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Trend reversal identification is childs play now
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Share it on FacebookHi Mudraites...
Trend reversal identification is childs play now.
No calculation of averages, no formulae...is required for that.
It works with 85% accuracy. Damn simple....
One can trade with this method with a horizon of one week to 10 days.
Any common man ( not the techies ) like me is interested ?
This is a simple method i use. This is not a software or any method copied from any place. This is my own method i follow.
I really dont know if anybody else is also using this method already.
ok...guys..... method is nothing great to boast about as i said in the begining.. But i found this is extremely easy to handle.
One can do a positional trading with a horizon of one week or so with this method. This is not for intraday trading.
Method :
You have to note down the current day closing price. ( it can be any stock or nifty also)
Compare the price with 5 day prior close price.
If the current day closing price is greater than 5 day prior closing price, then BUY next day.
If the current day closing price is less than 5 day prior closing price, then SELL next day.
if it is BUY, then one can buy at a price near to previous days closing price or low price.
if it is SELL, then one can sell at a price near to previous day closing price or high price.
No calculations or formulae required. only visual inspection.
Eg: RANBAXY
Date Closing price
20/1/12 468.35
23/1/12 463.45
24/1/12 467.70
25/1/12 474.50
27/1/12 443.90
30/1/12 450.65
31/1/12 449.55
here in this example, as on 31/1/12, the closing price was 449.55. 5 day prior closing price is 463.45.
So, the current price is less than the 5 day prior closing price. Therefore it is SELL as per this method.
Dont follow any method blindly. Kindly do your own homework first.
Thank you
Happy trading ..!!
Instead of 5 days prior closing price, one can compare with 6 days prior price also.
If it is a BUY, then one can keep a STOP LOSS of yesterdays low or just below yesterdays low.
Similarly, if it is SELL, one can keep STOP LOSS of yesterdays high or just above yesterdays high.
Or else, a stop loss of your convenience can always be put.
For stocks, any stop loss 2.25 to 2.7% is good enough.
The link to the modified method is in excel file here
In this file, i have analysed one year data of YESBANK with this method.
One has to just enter OPEN HIGH LOW CLOSE value of any stock copy the formula from the above rows. It will give next days trage suggestion and trade price with stop loss and target.
kindly check
http://www.4shared.com/account/dir/WnrhAwIK/_online.html?&rnd=67#dir=150503755
The links for xls version of the file is as below
http://www.4shared.com/office/LKjSJN1N/6day_trend_analysis_-_xls_old_.html
[URL=http://www.4shared.com/office/LKjSJN1N/6day_trend_analysis_-_xls_old_.html]6day trend analysis - xls old version.xls[/URL]
try anyone of these. you should get the file.
thank u
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yes kripakarji saw the reply thank u.. i try to back test the method n post the feedback..
Shankar ji
for SESAGOA and HINDALCO, is it not working ?
I will check that and come back to you. Right now, my EOD process is going on. Once it is over, i will check that. But it should work.
Thank you vijayan ji....for giving me the feeb back.
Jignesh ji ... i just posted a reply. kindly see that.
This post has got 1120 views as of now, but ony few feed backs. Please let me also know what u think about this method.
I appreciate your comments whether +ve or -ve.
pl post
M P ji
what you said is correct.
Todays nifty close is 5237.70 and 5 days prior nifty close is 5127.35. So the trend is still in BUY mode for tomorrow.
However, what we have to see here is, this trend is not get reversed to BUY mode today only. This trend has reversed to BUY mode on 10th Jan 2012 as per this method. So the trend is quite old now. So it might be ready for another reversal to DOWN mode anytime now.
What has to kept in mind that, we should enter the trade immediate next day, when the trend is reversed. And for nifty, one can get out of the trade if you get 80+ or more points. No need to wait till you get 250 or 300+ points. If we get, then it is bonus for us.
Similarly for stocks, one can get out of the trade, if one gets 3.5% or more profit from the trade price. no need to wait till the trend get reversed again for exit.
