Transcripts
1. Introduction to the Course: Hi. I am Ssirsingh I am the
founder of Trade Central, which is a trading
journal platform. I also share my
technical analysis on my blog Elliott
weavestrading.com. Coming to the course,
in this course, we are going to
look in detail at this swing trading
strategy that I call RAV because it uses indicators ROC that stands
for R anchor VWAP for AV and EMA for E. Moving on, this strategy is essentially
a momentum based strategy, which also uses trend
following as a filter. And this strategy does not require more than two to 3 hours of work as we are going to see in the strategy
deep dive section. This course has been
divided into two sections. The first section is the technical analysis basics that is relevant
to this strategy. So this course
will not obviously be covering the whole
technical analysis. We are just going to talk
about the indicators and chart reading basics that is essential for executing
this strategy. Second section is a strategy
deep dive where we are going to look at the strategy
in detail from execution, understanding of it, and
also a lot of examples. Finally, I would like
to thank you for giving me this opportunity to share
this strategy with you, and I'm looking forward to have you on board
for this course. Thank you very much once
again. See you in the course.
2. Log Vs Arithmetic Scales: Hello. I hope you
have gone through the previous section and have created a free
TadingVew account. If not, you can pause this
video and create it now. Also if you want to use some other charting software of your liking, you
can also do that. In this session, we are going to change when setting
in the charts, which we are going to use
throughout this course. The setting I'm talking about is log and arithmetic scales. Once you log into
your tdingVe account, you will come to this screen, go to products and super charts, and you will have
this chart open. Um, so now if you click on the bottom right,
there's a gear icon. You click on that, it
shows few settings. So out of which there is these two settings,
regular and logarithmic. Regular is the arithmetic
setting I'm talking about, and then we have the
log setting here. So what do these settings mean? When we say regular setting
or arithmetic setting, it essentially means we are
talking in absolute numbers. So for example, if
I'm saying about this move from this
bottom to this top, let's say, this is around
165 and this is around 190. I would say this is a $25 move. But when I do the
same in log scale, I would say in terms
of percentage, not in absolute numbers. That is the essential
difference, but how does it
change the charts? Let me try to show you. Right now, you have regular selected,
which is arithmetic. I change it to log and you can see that there was a minor
shift to the values here. Let me try it again.
Yeah, you can see that. I think Apple is a high
value or high price stock, so we can probably go to
something which is not as high. This particular stock is $1.5. Now if I change from
regular to log, you can see there's
a significant change on the vertical axis. Why does this happen?
Why does it matter? So let's go to the
drawing board. Now we have chart is represented in
something like this. We have the time axis here and then we have
the price excess here. Let me give some What happens bottom my
writing, it's not very good. Now when we are talking
about arithmetic scale, let's say the stock move 10-20. Then at some point
of time later, the stock moved 20-30. When you are looking at a
chart in arithmetic scale, the size of this
move, these two moves will be same because you are
talking in absolute numbers. This is a ten point move and
this is also ten point move. But when you are talking
about logarithmic charts, what happens is let me
do the same thing here. Now, let's say the
stock move 10-20. Now since log scale
uses percentage, we would say this stock was ten points or $10
and move to $20, so it is 100% move, isn't it? Now, if the same stock
moves similar to 20 to 30, this bar or this move will be bit smaller compared to
this one, original one. Why? Because 10-20, it was 100% move, but 20-30, it is
just a 50% move. Because the price was
20 and it moved to 30, which is just ten points for
a 20 point or a $20 stock. That's a difference.
That's why you see when we change from regular
to log or vice versa, you see there's a shift in the vertical axis and the
shift is due to this fact. Why is it important? It is important because when we
are talking about trading, investing or comparing stocks, we prefer to do it in
terms of percentage. You cannot compare a high stock, high value stock like Apple
with a low value stock like Sundial that we saw in terms
of absolute numbers, right? Also when you are talking about moves in any kind of security, right, it's easier
to explain them in terms of percentage rather
than absolute numbers. Also in my experience, I have noticed that when
you are using log scale, and when you are
drawing trend lines or identifying price patterns, it's easier to do it or those price patterns
align better with log scale compared
to arithmetic scale. For that reason, we are going to stick with log scale
during this course, and I also suggest you to use log scale unless you have a very good reason to
use arithmetic scale. That's all for this
session. Thank you.
3. Concept and Identification of Trends: Hello. In this session, we are going to
talk about trends. You may have heard trend
is your friend and trend has a lot of significance when it comes to
technical analysis. Staying with trends
usually rewards you. What exactly is a trend and
how do we identify them? Trend in a stock market or
any other security market, it a cryptocurrency, fx, commodities, refers to
the general direction in which the price of
a stock is moving. The direction could be
upward, downward or sideways. How do we define upward, downward or a sideway direction? So here we can see the
price is in an uptrend. Now, the price usually does
not move in a straight line, which makes it a bit difficult to identify the
trends correctly. But price moves in something
called waves or swings. You can see this is one swing. Price moved up, made a high, moved down, made a
low, then again, moved up, made another high, move down, made another low. So the first thing
that we need to do is to identify these highs
and lows correctly. So we mark or name the highs swing highs and lows
swing lows, right? Once we have identified swing highs and swing
low in a prize movement, we need to look for
certain things. Here we can observe that this high is lower than this new high or this newer high is higher than
the previous high. And also, this new swing low is higher than the
previous swing low. When the current
highs and lows or current swing highs
and swing lows are higher than both of them, previous highs and lows, we say the price is an uptrend. So this is also known as making higher highs
and higher lows. When we say higher
highs, so this high, this one is a higher
high than this one, this low is a higher
low than this low. We are making higher
highs and higher lows. Once we are making higher
highs and higher lows, we are essentially
in an uptrend. Similarly, when we talk
about downward trend, the first thing we
have to do is to identify swing
highs, swing lows. Here is another swing
load, another swing high. Once we have done that, we need to see what kind of
pattern they are making. In this case, you can see that the price has
made a lower high, lower swing high compared
to the previous high. Similarly, the swing low, the current swing low
or the new swing low is also lower compared to
the previous swing. When both high and low. Swing high and swing
low are lower than the previous previous swing
high and previous swing low. We say the price is
moving in a downtrend. In this case, we say that the price is making
lower highs and lower lows, LH LL, lower high, lower lows, and that essentially reflects
a downward trend. So with that, we come to
the last kind of trend, which is sideways trend. In sideway trends, it's difficult to
identify what's going on, there is no clear up trend. I have created a very
clean sideway trend, but in actual real
world scenario, you may not find these kind
of clean setup for sideways. But one thing happens is that price typically
moves within a range. We have swing hygien
swing lows here as well. But Price makes a high, comes to a low, and
then reverses from it, goes up, goes in
the same region of the previous high and comes back and then keeps
on moving like this. Sometimes these moves
could even be like this. They may not be
exactly like this. It may not go to a down, it may go here
slightly up then down. But essentially the price
will stay in some range. It will not make consistent higher highs and higher lows or lower
highs and lows. When this happens, we say that the price is moving
in a sideways trend. Now that we have seen
different trends, we also need to understand
very important concept, which is change in the trends. How do we identify a
trend is changing? Now in this case, you can
see the price has been making lower highs
and lower lows. This lobe and this low, the new low is lower than
the previous low and then this new low is also lower
than the previous low. Same for the highs. All
the highs are lower. We can say that
the price has been moving into a downward trend
at this point of time. Here, the price
made a swing high. But it did not make another low. If it continued like this, then we would have said
that the price is still making lower highs and lower lows, but that
did not happen. I made a higher low. From this, this is a higher low. This is a lower high, but
this is a higher low. Now something is happening
after making this higher low, it made a higher high. Then it made a
high or low again. Now this is how we can say that now the
formation is broken, the downward
formation is broken, and a new trend has started, which is an uptrend
in this case. But one important thing to understand here is
when trends change, it does not mean a reversal. When I say in this
particular case, we saw that there
was a downward trend which turned into
an upward trend. But it's not
necessary that again, it will always reverse. It could also may have
been something like. So at the time of changing, it could have basically may have stayed somewhere like this
in some kind of range. So it could have changed from downward to
sideways as well. It's not necessary
that from downtrend, we will get uptrend or from
uptrend, we get downtrend. There would be intermittent
sideway trends as well. So it could be any
kind of trend change. That's all for this session. In the next session,
we are going to see some real examples using
real charts for upward, downward and sideways
and also we'll try to see trend
changing conditions.
