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The content of this course “Smart Trader Classroom Program” is developed and is copyright , in its entirety by
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Traders
For clear and enhanced learning and understanding

 Listen patiently during workshop

 Please fell free to ask question

 The workshop is for you

 Questions during discussions should be on current topic discussed

 Maintain classroom spirit

 We are a team learning to Trade

 During discussion sessions turn off your computer monitor

 Keep your cell phone on silence / vibrate mode

 To take urgent call step out of class with permission

Workshop Compliance Policy

Abide by the following rules

 Audio Recording : No audio recording is permitted during the workshop

 Video Recording : No video recording is permitted during the workshop

Prohibited in the classroom

 Use of personnel note book , i-pad , electronic device/diaries is not allowed

 No downloads or restricted websites is permitted during the workshop
 Switching on / off of your computers during workshop is your responsibility

Trading policy
 Participants are allowed to trade their own account with personnel EmTrade Login only
 Instructor will lay down rules for enhanced learning experience. Follow them.
 Class trading g rules during Live Trading Labs in personnel account will be clearly defined
Trade Element
Long Entry : Bullish – Upward Bias Profits : When Prices Are Rising

Target

Entry : Buy or Long

Trade Element
Short Entry : Bearish – Downward Bias Entry : Short Sell

 Short Sell : Cash Market Only Intra Day

 Short Sell : Futures No Restrictions

 Short Sell : Only Liquid Stocks

 Instructor Will Explain

Profits : When Prices Are Falling

Target
Trade Element
Reward To Risk Ratio Long Trade Short Trade

 Reward = Rs/- 25 Stop Loss @ 105.00

 Risk = Rs/- 5 Target Sell @ 125.00
 Reward : Risk ratio = 25/5 Reward = Rs/- 25.00
=5 Sell Short @ 100.00
i:e 5:1 RR / “5 R” Trade

Buy : Long @ 100.00

Risk = Rs/- 5.00
Stop Loss @ 95.00 Target Buy @ 75.00
Reward = Rs/- 25.00
Trade Element
Long Trade Short Trade
Trade Element
Long & Short Reward : Risk Tool in EmTrade with Settings

Long Reward :Risk Short Reward :Risk

User Defined Settings
EmTrade : Key Components
The Five Key Components
Market Watch
Charts
Drawing Tools
Indicators & Oscillators
Strategy EM
EmTrade : Login

(1)
(1)
(2)
(3)

(4)
EmTrade : Login
Day 1 we understand : Market Watch and Charts

Market Watch Charts

Open Open
Save Intra Day : Minutes Charts
Load End Of Day : EOD Charts
Predefined : Sector Indices Drawing Tools
Add Scrip Add Drawing Tools
Remove Scrip Remove Drawing Tool
Customizing Market Watch Customize Drawing Tool Settings

As class progresses we take all the feature

EmTrade : Market Watch

Instructor will explain

EmTrade : Market Watch

We selected Nifty (50)

All Nifty (50) stocks visible
EmTrade : Market Watch

User can keep the toolbar items as per his trading requirement
EmTrade : Market Watch

Trader can check or uncheck to

personalize the market watch items
EmTrade : Market Watch : Settings

Trader can customize market watch by clicking on “Settings”.

EmTrade : Market Watch : Settings

Market Watch Customization

 Background Color

 Fore Color

 Font : Style & Size

 Grid View

 Buy Order Color

 Sell Order Color

EmTrade : Market Watch : Settings
Black Background White Background
EmTrade : Market Watch : Add Scrip

Type the name of your scrip and select from the “Drop
Down”.
Economic Reports
Economic Reports
Significance Of Economic Reports

 Strength & weakness of Indian Economy

 Cost of doing business or

 Is Indian economy growing or declining

 Signs of robust growth in Indian Economy

 Impact analysis of economic reports

 As per your style of trading

 Trading opportunities around report release

Economic Reports
Key Reports : Economy and Business Environment

 G . D. P ( Gross Domestic Product )

 Interest Rates

 I . I . P ( Index of Industrial Production )

 Inflation

 Exchange Rate USD / INR ( Rupee )

 CAD (Current Account Deficit )

 Sectorial data release ( cement , steel etc.)

