DECMA 2019, 2ND -3RD MARCH, THE HOTEL WESTIN, PUNE

Day 1
SESSION 1
TECHNICAL STRUCTURE
Piyush Chaudhry - Wave Analytics
 MARKETS ARE EITHER
IN TRENDING MODE OR
IN CORRECTIVE

THERE’S NO THIRD POSSIBILITY

REGRESSION TREND CHANNELS

• Created by Gilbert Raff. Also called as Raff Regression Channel.

• Linear Regression Line is a Line of Best Fit.

• It’s a statistical way of drawing a Trend Line and uses the Least Squares Mathematical formula.

• Standard Deviation Channels are then drawn equidistant from the Linear Regression Line.

• A 2 – Standard Deviation Channel contains 95% of the prices &

A 3 – Standard Deviation Channel contains 99% of the prices.

• Pearson’s R Co-efficient is a measure of strength and moves between 0 and 1. Values above 0.90
reflect strong Trend is in place.
STRONGEST CANDLESTICK REVERSAL PATTERNS AND
RULES
• For Single Candlestick Patterns like HAMMER, HANGING MAN, INVERTED HAMMER, SHOOTING
STAR & HIGH WAVES – BODY (Open-Close) must be less than 25% of the High – Low Range of the
Candle.

• The Strongest Two-Candle patterns:

BULLISH / BEARISH ENGULFING
PIERCING LINE – The second Bullish Candle must retrace at least 2/3 of the previous Bearish
Candle
DARK CLOUD COVER – The second Bearish Candle must retrace at least 2/3 of the previous
Bullish Candle
TWEEZER KICKER

• Three Candle Patterns – MORNING STAR & EVENING STAR

CANDLESTICKS REVERSAL CHARACTERISTICS AND
PHENOMENON
• Establishment of Prior Trend

• Range Expansion
CANDLESTICKS REVERSAL CHARACTERISTICS AND
PHENOMENON
• Exceptions
• Collusion of Several Short Range Days and Pattern Failures
• Confluence of Reversal Patterns of prior Highs / Lows
Continuation Candles Characteristics:

- Short Range Candles*

- Outside Days
- Very less Range Intersection

* If it’s not a Shooting Star, most of the Short Days candles are continuation patterns.
CLASSICAL / CORRECTIVE PATTERNS

• Continuation Patterns: FLAGS, PENNANTS

• Cut-Off Concept - The patterns that continue the previous Trend are the ones that do not retrace
more than 38.2% of the prior Trend. Anything more than 38.2% can go either way.
Exception: Rectangles at the Top

• Reversal Patterns: Head & Shoulders (Inverted), Wedges

• Cut-Off Concept - In Head and Shoulders, apart from Height & Volume comparisons of Left and
Right Shoulder, the Right Shoulder must be less than 61.8% of the Head for it to have a high
success rate.
THANK YOU
SESSION 2
Intraday Trading of
Nifty & Bank Nifty
With Decision Points – Uday Dave
About Me

• Uday Dave, 45 yrs

• Full time day trader since 2016

• Price action only

• Discretionary style

• Mainly trade Nifty & Bank Nifty futures & options

Inspiration

SMART Trader (http://niftynirvana.blogspot.com)

Flow

If you cannot explain something in simple terms, you don’t understand it.

• Day Trading

• Structure

• Strategy

• Tactics

• Trade example
Disclaimer

If you cannot explain something in simple terms, you don’t understand it.

• No holy grail.

• No guarantee of success.

• Losses can occur.

• Learn well, practice hard and gain confidence before putting money at risk.
Day Trading (Intraday Trading)

• What is Day Trading?

• It is a speculative buying and selling of financial instrument. Trades last few seconds, few minutes or
few hours only. Open positions are never held overnight or over the weekend or when the market is
closed for a holiday.
Day Trading as a
Business
Day Trading As a Business

• Understand business well

• Multiple trades for small gains

• Aim to earn on most days of the month, not to become rich overnight

• Manage risk reward well

Basic Requirement

• Decision making: Strategy/system with an edge. Charting tool.

• Execution: Good broker & trading platform, internet, computer etc.

• Trading skill development & mental preparation

Blend it with your personality

• Most popular style: Swing kind of day trading where a position might be held open throughout the
day in order to benefit from a strong trend.

• Scalping: High-frequent entering & exiting of positions.

• My style: Limited no. of trades (1 to 3 trades/day) to achieve best performance.

Nifty & Bank Nifty – Why?

• Lower spreads: Lower the difference between bid & ask, the lower will be the trading cost.

• High liquidity: Both in futures & options. Possible to scale up.

• Minimum capital requirement: Rs. 10k to 20k for one lot of Nifty/Bank Nifty with Bracket/Cover
Order types for futures. With options, even less.

• Being an index, very less news based wild moves and less unpredictable as it usually follows
domestic & global market sentiments.
Define Structure
Structure
Structure
Structure

• Theoretically 70% of the time markets will be trading in a range. They are in a trend only at the
remaining 30% of the time. It is very difficult to know exactly where the trend will start and where it
is going to end. By the time we know a trend has started it is too late to enter and we are not able to
capture a major portion of it.

• So I thought it is better to trade the markets as if it is in a range 100% of the time. Then I am going
to be correct 70% of the time.
Define Range

• There are two types of moves, impulsive and corrective.

• Impulsive moves are momentum moves in the direction of trend and corrective moves are weak
counter trend moves.

• Every move (impulsive or corrective) is a probable range.

• Generally during trend periods corrective moves become ranges. Impulsive moves too can become
ranges especially during sideways market.

• Ranges can overlap and there could be ranges inside a range.

• Try to buy the range lows and sell the range highs.
 Define Range
Trend is a breakout from range extreme. Prolonged trend is series of range breakouts.
Define Range
Define Range
Buy Low, Sell High
Buy Low, Sell High
Decision Points

Every range extreme is not tradable in my scheme of things.

I would like the range extreme to match with trader decision points, in other words a confluence.
A slight change in perspective can make a lot of difference.
Decision Points

• Previous Day High (PDH)

• Previous Day Low (PDL)

• Previous Day Close (PDC)

• Big Round Number (BRN) (100, 500, 1000, 10700, 11000, 25500, 26700 etc)

• Day Open (DO)

• High of the Day (HOD)

• Low of the Day (LOD)

Decision Points
Decision Points
Decision Points

• Decision points are price levels where day traders are expected to act. Most of the time these are
levels where a demand and supply imbalance existed. My trading revolves around these points and I
expect the traders to act forcefully at these areas.

• DPs are reference points to navigate the chart space.