4. Identifying Trends Examples: Hello. In this session, we are going to
look at some real charts and we'll try to apply the knowledge for identifying trends using things that we learned in the
previous session. So here I have the
Bitcoin chart open. So Bitcoin is currently
trading at $37,525. And first thing we are
going to do is we'll try to identify the swing
highs and swing loves. Let me select highlighter. Now, here at the bottom, I can see this is a swing love. Then this could be
another swing low. This could be another swing low this as well, this as well. You could even consider
this if you want to. But in the bigger picture,
I think it makes sense. I think it is still making
a swing high. Is it. Let me try to mark
the swing highs now. We'll color them differently. We'll make them red. This is a swing high. This
is a swing high. Now, if we see it is consistently making higher
highs and higher lows. Here, you might feel like this is not a higher
high, but it actually is. If we try to zoom in, we can see that this low is at a higher
position than this low. Bitcoin has been making higher highs and
higher lows, right? But if I'm looking
at, let's say, this particular
section in isolation, then it might feel
like the bitcoin is in a downtrend, right? Because I'm not looking
at the bigger picture. But now when I looking
the whole thing, I can see that the bitcoin
is in up similarly, just before this
uptrend started, Bitcoin was in downtrend. We can try to again
identify the lows here. This is a low low, this is another low.
This is another low. Then we will try to highlight the swing highs Here we can see it was
consistently making during this time frame
during this duration, it was making lower lows
consistently and lower highs. We could say that
the bitcoin was in downtrend during this and we could figure out where
exactly the trend change using the principles we learned. Here we can see till
this point of time it has been making lower
highs and lower lows. But at this point,
you can see it stopped making lower low
than it made a higher high. And after making this
higher high, it made sorry, after making this higher low, it made a higher high, and then it continued like that. So at this point of time, when it stopped
making lower lows, we knew that the trend
might change from here. It could either be uptrend or it could be sideways, right? Similarly, we can try the same thing in any
kind of security. Let me open GBV USD for X. Now that we have
seen this pattern in one of the chart in Bitcoin, you should be able
to figure out, you should be able
to see clearly that this currency pair has also been making lower lows
and lower highs consistently. We can see that this
is a downtrend. There are phases
in between where it did not make a
lower low directly, where it stuck in small
range and then it continued making a lower low
and then because it did not break
the previous high, at this point of time, even though I did not
make a lower low, but after in the
next sing it made a lower high and then it
continued with a downturn. Similarly, here I think it's a bit interesting phase
slightly from this bottom, I think we can still
see some higher highs and higher lows being made. But in this particular range, we can see this is a sideway. There were no new higher highs
or lower lows being made. The zone was more or
less same and the price was stuck here for some time
before it started moving up. This is how we apply the trend
identifying information.
5. Understanding Trading Timeframes: Hello. In this session, we are going to talk
about time frames. What are time frames? If you open trading view
and open any chart, you would notice some time
durations mentioned here, five minute, 15 minutes, 30 minute, 1 hour, day, week. If you will open this drop down, you can see, there are
a lot many options. Second section, then
minute section, you have different
values for hours. These are essentially
time frames. Now when you think about it, Time frames are essentially
different lenses through which we try to look at the markets because each time frame provides us a
different perspective. Coming back to the
same question, what exactly is the time frame? I have the five minute
chart open here. When I say five minute chart, it essentially means it takes 5 minutes for one candle or this 1 bar to
form completely. Each bar or each candle on this chart represents
the five minute duration. So if I'm seeing, let's say, these one, two, three, four, five, six, seven, eight, nine, ten, then essentially
means I'm looking at 50 minutes of
data, then into five. Now if I explain this, I will go to 1 second chart. Now here you can
see every 1 second, there is a candle being formed. Right? So this is
essentially a time frame. Now, understanding
the significance of time frame is very important. And before we do
that, let's jump on to understanding something
called trading styles. In financial markets, we
have different kind of traders and all traders have
their own trading styles. We are going to just take a look at trading styles
because that has a very deep relationship
with time frames. So one of these trading
style is known as scalping. Scalping is considered the
most dangerous form of trading because these kind of trade last hardly from few
seconds to few minutes. People are trying to capture very short term moves when they are trying
to scalp the market. Then the next form of
trading style is intraday, which is much more
common where people are trying to enter into a trade and which lasts for typically minutes to
some hours sometimes. But these trades are typically opened and
closed on the same day. The third form of trading
style is swing trading. Swing trading, people enter into trades with an intention to stay in the trade for days to weeks. If you remember we studied about swing size and swing lows. Swing trading has
got its name from those swings where in
the swing trading, people are trying to
capture one full swing. Depending on which
direction a trend is. That's where the swing
trading got its name. And these traits typically
last, as I said, for sometimes just
a couple of days and it could actually
last for one, two, or three, four weeks, depending on how strong
or weak the trend is. And, um, another form of popular trading style
is positional trading, which is a much longer
term trading style in which people are trying to capture the
larger or long term trends, which could last from weeks to months and
sometimes even years. So these trades might last from this much
time frame, right? So each trader have
their own style, and many other trader typically do one of these
kind of training and some experienced traders might even do multiple kind of they might even do intra
day and they might also be involved in
swing in position. Now that you have some idea
about the trading styles, we can see how these
trading styles are connected with time frames. So now we saw that there are four forms of popular
treading styles. When you're scalping,
majority of the people use 1 minute or three
minute time frames because they are
trying to capture very short term moves, right? So they need to
kind of enter and identify the moves very quickly and enter into a
very short period of time, they don't need to
look at very large or longer time period because their intention is
to capture smaller moves. For intraday, the
commonly used time frames or the popular time frames are typically 5 minutes
and 15 minutes. For swing trading,
people use 1 hour, four hour, and sometimes
even the time frame. For positional trading,
people use one day, one week, one month time frame. They can even use
quarterly time frame, three month time frame. It's not necessary that these
are the only time frame. People can change it, people can tweet them as
for their own convenience, but these are some of the popular time frame
people typically use.
