The Principle of Technical Analysis - The Trend
• Define what is meant by a trend in technical analysis.
• Explain why determining the trend is important to analysts.
• Identify primary, secondary, short-term, and intraday trends.
• Describe the basic beliefs behind the art of technical analysis.
• Define “fractal” as used in describing price action.
• Explain why trend identification is important to achieve profits.
• Recognize an uptrend, a downtrend, and a trading range.
• Identify trends using most common methods.
• Recall how significant reversal points are identified.
• List general rules for Channel.
• Describe the history of Dow Theory.
• Discuss the basic principles of Dow Theory.
• Identify the three basic types of trends identified in Dow Theory.
• Differentiate between primary, secondary, and minor trends.
• Identify the three basic trend patterns of all prices: upward, downward and sideways.
• Describe the “ideal market picture” according to Dow Theory.
• Express the concept of confirmation in Dow Theory.
• Explain the role of volume in Dow Theory.
• Charting Explain the six basic tenets of Dow Theory.
• Diagram the three phases of bull and bear markets.
Technical Analysis Using Multiple Time Frame
• In addition using multiple time frame analysis brings you closer to attaining the difficult-to – achieve goal of constant
growth with out drawdown.
• Market activity must be studied on several time frames to achieve the most objective analysis of trends.
• The use of multiple timeframes to analyze a stock for low-risk, highpotential reward trend trades is a concept called “ trend alignment.”
The Multi Time Frame Analysis
• Always look at the big picture.
• Always check the HTF, ITF and the LTF trend.
• Always trade at the LTF level.
• Investors focus on Daily, Weekly & Monthly Charts.
• Positional traders focus on Hourly, Daily & Weekly charts.
• Intraday traders focus on anything below based on your depth of trading.
• 5 mins, 15 mins, Hourly.
• Hourly, Daily, Weekly.
Price Action Trading
• There are strictly no indicators in price action trading .
• Price is the only truth and is always driven by the dynamics of the daily supply and demand.
• Price is happening Now. Hence, you are always in the present and never in the past or the future.
• The zones are the places of major action with respect to price. Every zone ( RBR, DBD, RBD, DBR ) need not to be a trading zone.
• We will look for specific scenarios to trade and we shall be very selective.
• The zones are the places where we actually look for high prospective trades.
Advanced Price Pattern:
• Flag Limit ( Continuation Pattern, Single Engulf)
• Fail to Return ( Continuation Pattern, Double Engulf )
• Caps ( Reversal Pattern, Double Engulf )
• Swag ( Power Pattern, Engulf )
• Quasimodo ( Double Engulf )
• Diamond ( 4 Engulfs )
• Dancing Lady ( Single Engulf with a Compression )
Price Chart Patterns:
• BAR Chart Pattern
Three Bar Groups.
Matching Highs / Lows.
4-Day Narrow Range & Inside Day.
4-Day Wide Range & Outside Day.
7-Day Narrow Range & Inside Day.
7-Day Wide Range & Outside Day.
• Exotic Chart Pattern
Sea Horse Pattern
• Event Pattern
Dead Cat Bounce
Island Reversal Pattern
• The ABCD pattern is a chart pattern we use in chat to identify potential long trade setups. We generally use this pattern intraday, however, it can be applied to different timeframes. The pattern is characterized by an initial spike (A), during which the stock price reaches the high-of-day.
• The Gartley pattern is a harmonic chart pattern, based on Fibonacci numbers and ratios, that helps traders identify reaction highs and lows.
• The Bat pattern is a retracement and continuation pattern that lets you enter a trend at a good price just as it is resuming. It is similar to the Gartley pattern but uses different Fibonacci levels.
Advanced Candle Stick Analysis
• Candle signals must be evaluated and acted upon within the market’s context.
• Reversal Pattern and Continuation Pattern.
• See when to ignore a candle signal.
• Effective money management concepts to maximize the effectiveness of candle charts.
• Attempting to trade reversals can be risky in any situation because you are trading against the prevailing trend. Keep the larger picture in mind.
• Candles Addition and Subtraction
• Framework – Analysing real bodies and shadows.
• Continuation Patterns - Rising And Falling Three Methods, Rising Window and Falling Window, Tasuki’s, Fry Pen Bottom, Dumpling Top, High / Low - Price Gapping Plays, Gapping Side-by-side White Lines.
• Candles with Western Charting Tools.
• Hook Reversal, Kicker, High Wave Candles, Belt Hold Lines, Tweezers, Three White Soldiers and Black Crows. Three Mountain top, Three River Bottom, Three Buddha top & bottom.
• Stock market cycles are the long-term price patterns of stock markets and are often associated with general business cycles.
