I am new to TA and after going through several material, developed a checklist that was supposed to help me pick a stock that is likely to fetch profit. I understand that success is not guaranteed but my first attempt at it and it bleeds me to death. Where am I wrong?
Here is my checklist don on ASTRAL on 17th Nov, 2020.
Is there a breakout(Yes/No)? Yes
Is Price > 20 EMA(Yes/No)? Yes
Is Price > 50 EMA(Yes/No)? Yes
Are 20/50 EMAs > 200 SMA(Yes/No)? Yes
High Volume in last few days around highs(Yes/No)? Yes
Momentum Divergence(Yes/No)? No
Momentum swing in line with price swing(Yes/No)? Yes
Daily trend in line with weekly trend(Yes/No)? Yes
Weekly trend in line with monthly trend(Yes/No)? Yes
I entered into a position in ASTRAL on 18th Nov, 2020 at 1500+ and at close it dropped by 5.75% closing at 1396.55.
What am I missing? Where did I go wrong?
Appreciate your patience for reading and replying.
Be it any form of analysis, nothing works 100%, trading is more about being desciplined and managing your risk. You can give this a read to understand what I’m talking about, will also give you some insights.
Will also like to suggest you read this module on Risk Managment on Varsity.
maybe you didn’t go wrong anywhere with your rules but that doesn’t mean you will succeed 100 percent… nothing works for sure in stock market, this is the way it is, here in long run you have to focus on managing your risk and protecting the capital… if we are desciplined, success will eventually follow.
I think you tried to code your TA knowledge and jumped on to apply it , ignoring simple things, nothing works 100% but simple things works better , TA helps up to a certain level , rest is trade management , if you look at the chart , price was way above the SMA in other words say above the Mean’.
Yes I do understand nobody can succeed 100% of the time and have seen the learn, adapt and improvise
I asked this question coz I failed at my first attempt at trying a systemic approach. That too it was an unexpected fall. So just wanted to check with others who are more experienced to see if I am doing something terribly wrong.
1 thing I learned from Gautam’s response is the time factor which I would glance over but didn’t put much weight over it. Would look at that going forward.
I think one of the best way to figure out about the efficacy of your strategy is to backtest it. I have been effectively using @Streak for this purpose.
hi, i made that as a satirical response, for those , who have feelings of self doubt and seem nothing is working.
Sometimes, you need to look harder in the same charts. And looking harder takes time and passion. Without passion,you will never be able to create the necessary time.
Everyone has a different way of clicking in the markets. Make trading personal. You cannot copy someone in this business.
You have to be the mechanic. If the car breaks down, well, you know where it went wrong.
For people, who keep asking questions, why this doesn’t work,a human baby, well my baby took t 2 years to walk after occasional falls.
We all come here as a baby, and you can’t expect much at this stage. The answers are within you, though it might seem people are doing great. They all have their own stories. We never know.
Just give dedication and time. This is like an art. You have to love the art to perform.
Messi trained for 14 years, to reached that level what we know now. That’s what i recollect.
And a human baby of 10 years is still a baby. Be humble, be money smart and keep trying. Most will quit, it’s okay, their calling is different. Atleast they tried.
Sir I understand all the philosophy of having patience, hardwork, spending time etc. You have right to be philosophical and that’s part of the answer but I am here to learn where did I go wrong. Understand the intent.
Since you are quoting sports let me try to draw analogy using the same. When Wasim Akram was asked what difference do you see between current Indian and Pakistani players. His reply was, Indian bowlers wanted to learn and improve and would always try to talk to me asking for help and insights. Pakistani players wouldn’t even acknowledge my presence.
I am just trying to consult a Wasim Akram here to seek direction knowing fully well hard work, dedication and commitment is my look out.
if you had taken intraday trade in the first few mins. there was an RSI divergence in 5 and 15 min timeframe., right at the breakout candle above previous day high.
Nothing is wrong, some strategies don’t work at all times. So, all you need to consistently learn from mistakes and grow with it. This will help you in cracking technical analysis at your fingertips.
There are mainly 3 stages of Technical Analysis -
Performance
Levels
Indicators
Think of your stock into these 3 practical aspects so that you gain better insights.
How many time frame you have checked? Time frame also is very very important criteria which comes under technical analysis. Did you check 1 hour time frame? I have crossed check as per you data in 1 hour time frame. In that chart i can clearly see that the candle formation from 10:15 to 11:15 is “shooting star” and this formation in uptrend is the sign of bearish reversal. You should have exited from this point by taking small profit (I am considering you are seating in front of your system).
If you are long term investor and do not have so much time then you should wait it may come upward, no need to worry.
But remember candle is very important factor here.
There is nothing wrong, price could have continued, this is the problem with stocks making all time high you dont know from which price it will reverse. Personally i wud wait for a pullback to 1300, breakout level. Best bet
No analysis is 100% effective ever. Dont you think if technical analysis gave full-proof results every trader around the world would be doing it now? The thing is TA can give you great idea about when to enter and exit trades, but always try to look at the macro environment. Always look for news regarding that company before you enter into position. It may have very possible been in an overbought range when you entered and hence the price corrected itself. Moreover even when considering breakouts, I guess you used indicators. It is always advisable to fully understand the indicators first before entering into position. Certain indicators work only in certain situations. Make sure you follow and understand them correctly before using them.
Question: What is your timeframe? Going by your checklist, you’re probably not day trading so your timeframe is at least a few days. If thats the case then an entry at 1500+ is kinda too high
Ask yourself- at what price would the pattern you’re trading in ASTRAL have failed? I think you’ll conclude that your risk is too high
Point 2: Regardless of this, any strategy is just a way to make a bet. And bets fail. Which is why you need to minimize risk in order to stay convex (goes back to the point above)
