing chart as follows: 1. If current closing price is higher than previous closing price = Bullish trend 2. If Current closing price is lower than previous closing price = Bearish trend

The very first calculations for average gain and average loss are simple 14-period averages(default period): The first question is what is the average gain? Let me give you a very simple example.

Above is chart connecting 14 closing prices. We are calculating the average gain and loss over the last 14 periods

Let us calculate gains and losses on this chart. First Average Gain = Sum of Gains over the past 14 periods First Average Loss = Sum of Losses over the past 14 periods In the above chart, Bullish readings (Gain) are = 10,10,10,10,10,10 and 10 Bearish reading (Loss) are = 10,10,10,10,10,10 and 10 Let us calculate the simple average price of the gains & losses: Bullish average = (10+10+10+10+10+10+10)/7=10 Bearish average = (10+10+10+10+10+10+10)/7=10 So average gains were 10 points and average losses 10 points.

How to know how strong the bulls are? The average of losing bars plus the average of winning bars was =10+10=20 Average gain was 10 So, RSI will be (10 / 20) x 100= 50 The key thing to take note is that the higher your average gain, the higher your RSI is going to be. Make sense? Suppose in the above example average gain is 15 and average loss is 5 RSI will be (15/20) x 100= 75 So, when RSI is at 50, it means Average gain is equal to Average loss. RSI goes up: When your average gain is greater than your average loss in a particular look back period, and this pretty much means that the size of your bullish candles is larger than the bearish candles. RSI goes down: When your average gains are smaller than your average loss in a particular look back period. This means the size of bearish candles is larger than the bullish candles. In other words, the RSI indicator measures the momentum of price or trend (Disclaimer: I used a very simplified version of calculation for the Relative Strength Index (RSI) indicator, I think their calculation used is a little bit more complicated. But again, the concept is the same.)

Parameters

The default look-back period for RSI is 14, but this can be changed. Look-back period for RSI is lowered to increase sensitivity or raised to decrease sensitivity. 7- Period RSI is more likely to reach overbought or oversold levels than 14- period RSI.

Uses of Relative Strength Index Trading Strategy RSI shows overbought or oversold RSI When above 70 and oversold when below 30. These levels can also be changed if necessary to better fit the security. For example, if a security is repeatedly reaching the oversold level of 30 you may want to adjust this level to 20. Relative Strength Index (RSI) overbought and oversold readings work best when prices move sideways within a range During strong up trends, the RSI may remain in overbought for extended periods. So consider only oversold when trend is strong .reverse for strong down trend

RSI pattern RSI also often forms chart patterns(like price chart pattern) that may not show on the underlying price chart, such as double tops and bottoms, support resistance and trend lines .

Identifying trend using RSI Uptrend If RSI above 50.This tells you is that the average gain is larger than the average loss, you can conclude that it’s in an uptrend. In an uptrend, the RSI tends to remain in the 40 to 80 range with the 40-50 zone acting as support zone Downtrend If RSI below 50 .This tells you that the average loss is greater than the average gain, and you can conclude that it’s in a downtrend

During a downtrend the RSI tends to stay between the 20 to 60 range with the 50-60 zone acting as resistance zone. These ranges will vary depending on the RSI settings and the strength of the security’s trend

DIVEREGNCE If prices make a new high or low that isn’t confirmed by the RSI, this divergence can signal a price reversal.

Price makes lower low while RSI makes higher low. Why? A bullish divergence occurs when the price makes a lower low and RSI forms a higher low. If RSI does not confirm the lower low and this shows strengthening momentum. It means there were gains in between while price made new lows but the gains prevented the RSI from making a corresponding lower low. The logic is reversed for the Bearish divergence.

