2M Chart for the same setup. You can see the first false breakout.
Before we write down further rules of the system, lets broadly classify the general current market trend as Bullish mode and Bearish mode.
Bullish mode: Following are the characteristics of bullish market.
- Number of stocks hitting 52 week highs gradually increases(usually above 50 in NSE).
- FII investments are seen.
- After breakout, stocks can easily go up without resistance. This can be felt from your recent entries.
Bearish mode:
- Number of stocks hitting 52 weeks high gradually decreases(usually below 50 in NSE).
- FII pulling out money.
- After breakout, stocks see lot of resistance and cannot move up. Based on your recent entires.
Our charts will have few sets of moving averages(200, 150, 50, 25 and 10). They will provide a general trend of the instrument.
Following conditions have to be met for an instrument to get added to the watchlist.
- Instrument must be in stage 2(for more details see Stan Weinstein Stage analysis).
- Price is above 200 and 150 SMA on daily charts. Both trending up.
- Good volume collections on up days, showing FII interest.
- Price is now consolidating after a big up move forming bases.
Entry Points
When the stock breaks through the base with good volume. Entires are taken in 2 min charts. Entry is made immediately when the price breaks through the previous resistance. But we will wait for the candle to close. But if the trade turns down and closes below the entry point as a bearish candle in the daily chart the position is closed immediately. SLs are created based on the chart but not beyond 8%.
Exits
Initial SL: Sometimes we may not wait for the 8%SL to hit. The moment the risk outweighs the reward, we will get out of the position.
For profit-taking exits based on the mode of the current market, an exit strategy is chosen. During a bearish market mode, sell on any weakness signals. During a bull market mode, SLs are trailed to the recent higher low.
Money Management/Risk Management
Any system is as good as its MM. Our idea is to lose as small as possible, targeting a max of 8% loss on every entry. And letting the profit run as long as possible.
LO-Trader
[Amateur vs pro]