6. Type of Charts: Hello. In this section, we are going to
quickly take a look at all the different kind of charts that are available
in training you. So we have candlestick
charts, bar charts, HakanoshiRnko, Kagi
point and figure range, line area, step line. You might be overwhelming number of chart types that
are available, but we don't need to
study all of them. We are only going to focus on candleystic charts, bar charts, and haikanashi because
these three are the most commonly used chart
types and as you will see, you can obviously look
at, explore other charts, but you don't really
need to if you are really comfortable
using candlestick bar and hi kanahi charts. Let me quickly also show you on tiding you how do
these charts look like? Right now, you can see this is a candlestick chart.
Candles hart. This is how a bar
chart looks like. I will change it to HakanasheT is how Hikanashi looks like. It is similar to candles with some minor differences
that we are going to discuss in more detail in
the forthcoming sessions. Feel free to explore other
kind of charts on reading you. And do let me know in the Q&A section in case you have any questions
about those. But for this course, we are going to stick
primarily with bars, candles and Hakanash. See
you in the next session.
7. Candlesticks Charts: Welcome back. In this section, we are going to learn
about candlestick charts, and to make sense of
candlestick charts, we first need to understand
the anatomy of a candle, how a candle is formed, and what information a
candle conveys to us. So now you can see we
have two candles here, one green, another one red. These are typical
candles that form, but they may not look
exactly like this. These candles are
created to make sure you understand all the
different components of the candle correctly. And once you do that, even if the candle
formation is different, you will be able to make
sense of that candle. Let's begin with the candle on the left, which is
a green candle. If you remember, during the
time frames we discussed that each candle represent
the duration of the selected time frame. If this candle, we are seeing in a five
minute time frame, this means this candle was formed over a period
of 5 minutes. So now you see the highest
point of this candle. That is a high
highest price which was touched during this
five minute duration. It could be like
one day duration, one day or it could be one
week or it could be anything, but just for the sake of
understanding this part, let's use 5 minutes, right? So assuming this is a
five minute candle, this was the highest price that was touched
during that 5 minutes. Same for the lowest
during this fit this was the lowest price that was
touched by this security. Here is an interesting part. Depending on whether
we are looking at a green candle
or a red candle, we have to identify open
and lose accordingly. If you are looking
at a green candle, that means the open of the candle was
lower than the close. The close was higher.
Basically, price close at a higher value, then it becomes a green candle. What exactly is open? When this candle started forming after the previous candle was completed, this is
where the price was. This is at the open essentially. Then price closed
when this five minute elapsed and the next
candle was about to form, this was where the
price was at the close. Moving on to the red candle. Highs and low remain the same. This was the highest point or highest price that was touched
in the given duration, let's say five
minute and this was the lowest price that was touched during this
duration of five minute. As for the open and close, they will be opposite in
case of a red candle. In red candle, open is
higher than the close. That means when the
candle formation was done at that time, price close at a
lower value than it opened and that results
in a red color candle. And this thick portion
of the candle, that is called the
body of the candle. These lines that you see on top and bottom part
of the candles, these are known as
shadow or wick. It's not necessary that each
candle will have a shadow. Some candles may just
be something like this. Some candles may look like this, where there is no shadow or some candles could
also be where we only have a shadow at the bottom and no
shadow at the top. Conversely, we can also have candles which look like this. We can have also
candles which have uneven kind of shadow a small shadow at the bottom,
or bigger one at the top. We can also have candles which have bigger shadows
and very small body. We will go to Trading view
now and have a look at a candlestick chart
to understand the concept that
we discussed here. So here you can see, I have a candlestick chart open. I will go to five minute
chart zoom it a bit. Now I can see that this is a
green candle and you can see there is a small
wick at the top and a bigger wick at the bottom. This highest point
of this candle, this one, this is the
high of this candle. Similarly, this point, the
lowest point of this candle, this is high, and this is
the body of the candle. Since this is a green candle, we can assume that
this was open price, and this is a closed price. The closed price was higher. If you look at the red candle, we know that close was
lower than the open, right? So this will be the close, and this will be the open. Highs and low remain the same. So essentially, when we are
talking about a red candle, it essentially means the price closed lower than where it was. And when we are looking
at a green candle, it means price closed higher than where it was when
the candle started forming. So now if you think about it, this five minute candle or any time frame candle
tells us a story, and that story is a fight
between bulls and bears. So if you take this
candle as an example, this big green candle, this is where price
opened, right? And then Wolves kept on pushing
the price higher higher. But during this formation
time, at some point, bears took control
briefly and took the price down to
this low level. But bulls again came
with more strength and kept taking the
price higher and they touched at some point
of time this high finally closing this candle
at this closed price. It's very important
to be able to read the price action using these
candles because they can give us very valuable
clues about what's going on in the market and
what price might do next.