Here, in this article, I try to explain RSI Trading Strategy. I hope you enjoy this RSI Trading Strategy article. Please

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BTST Trading Strategy

BTST Trading Strategy Back to: Trading with Smart Money

BTST (Buy Today Sell Tomorrow) TRADING STRATEGY In this article, I am going to discuss the BTST Trading Strategy (Buy Today Sell Tomorrow) in detail. Please read our previous article where we discussed the Relative Strength Index Trading Strategy. This article will cover the complete detail about the BTST (Buy Today Sell Tomorrow) TRADING STRATEGY as follows: 1. Price Action based strategy

2. A clear rules-based system with defined Entry, Target & Stop Loss 3. Clear rules for stock picks, tell clearly which stock to Trade

WHAT is BTST (Buy Today Sell Tomorrow) Trading Strategy? BTST (Buy Today Sell Tomorrow) is a method that allows customers to sell shares before they are credited into a Demat account or take the delivery of shares. The reverse of BTST is called STBT i.e. Sell Today Buy Tomorrow

BTST Trading Strategy Advantages 1. It allows you to benefit from the short-term volatility or increase/decrease in the price of the stocks.

2. If you find intra-day trading unprofitable, then BTST gives 2 more days to your trades to improve its performance.

BTST Trading Strategy Disadvantages 1. Unlike intraday trading, most stockbrokers do not offer margin to BTST facility. 2. Overnight risk

Strategy for BTST trading Change of Guard (COG) LOGIC. Change the direction of MINOR move For more information read Candlestick Pattern Analysis COG ENTRY Either Pullback Reversal from the support level Trend reversal from the demand zone

Criteria for long 1. Previous day red candle should be small 2. Price at the clear support level

3. Next green candle(current t day) price close above the red candle(previous day) 4. CURRENT DAY CANDLE MAY GAP UP OR GAP DOWN DOESN’T MATTER 5. VOLUME GREATER THAN PREVIOUS DAY

Breakout Strategy Here I discussed the breakout trading strategy. read as logic and condition all are the same. Just move to a daily time frame Price should close below clean support and above the resistance level More condition. Go through the above article

Stock selection condition for both BTST Trading Strategy We will study the following parameters to select stock Attempted Direction (Up, Down, Sideways) or intraday structure Volume Generated (High, Low, Unchanged) Closing swing and volume Data(future and option) By studying the above factors we can get a tight grip on what the smart money was trying to achieve and was that attempt successful. And Possible of the trend for the next day

Internal structure Attempted Direction (Up, Down, Sideways)

Only select those stock .which intraday structure is either trending up or down

Opening range and follow-through

Select those stock which opening range got breakout and follow-through

CLOSING SWING and VOLUME If the market closes with an extremely unusual discount (closing at day low) OR excess premium (closing at day high), it is giving the trader a very loud and clear signal that continuation is likely the next day.

The last SWING or closing swing often tells the truth about how strong a trend truly is. “Smart money “shows their presence in the last SWING or closing swing, continuing to mark positions in their favor. As long as a market is having strong closes (closing at day high), look for an up-trend to continue. High volume on the close swing implies continuation the next morning in the direction of the closing swing.

Data Future open interest 2) Increase in open interest with an increase in price during the last swing of the trading day.it shows the strength of the trend

Option data 1. Long buildup or short buildup

2. Avoid short covering or long liquidation move Note-check option chain video for option chain analysis or you can read here

Next support and resistance level 1. Where is immediate support and resistance or supply and demand zone by technical analysis 2. Options support and resistance level

Stock selection condition for BTST strategy 1. CLEAN HEALTHY CANDLE

2. Today price trading above the previous day high(for long ) 3. Trending internal structure

4. The last swing must be trending and close at day high (for long) 5. Last swing volume and open interest increasing,

6. Technical analysis and Options data suggest no nearby any support or resistance level

Odd enhancer INDEX Identify what the general market or index is doing? 1. Trending

2. At support or resistance zone First Identify the support and resistance zones in the index (nifty). If markets closed near the support zone, I would know to look for opportunities to buy the next day as the price was likely to rally from that support zone

Sector selection

look at charts sectors to find some that are also trading near support zone as those sectors would likely rally from that support zone with the index (nifty ) market the following day. Out of the few sectors, I would always find one or two that were set up very well with the broad market (index). 1. If the index is bullish, select a strong sector for BTST

News stock AVOID frequently NEWS BASED SECTOR (LIKE PHARMA)

Check history CHECK the history of the stock and find whether the stock has the capability of moving consecutive strong days. if yes then select

Ol-OH If stock open with open high or open low Add confidence if open with open low or open high

