Tags - Candlesticks Trading Basics Blog Amibroker Posts

Basic components of a trading system from automated trading perspective

We keep hearing lot of jargons like automated system, semi-automated system, manual trading system and algorithmic trading. At the very high level there are 6 components involved in any trading system and each one in turn has many sub components. Some of the features might cut across the components.

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What happened to Regional Stock Exchanges in India?

During 1990s majority of the trading was happening in Regional Stock Exchanges, but now hardly any trading happens here and most of the trading have moved to major national exchanges like BSE and NSE. Regional Stock Exchanges story is not a happy ending one and now they are forced to shut shop due to their inability of meeting the requirements set by SEBI to be in business.

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Sectorial Indices in Indian stock market and how I use them for my daily scanning

Stock market usually represent the whole market and sometimes you might need to know how a particular sector or group of stocks are performing. This is when an Index of stocks based on a sector is created and you can track this index to understand the behaviour of the sector it represents.

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Revision of market lot of NIFTY and NIFTYMCAP50 by exchanges effective Oct31

Effective 31st Oct, 2014 market lot of NIFTY derivative contract would be reduced to 25 from 50 and market lot of NIFTYMCAP50 derivative contract would be reduced to 75 from 150

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How to select stocks for day trading or short term swing trading?

Selection of right kind of stocks is very important to be successful in trading. As day traders and swing traders look for short term movement they need to look for stocks that are very liquid and has enough volatility

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What is Quantitative Analysis in trading or Quantitative Trading?

Quantitative Analysis is application of mathematical models and statistical methods on financial data and this data can be both static and real time. Quantitative Analysis in trading is mainly used for identifying trading opportunities and risk management. You make use of computer simulations to do analysis, backtesting and validation.

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What is Quantopian?

Quantopian is an algorithmic trading platform where you can develop trading algorithms using Python language and then back test them. The whole application runs on a browser and you don’t need any installation.The whole application is cloud based and by default Quantopian provide 12 years of stock data (only US stocks) which can be used for back-testing.

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Four main advantages of a mechanical trading system

Mechanical trading system is catching up and we have lot of traders who rely on this for day to day trading. This article deals with 4 main pros of using a mechanical trading system

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Day Trading Pros and Cons

Day trading is a complex business until you get hang of it, but once you master day trading it can be very rewarding. There are lot of advantages in making day trading as a full time profession and at same time there are lot of disadvantages in day trading business. This article deals with some of the pros and cons of day trading.

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What is day trading and how to day trade?

Complete guide to day trading. Contains information on day trading trading patterns, day trading pros and cons, day trading strategies, day trading plan, stock selection criteria, money and risk management and other resources to help a day trader.

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How to select a broker for opening an online trading account in India?

Whether you are a day trader or a swing trader or a position trader or an investor one thing that is required is a trading account with a good online stock brokerage firm. In India you have lot of brokerages that offer online trading account and this articles looks into 10 important factors that needs to be evaluated before opening an online trading account

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What is Bracket Order and how to use it for day trading?

If you are a part time day trader and finding it difficult to manage your open positions or if you have multiple positions open intraday then start using Bracket Orders to manage your trades more efficiently with less time. This article explains what is bracket order and how to use it for efficient trade execution

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What is India VIX and how it is calculated?

India VIX is a volatility index modeled in line with CBOE VIX which indicates the near term implied volatility of the index. India VIX is calculated using out of the money option contracts of Nifty

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TRIN or Arms Index a stock market technical indicator for short term trading

TRIN or Arms Index is a market breadth technical indicator used by short term traders and used to identify overbought and oversold areas.TRIN or Arms Index also uses the associated volume for calculation.