8. Bar Charts: Hello. In this section, we are going to briefly
cover bar charts, and to understand bar charts, we have to take a look at how bars look like
and how do they form. Here we have 2 bars. On the left, we have green
candle and on the right, we have the red candle. If you will notice, they have the small outgrowth
coming out of the candle in both the candles. This outgrowth or
these small handles, they tell us about the open and close of this candle or of this
bar in this case. Highs and lows remain the same
as we have in the candles. The highest point of this bar is the high and the lowest point of this bar is the lowest price, the open and close are represented by
these small handles. Now, here is
important difference between candles and bar. In candles, we have no way
of identifying what is open or what is a close without knowing the
color of the candle. If the candle is a green candle, we know that the clothes will
be higher than the open. If it is a red candle, then we will know that the clothes will be
lower than the open. But bars, they help you
identify this information, open and close information without even knowing the
color of the candle. This left side outgrowth. This represents the open of a bar and the right
side outgrowth represents the close of the bar. Here we can see the open was lower than the close or
close of this candle, close of this bar was
higher than the open. That's why it's a green bar. Similarly, if we talk
about the red candle, highs and lows remain the same. This is the highest point and
this is the lowest point or the lowest price attained by this bar within
the given time frame, date, 5 minutes, ten
minute or whatever. Then we have the open close. As we said, open is
on the left side. In this case, this is the open on the left side and the close in the right side. Here we can see the close
was lower than the open, which resulted in a red candle. Right? This is the
important difference. Without even knowing the color, we can figure out whether
this is a candle, which resulted in a closed
price higher than the open, or if this is a candle, which resulted in a closed
price lower than the open. And this is not
possible in candles. Rest of the things
remain the same. The area between open and close, this is the body of the candle and the area above and below, the open and close, in
this case, this or this. These are the shadows or wicks, as we have in the candle. Similar to candles,
it's not necessary that each bar will have a wick or
not or the shadow or not. Some bar could be
something like open here, close here. There is no upper. The highest point of this bar is same as. Let me draw it again. Highest part of this
bar is same as close. The left side, open,
right side, close. Right? Now, we'll switch
to thrilling and we'll quickly have a look at some
real charts with bars. So here we have this chart. It is currently in candles. I will switch it to bar chart. So now you can see there
is one big red bar. On the left side,
we have the open, the side, we have the close. So we know that the close
was lower than the open. That's why it is
a red bar, right? And there is no lower shadow
or wick in this case. If you look at this candle, it has a very small
upper shadow and a longer a lower shadow. It is a green candle. Why? Because the open is this left side is
lower than the close. Close was higher than the open, right? Same for this candle. This candle, if you see,
it has no upper shadow. So highest point
of this candle or this bar is same as the closes, and there is a very little, very small wick at the bottom. So this is almost the
open was very close to the lowest point
of this candle. Right? Now if you see bar
chart and candle chart, both of them convey
same information to us. Bar chart could be preferred by some and candlesticks are
preferred by others. So both of them can be used for trading and
both of them can be used to arrive at
the same conclusion and both of them can
help us understand the price action in more
or less the same way.
9. Introduction to Technical Indicators: Mmm let's move on to
technical indicators. So what are technical
indicators? Technical indicators are
essentially derivatives of price and volume data and
open interest data also. Open interest, we
are not going to cover because that's part
of futures and options, which is not in the
scope of this course. So coming back to
technical indicators, technical indicators are
mathematical calculations based on historical
price and volume data. And they are used to forecast future price movements and identify potential
trading opportunities. Technical indicators help
traders analyze market trends, conform trade signals, and
manage their risk effectively. So we have different type
of technical indicators. We have trend
following indicators, then we have oscillators. We have momentum indicators, and then we have volume
based indicators. So we are going to take a
look at all of them briefly. Okay. So moving on with
trend following indicators. Trend following indicators help readers identify
the direction of the prevailing trend and
potential entry and exit points. Examples of trend following indicators are moving
averages, trend lines. Then we have oscillators. Oscillators measure the speed and magnitude of the
price movements. They help identify overbought and oversold conditions
in the market. So basically, when
we say overbought, it means that there has
been a lot of buying, and now it is exhausting
and selling might come. And when we say oversold, it means there has been
a lot of selling and selling might exhaust at this point of time and
some buying may come. So basically, these are
signs reversal signals. So there are a lot
of oscillators, and some of the popular ones
are relative strength index, also known as RSI,
and then stochastic. There are many others,
but in this course, we are only going to step
with some primary indicators. NN, we have momentum indicators. Momentum indicators
measure the rate of change in price movements. They help traders identify the strength and direction
of the price momentum. Examples of momentum indicators are moving average
convergence divergence, popularly known as MGD
and rate of change ROC. Finally, we have volume
based indicators. They help us analyze
trading volume to confirm the strength of price trends and identify
potential reversals. Volume is a very
important metric to identify the strength of trend and whether there are enough buyers to
take the price higher. Volume based indicator
analyze all the data and help us make more
informed decisions. Some of the examples of
volume based indicators are VWAP volume weighted
average price and OBV on balance volume.
10. Indicators Setup: Now that we have
covered the basics of chart already and indicators, let's set up our chart
for the strategy. In this strategy, we are going
to use three indicators. First indicator is the
momentum indicator, rate of change,
also known as ROC. Second indicator is
exponential moving average. Third one is anchored VWAP. So let's go to the chart. The first thing that we
are going to do is we will set the
timeframe to 1 hour. I have this chart already
in 1 hour time frame. Now we'll go to indicators. We'll search for ROC and we'll select rate
of change indicator. It is now plotted at the bottom. We will go to the settings. We will hide this ROC. The length or the period of
this indicator remains nine, we are not going to change it. Only change we will do here is we'll hide the ROC, we'll do o. Now, on this indicator, there is a three dot menu, more. You click on this, you
will get this option, add indicators strategy on ROC. So basically what we
are doing is we are adding indicator on
top of ROC indicator. You click on this, it will ask us what kind of
indicator you want to add. We want to add exponential moving average, EMA,
moving average, exponential, click
on it is added. Now we will go to
the settings of this newly added EMA and here we'll select
smoothing line also. EMA is already selected. Now you can see we have
two lines plotted here. Rest of the settings
will remain the same. We are not going to change it. Let me just increase the thickness of these lines so they are more
clearly visible. Yeah. Now we have
this indicator, ROC with exponential moving
average plotted here. Why we are using this indicator? This strategy is based on identifying the trends
using swing highs and swing lows and using this indicator with an exponential moving
average applied, it captures those
swings very well. So for example, here, price move from me select the. From here, this point, you can see the price moved up. This indicator moved up. There was some kind of congestion and that
congestion showed up here. And then there was an up move, this up move down this town move and then fresh
move, this fresh up move. Basically, this
indicator catches all the swing highs and lows. Very efficiently. That's
the reason I'm using this. There are other oscilators
and indicators we can use, but in my experience, ROC works best with EMA applied, and it gives us very
timely signals. Most of the other
indicators they give us delayed signals. Now, this is the indicator
setup that we need. Another indicator
that we are going to use is called Anchored VWAP, which you can access, you will go to this
left side menu. Click on the one, two, three, four, fifth option. There you will find volume
based anchored Vab. When you click on this, you
will not see any change. But you have anchor VP
indicator selected, which you can place
anywhere on this chart. So for this strategy, we are going to place
these anchored VWAPs on swing highs the candle which is highest close within
the swing high. So in this, this
close is 196.15, and this candle has
a close of 196.53. So this is higher,
so I'll click here. And now my anchored
VWAP is plotted here. So this is how we will
use anchored VAP, there is one thing you
need to be aware of. In trading applying an indicator
on top of an indicator, which is what we just did, we applied EMA on top
of ROC indicator. That's a paid feature. So you may not be able to
do it with a free plan. However, if you can find
this feature available in any other free charting software or maybe at a cheaper price, feel free to go ahead with that. I have also created a pine script which
Trading view uses. So you don't really have to
have this setup manually. You simply need to download this script which is attached
in the same session. You can download it and open it in any indicator
of your choice. It will look
something like this. Copy this code, go
back to Trading view. The bottom, you can see
pine editor option. Click on open new indicator, remove whatever is there and
paste your script there. Save it. It takes some time because
it will compile this code to verify
it is correct, and then it'll ask you to
give a name to this script, except the default one. Save it. Once this is saved, you have to click
on at to chart. Now you can see the
same indicator has been added without you having to
add these things manually. You can remove this
and use this one. Um, I'm not sure whether this
is also part of free plan. So if any of these works, any of these two options, either adding indicator on indicator or using this script, whatever works in
the free plan grade, if both of them do not work, then you might have
to do the same setup in some other charting software which you prefer to use,
which you want to use. Otherwise, you can
go WI reading view, basic paid plan itself. So that's the setup that you
will need for this strategy. And now we will deep dive
into the strategy details.