Exit Most of the time these scripts are opened the next day with a gap up .profit should be booked within 5-10 minutes in the next session. If the price moving strongly from the open in the direction of your entry, you can trail your stop loss If the market closes with a strong premium (closing at day high) but opens weak (gap down)the next morning, the odds favor that the first move will be to the upside to test the previous day high(fill the gap). If the market closes weak, and the futures close with a discount (close at day low), yet the market gaps up the following morning, the first move should be a retest down to attempt to fill the gap. If the price gap down (you took BTST).YOU can exit immediately or wait for opening range and place sop loss or wait for the first five-minute candle and place stop loss. It totally depends open your risk

Entry After 3:15 pm Please watch the following video if you want to learn and understand the BTST Trading Strategy (Buy Today Sell Tomorrow) concept in a better way.

Here, in this article, I try to explain BTST Trading Strategy (Buy Today Sell Tomorrow). I hope you enjoy this BTST Trading Strategy (Buy Today Sell Tomorrow) article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney.

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Technical Analysis

Technical Analysis Back to: Trading with Smart Money

Technical Analysis In this article, I am going to discuss Technical Analysis in detail. Please read our previous article, where we discussed the Volume Price Action Analysis. At the end of this article, you will understand the following pointers. 1. What is Technical Analysis?

2. The basic assumption of Technical Analysis 3. Rules for trend

4. Application of Technical Analysis

What is technical analysis? Technical analysis is the study of past market price action to try to gauge what the market might do in the future.

Technical Analysis – Assumptions The 3 basic assumptions of technical analysis 1. History repeats itself.

2. Prices move in trends.

3. Market Action discounts everything

History repeats itself. It states that human behavior will not change and commit to similar things repeatedly. Means chart patterns in the technical analysis have been used for more than 100 years, and they are still believed to be relevant and that often repeat themselves. Technical analysis is the study of past market price action to try to gauge what the market might do in the future.

Prices move in trends Newton’s first law of Motion state that “An object at rest remains at rest, or if in motion, remains in motion at a constant velocity unless acted on by an external force. So, the same way we assume that a trend remains in force till we don’t see a trend reversal price action that has enough force to change or stop it.

3 RULES FOR TREND 1. We expect an up or downtrend to continue in its current state until the next support /resistance or unless displaying evidence of weakness within the trend.

2. A sideways trend within the framework is expected to continue in its current state

3. If strength is shown on an approach to a support or resistance, we expect a breakout

Let’s apply this to the nifty 50 chart Price in uptrend making higher high (HH) and a higher low (HL)

Market Action discounts everything All known and unknown information related to security is reflected in the price of the stock. Prices represent the sum total of all the greed, hopes, fears, and Including fundamental or any major event. As soon as new information comes to light it’s immediately reflected in the stock’s price

Applications of technical analysis 1. Technical analysis can be used in stocks, indices, futures, commodities, or any tradable instrument where the price is influenced by the forces of supply and demand.

2. Technical analysis may not work with micro-cap companies and penny stocks which are controlled and operated by a handful of operators

Next MARKET STRUCTURE We will discuss 1. What is the market structure?

2. Principles of Market Structure

3. Elements of the Market structure Please watch the following video if you want to learn and understand the Technical Analysis concept in a better way.

Here, in this article, I try to explain Technical Analysis. I hope you enjoy this Technical Analysis article. Please

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Market Structure

Market Structure Back to: Trading with Smart Money

Market Structure | Technical Analysis Part 2 In this article, I am going to discuss Market Structure in Trading. It is the second part of Technical Analysis. Please read our previous article, where we discussed technical analysis part 1. At the end of this article, you will understand the following pointers. 1. What is the market structure?

2. Principles of Market Structure

3. Elements of the Market structure

What is the market structure? Market structure gives us bias for trading opportunities. In the bull market, we always look to buy dips Range market we look for buy low sell high

Principles of Market Structure 1. Price moves within a structural of support and resistance.

