Nitish Kumar Sir – Mentorship Program

Review Class: 25 Aug 2021

Topics Covered
TECHNICAL - REVIEW OF LEARNING
- Market Opening
- Trade Timing
- Support/Resistance
- Stop Loss
- Indicators
- General Topics

Context of the Review Class

It is important to review the topics covered on periodic basis so that concepts are clear
and understanding and practical applications are solidified.

MARKET OPENING
At market Opening
- Check whether opening is Gap up or Gap down
- In case of Gap Up and Gap Down, check whether Open High or Open Low is
formed
- In case Gap Up/Down and Open High/Low is formed, the Open price level can as
Resistance/Support for the day. (Open High level will be resistance. Open Low
level will be Support)

Watching these levels is very important for an Intraday Trader.

Use shorter timeframe and use these Support and Resistance levels for deciding the
trade

When Open High and Open Low are formed, Resistance and Support at that level is
formed. Using a lower timeframe take the trade confidently.
90% of the time the trade should work.
When these levels are broken on closure basis, use stop loss and exit.
(Don’t hope and wait)

TRADE TIMING

Don’t do any trade for the first 15 minutes. Keep away from the market
- Experienced Traders can start from 9:30
- New Trader – Start trading only after 11:15

Why So: It is important to understand and get a view on the likely nature of the market
for the day. This is possible only by watching the market for some time. Experience
traders will be able to make these judgements by watching for first 15 minutes. For new
traders, more time is required to understand the market behaviour hence wait for two
hours.

During the watching time, look for whatever is learned like Open Low/High, Previous
Support/Resistance, BB Trap, VWAP, AWVAP Levels etc.

 Note: Market Opening is driven by Retailer. Closing is driven by Smart Money

Jithesh
 SUPPORT/RESISTANCE

Previous Support is Next Support. Previous Resistance is next Resistance

Respect Previous Support and Resistance Levels

Very important aspect. As a trader you should clearly understand and mark the previous
Supports and Resistances. Try to see that on multiple timeframes and especially on
higher timeframes. This knowledge will give you a clear indication on current price levels
and potential price action near Support and Resistance

Psychology: When prices goes near to the Support and Resistance emotion does not
allow us to accept the fact. Example: Price is going up and reaching near the resistance.
Since the price action is that price is going up, we won’t accept the fact that there is a
resistance coming up nearby. A good trader should watch for price action near the support
resistance and make a logical call than an emotional call.

Trade:
Price at Resistance – Short Future, Buy Put Option, Short on Intraday; SL one close above
Resistance Level
Price at Support – Buy Stock, Buy Future, Buy Call Option; SL one close below Support
Level

STOP-LOSS

Challenges with System SL.

- When SL is put in the system and when it is visible, SL hunting happens
- It is better to do SL on closing basis – On whichever timeline followed
- If the concern is on a huge swing in price, the answer is that such incidents happens
very rarely in the market and is based on the news (Specific to the stock or for the
overall market). In that case everyone is affected, not just you. In summary, in
anticipation of a rare incident, don’t waste majority of your trades by becoming
prey to SL hunting

It is important that you follow your stop loss and not be on a hope for price moving back
in your favour.

You can try to avoid SL hunting but never deviate from executing a pre-defined stop loss
that was decided based on your analysis.

Decide the stop loss at the time of taking the trade itself and be religious in executing that
once the stop loss is reached as per the logic. For example, SL on closing basis is
confirmed, execute the SL rather than hoping that the next candle will go in your favour.

Jithesh
 General Note About all Indicators – None of the indicators are perfect and does
not give a 100% accurate result. You need to go with the probability and should be
systematic with the knowledge that nothing is perfect. The moment you realize the indictor
has gone wrong for a particular trade get out of the trade

EHLER FISHER TRANSFORM INDICATOR

Use this indicator along with Hilega Milega (HM) for confirmation. Check this indicator in
Monthly, Weekly, Daily and lower timelines. This will give you an overall picture. This
information can be combined with Support/Resistance to see how the price can behave.

For example,
- Buy is shown on - Monthly Weekly and Daily (Refer the class notes on details)
- Hourly chart is giving sell
- Price coming near the support and the indicator starts showing a reversal on hourly
chart
- You can go for a buy

PIVOT POINTS (STANDARD)

Provides a Pivot level and a set of Support and Resistance Levels. Price traverses between
these levels.

You can learn more about Pivot Points by searching in Google/Investopedia. Following is
a link that is from Investopedia

https://www.investopedia.com/terms/p/pivotpoint.asp

Use pivot levels along with the analysis of main trends. You can use it to initiate the trade
as well as to get an approximation for the target.

 Note: Nobody (Other than God and Mad ) can find out an exact target for a trade.
You have to go by your decisions based on emotion, support/resistance levels, other
parameters etc.

It is difficult for SL hunting at Pivot levels so these levels can act as a better SL level.

CPR – CENTRAL PIVOT RANGE

Try to learn about CPR from google. Following are two links I got
https://zerodha.com/varsity/chapter/the-central-pivot-range/

Secrets of a Pivot Boss – Is a good book where lot of information is there about Pivot.

Use CPR by Zerodha, it works well.

Jithesh
Important Point
CPR on multiple timeframes gives you different perspective and multiple ideas
- Up to 15 minutes (5 minutes to 15 minutes) CPR is good for intraday
- Using hourly CPR, Validity is for 5 days (One trading week)
- Day time frame – Valid for a month
- Weekly and monthly – Valid for the full year

You can get the view based on the kind of timeline you are using. For example, you can
get the view for a full week by looking at the hourly CPR. You can get the full month view
by looking at the daily CPR.

Analysis:
If the CPR is narrow, you can expect high volatility.
If the CPR is wide, volatility will be low.

Example, if the monthly CRP is wide, market will be range bound. If the hourly is narrow,
volatility will be there for the entire week.

Use CPR to prepare your view based on your trading style (Intraday, Positional etc.)
CPR works well for Support and Resistance Levels.

Virgin CPR – I could not understand it fully. Need to learn more.

DARVAS BOX

Gives clear indication of Support and Resistance levels. This indicator can be used along
with the decided view for a stock to identify the trade.

This indicator is available in Zerodha, Trading view etc.

More Info: https://tradingsim.com/blog/darvas-box/

Jithesh
 CANDELE REG LIN MultiTF

This is an indicator available in TradingView.

Looks for Candele Reg lin MultiTF from MarcoValente.

Give an indication of Buy and Sell with colour coding.

Note: If there are blue colour candles in any of the chart, it indicates uncertainty. I.e.
accumulation, distribution could be happening, you can stay away.

Jithesh
Price-wise Correction and Time-wise Correction

Two types of Price correction happen in the market

- Correct to a level, accumulate so as to go up later
- Complete fall so that company is going to go away

Corrections can be categorized as

- Price wise
- Time wise

Price wise correction: Price corrects to the average level before going further up. This
happens most of the time, typically when the upswing is sharp. Note that it is price that
comes back to the average level, need not that the price come back to the previous level.

Time wise correction: Price corrects to some level and stays there. Average of the price
comes to this level and continues to stay flat. The duration for which the price stays there
can vary. Sometimes many years (Example Reliance staying flat for four five years)

Jithesh