so we discussed that the most critical element is stock selection. So once you have chosen the stock, the real fight starts and that is the timing. So there are different indicators of timing and there are different indicators of stock selection.
For stock selection, first of all you have to adopt a top-down approach and you have to reach the stock and after reaching the stock, then see the chart. The biggest mistake people usually make in intraday trading is that you are looking at the charts daily. So many times I see that people are trading by looking at the daily charts, they are doing short-term trading.
By looking at the weekly charts, they are doing intraday and short-term trading. So the biggest mistake is that the time frame should be correct. So if you are a short-term intraday trader, then your time frame should be30 minutes, 60 minutes. If you are an intraday trader or you are trading for 1-2 days and you are strictly intraday, then look at the 15-minute or 10-minute chart.
So the most critical thing is the selection of the chart. If you make the same mistake, then all the other things will not be of any use. So the first thing is to get your time frame right. So once you start looking at the right chart, then you see the patterns in it. The patterns the trigger that gives you the right entry point.
Because look, we know that this stock will increase, you have selected the right stock, you have found the right sector, you have found the right stock, everything is fine. But if your entry point is wrong, then what happens is that the stop loss and your risk reward are imbalanced. So the biggest thingies that the risk reward should be correct.
Risk reward is your gain to pain ratio. Thetis, how much will be made and how much loss can be caused in return. The ratio of that is the risk reward. It will not be correct when you invest in the right place. So now look at any chart and you will see that there are only a few patterns that work in the short-term.
Although there are more than 100 patterns, but out of 100, a handful of patterns are effective in real life. So look, the hair that has turned white in the sun for so many years, the benefit of this is that by selecting it, I can tell you that these patterns are effective and these patterns should be kept away from them.
So you must have read lot of patterns in books, you must have read a lot of blogs, but we will talk about the effective patterns today. Okay, let’s continue. So look, let’s open a chart and this Isa 30-minute chart. So look, as we are talking about patterns, this is a 30-minute chart of Bank Nifty and if you look at this chart, then there are many patterns made omit from time to time. Look at this chart, you will see roughly this date is 13th.
So thesis the 30-minute chart of December 13th. Now you see a pattern is being made here, which is called the bullish flag pattern. In intraday, I focus on very few patterns, in which the most critical patterns are bullish flag, bearish flag. There is a pattern called rectangle, in which there is very limited consolidation and then there is a big breakout.
Apart from this, head and shoulders and inverse head and shoulders. So these are the total patterns that you should focus on. Apart from this, there is an ascending triangle pattern, which is a little less, but if it is visible, then it should not be left. So if you focus on these patterns, then there is a lot in intraday.
Now you see, everyone’s questions that how will we know in so many charts that where the pattern is being made. So for that, you will have to make a list of those stocks that you are tracking today and that list will be of those stocks that are related to your sector. So first identify the sector you have chosen.
After that, keep looking at the stocks of that sector one by one in intraday. If you are looking at a 15-minute chart and you are following 10stocks, then you have all the time. You have all the time. You can see a stock twice in 15 minutes. So you have all the time. Look at your list one by one. When the patterns being made, it is not that it is suddenly made.
It takes time to make a pattern. Soothe pattern is being made, you get a little idea that yes, there is something like a bullish flag in it. You put a line and keep it. As soon as it is closed, you get an entry point. So you have to work little hard, but it is not easy to earn money. But if you do that, returns are unbelievable. So let’s see.
Now, like today’s stock, I put it in front of you. This chart is of GSFC. Now this stock is not usually on the radar, but today it has a very good traction. And this is the chart in front of you. Now look, I saw this chart2-3 days ago and I saw pattern in it. Maybe you can see it too. This pattern is called cup with handle pattern. So what is cup with handle? This is a pattern that is made little less. Rare pattern.
It is generally believed that patterns that look less are more effective. The very common ones are usually less effective. So this pattern is around 70%strike rate. In this, the stock should be in a trend first. And after that, such consolidation, such a troughs formed in the stock. Like a cup. Like a cup. After the cup, there is a handle and after the handle, there is a breakout. So buy on the breakout.
Now, I want to tell you one thing in this, which I think is the biggest and most important element. You are seeing half the picture of the pattern. If you identify the pattern, then you have won half the battle. But you will win half the battle when you pay attention to the indicator below. So the indicator I have put below is my favorite indicator.
So I have no hesitation in saying that my favorite indicator is around 1500-1600 indicators. But this is the indicator I like the most. And this indicator is OBV, which means On Balance Volume. So it is a very powerful indicator and it combines both volume and price. So what happens in OBV is that if the price is high, then the volume of that day is added tithe positive side.
And the day the price decreases, the volume of that day is reduced from that score. So this is the line of the volume of the past few days, which you can see. And this is more important than volume. Now look at this chart carefully. So here you will see that you will see volume bars. Look at these volume bars.