• Day traders are creatures of habit and I assume they will act at these levels again and again.
Decision Points
Which one to use?
Decision Points
Time Frames

• Trends and time frames create lot of confusion among traders. I prefer to use only one time frame
to avoid confusion.

• 3-min candlestick price chart. 5-min/15-min looked slow and could not stand against Formula 1
speed of 1-min charts.
Acceptance & Rejection

• The core concept behind my method is acceptance and rejection of price at Decision Points.

• I assume the price to move within a framework of Decision Points.

Acceptance
Acceptance
Rejection
Rejection
Rejection
Three Trading Patterns
TST & FTC
BPB
BPB
BOF
BOF
BOF
Space

• We need some space for our trade to move and take our position to profit. Better to ensure that
there is some space between our entry and the first point of interest that can give our trade
some trouble.

• Trouble area is where price is likely to stop and reverse. It is the nearest price level where one can
expect some opposing order flow.

• This trouble area could be Decision Point, range high/low, swing high/low, price flip area, congestion
area, etc

• If trouble area is very close, better to enter into the trade upon break of trouble area.
Space – Trouble Areas
Barbed Wire

• Normally price will not stay at the decision points much longer.

• On rare occasions price will not run away from these areas, Instead it chops around it creating a tight
trading range(TTR) which is called barbed wire.

• Once a BOF trade fails, don’t be in a hurry to enter again. Better to stay out till price moves out of
the TTR.

• When in doubt, stay out.

Barbed Wire
Caution

• If space is an issue

• If it has already moved a lot

• Ahead of news flow

• After 3 pm

• When you are not mentally fit to trade

Price Action Analysis

• Origin of the move

• Distance it already traveled

• Strength of trend

• Strength of location

• Trade time
Trade Example
THANK YOU
My blog: https://charttechnicals.blogspot.com

Twitter: @charttechnical

Mail: charttechnicals@gmail.com
SESSION 3
Volume Expansion: An
edge for a low risk entry

By: Anand Rathi

WHAT IS VOLUME PRICE
ANALYSIS (VPA)
• Volume Price Analysis (VPA) is a technical analysis tool that combines both price and volume and
attempts to confirm price action or warn of potential weakness or lack of conviction by buyers and
sellers
• According to Anna Coulling: “There are only two leading indicators in trading. One is price, and
the other is volume. In isolation, they are weak and reveal little, but put them together, and just like
gun powder, they become an explosive combination.
• In short:
• Volume Price Analysis reveals the DNA of the Market, and places this awesome power in your
hands
• You can become a confident and assured trader, removing emotion and stress from your
trading
• Also, will start to enjoy your trading, as you will know where the market is going next based on
simple logic and the power of Volume and Price
IMPORTANT POINTS TO
REMEMBER
• Market is all about supply and demand

• Always give Importance to Price levels (range)

• If the volumes are conflicting with price, then price levels take precedence

• Mid-point of high volume candle gives an Indication with respect to aggressiveness

• Low/High of Breakout / Breakdown candle can be good indication about a false move
 I WILL BE TALKING ABOUT VOLUME
EXPANSION TODAY, WHICH IS PART OF VPA
THAT I FOLLOW
DISCLAIMER

• I have learned this overtime and is totally based on my learning's from the market

• I haven't gone through any books so u may or may not find these details in any books

• This is what I have been following since few years and has been working for me fine. I have my
Right to be wrong.

• Any stocks / index views discussed here are just for learning purpose, do not consider it as buy /
sell recommendation.
 UNDERSTANDING
VOLUME EXPANSION
WHAT IS VOLUME
EXPANSION
• What is Volume Expansion (VolExp)
• Whenever higher volumes are observed than in the recent sessions with or without major
change in price behaviour we consider it as Volume Expansion

• Advantages of following VolExp

• VolExp helps in identifying trading opportunities right near the inception of a trending move
providing a low risk-high reward trade entry

• VolExp helps to get very gud ROI in very short time period.
DIFFERENT TYPES OF
VOLUME EXPANSION
TYPES OF VOLUME EXPANSION

“PRAKAT” VolExp

• When we get a candle

whose color is opposite
to recent trend with
positive / negative close
compared to previous
day &
• Volumes are highest
when compared to that
of recent full leg of
move
TYPES OF VOLUME EXPANSION

“GUPT” VolExp

• In this case the candle

color and close are as
per ongoing trend but
occurs after a good
trending move &
• Next day high/low of
this candle gets crossed
without breaching
low/high of previous
day
 TYPES OF VOLUME EXPANSION

“KAPAT” VolExp

• A very high vol candle with

close in the direction of
present trend
• Generally seen after end of
major trending move.
• In subsequent sessions
price trades mostly within
this HVC range.
• Post this earlier trend or
opposite trend may
resume.
How to trade using
VolExp
• Entry: Candle close above or below high or

low of HVC candle.

• SL: Low or high of HVC

• Target: Minimum target- Range of HVC,

Probable target - Recent swing high/low or

major supply/demand zone having next

comparable vols.
Examples
Nifty Bottom VolExp
DHFL
Yes Bank
Vakrangee
ICICI Bank
Nifty VolExp Failure
Dish TV
State Bank Of India
Nifty VolExp- Voltaile
Move
Sunpharma
Have Conviction on your char ts and Follow your char ts
“RELIGIOUSLY”

THANK YOU

@anandrathi12
SESSION 4
FINANCIAL MARKET JOURNALISM
IN TODAY’S ERA OF HIGH-
FREQUENCY INFORMATION
NISHANTH VASUDEVAN [SENIOR EDITOR-MARKETS
THE ECONOMIC TIMES]
INFORMATION FLOW
THEN NOW
Fewer Players Dominated Information Is Democratized

Limited Disclosures Higher Disclosures

Research Reports Precious Commodity Research Readily Available

NATURE OF MARKET PARTICIPANTS
THEN NOW
Huge Army Of Traders Machines and Algo-Trading

Domestic Flows Fragmented Domestic Flows Institutionalized

Trades In Cash Segment F&O In Vogue

CORPORATE GOVERNANCE
THEN NOW
Shoddy Corporate Governance Better Standards Of Corporate Governance

Blatant Insider Trading Violations Insider Trading Curbed

 IS POLITICAL NATIONALISM
SEEPING INTO THE MARKETS?
EVOLUTION OF FINANCIAL
MARKET JOURNALISM
HIGH FREQUENCY JOURNALISM

Journalists On Their Toes

Online Reduces Discrimination

Quality of Reporting and Writing

Better Options For Consumers (Readers)

CHALLENGES FOR A STOCK MARKET JOURNALIST

Journalists Grapple With Market Complexities

Information Based On Elite Sourcing

Social Media
THANK YOU
SESSION 5
OPPORTUNITIES WITH
OPTIONS
RAGHUNATH REDDY

www.opstra.definedge.com
OPTIONS GIVE YOU ‘OPTIONS’
WHAT ARE OPTIONS? USES OF OPTIONS

• Options are the financial derivative • Speculation

of securities whose value depends
on the underlying or some other • Hedging
asset.
• Spreads
• Buying an ‘options contract’ gives
you the right to buy or sell an • Cost basis reduction of holding
underlying at a specific price on or stocks
before a certain date.
• Other combination of strategies for
• A ‘call option’ gives the holder the investing/trading
right to buy underlying asset while a
‘put option’ give you the right to sell
the asset.
HOW OPTIONS WORK

• Options gives you the opportunity

to participate in future change of
underlying asset price.

