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Thread: Parabolic SAR Indicator

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

#PSAR #Indicators #Definedge

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

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

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

Let us define the trend as:

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

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

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

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

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

Calculation of PSAR: EP, AF and PSAR

Extreme Price (EP) is calculated on every candle.

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

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

If Bearish trend

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

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

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

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

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

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

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

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

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

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

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

More from Prashant Shah

Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Alligator indicator

#Alligator #Indicators #Definedge


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

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

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


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

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


Simple explanation is – shifting the moving average can help one compare current price with past period moving average easily. It results in smoothening instead of increasing the moving average parameter. This is also known as Forward Displaced moving average.
STOCKSLEARNINGS , ALL , MARKETLEARNINGS
Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Central Pivot Range (CPR)

CPR is another popular tool. Three lines are plotted on the chart when we plot CPR.

The three lines are: CPR, TC and BC.

Let’s understand the calculation.


You may recall that I explained the calculation of Pivot levels in an earlier thread. CPR stands for Central Pivot Range. It is always a center line of the three lines that gets plotted in the chart.

CPR is a Pivot price. Pivot is average of HLC as explained in the prev thread.


We also discussed about Mid-range of the session. Mid-range is average of High and low price of the session.

The mid-range of the bar is known as BC in the CPR calculation. BC stands for Bottom central pivot.


Pivot level captures the relationship of the closing price to the range of the session.

Pivot price above mid-price = bullish pivot
Pivot price below mid-price = bearish pivot


So, CPR line is Pivot and BC line is Mid-range.

What is the difference between both?
Mid-range is average of High and Low.

Pivot is average of High, Low and Close.
What will make the difference between the two?

Close.
FINANCE , LEARNING
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Prashant Shah
Prashant Shah
@Prashantshah267
Back-testing of some candlestick patterns 🧵

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

Below is some interesting information.


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

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

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

Some top bullish patterns have below hit ratio:

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


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

Engulfing and Harami patterns have got better returns when traded at next candle of confirmation.
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Prashant Shah
Prashant Shah
@Prashantshah267
Nifty and RSI divergence. It is all about knowing your indicator well. Quick video (Hindi) :-)
STOCKLEARNINGS
Prashant Shah
Prashant Shah
@Prashantshah267
Thread: Decoding 2-period RSI

#trading


2-period RSI is a popular concept introduced by Larry Connors.

Many traders are using this method in their strategy.

There are two simple rules in the strategy that Larry Connors explained.

For buying:
• Price should be above 200-DMA (Long-term trend is up)
• 2-period RSI should be below 10 (better below 5)

For selling:
• Price should be below 200-DMA (Long-term trend is up)
• 2-period RSI should be above 90 (better above 95)

He also recommended exiting trades in profit. Exit if stock goes above 5 DMA after buying and exit of stock goes below 5 DMA after shorting. You can use DMA, higher period RSI such as 5 period or 14 period, ADX, Super trend etc. Possibilities are endless.

Bottom line is that he recommended exiting into profit instead of trailing. He did not recommend stop-loss because it can hurt the overall profitability according to him.

Let’s focus on the 2 rules stated above.

What is the logic of the system? It is a pullback trading system.
ALL

More from Trading

Anarchist \U0001f4a3Federation \u2764\U0001f5a4
Anarchist 💣Federation ...
@AnarchistFed
While watching the GameStop stuff has been mildly hilarious (I mean who doesn't like watching the financial elite squirm?) it's pretty clear that a whole bunch of folk have convinced themselves this is ACTUALLY some kind of revolutionary activity. It isn't. 1/


Sure, it's highlighted yet another way in which the bastards profiteer but that's about it, stick it on the pile with the fifty other pro tips to keep the poor, well poor... It's todays banter and tho a few folks might have egg on their faces, literally nothing will happen. 2/


GameStop's three largest shareholders have earned £1.5bn+ during this. They sit at the top of some 200 institutions which are rolling. Meanwhile the ersatz rebels are now watching the bubble, realising there is profit to be made and having a wibble. 3/


No doubt some TRULY believe they are taking part in some kind of revolution but frankly it's utterly absurd and the vast majority are in it for the lulz and to cash in quick.

I'm sorry to tell you this, but you don't own GameStop.

4/


The reality is, the scale of the economic disparity and corruption is simply vast. Billionaires loosing a few millions means nothing. They buy one less yacht and you continue to live meal to meal.

The "Free Market" changes a few systems and the abuse continues. 5/
TRADING
Conservative Trader
Conservative Trader
@AnandableAnand
How to get rich trading (without getting lucky)

Complete beginner’s guide to wealth of Rs 10 Cr in 10 years

Step 1: start trading live

1/n

Nothing can substitute experience of live trading

No amount of back-test, studies or indicators can substitute training your mind with screen time

As a beginner, In live trading, you will make losses almost everyday

2/n

So here are the conditions which you can’t violate in first year
If you can’t follow these rules, this document is not for you

Start with trading capital of Rs 1 lakhs

Max loss per trade 0.25%, i.e. 250 Rs

Max loss for the day, 1%, i.e. Rs 1000

Max 6 trades in a day

3/n

I know, these conditions will cripple you in terms of what all you can trade and how

But just like any start up, trading is also about making it through initial gruelling constraints of life

You will also learn, how to turn these adverse rules to your advantage

4/n

Btw, you can sell directional banknifty options, obviously you can buy options, can do cash stock trading and much more under these conditions

Think about it, you will be do all kinds of instruments, just that PNL will not be roller coaster ride or exciting like a casino

5/n
TRADING , ALL
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Trader knight
Trader knight
@Traderknight007
How position sizing can affect your trading performance-

Assuming that you are trading a Trend-following system with Big RR and low win-rate.