11. Strategy Deep Dive: Mm hm. It's time to jump
into the strategy details. First thing, this is
a swing strategy, which means that rates can last 1-2 days to a couple of weeks, sometimes longer,
but this is what generally would happen trades
would last for a few days. This is a long only strategy, which means it can be used only for buying stocks,
crypto or flex. It cannot be used
for short selling. What this means is in
financial markets, we make money in
two different ways. Let me switch to drawing board. So let me try to explain
it in a very basic way. When we buy we hope we are going to sell it
in future at a higher price. If I'm buying something, let's say at 100, I hope to sell it at a price higher than
this, let's say 120. Let's say this is some chart. Time and price. This is let's say 100
Let's say 150 and so on. One thing I can do is I can buy here at this point
and then sell here. This is what we do
in this strategy. We buy at a lower price and then hope to sell it
at a higher price, and that differential
is our profit, 20% in this case. Another way we can do this thing is I can sell this at 1:20. And to buy or cover my position, let's say this is 100 at 100. If you think about it, we are essentially
doing the same thing. We are buying cheaper, selling at a higher price. We're still buying
at a lower price and selling at a higher price. Only difference is we are first selling it
and then buying it. There are some instruments in
the financial markets which allow you to short
sell futures options. You can to the trade both ways irrespective of whether the markets are
going up or down, you can make money
on both sides. But this strategy
that we are going to discuss in this course, that is a long only
or buy only strategy, which means this is
not an option for us, and this is what we
are going to do. We are going to buy low
and sell high. Moving on. This strategy is based on
a combination of trend following and momentum as per the trend
identification session, we saw that using the swings, we can try to
identify the trend. If we are seeing higher
highs and higher lows, that means that we
are in an uptrend. If we are seeing lower
highs and lower lows, that means we are
in a downtrend, and when there is no
clear swing direction, then we say it's
a sideways mark. We use swing patterns to
identify trend and we use ROC indicator rate of change indicator for
identifying the momentum. Finally, we use
anchored VWAP for our entries and exits
as well in some cases. These are indicators we are using as we have seen
in the previous video, rate of change, exponential moving average, anchored VWAP. Now there are some
prerequisites for this setup, we need to make
sure these things exist in a chart before
we take any trade. First prerequisite is price should be making higher
highs and higher lows. So price should be in a clear uptrend, that's a prerequisite. Second thing is ROC, rate of chain should have
gone below zero line. First thing, should
be in uptrend, we should be able to
clearly see higher highs in high low and then ROC should
have gone below zero. When we say the ROC
has gone below zero, it means a swing is completed. On the downside and now, there's a possibility of
fresh upswing will start. Let's go to the chart and try to see these two prerequisites. First thing, we said the stock should be
in a clear uptrend. Here we can clearly
see the stock is making higher highs and
higher lows, right? From this point to this point, we can see there is
a clear uptrend. Second thing we said, ROC
should go below zero. So here we can see
during this uptrend, here the price went below zero. At this point of
time, we know that, okay, we have the prerequisites for this reading setup in place. Now, how do we take entry? Here is the entry criteria. We use the most recent swing hi to plot AVAP
or anchored VWAP. We anchor the VWAP to
the Kendle or bar, whichever chart
we are using with the highest closed
value in the swing hi. Sorry for this hypo here, it should be SWING. So we'll go to the chart, and here we see the price
have gone below zero. This is a zero line, this one. Now we'll go and
select anchored V Web, and at this point, we will see what is the
most recent swing high. This is the most
recent swing high. And this is the green candle is the one which has
the highest close. The next candle, red candle, it has a close lower, which is at 468.04. The green candle has
a close at 469.77. You can see the open
high close values here. When you hover your
mouse on a bar, you can see the respective HLC or open high close
low values here. So I will anchor this Vwb
by clicking on this candle. So now I have placed
my anchored Vwb. Now, we enter the
trade once price has closed above anchored VWAP. Now we need to wait till the price closes above
anchored Vb which is this black line
here let me zoom in a bit and here I can see actually this small
candle, this closed above. If I will zoom it further, you might be able to see
this can has closed above. So now we have a
entry setup in place. Here, one important
thing to notice if the price starts making
lower highs and lower lows, then we have to
ignore the setup and the stock and wait for
another opportunity. At this point of time, here you can see it is making higher
highs and higher lows. Now if you see this stock
here has made a lower high, if we will zoom it a bit, we can also see that this stock
has also made a lower low because this law is 459.37
and this low is 459.18. It has made one lower
high and one lower low, which is what we need
to disqualify a trade. We'll go on and keep looking
for another opportunity. Here also price came down, but we can see that the
price started making lower highs and lower
lows or rather sideways. So this also wouldn't
have worked. Let's go on the yeah. Here, also, we can see the
stock is in a clear uptrend. So here, let's try to
find some opportunities. So here also, it's an uptrend, but this is rather flattish. So we should try to look for more steeper upward trend,
something like this. Where you can clearly see the
price is clearly going up. So here you can see that
the stock is in an uptrend, first requirement,
first prerequisite. Second is, ROC has
gone below zero. We can verify that it is -0.01, looking at this price by
hovering our mouse here. At this point of
time, we have to see which is the most
recent swing high, and we will place our
anchor via on that candle. This is the one. Now
at this point of time, the price went below. Now from here, we have to wait when the price
closes above it. Here the price has closed above. At this point of time,
we can take an entry. I'm using this entry,
long position tool, which is available in
trading view gov gives us a visual look of our trade where we are inter
taking the entry, where we are setting
the stop loss, where our profit is going to be. As soon as this candle close, it's important that you have
to wait for the candle to close and you should not take an entry as soon as
the price goes above. Wait for this candle to close. Once this candle has closed, then in the next candle, we'll take an entry. Then our stop loss will be below the most
decent swing low. This swing low is 44242, this is 442-69-4402 is lower. We will set up our
stop loss below 44242, could be anything below it. I'm setting it to
let's say 442.14 and then target
will be two times. Here you can see it shows
a risk reward ratio, which basically means how
much money I'm risking and how much money I
will be making if this trait works
out in my favor. In this strategy,
our risk reward is two times that of our risk. So 1.94 will increase it
further, add it to two, and then we can
see the price kept going up and this trait
worked out in our favor. What is the exit criteria? Exit criteria, first
exit criteria is, we exit the trade when one of target price or stop
loss prices hit. In this case, our
target price was hit. If the trade did not go in our direction and
our stop was hit, then also we would have exited. Second way of determining the
exit is during the trade, we keep adding anchored VWAP at lowest close of new
swing lows, if any. Now, as this trade has started as in going
in our direction, and here we can see this
trait formed a swing low. As soon as it has made
