Bank Nifty Trading - Bank Nifty Future Trend - Part 3

Bank Nifty Trading - Bank Nifty Future Trend - Part 3

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Hi guys so, this is the third part of trading. In Bank nifty video series so, till now we have covered, two. Parts in the first part we saw about basics of Bank nifty instrument, in the, second part we saw relative, strength analysis, of Bank nifty so. This third part is dedicated, to Bank nifty and overall, trend analysis, of Bank nifty and in the fourth part I will be covering entry exit and trailing. Stop loss techniques, that. We'll be covering in the topic of risk management so. The learning objectives, for this video is, will be seen, how to identify trend, in any instrument, in this case it is Bank nifty will. Be seeing why trading, in the direction of trend is extremely, important, I'll be, covering up a concept of path, of least resistance and, I will be showing white traders, need to understand, this concept in need in order to become successful trader. Then. I'll be sharing one tool with you the which I have covered in my many videos of it, helps in identifying, overall. Trend in the asset and then. I will be coming to a topic. Of trend, analysis, in timeframes I'll be, showing here why selecting, the appropriate time. Frame is necessary, in order to determine the trend quite. Often the. First mistake the traders do is they select. A wrong timeframe and they then try to determine the trend on that, so. I'll be sharing. Some thoughts on this and finally. Will. Be conducted on conducting, trend. Analysis on PSU banks and private sector banks and I'll show you how this video actually fits in with. Respect to the first two videos we have done and what will be coming in part four so. Let's get started the, first thing I want to tell you is since this. Topic, is about trend, trading. Remember. Two things our, job as a trend trader is just. To follow the trend and number. Two we don't get into the business of anticipating. Tops and bottoms right so if a trend is up we'll. Be participating on the long side if the trend is down and the, conditions are right we will be participating on the short side right. So. The first step is to, recognize what, a trend is so. We have a chart here which. Is broadly, range-bound. It's. About a ten-year chart and what. We can see in once, short is that this is not a trending, stock or an asset, right. So. The, first question that you have to ask yourself when you see a chart is whether this is a trending chart or not if that chart, is not a trending, chart then you know what you cannot apply principles, of trend trading on that chart it's just better to switch to. A different instrument, I also. Want to highlight one thing that. If you are trying to identify long-term. Trends please use long term charts if you're trying to identify short-term. Trends please use short, term charts don't, mix the two quite. Often what happens happens. Is that traders. Try to identify, a long term trend through, short term charts so. That does not work so please keep this in mind that long term trends should only be identified through, long-term, charts. So. This is another chart. That I want to share so. As soon as you see this chart the first thing that comes to your mind is the price is heading higher the. Same feeling you get here it, was here, even. At this point you had a clear higher, high structure, in place right. So, this is how a trend. Uptrend. Looks of course, there are periods of volatility, that we'll be covering up later but. In, case you have to identify trend, for stocks try. To stick. To long-term. Charts and that is daily timeframe or higher I usually, prefer daily, weekly timeframe for, stocks. In, case, for index let's say nifty Bank nifty SNP 500 what. You can do or their respective ETFs. You can also move down to alley timeframe so alley timeframe, and daily timeframe are pretty good in terms of identifying trend, for ETFs, or you, know index. Trades. Don't. Go. Below, oddly that is my experience you will just add a lot of noise to, your charts, and overall, your market analysis, so, just. As a golden rule in case, you want to create, stocks. Stick. To daily timeframe and above in case of index hourly. And above right so. This is one more trending, chart again, what we see here, at each, respective, points, is that price is trending, lower so. These are the kind, of charts you need to see whenever, you are trying to identify a, trend in any asset. You would actually the know the trend the moment you look at the chart in case you cannot determine the you, know trend of an instrument by just. Looking at it at the first time you know what that chart is confusing, it's not worth it just move on to another. Instrument, right so, one thing I want to make clear about down trending market is if you see this chart this, was a fairly up trending stock.

