Tuesday, May 10, 2016

Proof of Pudding (Mature Trader) is in Eating (Systematic Approach)

From the Desk of Sagar Nandi and Superior ProfitPicture

Yes. I did not say that proof of mature trader is in profit. Profit tend to come as a result of discipline. And money management.  And patience. And a robust trading system - I use CUE Trading System.

In the Superior Profit webinar conducted on 27th April 2016, I had introduced the CUE Trading concepts with many real trade examples. For Long Term Investment, Swing Trade and for Day Trades.

In that webinar, based on CUE Sonar and CUE At A Glance analysis, I had identified a potentially actionable stock at that time.
That stock was Dishman Pharma (Thomson Reuters symbol DISH.NS) in National Stock Exchange of India. That was presented as a Trend Following Go With Flow Short potential Swing trade. You may like to review the CUE Intro video here.

Note: Dishman Pharma was discussed right after 1 hour 02 minutes into the webinar. You may directly go there if you wish to - in the video link provided above.

Note: Some stocks in India market does not allow Shorting the stock as of this posting. This post is aimed at explaining how a stock in similar CUE setup could be traded using Short stock, Short Futures or Put Options - in any market that allows Shorting or using Put Options on a stock.
Let us go through this actionable trade idea as presented in the webinar at that time. Below is the snapshot of Dishman captured right from the video recording of the webinar - let us study the signals shown by CUE System on Dishman on 27th Apr 2016.

​Reading from Weekly Chart (Backdrop Template):

    1.    From June 2015, Dishman had gone up sharply – reaching the peak in Oct, 2015.
    2.    Around this time Weekly chart had several Candles with long Upper Tail – indicating that Bulls are losing steam and Bears are pushing price down every time Bulls try to raise price up.
    3.    Since then Dishman is moving sideways in Weekly chart till April 2016.
    4.    On 27th April (the webinar day) the last bar on the chart has broken down the Triangle that was formed due to the sideways move in this chart. This is a Bearish indication.​
Weekly signals were Bearish - right? Now, for more accurate Swing Trade entry – as per Superior Profit Rule Book, we look at Daily chart using Hop On Template.
​Reading from Daily Chart (Hop On Template):

    5.    In Daily chart, Flow Candle color turned Bearish (Magenta) as price came down and is resting right at the Memory line. If it falls below the Memory next day, it would give a valid Go With Flow Swing Trade Short signal.
    6.    Relative Performance had tilted down indicating Dishman was not only starting to fall but it was underperforming Broad Market (the Broad Market to which a Stock is compared is adjustable in CUE System – in this case, as Dishman is traded in India, we had set Broad Market to India Bombay Stock Exchange Index which is SENSEX).
    7.    Movement had turned Bearish on all the parameters (Acceleration, Speed and Movement) – as seen by the series of red dots in the Hop On Template.
That was the analysis of the stock in the webinar on 27th Apr 2016. It was bearish and a Short could be entered the next day if Dishman continued to fall. What happened next? For that let us look at DISH.NS through Hop On Template as captured on 6th May after Market Close.

Exiting the trade with profit:

​    8.    On 28th Apr Dishman continued to fall - triggering the Short Entry on Fine Tune chart or as price went below Low of 27th Apr for those not using Real Time data.
    9.    Where to put Stop Loss, that would be found using the Protection signal on Hop Off Template (see below) and would be 184.8 that was never hit.
    10.   Instead, on 6th May, in 7 trading days since entry, Dishman hit lower Boundary at 155 – which is our standard exit point for Go With Flow Trend Following Swing Trade. And the trade would be exited with profit.

Pre calculating Stop Loss:

​It was important to keep Stop Loss pre-decided. And we could calculate Stop Loss level using Hop Off Template as explained in chart below.
The result?

Following disciplined way and easy to use CUE charts, a profitable trade could be identified and executed.

Any CUE trader could do it!
​I had shared this actionable trade on 27th April webinar.  However it is not only me who could identify such actionable trades.

Any of our CUE Global System traders could easily scan for this or similar stock, analyze, enter and exit the trade. In India or USA or any other market in the world.

Does your trading system allow you to do that?

Sagar
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