2. A breakout of the structural of support or resistance will lead to price movement in the next area of the support or resistance

Elements of the Market structure The market structure consists of 1. Phases 2. Trend

Phases How does the market really work? All financial markets work on the universal law of Supply and Demand. Law of Demand– The higher the price of an item, the fewer the demand (buyers don’t want to buy at a higher price) and lower the price, higher the demand (buyers want to buy at a low price) Law of Supply– The higher the price of an item, the higher the supply (sellers want to sell at a higher price) and lower the price, lower the supply (sellers don’t want to supply at a lower price So prices go up to find sellers and then go down to find buyers Let’s think from the perspective of smart money

What is smart money? Smart money are nothing but professional money, big hedge funds and institution’s If you want to be a successful trader you have to understand where these smart money place themselves and where their orders are If you don’t know this you might get trapped by smart money

The price goes through 4 Phases 1. ACCUMULATION 2. UPTREND

3. DISTRIBUTION 4. DOWNTREND

ACCUMULATION Accumulation means removed from the floating supply of stock by buying Demand coming in to gradually overcome and absorb the supply and to support the stock at this level How smart money do that? they buy as much of the stock as possible, without significantly putting the price up against their own buying until there are few, or no more shares available at the price level they have been buying at Accumulation generally takes place within a well-defined congestion area, where the stock appears to have no interest to either move up or move down. The smart money ensures that the stock is contained below a certain upper level which is the supply area. At the same time, the smart money also supports the prices above a certain lower line which is the support area.

How does trend change? Stopping action(stopping the downtrend) Change of character(strength of trend change from bearish to bullish) Testing of supply(testing supply whether present or not) Mark up(if no supply found in testing action )

We will discuss in depth later sections. There are many other patterns that signify accumulation. Some of them are rounding bottoms, reverse head and shoulder and double bottoms patterns triple bottom pattern

UPTREND Once the supply observes by smart money. When general market conditions appear favorable, the Smart Money can then mark up the price of the stock At some time in the future First, the market breaks out from the end of the accumulation phase, moving higher steadily, with average volume. There is no rush as the insiders have bought at wholesale prices and now want to maximize profits by building bullish momentum slowly, as the bulk of the distribution phase will be done at the top of the trend, and at the highest prices possible. Again, given the chance, we would do the same

DISTRIBUTION Smart money will take advantage of the higher prices obtained in the rally to take profits by beginning to sell the stock back to the uninformed traders/investors Opposite of accumulation process

DOWNTREND Once the distribution completed. the Smart Money can then mark down the price of the stock At some time in the future. Let’s combine all phase

So, let’s try to put the above phases with nifty 50

This is all the smart money is doing, they are simply playing on the emotions of the markets which are driven by just two. Fear and greed. That’s it. Create enough fear and people will sell. Create enough greed and people will buy. It’s all very simple and logical This cycle of accumulation and distribution is then repeated endlessly, and across all the time frames. Some may be major moves, and others minor, but they happen every day and in every market

Trends: Let us first understand what is a trend. In a healthy bull trend, the upswing generally exceed the downswing in length and making a higher high and higher low, the reverse is true for the bear market

WHY Trend Analysis for Trading? Trading against the trend, without a trend, or poor quality trends are one of the most common reasons traders fail. The quality or strong trends have more predictable success (edge) Controlled arrangement of price bars and pullbacks provide greater certainty that reverses at supply and demand happen Poor or weak trends have lower predictability Uncontrolled arrangement of price bars and pullbacks into supply and demand lessens chances of a reversal

Determining the market trend According to Dow Theory, the market has three trends Primary trend: In Dow Theory, the primary trend is also considered as a major trend in the market. It has a long term impact Secondary trend: Dow calls a correction in the primary trend as a secondary trend. In a bullish market, the secondary trend will be a downward movement and in a bearish market, it will be a rally. SHORT TERM trend: The Minor Trend is a corrective move within the secondary trend

Which time frame trend is best? It depends on what time frame you are looking at. Larger Timeframes establish and dominate the trend. If we are looking at daily time frame and price is making higher highs and higher lows we are in the bull market But if we are looking at a retracement of that bull move in 30 minutes time frame we might be a short term bear market even though overall market is bullish

Let’s do an example

The Ultimate objective of technical analysis is to find the location of trend and trade according to the trend Some of the tools which are used for technical analysis are

Swing(the building block of trend) Support and resistance supply and demand zone trend line pattern gaps volume open interest signal candle for entry Please watch the following video if you want to learn and understand the Market Structure in the technical Analysis concept in a better way.