It's It's a, volatility. Is low and it's kind of rising, without, any significant, volatility well such kind of charts you'll find a lot you, know when you're trying to identify an, uptrend, because while prices move up volatility. Tends to come down whereas. Down trend is sort of different they'll. Be very you. Know rare, charts, that you will see that will have a smooth, downtrend. Over. A period of few years you'll always have these sort of counter, trend rallies, it's, just because of the nature of how downtrend, works. Volatility. Is always high because fear is a stronger. Emotion, than greed and which, is why you. Will find these. Sharp, counter, trend rallies which are actually missing in. An in a proper, up trending chart right. So. So these, are the two kind of charts that you have to identify it, first is this and second. One is this in, case you come across a chart which is somewhat. Like this over a long. Term chart long, term timeframe just change the instrument right. So. I'll. Just explain, you this concept concept, of trading, and direction of trend so, what I have here is the chart of Bank nifty. This. Is since 2014. I've mocked out the breakout, points, and the proper pivot point I have. Done a separate, videos on how to identify. Or, mark proper, pivot on charts I've shared the link in the description, box below in case you need to know why. Some points. Are valid pivot, points and some should, not be counted as pivot points so, do, go through that video as well so. The, easiest way to identify an, uptrend is you, won't find much you, know significant, retracement, or volatility and at, each Junction, you can actually mark out relevant, pivots so this actually, forms, uptrend on the, down side what happens is you will you, will find consistent. Lower lows that are you. Know forming on charts and and, these higher high structure, is sort of missing so that is how you identify a downtrend, this, is just price structural, analysis, it's extremely, simple. Again. What. You have to do is you just have to identify relevant, pivot, points to know whether the price is trending up and relevant. Pivot points on the downside, to identify, where the price is trending down so, have concept, I have explained this concept, in great detail in one of the pivot point videos, that I just mentioned, about Sojo just, go through that. So. The concept of path of least resistance is, something, which. Is very easy to understand. But it's very difficult to implement just because of our, human. Nature now. The concept. Says that when a prevent, price is moving up do, not try to short, short. Sell that particular, asset now. These are the relevant pivot points that I have marked on the chart. It. Is for two purpose one I want to show how up trending stock or an asset looks like another. These. Are the retracement, points. Where you know maximum, traders, will, try to short, the stock just because they, look at retracement, from 600, to about 480, they, try to extrapolate, that to over 300, 200, and then they try to short the stock or an asset well, what is happening is that until, and, let, us start with this pivot until this pivot is violated, the trend is in place now, as soon as the new pivot is formed then as. As. Far as this pivot holds the, trend is up then, we form another pivot so this is how we move as pivots, start, moving higher, the. Path of least resistance that.

The Chart is telling you is on the way up so, understanding, this concept. That. When you. Know a trend is clearly up and the, path of least resistance for, prices, on the upside do, not get into the business of short selling the stock because, you'll go through tremendous, amount of financial pain and psychological. Pain which, actually, is more, damaging, than you know financial, pain so. That is why I, would urge you to stop the video here take, a snapshot, of this screen. Because. Keep this in mind and as a trend, trader you. Have to abide by the rule of path of least resistance. Wherever, the price is going go in that direction go, don't sort. Of create counter trend so. This example is on the downside see how clearly pivots, are being marked on the downside, now, if you try to buy here if you try to buy here or at, these levels or at these, levels you're only going to take losses nothing, else right, no, matter how much you. Know value you get at these these. Prices, by valuing mean, there, are value investors, and traders in the market who do not mind their stock falling 20 30 40 % because they know the business is strong and the, price would had higher well. My reasoning, is that I don't, want to ridicule any method but, our job is to put money, to work in stocks, and assets which are performing well right. So, we want to put, money in stocks which are clearly trending, higher which actually strong financial, companies but, they need to show structure, of higher high and higher low so, in this particular chart, the. Path of least resistance is, on the downside, look how easily prices, you know it moves down over a period of time so, which is why we do not need to go. And take a long position in such, talks because again the path of least resistance is, on the downside, so. The first exercise that I want you guys to do is whenever you look at the chart any. Chart after this video ask, yourself, this question what is the path of least resistance in, this particular, asset or the asset that you are looking at if the, path of least resistance is, on the upside go, ahead and buy that stock if you, don't get a clear answer just, just, switch that chart over and move to other, stock in case you get the answer that the path, of least resistance is, on the downside you know what don't go and buy that stock right. Always. Remember one thing the, trend is your friend in my trading room I have this. Sort. Of pasted. On my wall in a huge picture, because, I always want to remind myself that I, I'm. A trend trader a trend investor, so, I always follow this rule that trend is my best friend. And I do not want to get into the business of anticipating, where the rally would end and where, the bottom would form right. So. This is the tool I was talking about I simply, use a 200-day, moving average, I've been sharing these charts over, and over again in my market analysis videos because.

