BC GENERICLEARNINGS
Saved by @SAnngeri

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

A thread 🧡

1. Front running the market based on my analysis:

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

How?

(1/n)

 Example:

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

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

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

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

(3/n)
For your analysis to be correct, market buying>selling at support, market selling>buying at resistance.

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

(4/n)
Remember that no support is too low to be broken and no resistance is too high to be broken.

(5/n)
2. Having the same timeframes for analysis and trading:

If you are a price action based trader, the most important guiding principle for you is:

1. Higher the timeframe, more accurate and reliable the technical analysis
2. But big moves start on small timeframes first.

(6/n)
Both sound contrarian? Yes, they do.

The key is to balance these two principles and have a structure where you analyze markets on a TF and trade on a TF which complement each other.

(7/n)
Example:

If you are a day trader, do not pick stocks on 15 mins TF and trade on 15 mins. Switch your analysis to hourly TF/daily TF.

It will help avoid choppiness in the markets to a large extent.

(8/n)
3. Taking reversal trades based on divergences:

A divergence is a signal for a potential reversal which MAY occur, but not a confirmation.

Just taking reversal bets on divergence will sooner or later burn big holes in your pocket.

(9/n)
To trade any divergence, have a structured rule based action, (Ex: I use fibs to validate divergences) and then take reversal trades after PRICE CONFIRMTION.

Every divergence does not mean reversal and every reversal does not come with divergence.

(10/n)
4. Using multiple oscillators:

Some people use RSI, MACD, Stoch RSI all on one chart.

On a minute basis, even though these oscillators have their own differences, fundamentally on a broader perspective, they have the same purpose.

(11/n)
Doesn't matter whether you use a analog watch or a digital watch, primary purpose is to check time.

So, pick one oscillator and do not clutter your chart and minds in live markets.

(12/n)
Relying too much on candle patterns:

This could get a bit unpopular but I like to put the truth out:

Bullish candle patterns work well in bull markets and bearish patterns work well in bear markets.

(13/n)
But on the whole, deciding the direction of a stock and taking a trade just based on "one single candle pattern" is injurious to account in the longer run.

(14/n)
Focus on understanding the market mechanism.

Deciding the direction based on just 1 candle without considering the positions of market participants of different timeframes is not a good practice.

Focus on developing an analysis method based on multiple factors.

(15/n)
Hope you liked the contents of this thread. If yes, like and re-tweet.

Follow me to get more such content and knowledge

#stockmarkets #trading #Nifty

More from Killer Trader πŸ“‰πŸ“ˆ

Killer Trader \U0001f4c9\U0001f4c8
Killer Trader πŸ“‰πŸ“ˆ...
@KillerTrader_
How to build a successful trading mindset?

A thread 🧡

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

#StockMarket #trading

(1/n)

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

(2/n)

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

Why?

(3/n)

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

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

(4/n)

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

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Killer Trader \U0001f4c9\U0001f4c8
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Improve your volume analysis using volume profile.

A thread on volume profile 🧡

Traditional volume indicator is widely used by almost every trader.

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

(1/n)

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

(2/n)


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

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

Read to find more.

(3/n)


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

But how does this help a trader?

(4/n)

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

Of course, it is volume that drives the price.

(5/n)
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Trader Abhishek
Trader Abhishek
@KillerTrader_
Introduction to imbalance charts (orderflow trading):

A 🧡

(1/n)

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

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

(2/n)


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

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

(3/n)

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

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

(4/n)

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

(5/n)
ALL , TRADING
Killer Trader \U0001f4c9\U0001f4c8
Killer Trader πŸ“‰πŸ“ˆ...
@KillerTrader_
Thread on sideways market:

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

(1/n)

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

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

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

Instead it results in a sideways price action.

When their positions are built, aggressive activity begins which results in markets moving in a trend. First positions are built slowly and then markets are moved aggressively in the favorable direction to get profitable.
TRADING
Killer Trader \U0001f4c9\U0001f4c8
Killer Trader πŸ“‰πŸ“ˆ...
@KillerTrader_
How I understand the strength of a trend:

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

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

(1/n)


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

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

(2/n)

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

See below chart where sellers sold huge around PDL.

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

(4/n)


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

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

Charts by @gocharting

(4/n)
#nifty
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