Economic Reports
Economic Reports
Gross Domestic Product (GDP)

 Money value of everything we produce within the country

 Measures size of economy

 Total market value of all final goods & services produced

 GDP = Consumption + Investment +

(Govt spending +Exports – Imports)
Economic Reports
Interest Rate
 Decision making authority –Reserve Bank of India (RBI)

 RBI quarterly monetary policy

 Decides on increase - decrease or status quo

 Cost of doing business gets affected

 Demand for goods and services gets affected

 Expect market volatility during report release

Economic Reports
Index of Industrial Production

 Details growth of specific sectors – Mining , Manufacturing , Utilities

 Short term changes are measured

 Measures changes in the volume of production of a basket of industrial products

 Compiled and published by Central Statistical Organization (C.S.O)

Economic Reports
Inflation

 W.P.I (Whole Sale Price Index)

 C.P.I (Consumer Price Index)

 W.P.I index reflects average price changes of

goods that are bought and sold in whole sale market

 C.P.I actual inflation that affects the end user

Economic Reports
Exchange Rate

 USD /INR

 Price of foreign currency in terms of domestic currency

 Amount of domestic currency required to buy one unit

of foreign currency

 Data available in graphical form on EmTrader

Economic Reports
Rupee Fluctuations
Rupee value keeps fluctuating. This change in rupee value is :

 Rupee appreciation

 Rupee depreciation

Rupee Appreciation (USD/INR) Rupee Depreciation (USD/INR)

Economic Reports
Exchange Rate

Effect on If Rupee Depreciates If Rupee Appreciates

(e.g. when USD/INR moves from 60 –65 (Rs/-) (e.g. when USD/INR moves from 65 –60 (Rs/-)

Imports becomes costly as for each USD we Imports becomes cheaper as for each USD we
have to pay Rs 5 more. Imports becomes have to pay Rs 5 less . Imports becomes
Importers
costly. cheaper.

Exporters will have higher revenue. Exporters will earn less revenue.
Exporters For exports of each dollar, the exporter will For exports of each dollar, the exporter will
get Rs 5 higher. Exporters earn more. get Rs 5 less. Exporters earn less.

Oil companies (both up stream and

Industry Sectors Information Technology , Pharma and export downstream),jewelers (Gold companies
oriented companies
Economic Reports
Current Account Deficit (CAD)

 When imports are higher than exports

 When a country imports more, it need to pay in foreign currency

 This causes a country's currency to depreciate as demand of its

currency decreases

 Reverse holds true in case of current account surplus

Economic Reports
Date of Data Release
A Trader / Investor should maintain a release calendar

Report Agency Date Time

G.D.P
Interest Rate
IIP
Inflation
Exchange Rate
CAD

Grads trading with Emkay Global will have access to the Economic Research Reports
Economic Reports
Economic Reports & You
Report Style of Trading
G.D.P Long Term Investor

Interest Rate Short – Medium – Long Term

IIP Short Term

Inflation Short Term

USD / INR All

CAD Long Term

Economic Reports
Response Lag
The time lag between when a corrective action is taken in
the economy and when any changes coming from the
action are noticed or felt. Corrective actions may be taken
by the government directly, or more commonly by central
bank or other mandated monetary authorities.

Also known as "impact lag", or the time it takes for the

impact of corrective action to be felt by the economy.
BREAKING DOWN 'Response Lag'
If the economy is deemed to be running too hot or too
cold, or a sudden shock occurs, there are three time lags
to consider before the economy can properly adjust. The
response lag occurs after the recognition lag (how long
before the shock or shift is noticed) and
the implementation lag (how long before corrective action
is first taken).