My My. Concept, of trend trading is very simple. What. I feel, is that even, a ten year old or an eight year old should understand, what you're doing that is how simple your method has to be so. What I particularly, do in my trading is that I like, to see where the prices, with respect, to 200-day, moving average, and I also like to see the slope of 200-day, moving average, now this is something I covered in the relative strengths part also the. Part two of Beng nifty series so. This. Is what I want that a price, has to be above the 200-day moving average, to be considered, as a valid buy in, case the price is below the 200-day moving average, usually. I don't go and buy that asset, right, so, if you notice this. This is a 15-year, chart of Bank nifty if, you notice all the major bear. Market phases whether, it is 2013. 16, or, even. 2008. 2011. These. Sort of phases happen below 200-day, moving average, right so whenever the price is consistently, below 200-day, moving average, there is no point trying, to buy the particular. Asset in, this case Bank nifty why, would you want to take a long trade when the price is below 200 day moving average, it just, does not make sense what. You need to do is you, need to trade in the direction of trend when the price is clearly sustaining, above 200-day, moving average, yes, you will miss out these V, sort of reversals, these are about 10-15. Percent reversals, but but that is fine you're, getting about 60 70 percent here again. You. Do not get much of trades here you got about 40 percent here, last, two years again you've got about 40 percent so. If in in, two, three years if you get these 40 50 percent, kind of trending moves and this is just, bang nifty then, why do you want to unnecessarily go, and buy when prices, below 200-day, moving average, so, this is something I religiously. Follow I never. Buy buying nifty or, any banking, stock when I find the price below 200-day, moving average, because I always, feel that. If, the price sustains, below the average then you know it can, fall to any extent, right, so, these small whip. Sauce that you're seeing in and around average that price goes up and goes down to, filter this what, we do is we are just interested in this slope of the average now, if you see. Today. I am recording this on, 18, June as, a bank nifty is sort, of struggling to get over, 27-thousand, as, we've been seeing in our Market Analysis video look. At the slope slope is still up so in. Early March this year price, actually moved below the 200-day, moving average, but I was, not inclined to short sell because the slope was still up so. The slope is sort, of flat link flattening out it's still not properly. Flattened, out but. Still again I am not inclined to short short. Sell a band nifty till I see this pivot, point breaking, right. So. Now I come to the topic. Of time frame selection. So. Before this time frame selection I'll just explain, you this structure, here because, this is one of the most. Basic. Spry, structures, in market but it actually also causes, a lot of confusion. With. Respect to trend because time, frame selection is not done properly so what, happens is price faces resistance at some level it comes down then it breaks out and a, trader at, this point things that are valid breakout is happening and the trend is, changing on the upside but you have 200 under you understand, the importance of time frame here now, look at this chart right, and look, at this chart so. This chart and this chart is actually same all, right for the same period now, look what is happening here this. Sort of price structure happens, here so, in case you are here you see that you know prices, taken resistance, at this level and we've, had a breakout here so it's time to go long then. Price makes a lower. Low then, we here we get a lower high but, again we see some consolidation and again a breakout at this point same. Thing is happening at this point that price takes a resistance, it forms a small range then breaks out again. It is happening at this point that. Takes multiple rejections. At this this. Line then, it finally breaks out so. If you're taking if you're, considering, trend here, while, price is making lower low. At each, Junction, it is also making higher high at some places case, in point this this. Even. This point right, so, why this confusion, is happening, it leads to a doubt over trend structure, because, your time frame is not right now. This time frame is I think 30 minutes 30, minutes chart, now, this time frame is weekly. Time frame, all, right so, look look at the difference here clearly, here, you see a structure, of lower low and lower high forming, right, there, is not one pivot, high where closing has happened above the pivot above.

