Price Action Trading Presentation

 

PRICE ACTION TRADING EXPERIENCE SHARING SESSION WITH VIVEK 27th Aug 2020

AGENDA

 

▪ PRICE ACTION  –  AN ART TO BE ON THE RIGHT SIDE ▪ MARKET STRUCTURE & AREAS OF INTEREST ▪ 3 PRICE ACTION TRADING SETUP ▪ SUPPLY / DEMAND ZONE REJECTION ▪ 1st & 2nd PULLBACK AFTER BREAKOUT ▪ 2 PM & 4 PM SETUP (CONTINUATION PATTERNS)

▪ TRADING IS A JOURNEY: PROTECTING CAPITAL TO BUILDING WEALTH ▪ PROTECTING CAPITAL: RISK MANAGEMENT & POSITION SIZING ▪ BUILDING WEALTH:

▪ TRADING ADVICE ▪ TAKE AWAYS -

SCALE & COMPOUND

FOR WORKING PROFESSIONALS PROFESSIONALS

HOW A NEW PERSON SHOULD START THE JOURNEY

 

SUPPLY/DEMAND ZONE REJECTIONS

 

1ST & 2ND PULLBACKS AFTER BREAKOUT

 

2 PM & 4 PM SETUP TREND STRENGTH

 

TRADING IS A JOURNEY C APITAL PROTECTING CAPIT AL TO BUILDING WEALTH 1. CRAWL: PRESERVE PRE SERVE CAPITAL  A) AVOID BIG LOSSES

2. WALK: SMALL PROFITS  A) SMALL LOSSES, LOSSES, SMALL PROFITS B) SMALL LOSSES, BIG PROFITS OCCASIONALL OCCASIONALLY Y

3. RUN: BIG PROFITS (CONSISTENTLY)  A) SMALL LOSSES, LOSSES, BIG PROFITS (MORE OFTEN) B) SMALL LOSSES, BIG PROFITS (CONSISTENTL (CONSISTENTLY) Y)

 

PROTECTING CAPIT CAPITAL AL RISK MANAGEMENT & POSITION SIZING

➢

Define % you will lose on each trade in trading & investing. Both required different level of planning

➢

In trading, set 1% risk rule for standard trades & 2% risk rule for high probability trades

➢

In investment, set 2-10% rule based on your expected return and/or trading setup

➢

Target minimum 1:2 risk reward reward.. More the better.

➢

Define how you will hedge your position for overnight risks (Use Call or Put protection)

➢ ➢

Define how will you lock profits (Via Options)

➢

 Above all, DIVERSIFY your capital & have a separate trading plan for each!

Use Stop Loss in every position. position. No mental SL please

 

DIVERSIFYING DIVERSIFYIN G CAPIT CA PITA AL

 

Capital 10,00,000

Trading

Investment

500,000

 @PA  @PAVLeader 

Intraday

Swing

200,000

Cash 100,000

500,000

300,000

F&O 100,000

Cash 100,000

Cash Portfolio 500,000

F&O

Stock 1

200,000

50,000

Stock 2 50,000

Stock…n 50,000 each

SPLIT YOUR INVESTMENT CAPITAL EQUALLY INTO 10 OR 20 STOCKS WITH EACH HAVING A FIXED % OF RISK. THE ABOVE SHARED IS JUST AN EXAMPLE & YOU CAN MODIFY IT TO SUIT YOUR CAPITAL, RISK APPETITE, STYLE OR CHOICE OF INSTRUMENTS OR SEGMENTS YOU WOULD LIKE TO TRADE. THIS MODEL IS VERY FLEXIBLE @PAVLEADER

 @PAVLeader   @P AVLeader 

CASE STUDY FOR A RETAIL RETAIL TRADER WITH 1 LAKH CAPITAL

 

• • •

Level: Beginner  Beginner - Tra Trade de ONL ONLY Y in Cash by trading in F&O especially Options Options) ) (control your greed to become rich overnight

• •

Risk to Reward: 1:2 Mode of trading: Intraday

Capital: 1L Max loss per trade: 1% (INR 1000)

CAPITAL CAPI TAL MAX RISK RISK BUY PR PRICE ICE STO STOP P LOSS LOSS STO STOP P LOSS POIN POINTS TS (C(C-D) D)

TARGET PRICE (2R)

QUANTITY ((B B/F) RESULT PROFIT/LOSS NET CAPITAL

POSITION 1

1 10 00000

1000

100

95

5

110

200

WIN

2000

102000

POSITION 2

1 10 02000

1020

500

480

20

540

51

LOSS

1020

100980

POSITION 3

10 1 00980

1010

1000

950

50

1100

20

LOSS

1010

99970

POSITION 4

99970

1000

2000

1900

100

2200

10

WIN

2000

101970

POSITION 5

101970

1020

300

270

30

360

34

WIN

2039

104010

Once you are comfortable with this model, then scale & compound to generate wealth

 

TRADING PLAN FOR WORKING PROFESSIONALS FIRST & FOREMOST FOCUS SHOULD BE ON YOUR JOB

➢ DEFINE THE TYPE OF TRADING (CASH, F&O, FOREX, COMMODITY): Define your instruments & type of trading you will do ➢ LIMIT YOUR TRADING INSTRUMENT LIST: Make a list of Stocks & Index (max 10)