Source : Investopedia http://www.investopedia.com/terms/r/response_lag.asp

Economic Reports
Economic Data Release : Positive or Negative has a :-

 “Response Lag Time “

 Should be seen in context of Trend

 Immediate opinion should not be formed and traded

 As you gain experience as a Trader interpretation will be clear

 Study last 12 data release and see the immediate impact

 Study last 12 data release and see the post data release price movement
Economic Reports
Data Release

 Day traders and overnight traders should stay away from the markets around the time of data release

 As you gain experience and understanding you will equip yourself to take advantage of data release
Technical Analysis
 Method of evaluating exchange listed securities by studying the past price movement.

 Technical Analysis is about probabilities and not absolutes.

 Uses price charts and other tools to identify trends and patterns.

 Forecasts demand and supply

 History repeats itself

 Market discounts everything

 Tarde decisions based on price charts

 Basic component of technical analysis is price chart

Charts
Charts

 Traders Decision Making Tool

 Definite Shape To Prices

SELL  Representation & Decision Making

BUY  Graphical Form

 Diagnostic in Nature
Charts
Price Charts exhibits four key elements: Actionable decision making

 Support : A price area where declining prices stop and moves upwards

 Resistance : A price area where rising prices stop and moves downwards

 Trends : Price action – Rising – Falling – Sideways

 Human Emotions : Fear & Greed

As a SMART TRADER you will understand to analyze all the four on a price chart

As a SMART TRADER you will understand to analyze all the four on a price chart
Basic Price Charts
Charts contain four price fields

 O = Open

 H = High

 L = Low

 C = Close

Commonly referred to as “OHLC”

Basic Price Charts
Price charts are categorized on the basis of

 Time

 Price Styles

Time Price Styles

 Line Chart

 Bar Chart

 Candle Chart
Basic Price Charts
On Basis of “Time”

Intra Day Charts or End of Day Charts (EOD)

Prices are represented in form of

 Minutes Daily – 1 day of OHLC
 Hours Weekly – 1 week of OHLC
Monthly – 1 month of OHLC
Minutes Chart Hourly Charts
Quarterly – 1 quarter of OHLC
5 Min 60 Min
Half Yearly – 6 months of OHLC
10 Min 120 Min
Yearly – 1 year of OHLC
15 Min 240 Min
30 Min User Defined
User Defined
Basic Price Charts

High Close
Open Low
Types of Charts
Types of Charts – Price Styles

 Line Chart : Represents only closing price

 Bar Chart : Represents open , high , low , close

 Candle Chart : Represents open , high , low , close

Difference between Bar chart and Candle chart is

visual representation of price in terms of shape
Types of Charts
Commonly used price charts

Line Chart Bar Chart Candle Chart

High High

Close Close
Close

Open
Open

Low Low

Smoothens Price OHLC Visible Visual Representation

Types of Charts
Commonly used price charts

Line Chart Bar Chart Candle Chart

Smoothens Price OHLC Visible Visual Representation

EmTrader : Practical's
30 minutes Instructor will demonstrate the same All participants practices the same
Risk Management

Cut your “Loss”

Let your “Profit's” run
Risk Management
Analyse
Exposures
Risk Management
 Trading with protection in every trade

 Cut your losses as per your plan

 Always use a stop loss in every trade

 Stop loss is not a loss

 Stop loss is the cost of conducting “Trading Business”

Risk Management

Stop loss can be used in five ways

Fixed Rs/- amount e:g Rs/- 5,000 per trade

Percentage of traded price
Volatility based stop loss
Based on support & resistance band
Based on fibonacci studies
Based on moving averages
Based on Average True Range (ATR)
Candle Studies
Candle stick charts were introduced to the world by a Japanese trader named Munihesa Homma.Its
origin dates back to 1700,s.Munihesa Homma was a rice trader in Osaka rice futures. He developed a
method to analyze price of rice contract now commonly known as Candlestick Charting.