a fresh new swing low, we will add anchored VWAP on the lowest closing candle of this swing low,
which is this. Yeah. And then we will see if any candle closes below this, then we will exit. That's one way of
safeguarding our trade. In this case, you can
see that trade actually stayed above all these
we both the VPs for a very long time and
we could have actually trailed our trade and stayed in this trade
for a much longer time. But this is a swing
trading and we took this trade on 14th and is
finished on next day 15th. So we should try to
stick to our rules, we should not get tempted. Whatever our rules are, we have a rule that
we should exit as soon as our target
or stop is hit, or any of the other
conditions are met like this swing
low in this case, which was not broken,
so we stay in a trade. As an arid precaution, we can also exit at any
point of time if you observe lower high and lower
pattern forming on char. So now we are in a trade
and during a trade, if you see that
the stock has made a lower high and lower low, then also we should
exit immediately. But for that to happen, we should at least wait for one set of lower highs and
one set of lower lows. Similarly, just like we have one swing high and
one more swing high and one swing low and
this is another. Swing low. We need to have basically
a pair of swing high and pair of swing lows
in lower formation, lower high in lower low
formation to confirm, the trend is changing and then
we should use it as next. But most of the time, it
will not come to that. Most likely it will either your profit target target will be hit or your stop
loss will be hit, or the second condition
also would be met where the price might close below
the swing lows anchored. So that's exit criteria. Now, the most important thing, how do we manage our
risk in this strategy? In this risk strategy, we risk no more than 3% of the
capital on a single trade. Basically, what I'm saying is, let's say you have
100,000 capital, then you should not risk
more than 3% in this case, 3,000, more than 3,000 on a single trade
on this strategy. You can also use 2%, that will be 2000 in this example for a more
conservative approach. I will come to how we can ensure that no more than
2% or 3% is lost. That is a concept
called position sizing, that will be the next thing
we are going to cover. But for now, just understand
that in this strategy, we are not going to risk more than two or 3% of our
capital on a single trade. Stop loss is below the
most recent swing low, which should also be below VWAP. As I said previously, we are going to set a stop loss below the most recent swing low. And you can see this swing lo is also below the VAB, right? So that is our stop loss. Target profit for the
strategy is twice that of SL. I, if the stop loss
is five point, the target should be ten points. This gives us a risk to reward
ratio of one is to two. We are risking one point
to make two points. Here you can see
our stop loss is 4.31 and our target is 8.63, which is double
that of the stop. Let's take a look
at another example of the trade in a
different chart. Here I have VDL or danta
from Indian markets. Here I can see it is in
a very clear uptrend, but you can see this is more a straight line move and not many swings
are formed and even the ROC did not really come down to zero till
this point of time. When it came to zero, it started making lower
highs and lower lows. This is not a valid setup. Let's look at some
historical price action. Here we can see we have some
ups, uptrending swings. Here we can see that
this is an uptrend, we have a higher high here
and we have a higher low and then here the price
went below zero line here. Now at this point, what we
are going to do is we are going to use our
anchored VAP and we will apply it on the highest closing candle
of the most recent swing. From this point, this is
the most recent swing high. I will apply it here and then we will wait for this candle too. Close any of the candle
to close above this Vab. And here you can see the candle, this candle closed above it. So here we'll use a long position tool
to visualize trade. Somewhere here in the
next candle, we'll enter. Stop will be below the low. Low in this case is 241.5. I'm putting my stop at 2:41 0.4, my target will be two
times of this stop. Then you can see the trade
went down for some time, but it reversed and at this point of time
our target was met. We took this trade on
11th and this took one, two, three, four, five, six day. This trade was completed, uh with a positive outcome. We can also look for some
more trades here in the upend we did not get here
we have a trade. Here you can see we are making higher highs in
higher low and here the price went down and
after this price went down, we have to figure out the most recent swing high,
which was here. But here, this is a red candle, but even then this closed
above this green candle, the close of this red candle is 38.3 and close of this
green candle is 237. So we will put our anchor
view on the higher candle. And here you can see
this candle closed. We will enter the position here. Our stop loss will be
below this swing low. Target will be two times
that of our stop loss. In this case, as you can see, this trade did not
really work out in our favor and it hit our stop. Let's also try to
see if we could have avoided this
situation to some extent. Now, we said that
during the trade, if we see lower lows and lower high formation,
this was a lower low. Sorry, this is a lower high, and this is a lower low. As soon as this low
was broken here, that we knew that this data
stock has made a lower, low and lower high formation, we should have exited on this candle itself because
this candle breached this low. We wouldn't have had to take up all this loss and we would have exited with
a very small loss of 1.45 points instead of
taking the full 7.7 points. Also, as I said, as soon as a new swing low is formed when
we are in a trade, we should place anchor VWAP on the lowest closing candle
of that swing low. So in this case,
this is the candle. And now, as soon as the
candle closes below this VA, we should exit this trade. So if we followed this, then we would have entered
somewhere here itself. On this candle itself
and we would have actually exited in
a little bit of money with 1.7 point of profit rather than
taking any stop loss. If you will follow all
the three exit guidelines that will help to ensure
that we are taking as minimal loss as possible
in the trades and we are trying to stay green
as much as possible. So what exactly is
position sizing? Position sizing determines
how many stocks or cryptos or whatever
you are trading, how many lots or what is the quantity that you should buy Esper or risk
management rules? When we are saying that
you should not risk more than 2% or 3%
of your capital, how do you determine how
much should you buy? So let's take this example. Let's say that your capital is $100,000, it could be rupees, anything doesn't really matter, and you are following a
risk of 2% per trade. You don't want to risk
more than 2% per trade, which will essentially
be 2000 in this case. You stop loss, let's say, is five points or
let's keep it real. Let's take what is
a stop loss here. This is a Euro USD
and this is not really ideal one
because the stop will run into very
small numbers. Let's use example from
this Netflix trade. Here the stop was 4.31. Here I assume your
stop loss is 4.31. So how would you have calculated quantity
or position size, your capital 100,000 hundred
K into risk 0.0 2/4 point. Instead of five,
you will be 4.31. This number would be something like 425 or something like that. You should have bought this
much quantity for taking this Netflix trade. This one. That will ensure that if
your stop loss is hit, basically the trade
goes against you, you will not lose more
than $2,000 or rupees, as per our position
sizing tools. That's position sizing for
you. It's pretty simple. Whatever your capital is, whatever your available capital, just multiply that by the risk percentage and divide
by stop loss and you will get the quantity
that you should be trading with for given trade. With that, we'll close
this long strategy video. In the next video, we are going to cover some more examples.
