Trade Journal - Stop Management [25 - 08 - 2021]

Here are my observations from today's trade in Ramco Cements Ltd. Below is the 5-minute chart of the same. The opening candle is marked in the chart. We can see that it's a small Gap up opening with respect to yesterday’s close.

At 10:00, the stock found Resistance near the current weekly pivot 'P' and started retracing. I felt it was early to call a short trade. In fact, there was even price-RSI divergence present. I missed first opportunity with favorable Risk-Rewards ratio.

Nevertheless, the stock once again found Resistance near the same weekly pivot at 12:00. There are two candles with wicks on upside their body. There was price-RSI divergence. Once the confirmation candle was on the scene, I put on a short trade.

The trade details are as follows. Entry point is at 967.2, target is at 957.3, and the stop is at 972. The Risk-Rewards ratio was 1:2. Since there were 5 points of risk position sizing was called for in this trade.

Now, as the trade was on, I noticed, the price-RSI divergence had bigger width. I also noticed price stalling near 965 where RSI started to consolidate near 40 levels. These two reasons were enough for me to close the trade since I wasn't comfortable with the visuals.

Anyway price shot past my entry and my stop was spared by just few 0.2 points. At this point, RSI was taking support above 60 levels. Since there was an opportunity to reduce the risk and more so supported by winds blowing against the plan, I closed the trade manually for 3 points loss. Please see the chart below to find the price bulldozing my stop a little later.

Lesson:

Continue to actively manage the trade throughout the trade.

Price-RSI divergence width must be taken into account in future trades.

Trade Journal - [18 - 08 - 2021]

I place here few important thoughts about today's trading session. This morning I had a plan to go short in Ramco Cements stock. In the previous session, the script had closed at 978, which also was a Day High. Please refer the 5-minute chart below to find the resistance zone marked near 985, whence I assumed the stock could potentially fall.

The Gap Up opening candle was a High-wave candle that clearly signaled indecisiveness at the start. I decided to wait for the price to take off either Low or High of the first candle. The second bullish candle confirmed the presence of bulls. I hastened to find the next level of resistance which fell near 1000 levels marked by upper horizontal box. I continued to wait actively looking for a short trade opportunity.

A first opportunity to sell occurred near 995 where a shooting star was confirmed by a bearish candle. The opportunity also offered 10 points bargain from the planned short trade earlier. It was difficult for me to pull the trigger in this opportunity.

Then, price slid down nicely. Though I sat at the fence, I continued to wait. Price retraced up to 50% of the fall in a Zig-Zag fashion on which channel is imposed. That's when I took the short trade. The trade details are as follows. The entry is @ 989, Stop placed @ 991.35, and target was @ 975.

In fact, first 5-10 minutes I was really hesitant to place the stop. I was in two minds deciding the point of stop. I desired a higher stop allowing the trade to have another point of cushion. But finally decided to place the stop at the planned point come what may.

Then as seen in the chart, a big red candle took the price down. Once this fall came, scanning the RSI, I could sense the intentions of bulls fighting back to take over the price as the indicator was stubborn near 40 levels. So, I decided to close the trade manually and was out at 980. Overall, this trade resulted in 9 points gain.

Lesson:

It's dangerous to debate the stop after the trade is on. Take the trade with complete backing from technical study.

What about Nifty 50 index?

Nifty  50 index opened Gap up by about 60 points and put up yet again another all time high @ 16700. Please refer the 5-minute chart of Nifty index below.

In the above chart we can see the confluence of weekly pivot 'R2' and the current day pivot 'r1' marked by the horizontal box. Once Nifty was below this confluence zone, we had a beautiful short trade opportunity. A pull back to the confluence level with RSI being resisted at mid-line 50 level was a favorable RR ratio short trade. Nifty went on to decline for the rest of the day.