Candlestick gives visual representation to price in terms of color and shape. Candle charts are
preferred by trades over other chart style.
Candle Studies
Candle Construction High

Close

Open

Low
Candle Studies
Red Candle : Bearish Green Candle : Bullish

Open Close

Open
Close

Seller in control Buyers in control

Candle Studies
Three components of a Candle Body Wick Tail

Wick

Body

Tail
Candle Studies
Based on price movement Candle can be

Expanded Range Candle Narrow Range Candle

 Exhibits larger price movement  Smaller price movement

 Larger real body  Small real body

 Close to one ATR price movement

Candle Studies
Tail Signifies buying power Buyers pushed prices higher

Body color does not matter

Tail
Candle Studies
Wick Signifies selling pressure Sellers pushed prices lower

Wick

Body color does not matter

Candle Studies
Doji Small or no body Open and close identical or around same level
Doji means indecision Body color does not matter
Candle Studies
No Wick No Wick
Open = High Close = High
O
N
L
Y
Very Bearish R Very Bullish
E
A
L
B
O
D
Close = Low Open = Low
No Tail
Y No Tail
Bullish Candle
Bearish Candle
Candle - Tail
Candle - Wick
Candle Studies
High - 200

178 78 % Very Bullish

162 62 % Bullish

62 % Neutral

138
38 % Bearish

123
23 % Very Bearish
Low 100
Candle Studies
High - 200

178 78 % Very Bullish Aggressive Long

162 62 % Bullish Moderate Long

62 % Neutral Long & Short

138
38 % Bearish Moderate Short

123
23 % Very Bearish Aggresive Short
Low 100
Fib Retracement Candle Levels
High - 200

178 78 % Very Bullish Aggressive Long

T F D
O O A
O R Y 162 62 % Bullish Moderate Long
L T
R
A
D 62 % Neutral Long & Short
E
R 138
38 % Bearish Moderate Short

123
23 % Very Bearish Aggresive Short
Low 100
Fib Retracement Candle Levels
High - 200

178 78 % Very Bullish Aggressive Long

Trade Initiation
162 62 % Bullish Moderate Long
Trend
+
ATR 62 % Neutral Long & Short
+
Fib.
138
38 % Bearish Moderate Short

123
23 % Very Bearish Aggresive Short
Low 100
Candle Studies

78 Very Bullish

62 Bullish

38

Bearish

23 Very Bearish
Candle Studies

78

62

38

23
Today we learned

Detailed practical understanding of :

Trading Mind : Psychology
Trading Terminology
EmTrade – Part 1
Economic Reports
Charts : Tools For Trading
Risk Management – Part 1
Candle Stick – Part 1
Accounts Opening Documentation
Q&A

Next 30 minutes on todays understanding

Practical Hand's On Learning
Trading Styles
Support & Resistance
Trends
Impulse
Corrective
Candle Studies Advance
EmTrade Part 2
Actionable Strategy
Trading Styles

Selection of Trading Style is based on your financial needs & financial goals

Cash Flow Wealth Creation

Short Term Long Term

Trading Styles

 Selecting the right style of trading is the key to long term success as a professional trader.

 Select a trading style that best suits your personality and stick to the trading style selected.

 Experience and understanding plays a critical role in selecting the right style of trading

 Accessibility to trading technology and corporate research are to be considered

Trading Styles

Trading Style Time Period Holding Period Asset Class

Intra Day Short Term Minutes , Hours Stocks / Futures

BTST /STBT Short Term One Trading Day Stocks / Futures

Swing Trading Days to 1 week Stocks / Futures / Options

Short Term

Positional Trading Long Term Months to 1 year Cash

Investment Long Term Years to Decade Cash

Trading Styles
Leverage : Short term traders should know the term and its pros and cons