Ignoring this fact, even if take risk and go for BUY tomorrow, as per todays close compared to 5 day prior close, then the buy price should be near todays close or todays low. ie. near 5237 or near 5159 or anywhere in between.
Since we go for BUY, the Stop loss can be kept little below todays low.
thank you
kripakarji very nice system simple n effective.. kripakarji if one has to trade this system where do u think one should book for profits like u mentioned nifty's trend reversed frm jan 10th n till now we hv seen 300+ points profit bt where should one exit or should we wait for the trend to reverse like stop n reverse trades..
Checked with Sesa Goa & Hindalco -- it is not working.
Dear KK
Again backtested another two months - Jan. 2011 and Feb. 2011, in these two months also it is giving profit of nearly 100 points intraday, except in Jan. 1 day SL hit and in Feb. 2 days SL hit intraday basis. However, it is more important to check the actual data in coming days rather than relying 100% on back data, because in NSE site we can check historical back data of OPEN-HIGH-LOW-CLOSE prices only; hourly historical prices are not available.
OK KK, LETS TAKE NIFTY
23------5046.25
24------5127.35
25------5158.30
27------5204.70
30------5087.30
31------5199.25 &
1--------5235.70 FOR TODAY CLOSE(JUST CHECK IF MY CLOSINGS WERE NOR WRONG)
SO AS PER YR TRIK 1-2-12 CLOSING @ 5235.70 & 5 DAY PRIOR CLOSING WAS 5127.35
& EVEN 6TH DAY WAS 5046.25
SO CURRENT NIFTY IS MORE THEN PRIOR 5-6 DAYS CLOSING NIFTY SO ITS BUY(LONG) NIFTY FOR TOMMOROW WITH STL-----5199.25 OR 5087.30
IS THAT U MEAN ?? KK............ PLS REPLY...............THANX
Dear KK,
Back tested the data of Banknifty for Nov. 2011 and Jan. 2012, it is satisfactorily working intraday as well, easily giving minimum 50 points per day (in fact most of the days it is giving more than 100 points intraday). More months are under checking & will come to you.
Yes....
How many of you back tested this method ?
Do you find it useful ?
Dilip ji
as per this method, nifty trend reversal occured on 10th Jan 2012. How far do you expect the nifty trend to go. It has already covered almost 300+ points.
It is better to see from the point where trend reversal started.
One can check with any stock prices which changed the trend from yesterday. I mean try to find some stocks whose trend changed only yesterday closing. I also need that data.
Siddharthi ji
For HDFC the trend was reversed on 30/1/2012. So on 31/1/12 ie yesterday, HDFC was a SELL candidate.
If you had shorted yesterday, see how much would have been the profit.
So kindly check from the point where the trend reversal has occured. Trend will not go unending. It will end somewhere and take a turn. Within that period we have to get out of the trade.
Hope i am clear
No Dear Kripakar,
Current price(is not today's) This is of yesterday's close i.e of 31/1/2012.Therefore it is Buy as per your formula?
DEAR MR. KRIPAKAR,
I TESTED THIS STRATEGY FOR HDFC AND OBSERVE THAT IT DID NOT WORK TODAY....
YESTERDAY CLOSE WAS 697.85 SPOT AND 5 DAYS PRIOR CLOSE ON 23RD JAN WAS 695.50 SPOT...
ACCORDINGLY IT IS A "BUY" FOR TODAY.....
TODAY ITS HIGH IS 693 AND LOW IS 673.80....
I HOPE I HAVE NOT MADE ANY ERROR....
if one can get 80+ or 100+ points in a trade, then i think the method is succesful.
Yes dilip ji
because you are just checking it today, it looks so.
But see it from where a trend reversal started. Then the sequence continues...
Yes Umesh ji
you are correct. After todays close, compare nifty close price with the close of 24/1/2012 ie 5127.
If todays closing of nifty is below 5127, then it is short term trend reversal as per this method.
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