• If you buy a ‘call option’ it gives the

opportunity to participate in uptrend
of a stock/asset price.

• And similarly, owning a ‘put option’

gives the opportunity to participate
in the downtrend of the underlying
stock/asset price.
OPTIONS MONEYNESS
• Options moneyness describes the relationship between the option’s strike price and the current price of
the underlying stock.

In-The-Money (ITM) Option Current Stock Price: 50

40CE 50CE 60CE

• A call option is ITM when strike price is below the current stock price.
• A put option is ITM when strike price is above the current stock price.
ITM Call
• Has both intrinsic and time value in the premium ATM Call OTM Call

Out-of-The-Money (OTM) Option 40PE 50PE 60PE

• A call option is OTM when strike price is above the current stock price.
• A put option is OTM when strike price is below the current stock price. OTM Put ATM Put ITM Put

• OTM options have only time value

At-The-Money (ATM) Option

• A call/put option is ATM when strike price is equal to or closer to the current stock price.
• ATM options also have only time value but its time value is much higher than that of OTM options
OPTIONS PREMIUM
• Options premium is the price paid to buy the option, also known as the option price.

Option Premium = Intrinsic Value + Extrinsic Value (Time Value)

INTRINSIC VALUE

• Intrinsic Value is the difference between current stock price and the strike price.
• Ex: 100CE call option when the stock price is at 110 will have an Intrinsic value of 10.
• Only In-the-money (ITM) options will have intrinsic value

EXTRINSIC VALUE (or TIME VALUE)

• Options time value is dependent on the time left to expiry, moneyness and volatility of stock
• Time value of an ITM option calculate by subtracting intrinsic value from the option premium
• Since out at-the-money (ATM) & out-of-the money (OTM) options have low or zero intrinsic value,
therefore Time Value = Option Price.
OPTIONS GREEKS
• Options Greeks measure different dimensions of risk in an option position which will help in adjusting
the position to minimize or eliminate such risk
DELTA
• Delta is a Greek that tells us about directional exposure of options.
• Delta is the expected change in the option’s price relative to the price change in the underlying stock or
index
• Example: Stock A of current price 100 and lot size of 100

GAMMA
• Gamma is a Greek that tells us about the changing directional exposure of the options
• Gamma is the expected change in the option’s delta relative to the price change in the underlying stock
or index.
OPTIONS GREEKS
THETA
• Theta (Time Decay) is a Greek that represents the daily decay of an option’s extrinsic value
• Theta is the expected decrease in the option’s price with every passing day.
• Example: Stock A of current price 100 and lot size of 100

VEGA
• Vega (Volatility/Vega Risk) is a Greek that represents the Option’s price sensitivity to 1% change in
implied volatility
• Long options have positive vega & Short options have negative vega
IMPLIED VOLATILITY (IV)
• Implied Volatility (IV) is the expected volatility in the stock’s future price as implied by the stock’s
options prices.
• IV is expressed as annualized 1 Std. Deviation Range of a stock price. Its calculated using Black-
Scholes Formula.

• Higher option prices - higher extrinsic value - high IV

• Lower options prices - lower extrinsic value - imply low IV

IV PERCENTILE
• IV Percentile is the percentage number of days over the past one year the IVs are under the current IV.
• An IV Percentile of 90 means 90% of the time in last 1 year, the IVs were below the current IV value.
• IV Percentile tells you how high the IV is for that particular underlying.
TOOLS TO ANALYSE
OPTIONS
OPSTRA Options Strategy Builder

• First step in analyzing options before placing a trade is to generate a pay-off chart and understand
potential profit and the risk.

• Several strategy builder tools are available as web apps and desktop apps such as options oracle,
trador, option action, snapalpha etc.

• Today, I will demonstrate Opstra options strategy builder & how it can be used to analyze, adjust
and track the options trades.

• The portfolio feature of Opstra app allows to save options trades and track them as a portfolio.
OPSTRA OPTIONS STRATEGY BUILDER
DEMO

http://opstra.definedge.com/strategy-builder
OPSTRA Options Algorithm

• Finding options trade opportunities in an underlying by manually changing strikes, option strategies
etc can be tedious when working with multiple underlying and multiple option strategies.

• Opstra Options Algorithm automatically finds the options trading opportunities after few inputs
from user and provide them possible option trades and option strikes combinations for a given
strategy or strategies.

• In addition, it also provides information on the probability of profit (POP), maximum possible return
on capital employed (MaxROC), maximum possible loss, maximum possible profit and margin
requirement of the options trades.

• A link is provided to pay-off chart of all the discovered options trades to aid in further inspection of
the trade.
 OPSTRA OPTIONS ALGORITHM
DEMO

http://opstra.definedge.com/optionsalgo
More on STRATEGY BUILDER & OPTION
ALGORITHM

http://opstra.definedge.com/how-to-use
DOES PRE EARNINGS MOMENTUM WORK?

• If so, which options strategies to use?

• If so, what are the ideal trade entry and exit points?

• If so, which stocks work?

• What are the historical win rates?

DOES OPTION SELLING STRATEGIES WORK?

• If so, under what conditions and with what returns?

• If so, what are the ideal trade entry and exit points?

• Does controlling risk by putting stop-loss and booking profits at pre-defined targets
improve the results?

• Does introducing moving average and IV percentile filters enhance or worsen the returns?
DOES TECHNICAL TRADING WORK IN
OPTION STRATEGIES?
• Can we use technical indicators to trade options strategies?

• If so, which technical indicators are ideal?

• If so, what are the ideal trade entry and exit points?
 OPSTRA
OPTIONS
BACKTESTER
OPSTRA OPTIONS BACKTESTER
• A first of a kind Options Back-testing Software in India

• Proof of concept back-testing strategies to test efficacy of various options strategies

• Back-testing is done using last 5 years of Options End-of-day Data of liquid FNO stocks to
maintain backtest structure.