Leverage is buying more with the same amount of capital. Leverage is a double edged sword

e:g . – If you have 1 lakh in your account. You can take position of 5 lakhs , that's you are leveraged 5 times

 Traders who are new to the stock markets should restrict use of leverage initially

 Experience and skill are key consideration in taking leverage in your trading

 As you become a seasoned trader and have comprehensive understanding of risk involved in leverage traders.You can
take advantage of the same.
Trading Styles
Leverage is a double edged sword

Style of Trading Cash Buying Power +1% -1%

Intra Day 100,000 10,00,000 (10 x) 10,000 (+) 10,000 (-)
Capital up by 10 % Capital down by 10 %

Swing 100,000 500,000 (5x) 5000 (+) 5000 (-)

 As you gain experience as a trader you can take leverage for short term style of trading

 Leverage should be avoided for positional trading and investment

Trading Styles
Day Trading  Positions are entered and exited on the same trading day

 Day trader does not hold position overnight

 Trades are closed using a profit target or a stop loss

 Trading intra day volatility

 Traders capture small price movement and build profits

 Requires constant monitoring

 Leverage can be employed

 Strong technical analysis skills required

 Knowledge of computers and expertise in EmTrade is must

Trading Styles
Trading Style Intra Day
Trade Holding Period Minutes to Hours
Overnight Holding Never carry positions
Financial Objective Cash Flow
Leverage Yes
Return Expectation 00.25 – 00.50 %
Suitability Full Time Screen Based Traders
Decision Making Chart 45 – 60 minutes
Trade Long / Short
Trade Initiation Chart 5 – 15 minutes
Trade Frequency 2 – 3 trades in a day
Trading Styles
Intra Day Trading : Trading several small price movement during the day

Short

Short

Long

Long
Long

Open : 9:155 Close : 3:30

Trading Styles
Swing Trading  Positions are entered and held overnight

 Trades can be both long and short

 Trades are closed using a profit target or a stop loss

 Trading an established trend on shorter time frame

 Does not requires constant monitoring

 Can Trade Futures and Options

Dn Swing : Short Trade
Up Swing : Long Trade
Trading Styles

Trading Style Swing

Trade Holding Period Day to 1 week
Overnight Holding Yes
Financial Objective Cash Flow
Leverage Yes
Return Expectation 01.00 – 05.00 %
Suitability Part Time Traders
Decision Making Chart Daily Chart
Trade Long / Short
Trade Initiation Chart 60 -120 minutes chart
Trade Frequency 2 – 3 trades in a week
Trading Styles
Up Swing : Long Trade Down Swing : Short Trade
Trading Styles
Positional Trading  Positions are entered and held for months to a year

 Trades are generally Buy / Long

 Fundamentals should be checked

 Trading an established trend on longer time frame

 Does not requires constant monitoring

 Should only trade in cash market

 Futures and Options can be used for hedging

 Short term price fluctuations are ignored

Trading Styles
Positional Trade : Longer Time Frame : Support @ Monthly Low Coromendal International Ltd. Emkay Global Research Report
Trading Styles

Trading Style Positional

Trade Holding Period Months to 1 year
Overnight Holding Yes : Can deploy hedging strategies
Financial Objective Wealth Creation
Leverage No
Return Expectation 05.00 – 25.00 %
Suitability All as is buy and hold
Decision Making Chart Weekly / Monthly
Trade Only Long
Trade Initiation Chart Weekly
Trade Frequency 2 – 3 trades in a month
Trading Styles

Styles of Trading Charts Time Frame

Intra Day Trade Minutes : Live Charts

BTST /STBT Trade 45 – 60 minutes – Intra Day Charts

Swing Trade 120 - Daily Charts

Positional Trade Weekly – Monthly Charts

Investment Monthly – Quarterly Charts

Should always consider Right time frame for :

Trade Decision Trade Initiation

Long / Short Entry – Exit - Target
Trading Styles
5 Minutes Chart 15 Minutes Chart 240 Minutes Chart

Daily Chart Monthly Chart

Trading Styles

Style of Trading & Expectations of Returns

Trading Style Return Expectation (%)
Intra Day Trade 00.25 - 00.50 %

BTST /STBT Trade 00.50 – 1.00 %

Swing Trade 1.00 – 5.00%

Positional Trade 5.00 – 25 %

Investment + 25.00 %
Trading Styles
Traders must take into account various factors when selecting a “Trading Style “.