In the next article, I am going to Market Structure Through Swing. Here, in this article, I try to explain Market Structure in technical Analysis. I hope you enjoy this Market Structure in the technical Analysis article.

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Understanding Market Structure through Swing

Understanding Market Structure through Swing Back to: Trading with Smart Money

Understanding Market Structure through Swing In this article, I am going to discuss Market Structure through Swing. Please read our previous article, where we discussed Market Structure in Trading. At the end of this article, you will understand the following pointers. 1. What is the swing?

2. Types of swing Why Swing points are important? 3. Chart reading through the swing

4. 4 Important facts that affect the swing

Introduction Before entry, you must know where buyers in a downtrend and sellers in an uptrend enter. Let me explain if you know that, this is the end of the swing downswing then you can buy with small risk and exit when you know that this the end of the upswing. For finding sellers in an uptrend or buyers in a downtrend we have to analyze swing structure, by weighing the relation of supply and demand Hence by observing market swing, we are able to glimpse into the structure of the market and get clues about 1. the current direction of the market(trend)

2. Strength of trend (buying and selling pressure) 3. Support and resistance

4. When will the trend change? 5. when to buy/sell/exit

Why Swing points are important? These points not random, they created by the market. They represent momentary changes and demand and supply forces. The bulls could not move the market above the swing high. This means that at that point in time, no one was willing to offer a price higher than the swing high. Traders saw no value above the swing high. In the future, his point may act as resistance. It is similar to learning to read a new alphabet-once you understand the characters, you can read the words, and once you know the words you can read the story. The first letter to master tells you what market activity causes the formation of a short-term high or low. If you learn this basic point, the meaning of all market structures will begin to fall into place.

Defining candle It focusses the relation between current candle high and low with previous candle high and low

Swing high and swing low Criteria for drawing swing high and swing low: SWING HIGH or SWING LOW CONSIST OF MINIMUM 5 BAR. The middle bar must be higher high and higher low then the two-proceeding bar and the two-following bar

Swing Types There are two types of swing 1. High and low

2. Swing high and swing low Let me explain to you

Swing low (SL)

The market tried to move down. Then, it stopped and the bullish trend resumed. The market broke all resistance (swing high) and made a new trend high. In other words, the market failed terribly in its attempt to move down. The lowest point it pushed to is called swing low

Swing low and low point Every major market has some pullback that is shallow and some last for one swing. The point where pullback goes deeper and lasts for more than one swing, forming a LOW. Eventually, this deeper pullback terminated and the trend resumed. A low becomes a swing low once price breaks out above the last extreme price high for the resumption of the bullish trend. Let me explain to you

LET’S DO SOME EXAMPLE

All the concept is discussed above are applicable for a swing high and high

HOW TO KNOW WHEN LOW BECOME SWING LOW When the price cleared the above swing high level. To clear a price level, the market must form a candle that is completely above the price level. This means if a candle low is higher than a price level, the market has cleared above the price level.

We will cover this in more details in the price action topic

Chart reading through the swing Charts have actual value in determining the position (location) and probable trend of stocks, by weighing the relation of supply and demand swing. To study charts, look for the motives behind the action which the chart displays. Whenever you read a chart, consider what you see there as an expression of the forces that dominate the price and when the force lift from prices. Study your chart from the viewpoint of the behavior of the stock, the motives of those who are dominant in it, and the successes and failures of the buyers and sellers as they struggle to dominate each other

Important facts that affect the swing are: 1. price movement 2. volume

3. The relationships between price movement and volume 4. The time required for all the swing movements

Price movement and swing Price movement (price changes from swing to swing) Observing the sequence of a price swing, we are able to glimpse into the structure of the market and get clues about support and resistance Lines of supply and support(trend) Changes of impulse and reaction movement (net gain or loss) Comparative strength and weakness(momentum) Development of accumulation or distribution

Swing and Support resistance This swing points not random, they created by the market. They represent momentary changes and demand and supply forces. The bulls could not move the market above the swing high. This means that at that point in time, no one was willing to offer a price higher than the swing high. Traders saw no value above the swing high. Hence, subsequently, when price moves close to or near above a swing high, we must remember that traders saw no value in buying above that point previously. Assuming that most traders have not changed their opinions, the price is unlikely to move above the swing high. Effectively the swing high mark a price area that resists the market from moving up this is what we call a resistance area. Reverse for support area

Changes of impulse and reaction movement (net gain or loss) By comparing impulse swing with retrace swing we can we can measure the strength of a trend 1. Increased IMPULSE swing is a sign of potential trend strength as the gain is positive. Shortening of impulse swing is a sign of potential trend weakness.

