Swing Trading Strategy – Part 5 – Moving Average & Stochastic Indicator

Swing Trading Strategy – Part 5 – Moving Average & Stochastic Indicator


– [Instructor] Hi, guys. Welcome to the part five
of Swing Trading series. So up til now, we have
seen the building blocks of swing trading, and now we
will be taking the information that we saw in part one,
two, three, and four, and that will be applying
now in the strategy section. So, in case you haven’t’
watched part one, part two, part
three, and part four, before proceeding forward,
kindly watch those parts because a lot of what
I’m gonna explain here will be more relevant then. So let’s get started. – [Announcer] In this channel,
we talk about trading, investing, and market analysis to help you become a
better investor and trader. So if you are new here,
consider subscribing. – [Instructor] So, the learning
objectives for this part is as follows. So I’ll be showing you a
basic swing trading strategy which works extremely well. All you need in this
strategy is price, either it can be a bar
chart or candlestick chart, simple moving average
and stochastic indicator. I’ll be covering up some
basics of stochastic indicator and how to use it. For this particular strategy, I have two fundamental criteria
which have to be fulfilled. Remember, I had given other
criteria as well, in part three, so those apply as well. And I will be taking those
briefly in later slides. Then we’ll be moving to
the top down approach, where we’ll analyze the
broader market first. Then we’ll move to sectors and
then we’ll short list stocks. So entry, exit, and stop loss, with respect to this
trading strategy, I’ll be covering
towards the end. So this our basic
top down approach. We start with the market,
move to the sector, then within the sector, we
move to the individual stocks, and then we apply the strategy. So whatever framework that
we are going to discuss here, that will be applying
first on market, then we’ll be moving to sector, and then we’ll be picking out
individual stock as a trade. So for this particular strategy, stocks should be the
preferred instrument. Kindly avoid futures, options, or any other
derivative instrument. By the time I finish
off this video, you will know why stocks
is the best instrument for this particular strategy. What we are looking to
do in this strategy, especially if you wanna go long, is we are trying to buy
into temporary weakness in an already
established uptrend. On the flip side, in
case we wanna go short, we would want to short sell
into temporary strength while the trend remains down. Also, do remember one thing,
that our holding timeframe is very limited here because
this is swing trading, and we’ll be only
holding our trades from few weeks to, let’s
say, one or two months. And the whole idea
behind this strategy is to target growth
stocks in order to get about 5 to 10% return. So, in this previous
slide, I’ve shown you that you need three
things, that is price, moving average, and
stochastic indicator. The moving average, we’d
require to determine the trend, so the trend reference would be a simple 200 day moving average. Just remember one thing,
that my trading revolves around extremely simple things. So which is why
most of my videos, you’ll find just one
to two indicators, or mostly I trade
with price action. The stochastic indicator
that is mentioned here, that is for timing purpose. So precisely timing the trade, I’ll be doing it through
stochastic indicator. And for this
particular strategy, you can either use a
web-based charting platform or a proper technical
analysis software. My bias is always towards
technical analysis software and there are some free
softwares available, so it’s not that costly, also. So let me first come to
the stochastic indicator. So stochastic indicator is
just a momentum indicator that was developed
by George Lane. Now this typically
indicates overbought or oversold level in a stock. So what it basically does is that it compares
the closing price to a range of its price over
a certain period of time. So the default setting for
stochastic is 14, 3, 3, that is for stochastic D, and for stochastic
K, it is 14, 3. But for this
particular strategy, the default indicator
preference would 8, 3, 3 and 8, 3 for stochastic K. So this can act as a
wonderful timing indicator, that is what I’ll be showing
you in this strategy. So what we need to do
is that we don’t need to use this indicator
as a trigger or as a reason to buy something. We just need it as
a trigger that, yes, this is the precise
time to enter a trade. So there’s a subtle
difference in this. You can experiment with
the parameters I have given that completely varies
from trader to trader, and I would definitely
encourage you to try out various parameters so that you can see
which parameters actually best fit your
overall psychological makeup as a trader. So now I’ll be moving
to the fundamental scan. What I need for this
particular strategy is that we need to short
list growth stocks. Now, I have three
fundamental criterias here. Number one, peg ratio has
to be greater than two, then, debt to equity
should be less than 0.5, and market cap should be