The Pivot high level right, so this pivot high is lower than this this. Pivot high is lower than this while, this pivot high is higher than this pivot high level which, actually appears which, actually appears here right. In, a, weekly, time frame chart this, just looks as a retracement. Because. You don't get any proper, closing. Above this pivot level, right, so, come back to this structure we, are looking for a breakout, above the previous pivot, high and a, closing above it so, this structure plays, out more, often in shorter, timeframe, charts than weekly. Charts, right. I hope my point is clear because. Don't get into the habit of selecting, you know time frame that is too short that actually distorts, the overall trend structure, I'll. Just repeat for, stocks, always. Prefer. Time. Frame which is daily, or higher right. For. Index, I'll, just come to that slide, yeah. For index, preferred. Charts, that are Rd and above let's say all each our daily chart you can identify trend, on index but for stocks always, preferred daily timeframe charts, charts or above write daily. And weekly quarterly, yes quarterly charts are also useful right. So, if you select your time frame properly, this. Problem, won't arise and let me tell you one thing in trend, trading once. You have got the direction, of trend right that. Is the only thing, you require, to actually become profitable, more. Often than not we, are looking for entry points exit points stop losses but, we fail to understand. The importance, of identifying the, trend and this. Trend identification. Has to happen on the right time, frame it should not happen on any time frame if you take a five-minute chart of this you'll find more sub trends within this trend right, so what is the use so, that is why I don't, have the feeling of fear of missing out on a rally. That is under undertaking. Take, your time move, to higher timeframe, charts analyze. The trend structure properly and then, you can move forward, so. Let us quickly go to the trend analysis, part of psu banks so, let's say today. We want to invest in PSU or private. Sector banks or let's say we want to trade in.

Either Of the two sectors or which, sector would you prefer if, you look at PSU, banks right now the price is below the 200-day moving average, and this will 200-day. Moving average, slope is also down so. You know what I am NOT interested in. PSU, banks no matter what value, underlying. Value these stocks I have but. I won't trade because the price is clearly below the 200-day moving average, if, you see over. The last five, years if you would have followed this simple concept of 200-day, moving average, in price you. Would have saved yourself, with a lot of pain with respect to PSU banks because you wouldn't have entered here you, wouldn't have entered here and you, know what all this volatility that is happening, in. PSU, banks currently, you won't be participating in it because, price. Is already below the 200-day moving average, right on the, flip side look, at private sector banks. Since. Same. Period five years private. Sector banks have been consistently. Above the, 200-day, moving average, barring, the time between July, and April. 2016, you, don't need to participate here because if. You follow the principles, of trend trading and identifying, trend correctly, you'll. Participate in this phase and you will participate in these phases and that's more than enough even if you see now price is, comfortably, above the 200-day moving average, and the slope of the 200 moving average is on the upside right, so between PSU banks and private sector banks private. Sector banks are clearly the favorable. Ones if you look at the second part of, relative. Strength analysis that we did on banking free last week we, came to a conclusion that private sector banks are outperforming, both, nifty, and Bank nifty so they automatically, qualify. As an investment or a trade right so. Well even after trend analysis, what we come to know is that private sector banks are still being favored in the market and it's always better to go with winners all, right so. I'll just show. You how this video fits into the overall. Magnetic. Tray ding series that we are doing so. First step was we, need to check where the Bank nifty is outperforming, nifty or not and with, the prices above 200 day moving average, in case we get a yes here then we move to the second step that, is with sectors outperforming. Whether it is PSE bank or private sector banks once. We are clear in this step then we move to the third step that is we conduct trend analysis, of Bank nifty both in terms of higher high higher. Low price structure and 200-day. Moving average, with, respect to price and slope of moving average once. We get a ok here and then we move to the fourth step that. Is we, conduct a trend analysis of psu Bank and private sector banks out. Of these we select which sector. Sub sector is actually. Qualifies. For investment. And trading and then. We shortlist. Bank, nifty for trade or PSE, or private sector banks stocks. Right so. Which is either you. Take. Up a simple Bank Nifty index for, a trade if all these criterias. Are satisfied, or if you, want to get into sub sectors and stocks, then, this step helps, you because it will tell you which sector is actually outperforming. The Magne 50 and nifty and within, the sector which. Sector. That is psu or private bank sector is trending. On the upside alright. So, the step six would. Be the part four of this video series where I'll be covering up entry exit and trailing stop and I, will be also showing you how to you. Know put, stop losses correctly, whenever you are starting a trade and how build on it so, this is how this, video actually fits in in, our overall framework of trading, bank nifty I hope, you have understood till, part three in, part four I'll be discussing, some position, sizing and risk management techniques which.

