Thursday, August 31, 2023

TRADING-How to increase usability of trading style-Part 3 -"Pattern Confirmation"

So how do we confirm a pattern? There are several methods and it is down to personal preference as to how you decide to confirm your patterns. However please be warned that the word ‘confirmation’ can be a little misleading as just because we confirm a pattern it does not guarantee that the pattern will be fulfilled. Confirmation simply means ‘a point on the chart in which we assume, when crossed, the pattern may reach a target’.
 
A pattern can be confirmed, only to see price reverse and trade back into the suspected pattern to make it a ‘failed pattern’. Each pattern has a breakout line which is similar to drawing a trendline or S/R level.    
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Breakout: We simply require price to cross the line. This is an ideal method if you want to set pending orders to catch the breakout. However price can (and does) return back over the breakout line to invalidate the pattern.

Close: We want to see price close a bar over the line to confirm the signal. This provides extra confidence and reduces the chances of it being a failed signal, however you also risk missing the move and for price to take off without you.



Multiple Closes: Some analysts use 2 or 3 closes to confirm the pattern. Whilst this provides even greater confidence you again risk the chance of missing the move for it to be profitable enough (for your reward/risk ratio)



Throwback: A throwback is my preferred style if trading the pattern. This is where price breakouts out or closes to confirm the pattern, but then returns to the breakout line. If this level then holds as either support or resistance it can provide an excellent entry with greater confidence and precision to achieve a much better reward/risk ratio. However the downside to this approach is you are much more likely to repeatedly miss moves if it doesn’t quite return to the breakout line.



I would not say that one method is not particularly better than the other, but it is important to use a method which suits your trading style and personality. For example an aggressive daytrader who must be in the markets as much as possible may not have the patience to wait for a throwback (in fear of missing out) so a breakout approach may be better. Similarly and End of Day trader with more patience may be better suited to the throwback.

Sunday, August 20, 2023

Two Levels of Wealth

 Two Levels of Wealth


Financial freedom is when you have enough money to do whatever you wish to do, work wherever you wish to work, and live the way you wish to live.


This is achieved by the time you are able to create a corpus somewhere between Rs. 5 Crs to Rs. 8 Crs.


This essentially means that a person who is having Rs 8 cr. Is as wealthy as a person having Rs  800 cr. Of even more at a Personal Level.


This is a very important point to bear in mind.


So why do people want more wealth even after crossing this level.


That is because people don't know about the power of compounding.


Why want more when it is not going to serve you, and that's a guarantee.


Is there a real reason to want more? 


Yes, there is one, and this is called the Social Financial Freedom.


This is having the freedom to change the lives of others. 


This is having the freedom to manufacture employment.


This is having the freedom to make the lives of people better.


And we are here talking about people who we don't even know.


This freedom is about progressing the society, the state, the nation, and the world.


This is the freedom to meditate, to love, to be content with yourself.


Sitting in a room alone for 30 mins and feeling completely in peace is the Social Financial Freedom.


This is the point of Beyond A Milion Dollars or Rs 8cr. is the inflection point after which we need to live for a Purpose for a Massive Vision. 


Not realising this and mindlessly building wealth will lead to a life of abundant poverty - abundant money + abundant unhappiness.


Time has come to discover the two levels of financial freedom, Personal Financial Freedom & Social Financial Freedom.


- Dharmendra Satapathy


Mutual Fund Investments are subject to market risk. 


Consult Your Financial Advisor (Wealth Doctor) before Investing & Regularly for Portfolio Check-up...

Seven reasons why India is a bullish investment opportunity for the next decade

Seven reasons why India is a bullish investment opportunity for the next decade


In a world of uncertainty, where the global economic landscape is evolving rapidly India shines as a beacon of stability and growth. With its sheer size of market, robust technological strengths, impressive GDP growth, large middle class, surging consumerism and stable government, India presents a compelling case for investors looking to capitalise on long-term growth prospects.


