Important Points that I learned from Come Into My Trading Room by Alexander Elder - Part 1

1. I - Important Points that I learned from the book – Come Into My Trading Room by Alexander Elder
   
   
   
   
   1)      People are more likely to be rational when alone, and grow more impulsive when they join crowds.
   2)      A stop order becomes a market order when the market touches that level. Suppose you buy 100 shares of Guinea Pig Factory at $4.25, expect it to rise to $7, but protect your position with a stop at $3.75. If the price slides to $3.75, your stop becomes a market order, executed as soon as possible. You’ll get out, but expect to suffer slippage in a fast-moving market.
   3)      Daily charts alone aren’t enough, and you need weekly charts with at least two years worth of history.
   
   
   MIND—THE DISCIPLINED TRADER
   1)      It is OK to make mistakes but not OK to repeat them. When you make a mistake for the first time, it shows that you are alive, searching, experimenting. Repeating a mistake is a neurotic symptom.
   2)      Money management rules draw a straight line between a business-man’s risk and a loss.
   3)      Healthy trading boils down to two questions you need to ask in every trade: “What is my profit target?” and “How will I protect my capital?”
   4)      Becoming a good trader means taking several courses—psychology, technical analysis, and money management. Each course requires its own set of records. You’ll have to score high on all three in order to graduate.
   5)      Whenever you enter a trade, print out the charts that prompted you to buy or sell.
   6)      What will you do if your stock jumps five points in your favor? Five points against you? What if your future goes limit up? Limit down? If you have to stop and think while you’re in a trade, you’re dead. You need to spend time preparing trading plans and deciding in advance what you will do when the market does any imaginable thing. Play those scenarios in your head, use your computer, and get yourself to the point where you do not have to ruminate about what to do if the market jumps.

Interpreting Stocks - 26th May 2010

NIFTY EOD Analysis as on 26th May 2010

Green candlestick with no lower shadow and a small upper shadow. The close was above the mid-point of yesterday's candle. Also, the trend channel acted as a good support from where the prices bounced back. Volume was higher than yesterday, showing that more people are eager to see the prices UP than lower levels.
CMF is showing +ve bias compared to yesterday(+) showing accumulation.
Stochastics is showing +ve bias(+) and just waiting to crossover.
EMA5 is below EMA15 (-). EMA5 support at 4897(+). EMA 15 resistance at 4992(-).
Slope of EMA 5 is up.(+)

Answers for Yesterday
Bulls came back with strong force today. the Breakdown yesterday was just a trap as of now. We have to wait for few more days of action so see if it was really a false breakdown.

Questions
Can Bulls continue their ride ahead? Let's wait and watch.

World Market Analysis as on 25th May 2010

Interpreting Stocks - 25th May 2010

NIFTY EOD Analysis as on 25th May 2010

 Big Red candlestick showing selling pressure. Volume was comparitively lower than yesterday. The close just broke the trend channel and the trend line.
CMF is showing -ve bias compared to yesterday(-) showing distribution.
Stochastics is showing -ve bias.(-)
EMA5 is below EMA15 (-). EMA5 resistance at 4880(-). EMA 15 resistance at 5010(-).
Slope of EMA 5 is down.(-)

Answers for Yesterday
It was all bears day today, dominated from start to end and in turn broke the trend channel and trend line.

Questions
Is this breakdown of NIFTY from trend channel and the trend line an indication of more bearish attack? Let's wait and watch.

World Market Analysis as on 24th May 2010