12. Example Trades: In this video, I'm going to show some rates on
different securities, starting with stocks,
and we will also see this trade in stock index, cryptograncy, and forex pay. This is just to show
that this strategy is universal and works
on most securities. I'll start with stocks and I have picked
Netflix for that. And here you can
see the Netflix has been in a decent uptrend, but we don't really have to worry about this because
when we are trading, we will not see this in advance. We basically have to
just look for a pair of swing highs and swing lows. In this case, for example, here we had down trend
and here you can see we had a pair
of swing high and a pair of swing lows which are on her high
higher low formation. You could also take
these two lows and these two highs,
anything it works. Now we have the trend
set up in place and now we have to wait for the
ROC to come to zero. We could have taken
this trade somewhere here also because here itself, the trade started making
higher highs and higher lows. If we took this trade, we first need to
lot anchored VWAP on the most recent high from the point where ROC
went below zero. This is the place. Here we can see the price
came a a VWAP here itself, we will take the trade here. Zoom in bit and our
stop will go below this most recent swing high
and our target will be twice. In this trade, you can
see within one day. I was triggered on
31st October and then it was completed in first
November within a day's time. If you were following
the same trend, you could have waited for this to come down to zero
RC which it did here, and then you could have
plotted anchored VAP on the most recent swing high from this point of ROC where
it went below zero. In this case, it will be this. But here you can see there is another higher swing
high closing candle which close above
this swing high. If such a case where
multiple swing highs exist, we should take whichever
is a higher one. This is just to
safeguard us so we don't enter a trade too early. In this case, we
will lot this here, price went below zero here and then we'll wait for
it to come above. This candle closed
above the anchored via this is where we
will enter this trade. Our stop loss will be just
below this swing low. This swing low is vote 29 70. We could put it at vote 960
or something like that. Then our stop loss target will be two times off our stops. Here, if we stayed
in this trade, it worked and we hit the target. But we probably wouldn't have stayed in this
trade for that long. The reason being we
had a couple of rules. The first rule was if the stocks makes lower highs and lower low formation during
the trade, we have to exit. But luckily, this stock did not make lower
highs, lower lows. Here you might feel that we have a lower low
and a lower high, but this is not a lower high, the high of this candle. The high of this candle is
higher than both these highs. This is not exactly a lower low, so we didn't have to
discard this straight, we did not have any lower
low, as you can see, lower high formation, that wouldn't have been
any reason for exiting. However, we did get
some swing lows here. So from those swing lows, we will plot the anchored viva. As an example here, we
would have plotted this. Then when the price closed below this anchored
Via we would have exited. This would have been our exit, we would have exited with a little profit and
we wouldn't have caught the full profit if we were following all
the rules properly. I would suggest
don't get tempted that we miss this trade
by following those rule, I would reiterate that
following these rules will help you immensely in the long run by
protecting your capital. So follow these rules, and, in fact, in this trade also,
you had nothing to lose. Like you actually
made little money. You did not lose anything. So even though we missed out on this full thing, by
following this rule, we should still continue
to follow these rules and as soon as any of the
exit scenario occurred, we should exit from the trade. So here are a
couple of examples, um, on a stock, let's move on to stock index. I am using Nifty index, uh, India 50 50 index. And, um, the index is currently making higher
rise and higher lows. In fact, here actually, the ROC also went below zero. If we had to a trade, we would have put
our anchored Vb here and this is where
we would have entered. This candle, you can
see closed above Vb we would have somewhere
entered here and we stop loss would
have been below this low and target would be twice. So this is how this trade would have been going
if we took this trade. But now here you can see this stock is
making a swing low. Once the price starts going up and the swing is confirmed, then we would add anchored VAP on this
low as a protection. As soon as the
candle closes below, if that happens, you will exit. If not, the stock might continue moving up and
we might hit the target. Let's go back a
bit and here also, we can see the stock had
been making higher highs and higher load after
making this series of lower highs and lower lows. Here this is swing
high, swing high. After making these
two and highs, we will wait for ROC
to come down to zero, which it did here -0.02. From here, we will now look for the highest closing candle of the most recent swing
high from this point, which is this,
we'll plot it here. The candle closed here and in the next candle, we'll
enter on the trade, we will take This is the most recent one,
but just to be safe, we could actually take
this one as our stop loss, but make sure your stop loss should not be too large as well. At the same time, do not
compromise on a stop loss. It should be at least below
any of the swing low. Go with this if you want to, but don't go with too large
or too small stop losses. Let's go with
something in middle. We have three lows here,
we'll go with the second one and then target
will set to twice. Here you can see the target was comfortably met within two
sessions, two days time. This is an index, just like NIPT you can also try strategy on SMP 500
or any other index. Let's move on to a
cryptograrenc, bitcoin. Bitcoin here we can see it has been making
in this stretch, higher highs and higher lows and it started making
the higher rise and higher rows and this point, we don't really
know these things in advance, what will happen. We just need to look for a couple or a pair of higher highs and
pair of lower lows. So once we see that this has been making
higher rise and rows, we will wait for the
price to come down, and this is not rise or ROC
to come down below zero line, and this is where it did. So now we will anchored VP. This point, it went
below zero ROC. The most recent highest
high is this candle. Now this candle closed above anchored VAR
we will enter on the next candle
somewhere here and our stop loss will be below
the low these two candles. When our target will be
twice of the stop loss size. Our stop is 370 points
and our target is 750 points and this
stray as you can see, work down beautifully
and the target was hit. We could have followed,
if you wanted to, we could have
followed this up move in case we get
another opportunity, but we did not get
any opportunity in this trend because ROC
never came below zero. It did here, but at
this point of time, you can see it started making
lower highs and lower lows. We will not take this trade. Let's move on to ForEx pair now. I am using Euro USD, which is the most popular
for pair for reading. And in this stretch, we can see Wexpaer is making higher highs in high low from this
point till here, we can see lower
highs in lower lows. From here, it started making
higher highs in lows. Now we will wait for this to touch for ROC to touch
zero or go below zero. This is where it did. Here you can see it
made a lower high, but it did not actually
make a lower low. I did not change to a downtrend, so we can still keep
an eye on this. And we will place anchored on the highest
closing candle of the most recent
swing hi and we'll wait for price to close
above. This candle closed. The next candle, we will enter. Our stop will be below the most recent swing
hi, which is this. And our target would be
two times our top loss. So at first glance, it looks like the trade
worked and let's try to see if any of our exit
rules got triggered. Here, it did not make any
lower highs and lower low, so we did not have any reason to exit
because of that route, but it did make a swing
low here after entry. We will place our anchor
va below this swing high. The lowest closing
candle is this one. So now luckily we can see that this price did not close below this anchored
weaver at any point of time. So this trade went through and if this candle would
have closed this red candle, then we would have exited at the break even price, no profit, no loss situation, but that also never happened and this trade worked out in our favor. Make sure, um, you
respect the rules, exit rules and whenever
any such condition arise because if you
don't follow the rules, there will be a time when you will keep hitting
your stop losses more often and that will cause a lot of
frustration that you are taking a lot
of bigger losses. Don't do that, respect the rules and follow the strategy as it
is supposed to be. I think we have covered plenty of examples and I hope you got some clarity on what to look for in a trade and
how to take positions. With that, I will close
this session. Thank you.
