Wednesday, September 23, 2015

Why do we fail making money in stock markets?

#why do we fail?
These days there are many indicators in stock market and not all of them works. If you ask me, the indicators fail most of the time. This is because most the indicators are made with price, volume and time. These are mechanical factors and can’t be accurate every time. Predictions using these alone may fail most times. With MACD, RSI and stochastics, many investors find the future prices of the stock or index but fail to be more practical. If you are procrastinating or failing badly, I suggest you to get my e-book recently published on amazon. Why do we fail??

But technical analysis should be used as an additional indicator and not as a sole indicator. People real buying and selling acts as the true indicator, which may not be possible to chart as an indicator. It is good to stick with the basics because it always works. Many people become over smart with the markets and lose their money. Be more practical and think about it, somewhere in the apartments you are having a laptop and you predict the entire markets??? How false is that??  How fake is that?? And you tell the other stock traders and advise them?? Make your own path, it is good to take inspiration but be unique and be confident of your style.

All the theories work to some extend but it’s not always right. Individual buying of stocks and selling of stocks gives us a trend but it may or may not be right all the time. Someone advertises in the newspaper or YouTube ads or through Sms that he can bring more money to you. If he or she can bring more money to you, why not they can earn themselves. Because no one has made only profits in the stock market, and it requires more buying power.

So, what is the point of this article??

Don’t trust someone that he or she can make money for you. Don’t trust any indicator software, if you get a buy signal you are not always right. Learn à Analyze àrepeat, you will get an idea on stock markets. Don’t complicate things, because it is already simple things that work faster and quicker, deliver your results. In technical analysis, you must know what trending pattern is, what bearish pattern is.

Of all the methods in technical analysis, some of them which found to be working are
1.       Open range break-out technique (Toby Crabel)
2.       Gann square of nine
3.       Turtle trading using 5 days instead of 20 days
4.       Sticky charts ( search this book on amazon)

The ratio of success is above 50% and it depends on the market conditions, person’s individual luck also plays its role here.

When it comes to fundamental analysis, we look at the P/E ratio and we look at the quarter results. Is the company having more debts??  If it is a fundamentally failing stock but it is in the hands of an institutional investor, it is going to be at high price soon or later. So, when you look for fundamentally strong stocks. It is advisable to look at the entire market scenario and the individual technical analysis of the stock. One way to earn easy money from stock market is to write a book on “How to trade on stock market?” or sell it on click bank. Understand that stock market is not for everyone, it is not profitable always. One in every ten people, has made huge losses in stock market. Even the cleverest person at stock market gambles with one trade making losses. It is not always losses, but the overall gain is what many want!

Thursday, September 3, 2015

Modified SAR technique

This is an Amibroker formula which I use with my trading everyday. Many people use the normal SAR formula or the EMA of past five days. But the accuracy is greater with the formula that I provide here.

_SECTION_BEGIN("Modified Sar formula");
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g,Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorDefault ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );

feb =(LLV(Low,5)*0.764)+(Ref(Low,-1)*0.236);
feb2 =(feb*0.764)+(Low*0.236);
feb1 = MA(feb2,5);
feb10 =MA(feb2,10);
Hig = EMA(High,5);
Lo  = EMA(Low,5);

Plot(feb1,"",colorBlue,512 +styleThick );

//Plot(Hig,"",colorBlue,512 +styleThick + styleDashed);
//Plot(Lo,"",colorRed,512 +styleThick + styleDashed);
Buy = Cross(High,feb1) AND MA(V,20)>500000;
Sell =Cross(feb1,Low)AND MA(V,20)>500000;
ExB =Buy;
ExS = Sell;
ExB_status = WriteIf( ExB, "Buy", " " );
ExS_status = WriteIf( ExS, "Sell", " " );
ExB_Color = IIf( ExB, colorDarkGreen , colorWhite );
ExS_Color = IIf( ExS, colorRed, colorWhite );
Filter = ExB OR ExS;
AddColumn( C, "close,", 1.2, IIf( C > Ref( C, -1 ), colorDarkGreen, colorRed ) );
AddTextColumn( ExB_status, "Buy", 1, colorWhite, ExB_color );
AddTextColumn( ExS_status, "Sell", 1, colorWhite, ExS_color );
GfxSetOverlayMode( mode = 0 );
GfxSelectPen( colorOrange, 2 );
GfxSelectSolidBrush( colorBlack );
GfxRoundRect(5,20, 250,63, 16, 20 );
GfxSelectFont( "Arial",12, 700, False );
GfxSetTextColor( colorPaleGreen );

GfxSetTextColor( colorBlue );
GfxTextOut(WriteIf(feb1, "MY-SAR:  "+(feb1),""), 8 ,25 );

GfxSetTextColor( colorRed );


How to calculate in excel:

Step1 : calculate the lowest value of value for past 5 days  and multiply with 0.764Step2 : Multiply the previous low price with 0.236 Step3: add the both numbers

when the close price is lesser than modified sar value , it is bearish and its time to sell your positions. when the close price is above the modified sar value , it is bullish and its time to buy. Do only when the cross-over occurs and not at other times.

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