Will Actually finish off this four four part series so. In case you have any doubt regarding what I've shown you just leave a comment below and I will get back to it and, this. This has been a fairly long video but for. Trend analysis, it was required because I cannot cover up trend analysis, in let's say a ten minute or fifteen minute video it's a vast topic I also, intend. To do. A whole separate, series of you. Know trend trading I have. Planned a 10 part series for, it so, it will take some time to cover up all the topics, in depth but I will definitely do it so. Do let me know in case you have any doubt I will surely get back to you and thanks a lot for watching this video bye bye click. On the subscribe button and Bell icon to, get instantly, notified, when a new video is uploaded thank, you for subscribing.

2018-06-23 21:50

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In this video, we take a look into concept of path of least resistance, overall Trend structure analysis of Bank Nifty and the importance of Trading in the direction of long term trend. I also show how this video clubs in with Part 1 and Part 2 in forming a framework which is required for Bank nifty trading. Let me know if you have any doubts. Part 4 will be released next week and will focus on Risk management in Bank Nifty. Thanks Guys.

thnx very much

Most welcome Vijay

Awesome, great, can't be more clear! Very eager to watch the 4th vid as it holds the masterkey of the trade. Thanks for sharing such invaluable info!....

Thank you so much Pramod.

Very nice video. On bank nifty request you to put video on bank nifty option trading soon. Thanks a lot for your videos.

Already in the works Android Gamers. Thanks

Explained excellently, makes me to go through again and again to gain knowledge. Thank you friend.

Thank you so much.

Awesome awesome!!

Thanks Indra

Do we need to select 200 day sma or ema? What is the difference and significant on this selection?

Most Welcome. Tc

Thank you bro.

Hi Karthick, Does not matter which number or which type you select. I have always traded with Simple Moving Average (SMA) and it works just fine. EMA is just little fast when it comes to adapting to current Price action. That's all. In the end, not much difference. Tc

Thanks for the series, it's really helpful. However most of the the retail traders are day traders and they are caught in whipsaws. In the 4th video may you please cover how to avoid them

Thanks Amar. I have taken a note of this. Tc

If we figure out the path of least resistance, then rsi is showing positive divergence w.r.t. price, we should still not go and buy even if it's for short term bounce (scalping trades) ??

You’ll have to backtest this Kushal. Let me know the results. Tc


Thank you PC Mohan

you are absolutely fantastic as usual. your thinking and explanation so refined and convincing that one cant hold back to comment on your video. god bless you.

Thank you so much Divyang. Such wonderful comments make my day. Tc

Dear Sir, Appreciate your effort to make this flow so systematic and concrete to build a super structure of BN trading. Must thank you for such an enormous gift at free of cost!

Thank you so much Deccan Honda :)

That’s good. But test it over a period of 5 years for accurate results. Tc

TradeWithTrend have tried it a number of times - and rsi strength even in a downtrend leads to a bounce in almost 90% of trades


Most welcome Shrikant

Appreciate the effort put to educate people through these videos. Keep it up.

Thank you Sanath

sir do u think you should sell when bank nifty trending down below 200 days moving average

Only on retracement. Unless risk reward is in favour, I won’t short sell.

Sir can u share banknifty data link

Sir do you conduct practical training sessions on Options Buying and Selling

Thanks for the comment A M Shaikh I don't conduct any training. I just upload videos here for everyone to learn from.

Explained very well thank you very much sir

Thanks Kannapiran

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