Simple and Profitable Strategy For The Short-Medium Term Trader

This strategy will help you spot swing/short to medium term picks. It works well for the trader who is averse to day or swing trading.

TECHNICAL INDICATORS USED AND THEIR INTERPRETATION

10 EMA: Shorter EMA. Trader should watch all crossovers of and around it.

50 EMA: Longer EMA. Trader should watch all crossovers of and around it. Use it as a confirmatory signal.

100 EMA: To know the general trend of the stock.

These are to be used on 1 WEEK Charts.

HOW TO INTERPRET STRATEGY ON CHARTS

If price is above 100 EMA, the stock’s trend is BULLISH

If the price is below 100 EMA, the stock’s trend is BEARISH

The trend changes when the price crosses the 100 EMA in either case.

Look for price crossing above or below 10 EMA.

If price crosses above 10 EMA, and if price is above 100 EMA, it is a BULLISH signal.

If price crosses below 10 EMA, and if price is above 100 EMA, it is a MILDLY BEARISH signal.

If price crosses above 10 EMA, and if price is below 100 EMA, it is a MILDLY BULLISH signal.

If price crosses below 10 EMA, and if price is below 100 EMA, it is a BEARISH signal.

Use the 50 EMA as confirmatory signals as the price crosses above or below it.

EXAMPLE 1

MEDIUM TERM technical analysis strategy

ONE: The price crossed 10 EMA and 10 EMA crossed 100 EMA first and later 100 EMA. This was a buy signal. At this time Mahindra CIE was at 195 levels on or around 9-1-2017.

TWO: The price crossed below 10 EMA and that was a signal to book profits. At this time Mahindra CIE was at 235 levels on or around 19-6-2017. Holding period 23 weeks. Gains 20%.

THREE: The price crossed below 10 AMD 50 EMAs and that was a signal to go short. At this time Mahindra CIE was at 240 levels on or around 15-1-18. It fell to 202 by around 19-3-18, a 18% fall.

FOUR: On the candles ended 2-4-18 and 16-4-18, the price once again decisively broke above the 100, 10 and 50 EMAs in that order, and the 10 EMA also crossed above the 50 EMA. All bullish signals. at that time, Mahindra CIE was at about 232 levels, and since then it has gained about 11% as on 6-7-18 .

ADDITIONAL NOTES: To get alerted about any change in the 1 Week trends, you also must keep checking lower time frames of 1 Day and 1 Hour. If there is any reversal happening on these charts, and if you have taken a position, you must act accordingly.

BONUS – PRICE ACTION NOTES: Look at the last candle on the chart and look at the volumes. I have outlined both in black.

how to analyze price action

Here is what we see:

  1. Abnormal volumes were traded in Mahindra CIE for the week ended 6-7-18.
  2. The volumes were absorbed, and as you can see, the candle has developed a very long wick at the end. This implies that all selling was absorbed and the stock was off the lows by a wide margin.
  3. This tells us that someone has picked up a large quantity of Mahindra CIE in this last week, and there may be something up in the stock.
  4. Based on this price action analysis, I would put Mahindra CIE on my watchlist.

SUMMING UP

Apply this strategy to any Indices or FNO stocks and check whether it works out on charts. This is a tested strategy and therefore should do well for you.

Additionally you can set up a screener (Latest Close Greater Than EMA 100) and get a list of FNO stocks. Then, you should check the charts and shortlist the stocks that qualify for a long or a short trade.

16 Comments on "Simple and Profitable Strategy For The Short-Medium Term Trader"

  1. ashsih gangwar | July 8, 2018 at 8:22 am | Reply

    Can we go for daily chart instead of weekly on this Sunil Ji?

  2. Hi Sunil,
    As mentioned, This strategy should be used on Weekly TF. What will be the approx time horizon for my investment in this case? Second thing, can i apply this strategy for futures chart? In case of futures, investment period will be one month only so will it be good to go with weekly TF. If not then please advice chart time frame and EMA to be used.

    • sunil.tinani | July 8, 2018 at 9:58 am | Reply

      1. Time horizon is from 1 week to several weeks
      2. Don’t apply on Futures charts
      3. If you are anyway watching futures, you can try this strategy on the charts and paper trade

  3. Dear sir,
    You are Phd in Physics and analyst in stock market. Believe me or not this is deadly combination and can create award winning strategy which can work in any market conditions. Keep sharing knowledge and god will bless you indirectly.

  4. Is there any method to calculate the target in this strategy?

  5. Sir,
    Thank you for this simple strategy. In addition to this which other indicators can be used… Eg macd, RSI etc. Short term purposes. Thanks

  6. please explain about ichimoku sir (how to apply for this ) …
    and can I apply supertrend DMI RSI HEIKIN ASHI to this …. thank you sir

  7. Dear Sir,

    I am slowly learning form you and i find it really great and easy to understand. Just would like know which website I can use to observe/apply the same. I am trying apply this strategy on investing.com but not getting one week chart option. Kindly help me on this.

  8. Can this be applied for daily trades? If yes, what would be period considered?

  9. “To get alerted about any change in the 1 Week trends, you also must keep checking lower time frames of 1 Day and 1 Hour. If there is any reversal happening on these charts, and if you have taken a position, you must act accordingly”
    what indicators to be used on daily or hourly chart?..same indicators or different

  10. where to put the stop loss?

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