13. Shortlisting Stocks: In the beginning of this course, I said that this strategy
is a good fit for working professionals
who do not have a lot of time to spend on going through the charts and understanding
technical analysis. And you might be
wondering that how is it possible now after
looking at this strategy? You may feel that you may
have to go through a lot of charts to find this setup. So there is a way which we are going to
discuss in this session, which will simplify the process of identifying
suitable candidates, and the whole process of
identifying and entering the positions and setting up alert should not take more
than two to 3 hours a week. Let's jump into
that. First thing we have to do is we have to define a way using which we can identify
or shortly some stock, which may have the setup
that we are looking for. We need to look for
these few things. First and the most important thing is we need to
look for stocks which are near their 52 weeks high
or at their all time highs. 52 week high is
essentially a year's high. Basically the highest they have been in the year
if the stock are trading at that level or
their all time high levels, then we have to look
for these stocks. Then we also need to look
for 30 day average value, which should be more than
ten lac or 1 million. The reason being we need to look for stocks
which are liquid, there are a lot of buyers
and sellers present. We need to look only
for stocks which have a 30 day average volume
of ten lacs or 1 million. This filter will ensure
that we are only looking for reasonably liquid stocks. You can even increase
this further. You can make it
two times 20 lac, 2 million or whatever, but this is a minimum you should not grow
below this number. Next, we need to look at the market capitalization of these companies of these stocks. We need to only look
for companies which have a market cap of
more than $100 billion if you are looking
for US markets or 500 rows if you are
trading Indian markets. So this will ensure that we are not looking for
companies which are very, very small and penny
stocks of companies, companies that have
some solid business. This market cap limit
will ensure that we can filter out some
unnecessary companies which we may not
really want to trade. Then next is price. The price should be
greater than 50 rupees and less than 500 rupees, talking about indian markets. This is we don't want to
avoid the penny stocks, 102 up B five Rupe stocks. 50 rupee is a decent number, but at the same time price
should not be too high, it should be less than 500. The reason being if the
price is very high, let's say 10,000 rupees
or 15,000 or higher, those stocks which
have higher price, they move less day to day
basis in percentage terms. We need to look for stocks
which are relatively lower priced and give us a bigger
move in percentage terms. Similarly for US markets, we should not look
for stocks below $10. You should avoid penny
stocks essentially, and you should also not go
for very high value stocks. Price should be
somewhere in between. $10 to $50 range. This is the criteria that we have and you can also add
some additional filters based on your fundamental
understanding that you may also want to just pick
the companies which have, let's say, year on year growth of 10% or higher or
company which have ROC or written on
capital employed or operating margin
more than 5%, 10%, 15%. You can also do those things if you have some
understanding about it. But at the minimum, you need
to have these criterias. Now that we have this criteria,
what to do about this. For this, let's go
back to tiding view. And when you have tiding
view open at the bottom, you can see stock
screener. Click on that. Re review has a built in
new 52 week high scanner built and you can simply use it and add these additional filters
that we discussed about. For example, the
market capitalization, average volume has to be at least 1 million
stocks that are near or 52 weeks high
and this you can ignore. This will give us
the price 50-500. This is basically
for Indian markets because I am currently
set to Indian market, we can change to any market in the world and then set the
conditions accordingly. So that will give us a list of stocks that are
matching this criteria. And when we are looking
at stocks which are near their 52 week
high or all time highs, that means those stocks
are likely in an uptrend and already making higher highs
and higher low formation. So let me click this first one. So here, I can see that this stock is also making
higher highs and higher lows. I will add the indicator. Yeah. In fact, you can see
that in the first to itself, we found the setup. It is making higher highs
and higher lows and ROC has just gone below zero line. What we are going to do next, we are going to apply the anchored VWAP on
the highest closing candle, which is this in this case, and then we will wait for
price to close above. So what you should do ideal
is during the weekend, you should run this scan, find the stocks
which are meeting this criteria and add
this Anchor V web. Next thing you have to
do is on this Anchor Vb, right click Add alert. And you can set that when this particular stock
crossing up anchored, we wp once per bar close because we don't want to
be notified unnecessary. Every time this
price goes above it, we are only interested when
the price closes above it. Once bar and then you can
set expiration date till when you want this
alert to be active. Then you can add a message. Let's say entry
riggerd or this stock. Or let's say swing or whatever. Then in the notification, you can select the options how
you wanted to be notified. If you have tiding view app, you will be notified in the app. You can also send an email. You can play a sound. You have all these options
and you can create. Whenever this price
will close above this, you will receive
a notification or an email and at
that point of time, you can just go quickly
and take this position. That's how the whole
process because running this stock a short
listing filter, once you have it up and
running in your trading view, it will not take more
than five 10 minutes and going through
the whole list, it might take maybe
half an hour, 1 hour time and you have
to do this over a weekend. And once you have identified the law of stocks which
are meeting this criteria, add this VAB and wait
for the price to close or above this VWAP, and you can get notified
using this alert feature in trading view so that as
soon as you get the alert, you can take a position. Similarly, if you take
a position, let's say, I'm taking a
hypothetical example, let's say we entered
here and this is our stop and this is our
target, something like this. If you have already set your profit target and exit target in your
system, that's fine. You don't really have to
do anything about it. But if you also want to monitor about the other exit conditions
which you should, then every day, you can
just see your open traits, maybe you have to open trades. So every evening or whenever
you get time during the day, just take a look at the chart
and see if it is making a formation which could possibly trigger any
kind of exit scenario. If not, you can just wait
for this date to work out. Otherwise, you can add
some additional alerts. For example, you can, let's say, create a line price level. It's a way if the price
goes below this line, let's say this would trigger
a lower high formation. In this case, it won, but I'm
just giving you an example that if the price goes
below this level, then I should be
notified immediately because it will probably create a lower high lower
low and I want to be notified so I can exit
this study immediately. Then you right click on
this and add alert on this and as soon as the price
is crossing this array, you want to be notified,
you can create this alert. So that's how using alerts and
using this stock screener, you can trade this strategy very efficiently without spending
too much time on it. Remember that alert again
is a premium feature, so it will not be
available in free plans. You may have to upgrade to a basic paid plan to
avail alert feature, and you may also have to upgrade because you
would also want to set up this indicator
using Pin Script or using indicator on indicator setup as we discussed
during the setup period. I hope this clarifies the
whole setup and how you can identify socks for this and how you can
enter the positions. Feel free to let me know through your tions in Q&A section. If you have any further doubts, I'll be happy to help you with the setup and we can
even discuss about different kind of conditions and when to do what,
when not to do what. With that, I wish
you all the very
Shishir Singh, Trading Coach, Trader, Elliott Waves
