Here's a case study of Axis Bank stock. I log my mid-day thoughts on my conceived trade idea. Basically, my first trade in Sunpharma was up and done. I was looking for an opportunity in Axis Bank. There was a ripe opportunity in the Axis Bank scrip at 10:50 A.M.
But I was really hesitant to take up this trade. First and foremost reasoning thought that dominated in my mind was, "Don't let go of the money you made in the morning." In the hindsight I see this thought as an illogical reasoning. Every trade has risk inherently ingrained in it. Let’s see the chart below.
The opening Candle is near daily pivot 's1' and it kissed the 200-MA in this 5-minute chart. Next 20 minutes the price zoomed to daily pivot level 'p'. I had this chart opened on in a different window. When I came back to look for opportunity the price had retraced 0.618% of the morning rise and had slightly moved up. Now, though I was hesitant I made up my mind to make this one a case study.
My conceived trade idea is shown in the chart above. Details are as follows. Entry is @ 709.3, Stop is @ 706.8, and target is @ 715. Risk-Rewards ratio is 1:2.3.
A mild congestion zone is marked in the chart by a yellow circle. I thought this could prove as a hurdle to target. I also thought that the price had to move beyond the weekly pivot hurdle shown in the chart as well. Along with this, we can see 200-MA running down. I thought price may get attracted to 200-MA. In the hindsight, I see that price had already kissed 200-MA in the opening candle itself which I mentioned above.
However, the trade worked out well, even though there was a slight down move in between.
Lesson:
Check the reasoning of the mind for its validity. If the reasons are illogical, you may convince the mind to take the trade in small quantity.
Know that each trade has risk ingrained in it. Losses do happen in trading.
Watch the charts carefully with complete focus. I conveniently didn’t recognize the opening candle’s kiss of 200-MA in this case.