The factors are :

 Capital requirement

 Time and effort devoted to trading

 Risk tolerance

 Time available during trading hours

 Time available during non trading hours

 Comfort with trading technology

 Trading for cash flow or wealth creation

 Complete understanding of various asset class

 Personality and temperament

Trading Styles
Support and Resistance
 Support : A price area where declining prices stop and moves upwards

 Resistance : A price area where rising prices stop and moves downwards

Support Resistance
Support and Resistance
 Support : A price area where declining prices stop and moves upwards
 Resistance : A price area where rising prices stop and moves downward

Support Resistance
Support and Resistance
 Support Band : Take the entire Candle which made the Low. This creates the Support Band

 Resistance Band : Take the entire Candle which made the High. This creates the Resistance Band

Support Resistance
Support and Resistance

Support Band Resistance Band

Support Band
 Support Band : Low formed with ERC Candle ERC = Expanded Range Candle
ERC = High & Low of the Candle is 60 % + of Period ATR
 Take 50% ERC Candle to mark “Support Band”

Support : ERC SupportResistance

: ERC
Support : ERC

100 %
50 %
Support Band
 Support Band : Low formed with ERC Candle ERC = Expanded Range Candle
ERC = High & Low of the Candle is 60 % + of Period ATR
 Take 50% ERC Candle to mark “Support Band”

Support : ERC SupportResistance

: ERC
Support : ERC

100 %
50 %

50%
Support Band
 Support Band : Low formed with NRC Candle NRC = Narrow Range Candle
NRC = High & Low of the Candle is below 60 % of Period ATR
 Take entire NRC Candle to mark “Support Band”

Support : NRC Support

Support
:Resistance
NRC
: ERC
Support : ERC

100 %
Support Band
 Support Band : Low formed with NRC Candle NRC = Narrow Range Candle
NRC = High & Low of the Candle is below 60 % of Period ATR
 Take entire ERC Candle to mark “Support Band”

Support : NRC Support

Support
:Resistance
NRC
: ERC
Support : ERC

100 %

100%
Support Band
Multiple Support Band : Which one to Trade Multiple Support Band : Which one to Trade
Resistance Band
Multiple Resistance Band : Which one to Trade Multiple `Resistance Band : Which one to Trade
Support and Resistance

Note the following with regard to “Support” & Resistance

 Role Reversal : Broken support becomes resistance

 Role Reversal : Broken resistance becomes support

 Traders Remorse

 Bull Trap

 Bear Trap
Resistance : Role Reversal
To be seen on higher time frame
 Role Reversal : Broken resistance acts as a support
 Weekly Charts
 Earlier a resistance when breached acts as a support
 Monthly Charts
 The resistance breached should be a prominent price high
 Quarterly Charts
 The resistance should be breached with high volume
Resistance : Role Reversal

Resistance

Support
Broken
Resistance : Role Reversal

Resistance Band

Support
Broken

Mark Resistance Band As Per ËRC Candle & NRC Candle

Resistance : Role Reversal
Daily Chart

Resistance Band

Support Band

RB Broken

Role Reversal
Support : Role Reversal
To be seen on higher time frame
 Role Reversal : Broken Support acts as a Resistance
 Weekly Charts
 Earlier a Support when breached acts as a Resistance
 Monthly Charts
 The Support breached should be a prominent price high
 Quarterly Charts
 The Support should be breached with high volume
Support : Role Reversal