So when the move came in this price, its base is put here. But if you just look at this isolated volume bar, then you don’t know much. But when you look at the OBV below, then you see that OBV broke its levels and gave a breakout. This OBV breakout is telling you that big positions are made here at this price.
And because big positions are made here, you saw the price point later. So you have to look at OBV very closely. If your pattern, the pattern you have seen in this chart, in that OBV is elevated, that is, it is increasing from the previous one, then assume that the moves that will come will be very powerful.
So on such charts, the value of success usually increases. And we focus on such charts where OBV is increased and a very interesting patterns formed. Here comes a question that people can use this indicator for derivative trading also for Nifty and Bank Nifty?
Obviously, you can do it in derivatives, you can do it in Nifty and Bank Nifty. And usually you can use it at any timeframe. So this is such time frame independent concept. Although we are looking at it on a 30-minute chart, but if you like to see a 15-minute chart or work more on it, then you can also apply Oban see.
So OBV is time independent. So when it is going up knob, we have an expectation of a bullish move. Absolutely. See, like this move. So if you look at this move carefully, then you will see that the real momentum, the real money was made when this stock went up from 135 to 150. Look at it carefully.
So I will zoom it’s you will see that this move of 135 to 150, this is the one that gave money. Before this, the stock was running in a limited area. So real money got made here. And what is the difference between this and the previous move?
OBV came into action. So if OBV is increasing, then we know that the stock is increasing in position. Now, as OBV started to fall from here, what is your opinion on this? See, what is OBV in this? See OBV as a price. As soon as you see that lower peaks start to form, that is, OBV is going down, support is broken.
So let’s see the trend of this too. Right. Let’s see the trend of that too. Let’s see if OBV is going down overall or going up. If OBV is going up, it means new positions are being formed and those positions are being held. This is a small indicator that anyone can see. So there is no qualification for this. You have to go to the trading view, put OBV. And when you put OBV, you will get a line like this.
If you look at it carefully and analyze it carefully, you will see very deep relations between this and the price. Right. So does it ever happen that these two do not sit in a correlation? It happens many times and for that you have to keep stop loss. See, there is no full proof and you should not expect it either.
So we assume that everything is fine, but suppose your time is going against time, then a good trade also fails. And if it happens, then it’s okay. We have kept stop loss for a day. There is a small stop loss. If our success rate is 70%, then were more than happy. We pray to God that we get a strike rate of 75-70%. So if you are getting that, then you are making consistent money. And you keep getting it.
If you are not interested, then you are able to keep very focused hike in you are identifying the patterns properly initially when you start seeing patterns like you are new to wicket you don’t see the ball the pattern you are but after some time on wickets the same is here you start seeing the size of the ball you have to give some time initially where there is pattern,
you don’t see it where there is no pattern, you feel the pattern is there but if you practice little bitten this will become your reflex action you will recognize the pattern immediately for investment there are many patterns we discussed flag and pole you told us about your indicator apart from this, are there any other patterns?
There are many patterns but which one to uses the most important thing many years ago there was an analyst Thomas Bulkovsk he studied hundreds of patterns and he made an encyclopedia the name the encyclopedia is Encyclopedia of Chart Patterns written by Thomas Bulkovski
and he studied every pattern’s strike rate and how many probable variations can be there it is a complete encyclopedia but all the patterns which you see in real life you don’t get success and the reason is market is a dynamic thing it keeps changing
it is not like 20 years ago when I started my career the things which were useful you will lose money so markets change traders also have to change the patterns which we are discussing in my experience they are doing the best jobs what are the patterns one pattern which you will see on every intraday chartist rectangle rectangle is a pattern which you can not only trade through stocks means by buying it in futures or cash.
but you can also buy it by buying this option rectangle basically means in a very limited area many candles are made and on the chart you will see horizontal chain usually after this volatility compression price suddenly expands and when it expands it goes up very fasts if you identify that kind of trade you will get good money
second thing is that you should not trade much so trade when you feel that trade is very good means you are addicted to it till you feel this is very important sir said that there is no need to trade much when you have 100% conviction then you will trade in cricket they say let the ball come to you,
in the same way, let the trade come to you you don’t reach out if you are running and catching the trade then you will get outs you should focus that trade comes to you like your dialogue this is correct we will put this on daily mojo people have an advice don’t run and catch the trade let the trade come to you because you are seeing something on the chart you are understanding something that’s why you will trade some people come in the morning and open the laptop and it is 7.09and they trade people have a pressure that it doesn’t work am saying this for the cameraman leave this daily labor work he is also a trader what did I earn today?
Continue sir there are many traders who think that trading is like daily laboring which you should earn something daily unfortunately, everyone wants but it doesn’t happen in the market it is not necessary to earn daily what did you earn in a month? Or in a quarter?