Market Size

India boasts a population of over 1.4 billion, making it the most populous country in the world. This sheer size translates into an expansive consumer base and an attractive market for various industries. The demographic dividend – a young population – further adds to India's growth potential. With a median age of around 29 years, India is set to enjoy a substantial workforce, fostering innovation and driving economic growth.


Technological Strengths

India's prowess in the technology sector is undeniable. The country has emerged as a global technology hub, with an ever growing software industry. That, along with the exponential growth of Indian startups across sectors showcases the entrepreneurial spirit that is spreading its roots not only in large cities, but also across smaller cities. In fact, with over 50,000 startups, India's startup ecosystem is the third-largest  in the world attracting billions of dollars of FDI every year. Startups are thriving across the country, leveraging technology to address unique problems and create disruptive solutions.


GDP Growth

India's GDP growth has been consistent and robust over the years. Despite global economic fluctuations, the Indian economy has demonstrated resilience, maintaining an average growth rate of around 7 percent. This sustained growth trajectory is projected to continue, driven by domestic consumption, investment, and a growing technology sector. According to projections, India is expected to become the third-largest economy by 2027, with a GDP surpassing $5 trillion.


Rising Middle Class

The burgeoning middle class in India is a compelling driver of economic growth. As millions transition from low-income to middle-income households, their consumption patterns are transforming the country's economy. The per capita income of India is set to double from the current $2,000 to $4,000 in 2028. By 2030, it is estimated that India's middle class will number over 700 million people. This demographic shift translates to increased purchasing power, greater consumption, and heightened demand for quality products, brands and services across various industries.


Growing Defence Budget

With global geopolitical dynamics evolving, India has been steadily increasing its defence budget to modernise its armed forces with an aim to become self-reliant in defence manufacturing.  India is among the top five largest military spenders globally and by 2025, India's defence budget is projected to exceed $70 billion. This growing budget not only supports the country's defence needs but also provides opportunities for investment in defence technology and innovation.


Make in India

Since its launch in 2014, India's "Make in India" initiative has catalysed diverse sectors. Global car manufacturers like Hyundai and Suzuki have ramped up the production units thereby increasing India's automotive output. Companies like Samsung and Apple have set up local manufacturing for their mobile phone business hence reducing the dependence on imports significantly. Various other industries such as pharma, renewable energy and defence have seen significant gains due to the local manufacturing push. In the last nine years, over $100 billion of FDI has come in, in the manufacturing sector. Manufacturing will be one of the largest job creating sectors in the years to come.

Make In India-Theme Stock


Stable Government

Political stability is a cornerstone of economic growth. India's democratic setup and relatively stable governance provide a conducive environment for foreign investments and domestic economic development. Recent economic reforms, such as “Digital India” and the "Make in India" initiative, showcase the government's commitment to streamlining business operations and attracting investment. India's push for infrastructure development is a pivotal factor in its bullish outlook. The expansion of transportation networks – road, air and rail, across the country is not only fostering economic growth but also improving the quality of life for citizens.


As we traverse the next decade, India's progress promises a host of opportunities for investors and businesses seeking to be part of a dynamic growth story.  In a world where economic powerhouses are shifting, India's role is poised to become increasingly significant. As we navigate the uncertainties of the global landscape, embracing a bullish perspective on India is not just a rational choice; it is an acknowledgment of the remarkable strides the nation has already taken and the immense promise it holds for the years ahead.

TRADING-How to increase usability of trading style ? - PART-2

 if you have read Part-1 , then you would have one question and many traders would have same question .


Short Term vs Long Term : Which is Better ?

Many Analysts or Traders prefer to specialise in one form of analysis. However I believe that by using the two in tandem you will achieve a much more comprehensive picture as their strengths and weaknesses complement each other very well..

