Trade Journal - Importance of Stops [16 -06 -2021]

 Here is the account of a trade that highlights the importance of Stops. Below is the 5-minute chart of Sunpharma scrip. The opening candle marked on the chart has an up wick which indicated weak bulls. After 40 minutes into opening a Dragon Fly Doji appeared on the screen. The candle's low is in confluence with yesterday's close. Immediately a confirmation candle also made its way into the chart.

That's when I decided to enter a long trade. The trade box is drawn on the chart. The trade details are as follows. Entry is @ 675.2, protective stop is @ 673.35, and the target is @ 681. This plan has 1:3 Risk-Rewards ratio. Reason for the target is that at 681- 682 levels there is a strong Resistance present. I also have drawn a horizontal box near 682 levels.

Now, as the trade was drawing near the target, I was confident that the target would be achieved. But the opposite happened. Price plummeted almost 10 points in the next candle bulldozing off my stop. STOPS ARE OF PARAMOUNT IMPORTANCE IN TRADING. This is the biggest lesson for the day.

In fact an hour later there was a selling opportunity appeared at 672. But I dared not to take the trade. I was emotionally exhausted looking at this sudden big candle.

What about Nifty 50?

Before we see what happened today, I desire to log here what transpired yesterday in Nifty 50 briefly. Yesterday's opening candle is marked in the chart. Yesterday Nifty opened Gap up and made an all-time High at 15900. All through the day Nifty stayed sideways finding stiff resistance near the current weekly pivot 'R1'. Below is the 5-minute chart of Nifty 50.

Now, let's look at what happened today in Nifty. Today's open candle is marked as well. It has a beautiful down wick which signaled weak bulls. A confirmation candle followed as well. To take long trade the Risk-Rewards ratio was unfavorable.

From 9:35 onward, Nifty started falling and made its first low near 15755 at 12:40. Later, Nifty attempted retrace the morning fall. But, Nifty was bucked strongly near the low of the opening candle that sent Nifty 50 down again and the broader index closed -0.64% lower for the day.

Trade Journal - Case Study [14 - 06 - 2021]

Here's is a case study of Bharat Forge Ltd. This morning Nifty experienced a big fall of 180 points in the first 20 minutes. This broader market behavior really unseated the trader in me to be active.

I closely watched my watch list. Zeroing on Bharat Forge I actively desired to pull the trigger. It was not possible. Therefore, I decided to watch price action. Below is the 5-minute chart of Bharat Forge Ltd. The opening candle is marked on the chart. Along with Nifty the scrip below also experienced fall in the first 20 minutes.

By the time the dust had settled 11:55 and two candles of prime importance made their presence into the chart: A high-wave and a hammer. I have marked the hammer in the above chart. A confirmation candle appeared as well. A good opportunity with favorable Risk-Reward ratios was at sight. My fingers were crossed at this moment.

As price went up, I knew it could make a case study. So I planned an entry at 737.25 and decided to actively watch the scrip. The trade box is drawn in the chart. The details are Entry is @ 737.25, Stop is placed @ 732.9, and the target is @ 748.5. Target falls in confluence with 200-MA and congestion zone marked by a circle.

For the rest of the day price was directionless. I closed the trade manually at 3:00 for 740.2.

What about Nifty 50 index?

Nifty 50 index opened Gap down and swiftly fell 180 points down in the first 20 minutes. The opening candle is marked in the 5-minute chart of Nifty 50 index below. The broader index found support a little below the current weekly pivot 'S1'. Please refer the chart below.

Reclaiming the points lost in the morning Nifty kept inching higher and higher for the rest of the day. Nifty closed 0.08% higher.