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Books on Technical Analysis and Candlestick Charting

There are econimical Indian edition books in the price range INR 450~700 /-
  1. Technical Analysis of Stock Trends - by Robert D. Edwards and John Magee
  2. Candlestick Charting Explained - by Morris and Litchfield
  3. Martin Pring on Market Momentum - by Martin Pring

Historical data of NIFTY50 stocks and description of some MS-Excel based tools are summarized below.

Filters and Scans in Trade Tiger

To to filter for unusual activity in futures and option (sharp rise or fall in OI). Unusual option activity before key events typically represent insider information. An increase in CALL option OI at ask-price (seller's price) is bullish, an increase in CALL option OI as bid-price (buyer's price) is bearish. Similarly, an increase in PUT option OI at ask-price (seller's price) is bearish, an increase in PUT option OI as bid-price (buyer's price) is bullish.

OI scan in Trade Tiger

Scan for stock based on your own pre-defined criteria
OI scan in Trade Tiger


Some rules of stock market movement:
  • The market direction rarely turns on a dime! It takes lot of time and energy to reverse the direction. Investors are like mules who take lot of pain before admitting defeat!
  • Stock market and physics: price is displcement, rate of change of price (ROC) is velocity, moving average are inertia (mass), indicators like RSI is momentum - combined effect of mass and velocity (index - a train moving at slow / high speed, stocks - a motorcycle moving at slow / high speed).
  • Trend is your friend until there is bend in the end! If weekly moving average (inertia or mass) is down, a move on daily chart against this direction may be a trap unless key supply zone or resistance levels are broken decisively.

View as on 13-Dec-2017 NIFTY50 weekly RSI


Technical analysis works, but market does retreat to some levels governed by fundamentals specially earning ratios. Combined "price earning ratio" of the stocks comprising the index is one such variable. In very simple terms, if you get 5% interest on your fixed deposits (FD), the PE ratio of your FD is 100/5 = 20. Similarly, if a stock is trading at 1000 Rupees and it generates profit of 20 Rupees per share in a year, its PE ratio is 1000/20 = 50.


NIFTY PE trading above previous year highs and a retracement is very likely. NIFTY50 PE Ratio

Reference: https://www.nseindia.com/products/content/equities/indices/historical_pepb.htm


Option Trading

There are only following 8 basic purposes of any option trade. One of these will be appropriate depending upon market conditions.

Option Type Trade Type Purpose(s)
CALL Buy Speculation:
Bullish Outlook
Hedging:
  • Either short-sell in stock or futures
  • Or short position (bearish speculation) in lower strike CALL
CALL Sell Speculation:
Bearish Outlook
Hedging:
  • Either long in stock or futures
  • Or buy position (bullish speculation) in lower strike CALL
PUT Buy Speculation:
Bearish Outlook
Hedging:
  • Either long in stock or futures
  • Or short position (bullish speculation) in higher strike PUT
PUT Sell Speculation:
Bullish Outlook
Hedging:
  • Either short in stock or futures
  • Or buy position (bearish speculation) in higher strike PUT


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The content on CFDyna.com is being constantly refined and improvised with on-the-job experience, testing, and training. Examples might be simplified to improve insight into the physics and basic understanding. Linked pages, articles, references, and examples are constantly reviewed to reduce errors, but we cannot warrant full correctness of all content.