There are many times when a well known pattern legitimately fails to do what it is supposed to do. But more often than not it is the failure of our judgment on the current situation or pattern that fails. This happens many times due to our wanting the pattern to form in a certain way and that call is taken before market tells us what is happening on the ground. This disposition of presupposing and [...]

Some of the patterns that are supposed to be quite good at predicting a reversal, e.g. Head and Shoulders, occasionally fail and one starts scratching one’s head with disbelief. (Almost always lots of bets are placed on such patterns, and scratching head is the only entertainment left due to the empty purse.) One of the main reasons for such failures is often simple, the averages are not aligned for the pattern to succeed. So while [...]

While trading breakouts it is necessary to see that the breakouts confirm moves in multiple time frames. e.g. a breakout in 4 hrly time frame must be possible. Also such breakouts need to be supported by alignment of averages in a time frame lower. If the averages are not stacked along with the breakout then one needs to wait for the alignment. Else a wide, sharp and fast price fluctuation can make a false breakout [...]

Congestion patterns make a trader get in to a lull as not much activity may happen. But the direction of the breakout from congestion pattern can be judged from the way the pattern develops. This can aid a trader to be prepared to take advantage of the breakout. So congestion pattern is not the time to stop analysis though one may stop trading during the pattern formation.

One simple way of trading, ignoring all kinds of indicators is follow the trend. Take classic Dow signals. i.e. on higher top/higher bottom one can buy. On lower top/lower bottom one can sell. Play with a given time frame in mind. i.e. if you are using the method in a given time frame keep profit/loss expectations in the same time frame.

Repeating patterns happen in the charts of most heavily traded stocks, futures, forex and commodities. These patterns are not same or simillar but can be called ‘on similar lines’. Depending on the contex of the trend they gain certain significance. Being able to read the pattern without missing out the context is very important for consistent results.

Another example of simple methods of trading is looking for breaks of support, resistance levels. The break of such levels in the direction of the trend in a higher time frame can be very good profit generating trades. Some times such breaks even in opposite directions of the next higher trend can be very productive. The main things to remember are: 1.  Let these moves before the break be of wide enough degree to ensure [...]

Funny that one tends to plunge in a transaction in a hurry and then wait for ages for it to mature. I have noticed that the signal takes a long time to mature and gives enough hints of its taking shape. There is no need to rush in. Wait for the signal to happen, it some times takes days to do so. Then get  in and the maturing happens that much faster. So it is [...]

There are times when you get near all right setups. It happens to me many times, particularly when I am looking for a signal, some how, now. That needs to be avoided. But there are times when an on the face of it good looking signal later reveals it was not so good after all, when it fails. It particularly happens at the shorter time frames. In shorter time frames the noise levels seem to [...]

Einstein is said to have said : we see what we want to see and not what ‘is’. Many times i have made the mistake of anticipating a signal. Only to be stopped out again and again. Funny thing is my anticipation is not bad – it does happen that way in a day or two. But by the time one gets tired of being proved wrong so when it really happens one is sitting [...]