greater than 5,000 crows. Now peg ratio is
nothing but a ratio that measures
growth of a company, which is why I’ve
short listed this. And debt equity is less than 0.5 because no matter what
sort of trading you do, you don’t want to be
caught up into companies that have too much debt. Rather, I am targeting companies
that have very little debt. And market cap should be
greater than 5,000 crores because, personally,
for swing trading, I don’t like microcap
or small cap stocks. So these parameters, you
have to enter in screener.in. I’ll be entering this in
front of you in a slide later. So these are the conditions
that we need to put, that is peg ratio should
be greater than two, and debt to equity
should be less than 0.5, and market capitalization
should be greater than 5,000 crores. After you enter this query,
just click on this button and you will get
a list of stocks. I’ll be showing you how to do
this in just about a minute. So, apart from the previous
criteria that I’ve shown here, that is peg ratio, debt
to equity, and market cap, remember in part three,
we had a checklist where we defined beta
value, and average volume, ROCE, ROE, and
institutional ownership. This ROCE and ROE would
automatically get covered in stocks that are
growing at a rapid rate, so these two filters you
can kind of remove it. But this beta value,
we need to have a stock which is trading
at the beta value to be more than 1.2 or 1.2. The average volume over
a period of 252 days should be greater
than this figure. And institutional ownership
should be 15% or more. So one thing I wanna say is that for this particular strategy, this fundamental scan
is more important. So in case you find average
volume about 20, 30% lower than this figure, do
not reject the stock. Similarly, if you see beta
values somewhere near 1.1, it’s fine. So the thing that I’m
trying to tell you is that don’t be too
rigid with figures. Try and be flexible. As far as a stock is
broadly satisfying all the conditions
that I’ve mentioned, you should select it
for a swing trade, provided it meets the criteria
set in the top down approach that we discussed
in earlier parts. So I’ll just show
you on screener.in how to run this
fundamental scan. So this screener.in, you can
enter it in your website. So now, what I’ll do is
that in the query sections, what I write is peg ratio
is greater than two. So just browse below
and select peg ratio. So this criteria should be
put as greater than two. Then, we are gonna
put debt to equity, you select it here,
should be less than 0.5. Then you need to move to
market capitalization. This should be greater
than 5,000 crores. Now once you have
entered this criteria, simply click on run this query and you will get
a set of results. So we’ve got 86 stocks here. Let’s sort it based on
market capitaliztion. So this is the list of
stocks that you’ll see. These are high-growth companies
which are low in debt. Let me just put 50
results per page. Yeah, so these are
the top 50 stocks that are high-growth
companies that are low in debt with market cap greater
than 5,000 crores. Let us move to page two. So these are the
remaining 36 stocks. So this is the basic
fundamental scan that you have to
run on screener.in. Again, this website
is absolutely free and you just need
to type screener.in. You need to login, create
an account, it’s free, and then you can run this query. So once you have
the list of stocks, the next thing that we move
to is our strategy screen. Now this how you need
to set up your screen. So what I have here is price
with 200 day moving average. This is stochastic with
parameters 8, 3, 3 and 8, 3. And this is the beta indicator
plotted over 252 days. So let us revisit our
top down approach method. So this is the market here,
then the sector, then stocks. So what we need to
do is first we need to move to the broader market. So the broader market trend
would simply be defined by 200 day moving average. That is where the price
is above the 200 day moving average or below it. Then once the market
trend is established, we will move to
broader market trend. That is sector trend. For sector trend, again, simple 200 day moving
average suffices. And then we get down
to individual stocks where we have already discussed about the criteria that
need to be fulfilled, along with high beta, volume,
and institutional ownership. We are looking for the
fundamental parameters that need to fulfilled,
and that is companies should be low on debt, it
should be a high growth stock, and market cap should be
greater than 5,000 crores. So let me take a case
study of 2009, 2010, and then I’ll be moving
to a more recent example. So this particular case
study is for Nifty. That is a broader market index. Then Bank Nifty,
that is a sector, and individual banking
stocks that I’ll be taking up in the subsequent slides. So this is the Nifty 50 chart. Now if you see, I’m just
using a 200 day moving average to determine whether
the trend is up or not. If price is below the
200 day moving average, I am classifying
the trend is up, and in this particular case,
I’ll be only looking to trade on the long side. If price is below the