• They are key to technical analysis where the approach to investing is based on cycles or repeating price patterns.
• The four stages of a market cycle include the accumulation, uptrend or mark up, distribution, and downtrend or mark down phases.
• Accumulation Phase: Accumulation occurs after the market has bottomed and the innovators and early adopters begin to buy, figuring the worst is over.
5 Phases of a Business Cycle
• Expansion, Peak, Recession, Trough and Recovery.
• Sectoral Rotation according to Business Cycle.
• Are market cyclical ?
• What sectors do well in a bull or bear market ?
• What cycle is the stock market in ?
• How do you find the market cycle ?
The Wyckoff Method
• Richard D. Wyckoff His Method and Story.
• The Wyckoff Method: A Tutorial Richard D.
• Wyckoff A Five-Step Approach to the Market.
• Wyckoff's "Composite Man“.
• Wyckoff Price Cycle. Three Wyckoff Laws
• Analyses of Trading Ranges.
• Wyckoff Schematics.
• Accumulation: Wyckoff Events Accumulation: Wyckoff Phases.
• Distribution: Wyckoff Events Distribution: Wyckoff Phases.
• Supply and Demand Analysis Comparative Strength Analysis.
• Nine Buying/Selling Tests.
• Wyckoff Buying Tests for Accumulation.
• Wyckoff Selling Tests for Distribution.
Elliott Wave Analysis
• Describe the basic operating theory of the Wave Principle.
• Define motive waves and corrective waves.
• Identify types of motive waves such as impulse, extension and diagonal.
• Identify types of corrective waves such as zigzag, flat and triangle.
• Label waves using standard Elliott Wave notation.
• Describe Fibonacci relationships as applied to Elliott Wave analysis.
The Anatomy of Elliott Wave Trading
• Elliott Wave Theory is a method of technical analysis that looks for redcurrant long-term price patterns related to persistent changes in investor sentiment and psychology.
• The theory identifies waves identified as impulse waves that set up a pattern and corrective waves that oppose the larger trend.
• Match the waves as labelled on a chart to the description in the text.
• List the waves considered the most advantageous to trade.
• Describe trade signals associated with various wave patterns.
Market Profile Trading
• Market Profile is a visualization tool to understand what kind of participants are coming into the market.
• It records the market activity and presents in a way to study the auction behaviour from the market participants.
• Helps the traders to understand the importance of price, time and volume.
• Helps Intraday traders and short term traders to effectively understand their trading competition and to understand.
Nature of Intraday Market Behaviour
• The Pure Trend Day is a day that opens on one extreme, makes directional movement throughout the day (with small balances), and closes at the other extreme.
• Double Distribution Trend Day, where the market opens on one extreme and closes on the other, but the directional conviction is not consistent throughout the day.
• The Pure Balance Day, or what is also referred to as a range-bound or non-trend day, is a day where there is very little sustained directional movement.
• The Normal Variation Day is a day in which the market extends the first hour opening range to one side or the other. By definition, this type of makes either its high or low of the day in the first hour of trading.
• The first hour opening range is a key reference period, because often the institutions are most active in this period and tend to set the tone early on.
• The Neutral Day is a day in which the market extends to both sides of the first hour opening range. Both buyers and sellers take turns being in control, and the end result is often a day which ends up neutral overall.
DAY OR SHORT TERM TRADING
OD (OPEN DRIVE) – (OPENING)
ODR(OD REJECTION)- (OPENING)
PPT(PIVOT PRESSURE TRADE) – (OPENING)
EVENING STAR – (OPENING)
MORNING STAR – (OPENING)
VIRGIN CPR RVRSL – (OPENING)
RCR (RED CANDLE RETRACEMENT) – (OPENING TO MID AFTERNOON)
GCR(GREEN CANDLE RETRACEMENT)- (OPENING TO MID AFTERNOON)
GAP UP REJECTION – (OPENING TO MID AFTERNOON)
CPR BO(CENTRAL PIVOT RANGE BREAKOUT) – (MID TO LATE AFTERNOON) GAP DOWN REJECTION – (MID TO LATE AFTERNOON)
M RVRSL – (MID TO LATE AFTERNOON)
W RVRSL – (MID TO LATE AFTERNOON)
RCBO (RED CANDLE BREK OUT) – (MID TO LATE AFTERNOON)
GCBO(GREEN CANDLE BREAK OUT)- (MID TO LATE AFTERNOON)
Open Range Breakout (ORB)
• The opening range is simply the high and low of a given period after the market opens.
• This period is generally the first 30 minutes or the first hour of trading.
• During this period, you want to identify the high and low of the day.
• The most important part of the opening range trading is the breakout from the range.
• In many cases, the opening range breakout determines the further price direction.