2. The increased reaction is a sign of potential weakness of a trend. The decreased reaction is a sign of potential strength of a trend

For more details, please read the following Thrust Pullback article Thrust Pullback

Comparative strength and weakness 1. Compare the momentum of the current price swing with the momentum of the previous price swing in the same direction?

2. Compare the momentum of the current price swing with the momentum of the previous price swing in the opposite direction?

3. Is the current price accelerating or decelerating? What does that mean?

For more details, please read the following Advanced Price Action Analysis article Advanced Price Action Analysis

Development of accumulation or distribution The trader will buy aggressively in the vicinity of previously established market support points, as he is convinced that a rally will generate sufficiently. When the trader notes diminishing demand in the rallies from each support point, he recognizes that his opportunity for successful speculation on the ‘Bull’ side is also diminishing Ultimately, worthwhile opportunity on the long side is gone, and the professional switches his position. Becoming a short seller at rally tops he increases the supply of stock and this increase intensifies the progressing imbalance favoring the sellers over the buyers. Again, the transition to a trend condition is accomplished with the line of least resistance now being a bearish one

TREND and swing Let’s combine all the above factors. Conventional technical analysis says the market moves in the up-down wave, what we call market swing. In a healthy bull trend, the upswing generally exceeds the downswing in length, the reverse is true for the bear market. When a trend fails to make a new high (failed rally), it possibly indicates a trend change (sideways or reversal).

Volume traded in each swing Volume (when to buy/sell/exit) of trading on alternative buying and selling waves Increasing or decreasing the pressure of supply and demand Buying and selling climax Activity or intensity of trading (the ability of bull and bear to attract following on advances and decline. rallies and reaction Characteristics of supply and demand whether urgent, timid, or aggressive

For more details, please read the following Volume Price Action Analysis article Volume Price Action

Volume and price of each swing Volume and price movement provide the greatest aid in: 1. Determining the direction of coming moves. 2. Deciding when to buy or sell.

3. Knowing when a stock is on the consolidation 4. Knowing when a move is ending.

For more details, please read the following Volume Spread Analysis article Volume Spread Analysis In the next article, I am going to discuss Supply and Demand Trading in detail. Here, in this article, I try to explain Market Structure through Swing. I hope you enjoy this Market Structure through the Swing article. Please

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Supply and Demand Trading (Part – 1)

Supply and Demand Trading (Part – 1) Back to: Trading with Smart Money

Supply and Demand Trading In this article, I am going to discuss Supply and Demand Trading. Please read our previous article, where we discussed Market Structure through Swing. At the end of this article, you will understand the following pointers. 1. What are the supply and demand zone?

2. Why supply and demand zones in our chart?

3. Why does the market return to the supply and demand zone? 4. Why trade from supply and demand zone?

What are the supply and demand zones? Supply-demand nothing but the border area of support or resistance

Why supply and demand zone in our chart? 1. Supply zone formed due to the smart money placing sell trades, we can confirm this to be a fact because the market continued to fall after the zone formed (opposite for demand zone)

2. If you are aggressive, you want to buy or sell NOW. In other words: you place a MARKET ORDER to buy or sell immediately at the best available current price

3. Because your position is pretty big, it won’t be filled all at once. It will get filled fast, you will be able to enter the whole position, but the position will get split as the price moves upward quickly. It is the aggressive market participants, who drive the price aggressively up or down with their market orders

4. So, the supply and demand zone can only be seen once price speeds away from the zone. It indicates that there was smart money buying or selling interest at the origin of that move

Why does the Market return to Supply and Demand Zones? 1. Due to Pending Block order

2. Because the smart money position is pretty big, it won’t be filled all at once smart money was not able to get all of their trades placed when the zone formed. If they rush into the market the price goes along with them. This action will make them buy higher and sell lower. They resolve this issue by leaving blocks of orders on the books

3. To get their remaining trades placed, the banks leave pending orders at the zones so when the market returns to the zone, the trades which they were not able to get placed initially are executed, and the market moves back in the direction to which the zone was created

WHY TRADE FROM SUPPLY AND DEMAND ZONE? 1. Low-risk high reward

2. You are with the smart money

Please watch the following video if you want to learn and understand the Supply and Demand Trading concept in a better way.