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Basic components of stock market trading

Even though the actual actions involved in trading is simple, i.e buy or sell a stock, the processes involved in deciding these actions are not simple and especially the one related to the trader himself - psychology

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Doji candlestick chart pattern formation

Doji candlestick chart pattern is formed when opening and closing price are same or very near to each other. Doji points towards indecision among traders in the market and points towards a scenario where both buyers and sellers are in equal strength. If the doji has longer upper and lower shadows then its called long legged doji

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Hammer candlestick chart pattern formation

Hammer candlestick chart formation is formed after an extended down move and usually its a bullish reversal sign. It has a small body with long lower shadow

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Hanging man candlestick chart pattern formation

Hanging man candlestick chart formation is formed after an extended up-move and usually a bearish reversal sign. It has a small body with long lower shadow

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Shooting Star candlestick chart pattern formation

Shooting Star candlestick chart pattern formation is a bearish reversal pattern formed after an extended upmove. If shooting star with gap up opening makes it a stronger signal

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Inverted Hammer candlestick chart pattern formation

Inverted Hammer candlestick chart pattern formation is a bullish reversal pattern formed after an extended down move. The significance of this formation increases if inverted hammer happens near congestion areas like support, moving averages etc

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Long bearish candlestick pattern formation and its variations

Long bearish candlestick pattern is one of the most bearish formation in candlestick analysis if it occurs after an extended up move or during breakouts.It’s easy to locate in any charts and always give a clue on current market sentiment

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What is Japanese candlestick chart patterns and analysis?

Japanese candlestick charting and analysis is almost 4 century old concept and it was originally used by Japanese rice traders.Candlestick chart patterns help a trader to understand the psychology behind the market moves. This has become one very important technical analysis tool for price action trading

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Long green candlestick chart pattern formation

Long green candlestick chart pattern formation is one of the easiest to recognize and it’s importance increases if it occurs after an extended downturn or during breakouts or near support areas.It’s easy to locate in any charts and always give a clue on current market sentiment

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Spinning Top candlestick chart pattern formation

Spinning Top candlestick chart formation points towards indecision among traders in the market and points towards a scenario where both buyers and sellers are in equal strength. These patterns need to be formed after an extended move in either direction and usually points towards market taking a breather or current trend weakening

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Gravestone Doji candlestick chart pattern formation

Gravestone doji candlestick chart formation after extended moves usually points towards a trend reversal.But its always safer to assume that the market is in state of indecisiveness and wait for next day stock movement for confirmation

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Dragonfly doji candlestick chart pattern formation

Dragonfly doji candlestick pattern is formed after extended moves and usually points towards a possibility of trend reversal. It can be formed after either up or down move

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MCX Launches mini crude oil future contract for trading

MCX after getting approval from FMC has launched mini crude future contract with lot size of 10 barrels , which is 1/10th of the regular crude oil contract. This is a boon for small time speculators and SMEs who use this for hedging purpose as this will help then in better risk management.

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Two main mistakes made by a trader and how to overcome them

Trading is a challenging career and it looks very difficult to master until you start consistently making money. There are lot of challenges faced by a trader whether its day trading or swing trading or positional trading. These challenges are both internal to the trader and external like market forces. These challenges and pressure forces the trader to make several mistakes.

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What happened to Regional Stock Exchanges in India?

During 1990s majority of the trading was happening in Regional Stock Exchanges, but now hardly any trading happens here and most of the trading have moved to major national exchanges like BSE and NSE. Regional Stock Exchanges story is not a happy ending one and now they are forced to shut shop due to their inability of meeting the requirements set by SEBI to be in business.

Read complete article »


Sectorial Indices in Indian stock market and how I use them for my daily scanning

Stock market usually represent the whole market and sometimes you might need to know how a particular sector or group of stocks are performing. This is when an Index of stocks based on a sector is created and you can track this index to understand the behaviour of the sector it represents.

Read complete article »


NSE disaster recovery testing and impact on retail traders

NSE is planning to conduct disaster recovery drill and as part of this they would be conducting live trading sessions on Nov 05 and Nov 07 from their disaster recovery site itself. Some of the data providers are not equipped to deal with this as they don’t have a connectivity with the disaster site. Retail traders need to plan for this event in case their data provider doesn’t have connectivity to disaster site.