• When the price breaks out of the range, there is a big chance that the price action will continue in the same direction.
Swing or Momentum Trading
• Swing trading can be defined as an investment strategy designed to identify and profit from the short-term zigzag price movements that almost always occur within any established market trend.
• Stock prices and market indices almost never move straight up or straight down – instead, they zigzag back and forth, making short swings across a fairly narrow range within a primary longer term uptrend or downtrend.
• Swing trading is an effective investment tactic because you are always trading in the direction of the primary trend.
Advanced Indicator : Bollinger Band, ATR , ADX and MACD
• Bollinger Bands are a type of statistical chart characterizing the prices and volatility over time of a financial instrument or commodity, using a formulaic method.
• Bollinger Bands are volatility bands placed above and below a moving average. Volatility is based on the standard deviation, which changes as volatility increases and decreases. The bands automatically widen when volatility increases and narrow when volatility decreases.
• How and When to Buy and Sell rules with Bollinger bands.
• The average true range (ATR) is a technical analysis indicator that measures market volatility by decomposing the entire range of an asset price for that period. Specifically, ATR is a measure of volatility.
Signals are used for exits:
• Exit your long position (sell) when price crosses below the ATR trailing stop line.
• Exit your short position (buy) when price crosses above the ATR trailing stop line.
• The ADX indicator is an average of expanding price range values. The ADX is a component of the Directional Movement System.
• This system attempts to measure the strength of price movement in positive and negative direction using the DMI+ and DMI- indicators along with the ADX.
• The ADX indicator measures the strength of a trend and can be useful to determine if a trend is strong or weak. High readings indicate a strong trend and low readings indicate a weak trend. When this indicator is showing a low reading then a trading range is likely to develop. Avoid stocks with low readings
Advanced Relative Strength Index (RSI)
• Range Shift Behaviour.
• Hidden Divergence, Positive and Negative Reversal.
• Price target from Positive and Negative Reversal.
• Trend line, Support & Resistance on RSI.
• Pattern on RSI.
• Three Period Divergence.
• Option Basics
• How to read and use Option Chain.
• What is the significance of OI (Open Interest).
• How to interpret VIX and IV in option buying and selling.
• Basic Trading Strategies.
• Introducing Vertical Spreads
• Demystifying Delta
• The Option Greeks (Vega, Theta , Delta , Gamma and Rho).
• Straddles, Strangles, and Synthetics
• Advanced Delta Neutral Strategies
• Trading Techniques for Bullish Markets. If the market is heading higher we'll show you how to create specific strategies that profit from up trending markets including low IV strategies like calendars, diagonals, covered calls and direction debit spreads.
• Trading Techniques for Bearish Markets. Declining markets and higher IV gives traders like us an amazing opportunity to sell expensive options that decay in value. We'll cover our favourite strategies to profit even when stocks are falling like iron condors, strangles, etc.
• Trading Techniques for Range - Bound Markets.
• Relative strength is a measure of the price trend of a stock or other financial instrument compared to another stock, instrument or industry.
• It is calculated by taking the price of one asset and dividing it by another. Which is known as ratio analysis.
• This number is given context when it is compared to the previous levels of relative strength.
• To calculate the relative strength of a particular stock, divide the percentage change over some time period by the percentage change of a particular index over the same time period.
• Intermarket analysis is a method of analysing markets by examining the correlations between different asset classes. In other words, what happens in one market could, and probably does, affect other markets, so a study of the relationship(s) could prove to be beneficial to the trader.
• Intermarket analysis is a branch of technical analysis that examines the correlations between four major asset classes: stocks, bonds, commodities and currencies. There are clear relationships between stocks and bonds, bonds and commodities, and commodities and the Dollar.
Trading or Investing (Model )
• Measuring the Hypothesis
• Selecting the Time Frame
• Developing the Strategy
• Entry Rules
• Exit Rules
• Position Size and Risk Management
Algo Trading (Concept to Execution)
• Stages of Algorithmic Trading
• Formulating the Trading Concept/Logic
• Filtering criteria to choose the scripts
• Verification of Logic (at High Level)
• Back testing
• Optimization of Parameters
• Paper Trading aka Forward Testing or Simulation Trading, in the real environment
• Deployment in the real environment
• Resources for learning Algorithmic Trading
• A walkthrough with a sample strategy in Python
The Statistics of Back testing and Optimization.
• Explain the statistical challenges faced when back testing.
• Appraise four important statistical features of time-series price data.
• Analyse three statistical concerns in back testing.
• Differentiate methods of optimization.
• Define “robustness” as it applies to trading systems Examine riskadjusted performance metrics such as Sharpe, Sterling, and Sortino ratios.