• Backtester Scanner to find ideal stocks for a given option strategy

COMPLEXITIES INVOLVED IN OPTIONS BACKTESTING

• Frequent lot-size changes

• Frequent margin changes

• Increased data complexity - multiple strikes, expiries, optiontypes, liquidity, greeks etc
OPSTRA OPTIONS BACKTESTER
DEMO

http://opstra.definedge.com/backtester
WHAT NEXT FOR OPTIONS BACKTESTING
• More backtesting strategies

• Custom strategies as per user input

• More historical data

• More technical triggers

SUMMARY
• Basics of Options

• Opstra Strategy Builder and Portfolio to analyze & track options

• Options Algorithm to quickly find options trading opportunities

• Options Backtester to test options strategies efficacy under different conditions.

OPSTRA EARNINGS OPTIONS TRADING

• Traders employ various options strategies to speculate and profit from the earnings announcements
by the NSE Nifty FNO companies.

• Unfortunately, the data required to strategize the options trades oriented towards earnings
announcement is disaggregated and not easily available on stock exchange websites

• On Opstra, all the information required for options trading of the earnings is gathered together for
easy access to users be it upcoming results, timings of release of earlier earnings announcements,
current IV levels and liquidity of the underlyings of interest.

• Upcoming results and historical earnings announcements dates can be found in Results Calendar.

• Current IV levels, Liquidity of options, IV Charts and other IV related information can be found via
Options Dashboard app.
 OPSTRA EARNINGS TRADINGS TOOLS
DEMO

http://opstra.definedge.com/options
http://opstra.definedge.com/results-calendar
http://opstra.definedge.com/historical-results-timings
THANK YOU
SESSION 6
A DAY IN MY LIFE
A day in my life
Early evenings – atleast sometimes
• Yes, we get to go home at a very decent
time, and that’s the telling advantage in
Mumbai, which is choked with traffic
And earlier mornings, stressful ones, always
• Trading mornings can be stressful… but
media mornings are always stressful,
especially business news anchors. I haven’t
had a single weekday where the first five
hours of my life, from 5 am to 10.30 am, I am
not wired the most
“THE BEST PART ABOUT MY JOB IS TO TALK
TO INTELLIGENT PEOPLE – IN MOST CASES,
ON MOST DAYS – AND KEEP LEARNING”
JUGGLING MULTIPLE HATS

WHY INDIAN MEDIA IS DIFFERENT

• .
A day in my life

Conventional TV Multimedia Digital Content

,
What happens behind the scenes

PREP Show start Post Mortem

THANK YOU
SESSION 7
 Trading
Scarecrows
Living with Event Risk
in Equities Trading
Day 2
SESSION 8
Demand and Supply on all timeframes
and Anchored VWAP

Deepak Thakran
Deepak Thakran

I am a IT engineer by qualification and a Trader who

trades using candlestick based technical analysis with a
combination of Behavioural finance. I run a blog on
www.Indianstockss.com and is active on Twitter from id
@indian_stockss .

Like everyone else my aim is also not to lose much and

protect capital and follow a trading system which focus
on what market is doing. My analysis is mixed with the
information generated from Markets and behaviour of
market during the rise and fall.
Demand and Supply on all timeframes and Anchored VWAP

Demand and Supply Anchored VWAP

• Basics of candlestick useful in demand & • How to trade / make a view based on
supply. Anchored VWAP
• Basics of Demand & Supply concepts
• Demand & Supply concepts including all
timeframes ( Intraday, Short term & long
term)
• How to trade stocks ,Index, and other
instruments with help of demand and supply
zones created as a reference by Markets.

Disclaimer: - Like all other trading systems, this too has failures. Following risk management is a Must
Demand and Supply on all timeframes

Basics of candlestick useful in demand & supply.

Pin Bar -

A pin bar pattern consists of one price bar or a

candlestick price bar.

In a bullish pin bar reversal setup, the pin bar's

tail points down because it shows rejection of
lower prices or a level of support

In a Bearish pin bar reversal setup, the pin

bar's tail points up because it shows rejection
of higher prices or a level of resistance

Call it hanging man, hammer depending on the

location where its formed and follow-up it gets.
Demand and Supply on all timeframes
Candlestick reversal patterns - Morning / Evening Star

• This pattern is made by a doji pin bar sandwiched between

two full-bodied candles.
• Demand / Supply psychology (Morning Star) –
• Market is in down trend making lower lows
• In its final push it catapult with force pulling in more
sellers
• Next candle price opens lower and buyers emerge.
They don’t allow the sellers any further ground making
a doji
• Finally sellers loose hope by next candle and buyers
make a sharp comeback
• This pattern has higher probability of winning when seen at
previous support / resistances and with high volumes on first
and second candle.
Morning / Evening Star live charts
Demand and Supply on all timeframes
Candlestick reversal patterns – Bearish / Bullish engulfing

• This pattern is formed when a large full bodied candle

completely covers the earlier full bodied candle
• Demand / Supply psychology (Bullish engulfing)
• Market is in down trend making lower lows
• In its final push it catapult with force pulling in more
sellers
• Next candle market opens lower, however buyers
emerge in full force and take the price higher above
previous candle close.
• Trend changes and buyers are in control now
• This pattern has higher probability of winning when seen at
previous support / resistances and with high volumes on first
candle.
Bearish engulfing live chart
Demand and Supply Zones…
• Demand & Supply are the most fundamental concepts in markets.
• Demand refers to how much quantity of a stock or Index buying is to be done at
a particular price point or price band.
• Supply represents how much the market can offer. The correlation between
price and how much of stock or Index is supplied to the market is known as the
supply.
• Price is therefore a reflection of demand and supply.
• Thus we can easily say that Price of Index or Stock moves between demand
and supply zones. New demand is required to break a supply zone and new
supply needs to come to stop prices from going higher.
…Demand and Supply Zones
• These are also known as Support & Resistances
• These are formed at levels where there is server imbalance of buyers & sellers
• At supports, buyers emerge leading to halt in price rise and reversal, similarly at resistance zone,
sellers emerge leading to price fall
• More steeper the reversal, higher is the imbalance and stronger is the resistance / support
• Resistance zone will act as resistance in future also, as all the sellers may not be exhausted and will
come again to sell if they get same price again. Hence, price has high probability to fall from that zone
again.
• Similarly, support zone will act as support in future also, as all the buyers may not be exhausted and
will come again to buy if they get same price. Hence, price has high probability to rise from that zone
again
Demand & Supply Zones – Live Chart
Anchored VWAP