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Revision of market lot of NIFTY and NIFTYMCAP50 by exchanges effective Oct31

Effective 31st Oct, 2014 market lot of NIFTY derivative contract would be reduced to 25 from 50 and market lot of NIFTYMCAP50 derivative contract would be reduced to 75 from 150

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July 08 Indian Stock Market Correction

After some days of rally Indian stock market witnessed a broad based selling today and Nifty closed more than 2% down. Even some of the defensive stocks were not spared today. The opening gap formed on 2nd July and which was closed couple of days ago was retested and broken down today.

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June 17, 2014 - Bulls are back in Indian stock market

Closing hour rally on June 17 in Indian stock market took many traders by surprise.Nifty and many blue chip stocks rallied with good volume indicating professional buying. Now Nifty need to cross the next resistance levels of 7650 and 7700 to resume the uptrend.

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Friday the 13th Indian stock market correction

On June 13, 2014 Indian stock market went into correction mode. 2 days prior to this there were warning signs pointing towards correction and a trader who could spot this would have capitalized this down move. This article highlights some of the signs that a trader could have used to position himself to profit from the down move.

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Indian Stock Market update for traders:Jun 02 to Jun 06, 2014

Bullish reversal hammer candlestick chart formation that got formed on Friday proved to be a genuine pattern and this week bullish reversal did take place. Major Indices closed at their life time highs on regular basis this week. Even volume picked up during later part of the weak indicating that bulls are in complete control.

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Indian Stock Market update for traders:May 26 to May 30, 2014

Indian stock market experienced profit booking this week. Crucial levels of 7350, 7300 and 7250 were broken and Nifty closed below these level. Even though 7200 level was broken intraday Nifty recovered and closed above 7200 level and formed Hammer candlestick formation with good volumes and this increased the probability of bullish reversal next week.

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Indian Stock Market update for traders:May 19 to May 23, 2014

Unlike last week volatility in the Indian stock market came down considerably. After taking a breather during initial part of the weak, Nifty made a decisive move on Friday closing above 7350 level for the first time. During this week 7250 level acted as good support level for the market.

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Indian Stock Market update for traders:May 12 to May 16, 2014

The week started with a rally on the back of expectation of NDA coming to power with absolute majority. Then on results day market made high of 7563 and “Buy on rumor and sell on news” trading strategy started playing out and profit booking started coming in at higher levels. Expect market to be dull and volatility to drop considerably next week

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Devils advocate - Trading strategies for May 16 2014 Lok Sabha election results

Even if last 2 times market has moved significantly on election results day, doesn't mean that it should happen again. Even if market moves in traders favor but not significantly, it might be loss making owing to high option premiums. Hope traders have heard this saying “ Buy on rumor and sell on news”. Exit poll is not always accurate, use it as one of the input and not the only input for trading.

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Indian Stock Market update for traders:May 05 to May 09, 2014

After lackluster week Indian stock market went up more than 3% on Friday with great volume. The trading range of 6650 and 6860 which we were mentioning has been tested in a single day. Looks like market is factoring in NDA coming to power and traders can expect very volatile market next week. Options are expensive indicating high move expectation for next week. Initially market will react to exit poll results and then to the actual results on May 16.

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Review of Indian stock brokers by a trader

Review of some of the online stock brokers in India like ICICIDirect.com, Sharekhan.com, Angelbroking.com and Zerodha.com by a trader who used their service for trading and investing. This blog article is just a personal opinion and not endorsement of any brokerage firm in India. Also recommendation services of these online stock brokers for trading and investing is not part of this review

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Indian Stock Market update for traders:Apr 28 to May 02, 2014

Indian Stock Market displayed weakness throughout the week. 6650 to 6665 zone proving to be good support for market and any breakdown below this level would make market bearish. Trading area around 6860 would be resistance zone on upside . Looks like market is trying to trade in a range before Indian assembly election results would be out on May 16.

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Indian Stock Market update for traders:Apr 21 to Apr 25, 2014

Indian stock market made new high during initial part of the week.During post lunch session of trading on Friday there was a sell off with decent volumes. Bulls should look out for break out of levels 6860 with decent volume and at lower level 6665 should provide some support.