Here, in this article, I try to explain Supply and Demand Trading. I hope you enjoy this Supply and Demand Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. In the next article, we will discuss 1. Which supply or demand zone reject the price 2. Good zone vs bad zone

3. Price action at supply and demand zone for confirmation 4. How to find supply and demand zone

5. How to draw supply and demand zone

6. How to trade with supply and demand zone

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Supply and Demand Trading (Part – 2)

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Supply and Demand Trading (Part – 2) This is Part 2 of Supply and Demand Trading. Please read Supply and Demand Trading Part – 1 before proceeding to this article. As part of this article, we are going to discuss the following pointers in detail. 1. Which supply or demand zone reject the price 2. Good zone vs bad zone

3. Price action at supply and demand zone for confirmation 4. How to find supply and demand zone

5. How to draw supply and demand zone

6. How to trade with supply and demand zone

Supply and Demand Zone types There are different supply and demand zone patterns. shown below: TREND CONTINUOUS BASE 1. RALLY BASE RALLY(RBR)

2. DOWN BASE DOWN (DBD) TREND REVERSAL BASE 1. RALLY BASE DROP (RBD)

2. DOWN BASE RALLY (DBR)

TREND CONTINUOUS BASE 1. Rally Base Rally (RBR)

2. Down Base Down (DBD)

TREND REVERSAL BASE 1. Rally Base Drop (RBD)

2. Down Base Rally (DBR)

How to Find Supply and Demand Zones or institutional activity? 1. Start at the current price

2. Look left and find smart money activity

3. Mark the base from which smart money activity initiates the trade

Smart money activity There are three main signs of smart money activity we can spot with volume Price Action: 1. Strong aggressive move with clear volume expansion 2. Strong rejection or trapping 3. Gap (check which gap)

Aggressive initiation activity 1. If you are aggressive o buy or sell, you want to buy or sell now. It means, you place a MARKET ORDER to sell or buy immediately at the available current price

2. Because your position is big, it won’t be filled all at once. It will get filled fast, you will be able to enter the full position, but the position will get split (due to the big position) as the price moves upward quickly. It is the aggressive market participants, who move the price aggressively up or down with their market orders.

3. So, the supply and demand zone can only be seen once the price speeds away from the zone. It indicates that there was smart money buying or selling interest at the origin of that move

Aggressive volume price action activity 1. STRONG AGGRESSIVE CANDLE 2. CLEAN CLOSE

3. INCREASING VOLUME

The strong rejection or V TURN 1. Strong rejection of price levels is a sudden price reversal. This zone is made when the price goes one way aggressively and then turns quickly and with the same aggression and speed goes the other way

2. What happens here is that one side of the market is aggressive and moves the price in one way. Then it clashes with the other side which suddenly becomes even stronger and even more aggressive. So, the price turns back quickly, and the stronger side takes over. Like V reversal

3. The zone where the other side took over is very significant because it marks a place where strong market participants rejected aggressively and started a strong countermove. This zone is significant for us because it will most likely be defended again if the price gets near again. It becomes a new demand or supply zone.

4. Pin bar or any reversal candlestick pattern formed at this zone

GAPS ARE THE STRONGEST FORM OF IMBALANCE 1. Mark the gap from where it occurs

2. Draw the zone(demand/supply) that is right below/above the gap, not the zone right before it.

Please watch the following video if you want to learn and understand the Supply and Demand Trading concept in a better way.

Here, in this article, I try to explain Supply and Demand Trading. I hope you enjoy this Supply and Demand Trading article. Please join my Telegram Channel to learn more and clear your doubts. https://t.me/tradingwithsmartmoney. In the next article, we will discuss the following pointers in detail. 1. How to mark supply and demand zone using candlestick 2. How to define strong and week zone

3. How to trade supply and demand zone

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