In 3 months if you don’t care about daily then you will earn money the reason for what you are saying is that we are stressed that today I have to take out1000 rupees from the markets when you trade with this feeling and suppose there is no chance there is no pattern you checked all the charts and you didn’t find a patterns you thought to buy this because it is goods as soon as you work on half chance the market punishes you
the good thing about the markets that it doesn’t waste times you can’t find a better master than the market if you understand this the market punishes you and you get punished when you make a mistakes the important thing is that we don’t need money daily we can earn so much in a day that we don’t need to earn for 3 days but what is important for that we will work only when our signals are telling us that it is good to trades the pattern and OBV where both are connected that trade is to be found and to find that trade you have to work hard people ask me if a scanner can be made so that our hard work is saved
we don’t have to see so many charts where patterns are made but these patterns you have to find them yourself with naked eyes these patterns are not candlestick patterns one more thing there are many traders who are interested in candlestick patterns and doing short term trading candlestick patterns are not very useful on this type of charts so always focus on the structural patterns which we just discussed
and find those patterns and work hard for that do your homework before opening the market when you show your effort to the market that I have done this much then the market is very generous it will give you money beyond your imagination
but for that you will have to work hard Sir, one more question you said in the beginning that there are some patterns which should be avoided are there any chart patterns which should be avoided there are many one is rising wedge and falling wedge
it is a popular pattern but the strike rate is not good second thing is it is a subjective pattern subjective means you will see it but you have to explain it to others that connect this with this the pattern which you have to explains not a pattern is that which you will notice immediately on which there is no doubt there are those patterns on which you have to work
there are some patterns that work well on longer term chart like rounding bottom it is very effective on long-term chart and we find the trading of rounding the bottom with a lot of effort but in short-term trading it is not that useful so every pattern has its own area of specialization where it is most effective so you have to keep that in mind when we talked about cup and handle it works well for long term which I have seen .
but when we talk about short term what is the strike rate of this strike rate is around 70%and we changed the chart time chart does not know that I am a 30 minute chart is charts if you find the same pattern on 30 minute charts the strike ration weekly is almost the same on intraday chart
but when people do intraday trading they trade for 5 minutes am not in favor of 5 minutes on 5 minute chart there are many formations and the moves are small understand one thing an average person is trading on his laptop through internet so the fight that is going on the people standing in front of you they have lease lines they have massive super computers they have many systems
so till your trade goes other people will loses if you want to earn money increase your latency5 minutes, 3 minutes these kind of charts you can trade automatically through alga trading but if you do manually trades then your success will increase when you see a 10 minute charts 10 minutes, 15 minutes this is the ideal time frame for intraday and if you can keep it till tomorrow then 30 minutes there are many more
for example, this is the chart of IDBI bank one more thing there are some patterns which you will see better on line chart now a days, whoever I see they all look like a candlestick but the pattern can be easily identified100%candlestick chart is more bright it has more visual impact line chart looks boring but there are some patterns which are easy to find on line chart but hard to find on candlestick
for example, here is an inverse head and shoulder if you see it like this then it will be hard to see but when you convert it to line it will be clear that this is left shoulder this is head, this is right shoulder and this is inverse head and shoulders when this pattern is being made see the time and it will be completed the next day so you got enough time to react it is not like you have to find any problem immediately if you miss it, then you missed the opportunity if you are seeing your list again and again then the pattern will be made in front of you and you will not know about it will be visible
and if it is visible, then you have to be ready to take the trade and see the OBV belowso you saw OBV started risingbreakout came on the chart and the most important thing in this is risk reward when you are buying, then stop loss should be correcting patterns, the best thing is that a definitive stop loss pattern itself tells you so you know that where to keep stop loss what can be the targeting target, always give priority to resistance where is the resistance like if you see on this chart when you were here,
you didn’t know you could see that there is resistance at 69so when we are buying this we know that there is a space of 69so it is a big move even if you don’t take that whole move according to your risk, take the reward and go, still returns are very goods I hope you all have understood about chart patterns infect sir has told you about his favorite indicator OBV which we haven’t covered on our channels today you have understood about on balance volume and infact sir has told you about his favorite chart patterns so now you will be able to increase your trading accuracy
infact one thing I like a lot Mr. Kunal that you people one thing I like more that you people keep guiding with your personal experiences it is not just about conveying your own experience you people are conveying your own experience which you have learnt over the years the benefit of this is whatever I am telling you is not rocket science if you read books, you will get everything,
but see the benefit of telling you is that the mistakes I have made in last 20 years if I can tell you that don’t go here, it is dangerous and go there, you can get some success then I think my public duty will be fulfilled so my focus is that whatever I have experienced will be able to share that .