200 day moving average, the trend is down, and I’ll
be only looking to trade on the short side. So why I’ve chosen this
200 day moving average is because it’s one of
the most widely followed moving average. It represents the overall
market sentiment well and it has stood
the test of time. Not just in our market. You can actually
go to any market and see how beautiful a
200 day moving day average has worked, which is why this
is one of my favorite tools that I quite often check. One more thing that
I wanna focus on is whenever you’re trying
to identify trend, please keep it simple. Don’t put on many
indicators on the chart. Trends should be
looked at in such a way that you can explain
it to a five year old. That’s how famous
traders have put it, and I totally agree with it. In case you have to explain
someone about trend, then I think your overall
methodology needs to chagne. What you need to
simply do is you need to have one simple tool,
one simple indicator. You can pick one,
whichever you like, but the way you classify trend that has to be extremely,
extremely simple. Trend reference
cannot be complicated. So keeping this in mind,
let’s look at Nifty 50 because the next step is
looking at Bank Nifty. Again it’s very
similar to Nifty. Variable price has been above
the 200 day moving average. There’s a trend in place and
the trend is on the upside. Whenever it’s down,
the trend is down, and you only need
to take short trade. So look at this
classical example, the price is above 200
day moving average, there is a lot of
uncertainty that happened over the last few weeks. But had you followed
this simple indicator, And this has been
consistently mentioning in my weekly market videos that both Bank Nifty
and Nifty were actually extremely strong despite the
broader market failing to rise. One of the reasons
was that price was easily above the 200
day moving average in both these given indices and which is why trend
was on the upside and eventually both Nifty and Bank Nifty have actually
made new all time highs. So now we move to
individual stocks. Now remember what
we have done is we have identified
trend of broader market, in this case it’s Nifty 50. Then we have
identified the trend for Bank Nifty
which is the sector. And then now we are moving
to individual stocks. So we are in this phase
that is 2009 and 2010. So Nifty 50 is in an up trend. Bank Nifty is in an up trend. Now we look for
individual stocks. Now between 2009, there
is much 2009 onwards, and between 2010, the stocks that
qualified were SBI, Yes Bank, Axis Bank,
and ICICI Bank. Similarly between 2011 and 2013, for the banking sector, the stocks which qualified
were Yes Bank, ICICI Bank and Axis Bank. Since 2014, Indus
Ind Bank, Kotak Bank, Federal Bank have qualified
for Swing Trading. So what are the criterias
that these stocks have qualified for? Volume, High Beta, Ownership, and the Growth criteria
that we’ve seen for this specific video. Now there’s one thing
I wanna tell you. Banking stocks won’t qualify for the debt to equity criteria. Usually debt in banking
sector is a lot more, which is why when
I was explaining the fundamental scan section, I told you that you need
to be little flexible in terms of various sectors
or individual figures as well, as in the volume criteria
or the high beta criteria. You need to be a little
bit flexible with stocks you shortlist and with
stocks you pass by. The concept of sister
stocks that we discussed in the previous part, that would’ve led you
to not participate in SBI between 2009, 2010. And because most of the PSU
banks were not confirming the trend even then. Bank of Baroda, Punjab
National Bank, and SBI were actually
confirming the trend, but I think the smaller
PSU banks were still sort of above the 200
day moving average, but still the trend
was not that strong. So for a better explanation, I’ll just take up Yes Bank,
Axis Bank, and ICICI Bank for the phase 2009 and 2010. So this is ICICI Bank
between 2009 and 2010. So as price moved above
the 200 day moving average, we’re not entering the trade. What we are doing
is we are waiting precisely for the point when stochastic 8, 3, 3 and 8, 3 touched 20 or dip below it. The moment you
see the stochastic below the 20 level,
I have marked it at the various points here. See the beta value
between 2009 and 2011. It was consistently
between 1.4 and 1.6. So the beta criteria
is satisfied as well. So all these points that you
are seeing on this chart, these are accumulation
point for a swing trade. So I’ll be showing you later which points you need to ignore or which points you need to
actually place a trade in. So the next stock is
that of Axis Bank. Again, these points that
I’ve marked on the chart, these are the point,
accumulation points, where you need to enter a
stock for a swing trade. When you would compare based
on the data between ’09-‘010, when you would compare ICICI
Bank, Axis Bank, and Yes Bank, you would find that in
this particular order, the stocks that were
extremely strong were Yes Bank, Axis Bank,
ICICI, and then SBI. So trading in Yes Bank,
this is the Yes Bank chart, so this has rallied more. This is ICICI Bank. It’s trend was up but