Anchored VWAP

• How to trade / make a view based on

Anchored VWAP

Disclaimer: - Like all other trading systems, this too has failures. Following risk management is a Must
Anchored VWAP
What is a Anchored VWAP

• VWAP as normally used is intraday VWAP

i.e. average price of all trades done in a
particular day
• Anchored VWAP is extended time VWAP
starting from a “Anchor” i.e. a point which
trader thinks is important and AWAP price is
average price of all trades from that point.
• “Anchor” can be anything i.e. Event Day, High
volume day, Swing high / Swing low, gap up /
down, Starting of series etc.
• Once a VWAP is plotted from anchor, it
shows the control of buyer / seller which is
not seen on simple candle stick bar chart.
Anchored VWAP – Charts Examples
Anchored VWAP – Charts Examples
Anchored VWAP

How to plot Anchored VWAP

1) It can be plotted in https://in.tradingview.com

Steps –
• Go to add indicator
• Search for Anchored – and selected
anchored VWAP
• Go to format tab for AVWAP and provide the
candle location as input

2) AmiBroker AFL - Attached

Yours Questions
Twitter id - @indian_stockss
Email - indianstockss@gmail.com
THANK YOU
SESSION 9
QUANTIFYING
BREAKOUTS
Subhadip Nandy

www.quantgym.com
Who am I ?

Subhadip Nandy – Independent quantitative trader since 2013,

Net experience in the markets of 18 years

Was the Research Head of one of the biggest commodity prop firms in India

Successfully designed algos on MCX and MCX-SX

Trading approach is 100% system oriented
A breakout is when the price moves above a resistance level or moves below a support level.

Breakouts can be subjective since not all traders will recognize or use the same support and
resistance levels.

Breakouts provide possible trading opportunities.

A breakout to the upside signals traders to possible get long or cover short positions.

A breakout to the downside signals traders to possibly get short or to sell long positions.

Breakouts with relatively high volume show conviction and interest, and therefore the price is
more likely to continue moving in the breakout direction.

Breakouts on low relative volume are more prone to failure, so the price is less likely to trend in
the breakout direction.
MAJORITY of the breakouts are FALSE BREAKOUTS

• According to Charles D. Kirkpatrick and Julie R. Dahlquist ("Technical Analysis: The

Complete Resource for Financial Market Technicians," 2007), roughly half of breakouts
that occur from trading ranges or chart patterns retrace back to within the trading ranges
before continuing in the original breakout direction. Combine this with the high rate of false
breakouts, and most novice traders lose money on the gyrations and end up missing the
big move when it occurs.
EXPLOSIONS are RARE
• “The big move" brings us to the next problem – large moves are rare, given the number
of potential ranges to trade. Traditional technical analysis methods use a profit target that
is equal to the height of the range (resistance minus support) added or subtracted from
the breakout price. While this profit target is reasonable, explosive gains do not happen as
much as the novice trader thinks. While range breakout examples are often used to show
a stock breaking out and making a large percentage gain, with potentially hundreds of
ranges being traded in different instruments in markets, what is the likelihood of picking
the few that will eventually explode? The probability is not high. And given the other two
problems with ranges (mentioned above), what are the chances the trader will be in the
trade when that move finally does occur?
QUANTIFYING BREAKOUTS
Prices have three derivatives :

TREND

MOMENTUM

VOLATILITY
QUANTIFYING BREAKOUTS
Prices have three derivatives :

TREND ( 5 period EMA)

MOMENTUM ( 11 period RSI)

VOLATILITY ( 5 period ATR)

 QUANTIFYING BREAKOUTS
Prices have three derivatives :

5 period EMA as a derivative for TREND

11 period RSI as a derivative for MOMENTUM

5 period ATR as a derivative for VOLATLITY

 QUANTIFYING BREAKOUTS
Breakout Confirmation :

We have breakout on price charts ( use line charts)

We also have a breakout on RSI(11)

We also have a breakout on 5-EMA

 QUANTIFYING BREAKOUTS
Entry conditions :

Calculate the 5 period ATR the first day price close once
breakout is confirmed
Buy value = Price Close + 5ATR
Stoploss = Price Close – 5ATR

Closing value essential for BUY or for StopLoss

THANK YOU !

www.quantgym.com
Twitter : @SubhadipNandy
Email : quantgym@gmail.com
Mobile : +91 97480 52739
THANK YOU
Website: www.quantgym.com

Twitter: @SubhadipNandy

Email: quantgym@gmail.com

Mobile: +91 97480 52739

SESSION 10
How to Outperform
Professional Fund Managers
and Some other Thoughts
By: Surender Singh Khalsa
 WHO AM I ??
➢Life Long Student of Markets and Society

➢Passionate about Markets and hoping to find the HOLY GRAIL

someday

➢Have managed variety of Funds in 2 large Life Insurance

Companies

➢Treat Fundamentalist and Technicalist with equal respect….but,

only to rational ones and those that question everything

➢Closet Chartist, believer in Price Action, Market Psychology and

Risk Management

➢Have been working to develop and run an complete Quant based

Trading Systems that will operate within India on Equities,
Commodities and Currencies
 DISCLAIMER

➢ No intention to demean anybody or any Institution

➢ Just Sharing my personal opinions
EVOLUTION OF THOUGHT LEADERS
Models or Opinions : Markets care for NONE
PREDICTIONS OF 2003
➢ Stock Markets will fall more than 90%
➢ Crude Oil will crash
➢ Record Bankruptcies of US Companies
➢ Third World war will begin soon
➢ Hemlines will fall and bright colors will
go out of style

LTCM : Model don’t work all the time

➢Scholes of Black-Scholes part of team and fund

running on BS model…used even today
➢21% in First Year, 43% in second year, 41% in third
year…
➢ Bankrupt in 4th year..Post Asian Crises
Higher Time Frame…used least
 Buy and Hold for Markets and not stocks
“ Investors would do well to learn from Deer Hunters and Fisherman who know the
importance of “being there” and using patient persistence, so that are there when
opportunity knocks. Most Investors know that over 92 year period from 1927 to 2018, SP500
returned 10.1%.

If we were to remove the returns of the best 92 months over that period, what would you
guess was the return of remaining 1012 months? I think most Investors would be shocked to
learn that the answer is virtually zero.