For example, assume that you risk one percent per trade on a 100,000 account
and you have 20 straight losses.

That one percent is of your remaining equity and at the end of 20 losses, you would be down to 81,790.60.

Now if you got a 30R winner and you are risking one percent of your balance of 81,790.60, your new equity would be 106,327.9,


You’ve had 20 losses and one winner though you are still up 10Rplus your equity is up by 6.3R percent.

Now, let’s say you risk five percent per trade on your balance. At the end of 20 straight losses, you would be down to 35,772.89 or down 64 percent.


If you risk five percent on this amount and get a 30R winner, you would be up to 89,621.48. You are up 10R, but because of your position sizing, your equity is still down over 10 percent.

#positionsizing
#Trading
#nifty50

This is why position sizing is the most important factor in trading if you get it right and you have an edge, you will do good.

Thanks for reading till here.
@AnandableAnand @jitendrajain @quatltd @sohamtweet
TRADING
Nikita Poojary
Nikita Poojary
@niki_poojary
#NIFTY

Bearish engulfing on monthly or bullish harami on Weekly , which one will play out?

Outlook for the week Jan 2 - 6, 2022.

THREAD: Deconstructing NIFTY on 5 different TF's.

#NIFTY

1. Monthly TF:

• Although the structure in monthly TF is of HH-HL, December monthly candle is a more of a bearish engulfing.

• However it is exactly at the support

• 17800-18000 looks like a strong support.


#NIFTY

2. Weekly TF:

• 17800- 1800 used to be a resistance in April & August 2022.

• However post BO of those levels, they might act as an immediate support.

• Current weekly candle is closer to the support (erstwhile resistance)


#NIFTY

3. Daily TF:

• After a sharp vertical fall, we expected a buying momentum

• Also Nifty filled the Gap.

• Strong support at 17800


#NIFTY

4. Hourly TF:

Moving within the rising channel, albiet the channel is quite steep.
TRADING
Aditya Todmal
Aditya Todmal
@AdityaTodmal
TradingView isn't just charts

It's much more powerful than you think

9 things TradingView can do, you'll wish you knew yesterday: 🧵

Collaborated with @niki_poojary

1/ Free Multi Timeframe Analysis

Step 1. Download Vivaldi Browser

Step 2. Login to trading view

Step 3. Open bank nifty chart in 4 separate windows

Step 4. Click on the first tab and shift + click by mouse on the last tab.

Step 5. Select "Tile all 4 tabs"


What happens is you get 4 charts joint on one screen.

Refer to the attached picture.

The best part about this is this is absolutely free to do.

Also, do note:

I do not have the paid version of trading view.


2/ Free Multiple Watchlists

Go through this informative thread where @sarosijghosh teaches you how to create multiple free watchlists in the free


3/ Free Segregation into different headers/sectors

You can create multiple sections sector-wise for free.

1. Long tap on any index/stock and click on "Add section above."
2. Secgregate the stocks/indices based on where they belong.

Kinda like how I did in the picture below.
SCREENERS , ALL , TRADINGVIEW

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https://t.co/4wC7k1Lh54 Ref 3: Why ALL your pangolin samples were PCR negative? to avoid deep sequencing and accidentally reveal Paguma Larvata and Oryctolagus Cuniculus?
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Some ofthe biggest breakouts occur after Volatility Contraction, the analogy is that more a spring is pressed, higher it jumps whenever it gets released.

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This post is pretty bizarre, but it manages to hit on so many false beliefs that I've seen hurt junior data scientists that it deserves some explicit

(1) The notion that R is well-suited to "building web applications" seems totally out of left field. I don't feel like most R loyalists think this is a good idea, but it's worth calling out that no normal company will be glad you wrote your entire web app in R.

(2) It is true that Python had some issues historically with the 2-to-3 transition, but it's not such a big deal these days. On the flip side, I have found interesting R code that doesn't run in modern R interpreters because of changes in core operations (e.g. assignment syntax).

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The kingdom of Sindh was ruled by its last Hindu king Raja Dahir during the 8th century. When Muhammad-bin-Qasim invaded Sindh, he decimated Sindh in his savage bloodlust. The chronicles of his advent are described in the Chachnama.


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Speech Delay is most common in children nowadays

In ancient times, our grandparents used to follow typical natural way of caring the needs of a child. All they used were more of natural products than chemical based for the growth of child.


One of major step followed was to feed Gurbach Jadd/ Vasa Kommu/ Acorus Calamus for initiating good speech ability in a child. This stem was needed to babies on Tuesdays and Sundays in mother's milk.

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This stem is burnt and rubbed against the grinding stone in mother's milk or warm water to get a paste


The procedure to make it is in the link

https://t.co/uo4sGp7mUm

It should not be given daily to the child. Other main benefits are

1. It clears the phlegm in child's throat caused due to continuous milk intake. It clears the tracts and breathing is effortless.
2. Digestion

For children who haven't got their speech and is delayed than usual should feed this vasa on these days in week atleast for 6months. Don't get carried away with this dialogue
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