For example, In Long Term patterns project future direction and price targets, they can be particularly tricky to time your entrance to a trade with maintaining a decent reward/risk ratio. And in Short Term patterns generate great timing for entry signals, they do not provide you with a profit objective, or much future direction beyond the candles you are currently looking at.

Tuesday, August 15, 2023

TRADING-How to increase usability of trading style ? - PART-1

 If you are smart enough then you will understand the following line in a minute :

You will significantly increase the usability of each style by combining the two together.


Many try to master one style and use them in isolation (as I did) but they will create independent problems for your analysis and trading. By blending the two together you will create a more structured and comprehensive view of price.

 

Combine these two styles of patterns recognition with trends, support and resistance and you will never look at a price chart the same way again.


    Why do chart pattern occur ?

The concept is similar to support & resistance: At any one time market participants have one of three choices -­‐ to buy, sell or stand aside. As this ratio between the three groups change over time, so does the supply and demand for any given market. As this force changes, so does price. This is all based upon participants (and groups of) opinions of where price ‘should’ be.

 

As the battle towards the ‘correct’ market price unfolds we see trends and oscillations develop, which when combined form familiar patterns.

 

If we can identify familiar patterns, technical analysts believe that [to a certain degree] price can become predictable.

 

The collective individuals within any market constantly changes, along with personal opinions of where price ‘should be’, or why they should move in the first place.

 

Regardless… a Technical Analyst always takes comfort in the fact that history does repeat itself as long as prices are always governed by supply and demand.


Long-Term Patterns (LT)

I refer to longterm patterns as those which take several (and usually much more) bars of data to create and they are also commonly referred to as Western Chart Patterns.

 

They are not related to the trading timeframe they are seen on, as LT patterns can be seen on any timeframe. However a rule of thumb is that the higher the timeframe you see a chart pattern it is generally consideredto be more relable, and the lower the timeframe tends to generate more fale signals.

 

You can see the same (or similar) patterns on a 1minute chart which may only take 5 minutes to create, whilst also seeing patterns which last years or decades on the Monthly timeframes.

 


Below is an example of a Double Bottom pattern which took 18 bars to create. I have hidden the timeframes as it is irrelevant – this could be a 1 minute chart or a 1 day chart, but the concept is the same.                

















LT Pattern Provides
  • Structure (Once combined with trends and S/R)
  • Future Direction
  • Price Objectives (Targets)

 Examples:

  • Double Bottom (pictured), Triple Bottom, Double Top, Triple Top,
  • Wedge, Head & Shoulders,
  • Symmetrical Triangle, Ascending Triangle, Descending Triangle,
  • Pennant, Flag


Short-Term Patterns(ST)

















Shortterm patterns can be produced from a single bar of dataomore and require either Bar Charts or Candlestick charts to identify them. As with LT patterns they appear on all trading timeframes and generally considered to generate more reliable signals the higher the timeframe.

ShortTerm Patterns (ST)


ST Provide

  • -          Signs of potential strength or weakness
  • -          Entry Signals
  • -          Exit Signals
  • -          Trade Management

Investment Theme-Make In India Theme

Initiative announced by Govt on 2014 , intention was to increase job opportunity and skill enhancement for country having the largest young working population and increase FDI in India as no other market provided as opportunity as large as this to make consume both in the same market.

25 Sectors of the economy are currently open to FDI Inflows. Global Investors are looking at India not merely as an opportunity to produce cheap but a huge market for their product  in terms of consumption.




Investment Theme-Smart City

The launch of Smart city and housing for all scheme in 2025 signaled a new era in the construction housing and finance sector. India's housing finance market is likely to get strong push from various initiatives of govt for affordable housing. The intention of the govt is to promote cities to provide core infrastructure with clean and sustainable environment.







TRADING-How to increase usability of trading style-Part 3 -"Pattern Confirmation"

So how do we confirm a pattern? There are several methods and it is down to personal preference as to how you decide to confirm your pa...