The remaining 1012 months provided an average return of just 0.01%

The best 92 months (8.3% of time) provided the return of 10.4%, same as period return

Again, We find the best 31 months(avg one month per year) provided more than 100% returns
of the year

The best way to achieve Long Term success is not in stock picking and not in market timing.
Sure, these approaches have their current heroes and war stories, but few investor heros last
long and not war stories are entirely true. The great pathway to long term success comes via
sound, sustained investment policy and holding onto it “
--Charles Ellis
Averaging works better in Volatile Markets
Passive : Nobody Knows more than the market

These fund had consistent 9 years of O/P…

all of which was given up in just ONE YEAR.!
Passive : Nobody Knows more than the market

Key Drivers :
➢ Lower Costs adds up meaningfully over medium and Long Term
➢ No chance of Underperformance
➢ No risk of Wrong stocks being bought
Even GODs don’t Outperform for long…
Has AMC business become FMGG Like?

The following are the main characteristics

of FMCGs:
From the consumer perspective
Frequent purchases
Low engagement (little or no effort to
choose the item)
Low prices
Short shelf life
Rapid consumption
From the marketer perspective
High volumes
Low contribution margins
Extensive distribution networks
High stock turnover

Source : Wikipedia
Silent Saathi…Consumption
Demographics: Potent and Silent Driver
 ULIPs….KQ Slips

➢ Badly designed but superbly marketed product

➢ Sold on Fear and emotions largely
➢ Takes 5 years of O/P for an FM to deliver results
➢ Best Commissions
➢ NO ULIP can ever beat a Index Fund+Term Plan combo, even if it
has Buffet managing it…Though he wouldn’t survive!!
➢ However for lazy/busy people, good for asset accumulation if ok
with returns
What Constraints Fund
Managers ?
What Constraints Fund
Managers ?

Internal External
What Constraints Fund
Managers ?
➢Same Stocks

➢Similar Buys and Sells

➢Similar Sector Exposures..

”I Like IT and Pharma”

➢Machine Replaceable
 PMS : Birth Pangs

➢Very early stage of evolution

➢Too many players with little USP’s
➢Mid-Cap Market itself not deep and
wide enough
➢Most Investors don’t understand
nature of Mid-Cap Investing
 Brokers…..Make you Broke

➢ SELL is a 4 Letter Word

➢ Straying away from Consensus often is a Career risk..IT Good Example

➢ TP Swings can hurt any existing investor

➢ Journalist or Analyst..Sometimes, its hard to tell

➢ How else will my IB, HNI desk thrive? Synergies(!!)

➢ More than 120 Institutional Brokers and many more retail

➢However, Read Research report only for the base content…Draw Your Own
Conclusions..
Mag Cover Indicator
 Summary
➢ Invest Regularly

➢ Always Invest in Passive Funds

➢ Era of Super Smart Fund Managers in MF/Insurance is

over

➢ Consumption+Midcaps SIP works better than even

Index over 5 year period

➢ Avoid ULIPS

➢ Read Brokerage Reports…But, only for content and not Its not necessary to do
conclusions Extraordinary things to get
extraordinary results—Warren
➢ Watch Business News like you watch Movies…Draw
Buffet
your own Conclusions

➢ NEVER Marry your opinions

➢ Be Humble
Lord Shiva- The Ultimate Trader

➢ Unwavering Focus

➢ Most Humble

➢ Best Warrior

➢ Completely Detached
SESSION 11
Deciphering Business News
Par tha Sinha
Sebi allows MFs in commexes
Adhia named BoB chairman
Carlyle buys 9% in SBI Life for
Rs 4635cr
A tweet may cost Elon Musk his
job
Why we do this?

To help you save your

time
Making sense of Business News
Headlines The Story
• Make it as crisp as possible without • Pyramid shape
compromising on the core idea of the news • Should answer ‘W-H’ type questions
• They’re never complete sentences • May or may not give a solution
• Usually exclude articles and auxiliary verbs

• Usually exclude punctuations

• Use abbreviations wherever possible

How we do it?
We divide the types of headlines
• People who matter
• Govt and regulators
• Rise and fall, ups and downs
• M&As, demergers, break-ups
• Labour and industrial relations
• Entertainment
• Legal issues
• New Ideas
• Opinions
• Edits
Why we do it?

It’s a Newspaper’s
navigation system
 What we
actually do?
Try to separate the
sound from the noise
Three comments on two biz areas

On Markets

The BSE-30 Index rose by 148 points (0.4%) in the past week to close above 36,000
mark. A sharp increase in geopolitical tensions between India and Pakistan kept
markets volatile even as global markets rose on optimism over US-China trade
negotiations. Yes Bank (+7%), Coal India (+7%) and Tata Motors (+5%) were the top
gainers, while Adani Ports and SEZ (-8%) and HDFC (-3%) lost the most in the BSE-30
Index.
Three comments on two biz areas

On Markets

We expect markets to remain volatile in the near term. Signs of de-escalation of

tensions between India and Pakistan is encouraging for Indian markets. Globally,
progress on US-China trade war, crude oil and currency movement would be actively
tracked by the investors.
Three comments on two biz areas

On eKYC ordinance
This will boost secured digital transactions across the country. It’ll be a win-win situation
for all stakeholders: Banks and FIs, customers and the government. Backing it up with
robust data protection will hold the key to unlock the bright future of financial sector in
India. It’ll also reduce the cost of identifying people, enhance transparency in
government-run welfare schemes and provide an additional layer of security.

Ramaswamy Venkatachalam
What we prompt you to do?
News to News & Forward
disagree Blogs looking
with
• Overcome confirmation • At times news is forced • Where are we headed
bias • Bloggers write only when • Is there any trend
• Challenge your they feel strongly about emerging
established beliefs something • What are the predictions
• At times contrarions win • So read both • Most predictions will fail
big (that’s ok)
What we prompt you to do?
Rank & Think Data,
File more charts etc

• People at the top give big • Most of the news you read • Interpret those your own
picture are not to be thought way

• People at lower levels about

give the ground reality

THANK YOU
SESSION 12
Buying on RSI
divergences in Nifty
and Selling on
Divergence of BSE
Smallcap/Nifty
 RSI Divergence on Nifty
The Matrix

Nifty 50 RSI Trader Investor ( SIP on RSI )

RSI @ 30 Buy only if Higher Top Higher 30-50% existing cash to be

2nd Bottom Positive Divergence.
3rd Bottom Positive Divergence
Bottom, Major Support with Strict deployed.
Stoploss below supports
Buy for a bounce back. 38-50% of 30-50% existing cash to be
the move as target. Stops at 2-3% deployed.
below entry or
Candlestick/Channel stops.
Beg Borrow Steal and Trade. Beg Borrow Steal and Invest.
Ready to digest 3-4% Nifty dip.

Will focus only on

the Triple
Divergence
RSI Triple Divergence

• RSI Triple Divergence to be seen mainly post a good 10% correction from the peaks. Larger
the correction better.