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Indian Stock Market update for traders:Apr 15 to Apr 17, 2014

This week critical support of 6700 was broken down but Nifty took support at 6665 level and bounced from there. Even though there was violation of crucial levels and then a rally the volume was below average for the week. For next week 6665 and 6820 are crucial levels to watch out for in Nifty

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Indian Stock Market update for traders:Apr 07 to Apr 11, 2014

Once 6700 resistance was broken there was an amazing one day rally, but after that no follow up buying seen. 6820 would prove to be crucial resistance and 6700 will provide support next week. Any violation and close beyond these levels should be taken seriously by short term traders

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Indian Stock Market update for traders:Mar 31 to Apr 04, 2014

During initial part of the week Indian stock market indices made new high but showed signs of tiring by forming Hanging man candlestick chart pattern two consecutive days. Later on after making new high market corrected on Thursday and also Friday was a correction day. Need to see whether this correction would continue next week also

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Indian Stock Market update for traders:Mar 25 to Mar 28 , 2014

Unlike previous 2 weeks this week Indian stock market broke out of the trading range and made lifetime high almost on daily basis. Bulls in complete control and also volume was good throughout the week.

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Indian Stock Market update for traders-Mar 18 to Mar 21,2014

Like last week even this week Indian stock market was range bound. After making a life time high during start of the week, the momentum was not sustained and indices traded in tight range throughout the week. Need to watch out for high volume tight range days next week, which usually indicates distribution

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Indian Stock Market update for traders:Mar 10 to Mar 14 , 2014

This article contains updates of Indian stock market from Mar 10 to Mar 14,2014. Indian stock market started the week by making new highs, but later it was not able to sustain momentum. For the whole week market was moving sideways with average volume indicating market is taking a breather. Selling is coming in near highs and buying near lows. Need to wait for decisive move in either direction next week

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Indian Stock Market update for traders:Mar 03 to Mar 07 , 2014

This article contains updates of Indian stock market from Mar 03 to Mar 07,2014. Indian stock market started the week with a weak note in line with global clues.But later Indian market went up with significant volumes and both Nifty and Sensex made life time high. Short term traders who were long made good money this week. Midacaps and small caps stocks are no where near their highs

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Indian Stock Market update for traders:Feb 24 to Feb 28 , 2014

This article contains updates of Indian stock market from Feb 24 to Feb 28,2014. Market moved in favour of bulls and last week’s bullish sentiment continued this week also. The best part was the Friday’s bullish candle formation closed above the significant resistance of the gap down window formed on Jan 27

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Indian Stock Market update for traders:Feb 17 to Feb 21,2014

This article contains updates of Indian stock market from Feb 17 to Feb 24,2014. This week bulls consolidated their position and there were some days of solid up move. The green bullish candles were formed with less volume and this is one concern for bulls

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Indian Stock Market update for traders:Feb 10 to Feb 14,2014

This article contains updates of Indian stock market from Feb 07 to Feb 14,2014. Market didn't breakout in either direction during this week and green bullish candle formed on Feb 04 is providing good support. Traders need to watch out for Feb 04 low area next week and see whether this would act as good support area

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Indian Stock Market update for traders:Feb 03 to Feb 07,2014

This article contains updates of Indian stock market from Feb 03 to Feb 07,2014. Market opened weak during the initial part of the week and then tested 200 day moving average three times and bounced back from there. Now market is trying to cross the top of bearish red candle formed during first day of the week which would act as resistance and low of the week should provide good support during next week

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Indian Stock Market update for traders:Jan 21 to Jan 31,2014

This article contains update of market action of Indian stock market from Jan 21 to Jan 31,2014. It focuses mainly on technical analysis for day traders and short term swing traders. Also whenever important candlestick pattern formation occurs it would be highlighted with a pointer to relevant resources for new traders

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What would be our focus area when we update this blog?

We will consolidate the daily updates that we would have sent throughout the day and then analyze the data.

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