New Lessons

Its my new initiative in my business. Though I knew its good practice and sometimes it is claimed to be imperative still I never bother to take cognizance of this exercise. After market hours an introspection or analysis of trade is very important and necessary. With this practice I can ascertain the reason behind fail trades, lesson I learnt from those mistakes and the measures I should take to avoid such mistakes in future. Coz lot of money and faith is on stake.

Above is the chronology of the trades of mini nifty. And the biggest mistake happened in the very first trade. Seeing the sell signal simultaneously on MACD and Stoch at 10:47:46 I short sold mini nifty at 5185. (the level and signal are encircled).

1. Mistake no. 1 is I failed to notice that inspite of sell signal the faster EMA is above the slower that signifies bullish (and not bearish) trend.

2. Mistake no. 2 is I failed to notice that even after the sell signal , the trigger lines on both indicators were moving horizontly instead of sloping down. And both lines were above zero when they were supposed to intrude the below zero zone.

3. Mistake no. 3 may prove suicidal as though I failed to notice all these movements still I kept it on. I should have square the trade in 15-20 minutes. On the contrary I squared off after 2 hours at 13:33:32 that too with loss. And see that at 14 hours the faster EMA crossed down the faster EMA.

Now see the whole movement in different perspective. 10 and 20 EMA gives good results with 5 min charts.

It is apparent from the chart (its 5 min) the sell signal on MACD and Stoch in quick succession. So we got the confirmation too. That’s good. Furthermore these signals were followed by EMA crossover that is supported by volume. All these movement signifies the change in trend. On safer side if we go short on EMA crossover (the middle of the corresponding candle i.e. 5198)

The buy signal on stoch can be ignored since the trigger line on MACD is still moving down and entering negative zone and the gap between both EMAs still exists. We gotta buy signal on stoch and the corresponding candle makes the low. That is at 5173. so we can easily get net 19 points. Good for quick trade.