➢ DEFINE & FINALIZE YOUR TRADING SETUP (DAILY/HOURLY): On-screen & Off-Screen Rules of engagement

➢ SET ALERTS ON MOBILE BASED ON KEY LEVELS: Trade based on alerts on your mobile

WHAT’S MY EDGE? As the list of trading stocks is smal smalll I understan understand d the behavior, behavior, key levels levels (supply/demand (supply/demand zones, recent swing swing high/low, previous day high/low) of these stocks by heart & have set the alerts in my mobile trading app high/low,

 

TAKE AWAY FROM THIS SESSION

•

Invest time & show comm commitme itment nt to lear learn n price action & volume analysis (refer the pinned tweet on my timeline if you need help). Read the books mentioned & as much as you can on this subject.

•

Do a lot of back-testing “manually” to cement your understanding. This bar by bar review will help build confidence

•

Build a trading plan (Trading setup, Timeframe, Instruments, Tools, Capital, Risk)

•

Trade what you see on chart chart,, NOT what you think will happen (avoid the noise from fellow traders, social media or any other form)

•• •

Have a fixed stock list as a beginner – Less than 10 Focus on risk first, first, rewards will follow Set realistic expectations, have patience, stay disciplined to follow your rules consistently through good & bad times!

 

THANK YOU

BLUEPRINT OF A TRADING PLAN

 

S.No.

1

2

3

4

METHODOLOGY

(A)

RISK MANAGEMENT

(B)

EMOTIONAL EMOTIO NAL BALANCE

(C)

Choose your trading system/setup: system/setup: Trend following Counter Coun ter trend Range bound Mean reversion Breakouts / Patterns

Define your total trading capital capital (1 Lakh, 5 Lakhs, 10 Lakhs or more)

Choose the the tools you need: Moving Averages

Define your risk/max loss per trade (should NOT NOT exceed 1% per trade &

Define a process to do post mortem of failed trades. You need to

Volume Trend Lines Patterns

do not take more than 5 at a time)

consistently review & improve your style/ methodology

Choose your time time frame Monthly, Weekly, Daily – For larger trend & context

Based on the instrument chosen define the quantity quantity (position size per trade)

Hourly, 15M, 5M – 5M – To time your entries

 Adjust your max risk/loss risk/loss as per SL

Start noticing your your emotions before, before, during or after you close a trade. This is important to track the reason why you entered a trade & why you exited?

Choose the instruments you will trade (Index or stocks). Back test your ideas or rules & finalize a limited number of instruments to trade

Maintain a trading journal where where you track “all your trades”. This is a must DO task.

@PAVLeader 

level but don’t change your SL Define how will you you use your profits? profits? Plan to take away a % of profits regularly

NEVER take revenge revenge trades after you you make big losses. The most important thing to recover after a big loss is self-confidence & NOT money

@PAVLeader 

5

Define entry & exits (SL, Trailing SL & targets)

IF YOU CAN MANAGE YOUR RISK WELL, YOUR PROFITS WILL BE TAKEN CARE C ARE AUTOMATICALLY. AUTOMATICALLY. SLs are MUST for every trade.

Pursue your hobbies, spend spend time with family,, friends or do things which family which makes you emotionally strong

TOOLS (D)

If you are a full time trader trader & you trade for a living, living, you need to have the following tools tools : 1. Stable Stable laptop laptop or or desktop desktop at at home 2. Robu Robust st interne internett (primary (primary)) & a backup internet link (secondary) 3. A mobil mobile e phone phone (as a backup) with internet & trading app 4. Hav Have e multip multiple le scre screens ens attached to your laptop/desktop if you do multiple time frame trading 5. Phon Phone e number number of your your broker  broker  6. Robust Robust power power back backup up to to cover you from power outages for 6-7 hours 7. Ab Abov ove e all all – SILENCE to have 100% FOCUS. Stay away from social media during trading time!

@PAVLeader 

   

PULL PU LLBA BACKS CKS VS. REVER REVERSALS SALS Reversals are nothing but failed pullbacks. Both have different characteristics characteristics & it is vital to know the difference clearly. People often get confused between these 2 so I am sharing my experience on these. Hope this will help you understand this subject better. Happy Learning!

Fac t o r

Pu l l b ac k / Ret r ac em en t

Rev er s al s

Volume

Volume may reduce because it is only for profit booking by retail

Volume may increase because it consists of Institutional selling (large block trades)

# of candles Candlesticks Money Flow Open Interest

Best pullbacks are between 3-10 candles Body size/ spread may get reduced

Takes more than 10 candles Body size/ spread may get increase

Buying interest during decline Very little or no buying interest  @PAVL  @P AVLeader  eader  Reduces Increases

Pivot

Doesn’t cross & close recent pivot

Will cross & close recent pivot

Fibonacci levels

Can retrace from 38.2% to 61.8%

Can go beyond 61.8% levels

Doesn’t break the trend line

Breaks the trend line

 After fresh breakout or new trend starts

Breakout or new trend fails with all or some symptoms above

Trend li ne Best time to trade

 @PAVL  @P AVLeader  eader