Broken

Broken
Resistance

Support
Support : Role Reversal
Weekly Chart

Resistance Band

Support Band

SB Broken

Role Reversal
Support : Role Reversal
Bull Trap Bear Trap

Resistance Band

Support Band

Will revisit the discussion on Traps on Day 4 & 5 during Moving Averages and Oscillators discussions
EmTrade : Charts
Instructor will demonstrate EmTrade Charts

EmTrade : Charts Tool Bar

 Opening Charts

 Changing Time Frame

 Marking Support Band

RB SB
 Marking Resistance Band

 Charts Settings

 Tools (SB –RB Settings )

EmTrade : Charts
Right Click On Charts Extensive Chart & Tools Settings
EmTrade : Charts
Trends
A Trend Is Your Friend Till It Bends At The Very End
Trends
Trend decides the “Direction "prices are moving “Direction “ decides the Trade
BUY
SELL
Trends
Trend is the direction prices are moving and can be categorized as below :-

UP Trend

DOWN
TREND

SIDEWAYS
TREND
Trends
Professional trading is trading with the “Trend “. Trade Action

UP Trend BUY / LONG

DOWN SELL
TREND SHORT

SIDEWAYS LONG
TREND SHORT
Trends
Two key composition of Trend :-
 Direction : Up – Down - Sideways  Momentum : Velocity of the price movement in the” ”Trending” direction

MOMENTUM

MOMENTUM
Trends
Stages Of Trend Cycle
Consolidation and Accumulation. This price action is referred to as “Base Building”.
Stage 1 Post a strong decline prices trades sideways for an elongated time period.

Upward trend or mark up. Prices break on the upside of the consolidation band.
Stage 2 This is also referred to as expansion stage. Price break out on the upside and starts
an upward price movement.

Distribution or topping after a substantial upward price movement. Prices mark highs
Stage 3 and lows around the same price points and trade within a broader range. Short term
volatility is seen in this stage.

Post the sideways movement in stage 3 ,prices break on the downside of its broader
Stage 4 consolidation range. Prices break the lower end of the consolidation band and signals
a downtrend.

Consolidation – Uptrend – Distribution – Downtrend (Completes One Cycle)

Trends
Consolidation and Accumulation. This price action is referred to as “Base Building”.
Stage 1 Post a strong decline prices trades sideways for an elongated time period.
Trends
Upward trend or mark up. Prices break on the upside of the consolidation band.
Stage 2 This is also referred to as expansion stage. Price break out on the upside and starts
an upward price movement.
Trends
Distribution or topping after a substantial upward price movement. Prices mark highs
Stage 3 and lows around the same price points and trade within a broader range. Short term
volatility is seen in this stage.
Trends
Post the sideways movement in stage 3 ,prices break on the downside of its broader
Stage 4 consolidation range. Prices break the lower end of the consolidation band and signals
a downtrend.
Trends
Four Stages – Complete Cycle

Stage 3

Stage 2

Stage 4

Stage 1
Trends
Four Stages – Complete Cycle
Long & Stage 3
Short

Buy / Long Stage 2

Short Stage 4

Stage 1
Long &
Short
Trends
Four Stages – Complete Cycle

Stage 3

Stage 2 Stage 4

Stage 1
Trends
Stages of Trend should be seen in the time frame as per your trading style

Charts Time Frame Trading Style

Intra Day 60 Minutes Chart

BTST /STBT 120 Minutes Chart

Swing Daily Chart

Positional Weekly Chart

Trends

 Identifying the begining of an Uptrend

 Prices posts first higher high and takes out the previous high

 Prices exhibit a sequence of higher lows (HL) and higher high (HH)