• The 3rd bottom does not stay for a long time and hardly gives you a chance to jump in.

• Acting either on 2nd bottom or post the confirmation of Triple Divergence is an equally good
strategy.

• Triple Divergence is a great time to Invest as well as Trade.

• Ideally it should work similarly on finding Tops but it does not as Topping out is a slow
process. Panics happen faster.

• Triple Divergence is seen once in a few years.

• The tough part is not to spot but to be able to act contrarian and digest the short term pain
after entry.

• The only time it did not work was in October 2008.

Triple Divergence - 2011 Nifty

3) Triple Divergence.
Channel Support.
Beg Borrow Steal

4720
1) - RSI 30 4728
Downtrend - No 4640 4530
Buy 2) +ve Divergence.
Did 50-60%
retracement.
Triple Divergence - 2013 Nifty

5486
5250
1) - RSI 30 5120
Support.
Stopped out
3) Triple Divergence.
Channel Broken.
2) +ve Divergence. Beg Borrow Steal
No trade. R/R
Triple Divergence 2013 Zoomed Version
Triple Divergence - 2016 Nifty

1) - RSI 30
Support 7240
Stopped out 6870 6825

2) +ve 3) Triple Divergence

Divergence Nifty Same bottom
Beg Borrow Steal
Triple Divergence - 2018 Nifty

10200
1) - RSI 30
Support 10140
10000
Stopped out

3) Triple Divergence
2) +ve Beg Borrow Steal
Divergence
 Selling on
Divergence of BSE
Smallcap / Nifty
 Why BSE Smallcap Index ?

• BSE Indices are not tracked as much and we find BSE Smallcap as the best indicator for looking at
froth/momentum in the markets.

• The reason to look at it is because it has the lowest of the smallcaps and is not limited by no of stocks like Nifty
Small 100. As of now the index has 861 Stocks !!

• The S&P BSE SmallCap is designed to represent the bottom 15% of the total market cap of the S&P BSE
AllCap. The index is designed to represent the small-cap segment of India's stock market.
 Momentum Divergence of BSE smallcap
with Nifty/Sensex
When Nifty makes lower tops or is struggling to make strong moves and BSE Smallcap Indices continue to make
higher highs or much stronger moves.

After this we generally see a good correction of 10-25% on smallcaps and 5-15% on the benchmark. The tough
part is this divergence can stick for a couple of months also.

So the strategy is to ride with strict stoplosses but start avoiding leverage.

Not the best time to put fresh money and if you are a conservative trader/investor keep increasing cash and go to
high cash.

After this formation one can keep increasing cash on the way down too
Nifty/Smallcap – Crazy Momentum 2007

There was a 30-40 % jump in the smallcap indices in last 2-3

months of 2007 compared to a slow and laborious 5-8%
move in Nifty.
This is the worst momentum divergence where the BSE
Smallcap Index moves 3x the Nifty move.
We all know what happened post January 2008.
Nifty/Smallcap 2010. Smallcaps rally
harder than Nifty/Sensex

Nifty/Sensex new highs though marginally higher but the

Smallcap Index did a much stronger move.
This was not as strong a divergence like 2007 but being
cautious and acting after breakdown would have helped.
 Nifty/Smallcap Momentum & Panic
Divergence in 2015-2016

Quite a lot of divergences in 2015 in the period when Nifty topped out at 9100
but BSE Smallcap Indices hit new 52 week highs 2-3 times.
The first two divergences in the year were followed by a good 10-20% correction
in smallcaps.
The last one in end of 2015 was the classical one which lasted 2 months and did
2-3 new highs and back close to 52 week highs whereas the Nifty kept making
lower tops.
Nifty/Smallcap 2016 pre – Demonetization
and Trump.

This was again a classical one with 2 months of newer

highs on BSE Smallcap Index but Nifty kept making
lower tops.
The Demonetization event helped the correction
which again 10-20% in Smallcaps.
Nifty/Smallcap 2017 end – How long can
it continue ?

This was the chart in December 2017

end. We all know what happened in
2018.
Buying on Panic
Divergence – BSE
Smallcap/Nifty
Nifty/Smallcap – Panic Divergence in 2008.
Smallcaps make new lows Nifty/Sensex does not.

4-5 months of divergence with Smallcap

Indices making couple of new lows
Nifty continues holding above the 2008
lows.
Panic Divergence
Some times it
doesn’t work !
Smallcap Divergence Bounce and Flop 2018-
2019

This trapped us !!

Divergence last for 4-5 months.

Nifty went to new all time highs.
BSE Smallcap Index only bounced 10-
12%

4-5 months of divergence

again.
Lows of 2018 broken on BSE
Smallcap in February 2019.
Better times in 2019-2020 ?
Panic Divergence
When it Works !!
déjà vu 2013
 Nifty/Smallcap Panic Divergence 2013.
Smallcaps break 2011 lows but Nifty holds on.

BSE Smallcap Index was down more than 50% from 2010
peaks.
BSE Smallcap Index did a stronger downmove and also broke
2011 bottoms where as the Nifty was 10-15% higher than
those lows.
This signalled extreme panic in the markets and the reversal
since then has been amazing. Almost 4x move in Smallcap
Index from 2013-2018 !!
 Conclusion

• What is the Best Case !!

• Buying when Nifty Triple Divergence co-incides with BSE Smallcap and Nifty Panic Divergence.

• Selling on BSE Smallcap and Nifty – Momentum Divergence.

• One such round with full allocation is all you need.

• For example buying in August 2013 at 5100-5300 Nifty and selling in Mid to end of 2015 at 8500
or a BSE Smallcap Index at 5200-5500 to 11500-12000 in 2 years would imply a crazy return
even if it was a random portfolio.

• Similarly buying in February 2016 and selling in end of 2016. Would be a move from 7000 to
8500-8800 and BSE Smallcap from 9500 to 13000-13500.

• Focus on getting one full cycle right and it can do wonders to your investment/trading returns.

• Today at 13500-12000 BSE Smallcap Index is the Risk-Reward placed similarly ?

THANK YOU
Nooresh Merani

www.nooreshtech.co.in
www.analyseindia.com

Twitter = @nooreshtech

9819225396

nooreshtech@analyseindia.com
SESSION 13
INTRADAY STRATEGY
USING BANKNIFTY
WEEKLY OPTIONS

BY – ANKIT CHAUDHARY
CONTENTS:

• Intraday Strategy – Donchian Channel

• Prerequisites for this strategy
• Strategy Execution
• No Trading Days for this Strategy
• The Math behind this Strategy
• Pros & Cons of this Strategy
• Conclusion
Intraday Strategy – Donchian Channel
● Donchian channel is an indicator used in market trading developed by Richard
Donchian - "The Father of Trend Following”. Richard developed the indicator in the
mid-twentieth century to help him identify trends.

