Lessons from the Pros

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How I Trade

As an instructor at Online Trading Academy and a trader, I am very familiar with many technical analysis tools.  I further demonstrated my technical analysis knowledge by attaining the Chartered Market Technician designation. However, when it comes down to trading and profiting from market moves in any market, I always rely on the basic tools of supply and demand.

Many students claim that I trade differently than other instructors due to the fact that I use technical tools like the CCI or the MACD to base my decisions. This couldn’t be further from the truth. I use the indicators as odds enhancers, additional signals to improve my odds of a correct trade, not for the decision to enter itself.

Those of you who are in the Extended Learning Track are aware of my 8/89 Strategy. I will not detail the strategy here in the newsletter so to protect the integrity of the XLT.  However, when I am utilizing that or any other strategy that may use other indicators for identifying potential entries and exits, I will never stray from buying at demand or selling at supply.

Let’s turn to the Pro Picks as an example. The India Pro Picks have been doing quite well since they started in June last year. In my recent intraday pick of DLF, we sold short at the supply level based on what was taught in class, see Figure 1.

I was able to confirm whether to exit at my target or allow the profits to continue by analyzing my price and indicators at the target zone. Looking at the following chart, I saw evidence to take partial profits and allow the winners to run until stopped out. Price showed positive divergence at the first target so partial profits needed to be protected, see Figure 2

Another trade was taken on the Nifty Futures on the same day. Entry for the trade was 5224. The price blasted into Target 1 so the trade was held until Target 2.

In all, the best use of technical indicators is as a decision support tool, not for the decision to enter or exit itself. This applies for all types of trading, intraday, swing, or position.  To learn more about how to properly use these tools and which tools are best to use in which market environment, I invite you to join me and the other instructors in the Extended Learning Track (XLT) program offered by Online Trading Academy.

DISCLAIMER This newsletter is written for educational purposes only. By no means do any of its contents recommend, advocate or urge the buying, selling or holding of any financial instrument whatsoever. Trading and Investing involves high levels of risk. The author expresses personal opinions and will not assume any responsibility whatsoever for the actions of the reader. The author may or may not have positions in Financial Instruments discussed in this newsletter. Future results can be dramatically different from the opinions expressed herein. Past performance does not guarantee future results. Reprints allowed for private reading only, for all else, please obtain permission.