 Demand is greater than supply and buyers are in control

Trends
UP Trend : Sequence of Higher Low's and Higher High's

Signals Uptrend
HH

HL
L
Trends
UP Trend : Sequence of Higher Low's and Higher High's

HH

H Signals Uptrend

L HL
Trends
Down Trend : Sequence of Lower High's and Lower Low's

H LH

LL
L

Signals Dn Trend
Trends Down Trend : Sequence of Lower High and Lower Low

H LH

L
LL

Signals Dn Trend
Trends
Two key components of Trends

Impulse The primary direction of price movement

 Uptrend – Rising Prices

 Downtrend – Falling Prices

Corrective The reactionary movement in price in the opposite direction of the primary trend

 Uptrend – Falling Prices

 Downtrend – Rising Prices

Trends
Impulse The primary direction of price movement Impulse in an Uptrend

In an uptrend rising prices are labelled as impulse

Price action in Impulse

Impulse
 Strength in price movement

 ERC expanded range candle (Green)

 One ATR price movement

 Breaks above immediate resistance levels

Momentum Expect Momentum – look for breakouts

Trends
Two key components of Trends
Impulse in an Uptrend
Impulse The primary direction of price movement

In an impulse rising prices are labelled as impulse

Price action in Impulse Impulse
 Strength in price movement

 ERC expanded range candle

 One ATR price movement

 Breaks above immediate resistance levels

Momentum Expect Momentum – look for breakouts

Trends
Impulse The primary direction of price movement Impulse in a Downtrend

In a downtrend the falling prices are labelled as impulse

Price action in Impulse

Impulse
 Strength in price movement

 ERC expanded range candle (Red)

 One ATR price movement

 Breaks above immediate support levels

Momentum Expect Momentum – look for breakouts

Trends
Impulse The primary direction of price movement Impulse in a Downtrend

In a downtrend the falling prices are labelled as impulse

Price action in Impulse

Impulse
 Strength in price movement

 ERC expanded range candle (Red)

 One ATR price movement

 Breaks above immediate support levels

Momentum Expect Momentum – look for breakouts

Trends
Corrective in an Uptrend
Corrective The corrective or the countertrend movement in
price in the opposite direction of primary price
movement.

Corrective In an uptrend falling prices are referred to as

Corrective.

 Slower and drifting price movement

 Narrow range candles (NRC)

 Lack of momentum

 Holds support level of primary trend

Corrective
Trends
Corrective in an Uptrend
Corrective The corrective or the countertrend movement in
price in the opposite direction of primary price
movement.

Corrective In an uptrend falling prices are referred to as

Corrective.

 Slower and drifting price movement

 Narrow range candles (NRC)

 Lack of momentum

 Holds support level of primary trend Corrective

Trends
Corrective in a Downtrend
Corrective The corrective or the countertrend movement in
price in the opposite direction of primary price
movement.

Corrective In a downtrend rising prices are referred to as

Corrective.

 Slower and drifting price movement

 Narrow range candles (NRC)

 Lack of momentum

 Holds resistance level of primary trend

Corrective
Trends
Corrective in a Downtrend
Corrective The corrective or the countertrend movement in
price in the opposite direction of primary price
movement.

Corrective In a downtrend rising prices are referred to as

Corrective.

 Slower and drifting price movement

 Narrow range candles (NRC)

 Lack of momentum

 Holds resistance level of primary trend

Corrective
Trends
Actionable Strategy Uptrend : Identify support band for creating long position or buy

Buy

Buy
Trends
Actionable Strategy Uptrend : Identify “Support Band” for creating long position or buy

Buy Buy
Trends
Actionable Strategy Downtrend : Identify “Resistance Band "for creating short position or buy

Short Sell

Short Sell
Trends Short Sell
Short Sell
Actionable Strategy Downtrend : Identify “Resistance Band "for creating short position or buy

Short Sell
Trends
We will study and understand :
Trend The primary direction of price movement
Price Action

Momentum The speed / velocity of the price movement in the Fibonacci Studies
direction of primary direction
Moving Averages
 We have understood price action
Oscillators
 Over the next three days we will understand
each of the above stated component Multiple Time Frame

Multiple Candle Studies

Chart Patterns