● Donchian Channel is formed by taking the highest high and the lowest low of the
last n periods.

● The upper band marks the highest price of a security over N periods while the
lower band marks the lowest price of a security over N periods. The area between
the upper and lower bands represents the Donchian Channel

● It is commonly available on most trading platforms. If a price is stable the Donchian

channel will be relatively narrow. If the price fluctuates a lot the Donchian channel
will be wider. Its primary use is for providing signals for long & short positions
Intraday Strategy – Donchian Channel
● Donchian’s 4 week trading rule system has been at the heart of many
successful trading systems, and is one of the simplest and most profitable
ways to trade trending markets. Here N = 4

● Apart from the 4 week rule, Donchian did work with a 5 and 20 day moving
average crossover signal system, and devised buy and sell rules using a
weekly time period

● People tend to think complicated is better, but the 4 week rule is a straight
forward way of getting you on the right side of a profitable trend. Note that
this system was also Richard Dennis’ inspiration for his trading methods,
and was taught to the legendary Turtle Traders
Prerequisites for this Intraday Strategy

● A Software which is able to generate Buy/Sell Signal on Donchian Channel Strategy

● An Efficient Dealer who takes less days off or an Algo Trading System

● A trading account with a discount broking firm or an advance brokerage plan with a
traditional broker (preferable)

● Discipline, Time & Patience

Strategy Execution – BankNifty Weekly Options

● Selection of Time Frame which suits you (5 Min/10 Min/15 Min)

● Selection of ATM Strike Price (preferably equally priced) before first cut off time according
to time frame selected

● A Buy/Sell position in both ATM Call & Put will be OPEN during trading hours

● Constant Monitoring of Buy- Sell signals during trading hours

● Stop and reverse orders to be executed on time as and when a fresh Buy/Sell signal comes

● Both open positions to be squared off compulsorily at 3.15 PM

No Trading days for this Strategy

● RBI Policy Day

● Budget Day

● Election Result Day

These are “High Risk High Return” days & it is advised to avoid trading on these days.
However if one is willing to take risk he/she must reduce the quantity
The Math behind this Intraday Strategy
Margin Required according to the quantity mentioned in this strategy

• For Short Options = 600 qty = 30 lots = 30*61000 = 18,30,000

• For Long Options = 600 qty

ATM price of option on the first day of weekly expiry = 250

Margin = 250*600 = 1,50,000

• Max Drawdown = 7,00,000

• Total Margin Required = 26,80,000

The Math behind this Intraday Strategy
Margin Required according to Drawdown

• Max Drawdown = 7,00,000

• Margin Required = 2x of 7,00,000 = 14,00,000

On the conservative side you can keep 3x of Max Drawdown

The Math behind this Intraday Strategy
Brokerage
Pros & Cons of this Strategy
Pros

● No Overnight Risk - Biggest advantage of any Intraday Strategy

● This strategy like any other trend following strategy limits losses and rides on
profits, irrespective of all other rules

● Trading in ATM Call & Put options means no dearth of liquidity

● Scalable - Subjected to exchange limit of not more than 2500 qty in one order

● Strategy based Advantage - Trend following gains can be captured on both long &
short side considering positions will be open in both Call & Put at any given point
 Pros & Cons of this Strategy
Cons

● Long upper & lower shadows in a candlestick will result in bigger stoploss for that
trade

● This strategy demands ‘No Holidays’ as you never know which trading day can have a
trending move so a back up person is required if your dealer takes a day off

● The cost & risks of doing this Intraday Strategy increases if IVs rise sharply due to an
upcoming event or a global sell off

● You can only do forward testing as back-testing of this strategy is difficult as charts
of weekly options are removed from most of the softwares post the weekly expiry

● As a system trader you have to wait for candlestick to close to execute the next trade
Conclusion
● This is not a Holy Grail trading system & doesn’t guarantee profits each week,
however I expect it to deliver significant returns on capital employed in long term

● This trading system is unlikely to be profitable when BankNifty is highly volatile in

a tight range resulting in multiple buy/sell signals

● Now that weekly options are also introduced in Nifty you can also start doing
forward testing on NIFTY weekly options. However in my view Nifty weekly
options may offer a low risk low return proposition compared to BankNifty which
is a different animal altogether.

● My preferred parameters for using this strategy would be N=4 on a time frame of
10 min but that doesn’t mean this will result in the best possible outcome, you
can tweak these parameters to your convenience & do forward testing of the
same parameters for some months
THANK YOU

Ankit Chaudhary
@entrepreneur987
Mob. : 9899899989
SESSION 14
The Composite Man Theory

• The Composite Man carefully plans, executes, and concludes his campaigns.

• The Composite Man attracts the public to buy a stock in which he has already
accumulated a sizeable line of shares by making many transactions involving a
large number of shares, in effect advertising his stock by creating the
appearance of a “broad market.”

• One must study individual stock charts with the purpose of judging the
behaviour of the stock and the motives of those large operators who dominate
it.

313
Three Wyckoff Laws

1. The law of Demand and Supply

• Demand > Supply = Price rise
• Supply > Demand = price fall

2. The law of cause and effect

• Cause = measure of horizontal point count on P&F
• Effect = distance the price moves corresponding to the point count

3. The law of effort

• Divergence between price and volume
• Is shares unloading started – signs of Distribution

314
Wyckoff Price Cycle

315
 Accumulation Phase

Abbreviations:
PS = Preliminary Support
SC = Selling Climax
AR = Automatic Reaction
ST = Secondary Test
LPS = Last Point of Support
SOS = Sign of Strength

316
Bank of India

317
TechM

318
 Distribution Phases

Abbreviations:
PSY = Preliminary Selling
BC = Buying Climax
AR = Automatic Reaction
ST = Secondary Test
LPSY = Last Point of Supply
SOW = Sign of Weakness
HH = Higher High

319
Bajaj Finsrv

320
IOC

321
Adani Ports

322
A Wyckoff Cycle

323
Bharat Forg

325
BEL

326
 Thank You

Listen to what the Markets is saying about others,

not what others are saying about the Markets.
-Richard Wyckoff

327
 DEFINEDGE CONFERENCE ON MARKET
ANALYSIS (DECMA2019)

Definedge Solutions, 17-18 Lokmanya house, Kothrud, Pune.

Mail: Info@definedge.com Call: 7276010270, 9764800700 Twitter: @definedge
WWW.DEFINEDGE.COM
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