it was kind of flattish and Axis was the next best. Now this is, again,
how I’ve classified Yes Bank as the best bank
in terms of growth criteria. Yes Bank was growing at a more
rapid pace than Axis Bank. Axis Bank was growing
faster than ICICI, and ICICI was actually
growing faster than SBI. So the crux of this strategy
is to be into growth stocks and identify when those stocks will enter a period of weakness, and then kind of
piggybacking on the trend. That is what the
strategy is all about. So this is Yes Bank. Now if you see this
particular point, if you started Buying in here, this swing would’ve easily
above 10% developed. If you see this point,
this was sort of flattish for a few weeks
then it took off. If you see this
particular point, again, this immediately
rallied about 10%. If you see this point, it actually kind of
remained flat for a while, then it moved up. So you need to adjust
your position sizing based on what you are
seeing on the chart which is why if you see
this particular chart, futures is actually not
the kind of instrument that you should be
trading the strategy with. Now just take up
this particular case. In case you start buying here
and the price moves down, what you’re
essentially sitting at with a sizeable amount
of position here, because do not forget in
futures, lot size is defined. So this can be 1,000 shares or 1,500 shares or 2,000 shares. So you’ll be compelled
to hold on to those particular
lots despite of price falling below your entry price. Whereas in individual stocks, you can actually
buy one stock here, 10 stocks here, 20 stocks here, 30 stocks here, 40 stocks here. So the flexibility in
terms of position sizing is to a large extent
available with only stocks. Not in futures, not
in options because their lot size is
actually fixed, right? So how do we enter a trade that I’ll be just covering
up in a few slides? I just wanted to
give you an overview that our basic step
after completing broader market analysis,
sector analysis, and then coming to
individual stock, our basic criteria
is price should be above the 200 day moving average with sector trend bullish,
overall market bullish, then we are looking for a period of temporary weakness
where the stock becomes extremely
attractive to us in terms of Swing Trading, provided the fundamental
criterias are fulfilled and the beta criteria
is fulfilled, right? I hope by now the strategy
part is clear to you. So now we come to entry. Now entry in this strategy
can be taken in two ways. One is the aggressive entry, and another one is the
conservative entry method. In case you are a beginner, start with the
conservative first. And as you learn
the strategy more by trading it frequently, then you can move on
to the aggressive part. So what is the
aggressive entry method? The aggressive entry method is that as stochastic
starts to dip to or below the 20 level, you start accumulating
the stock. So every day you
kind of buy little with final entry
actually happening when stochastic
enters the buy mode. Now when does stochastic
enter the buy mode? Just take a look here. If you see in this down move, the stochastic K
is actually below the stochastic D. So whenever the stochastic
D actually crosses the stochastic K from below, that actually is a
confirmation signal to go along in terms of
timing the trade, right? So what you can do is, I’ll
just explain this video with an example, yeah. So this is an aggressive
entry example. Again I’ve taken ICICI Bank because it was the weakest stock and I want to explain
this on a weak stock first because in a strong stock things automatically
get quite easy. So this is the place where
stochastic dips 20 level. I’ll just take you
to ICICI Bank stock. So I think we are in July. This is the place
where stochastic actually first
time dips below 20. In this particular phase,
stochastic did not dip below 20, it was just at 22 or 23, so our entry did
not get triggered. Yeah, so this is the place. The prices 118.7. So in the aggressive
entry method, what you need to do is as
stochastic remains below 20, and the price falls,
you keep on buying it. Why you buy it,
because for the later rise in the price, you kind
of average your entry price. Now in this particular
case, what you’re gonna see is that on 8th July
price was at 118, on 9 July it was 115,
on 10th it was 114. On 13th it was 115. So these four particular days, you should’ve bought into this
stock when it was falling, that is weakness was setting in. This candle that you see, this was formed on
14 July, it was 123. Now this is precisely the point when the stochastic entered
the buy mode, right? And then price moved
from 123 to about 145. So this is the
aggressive entry method that as weakness
sets into the price in a strong trending price, what you need to do is
as soon as stochastic dips to or below 20 level, you start buying the stock
in a staggered manner. And you keep buying till you
get a rise of about 5 to 10%, or let’s say 15% over the
next two, three months, right? So in the conservative
entry method, what you do is you
buy all the quantity that you want to buy at once whenever the stochastic
crosses on the buy side. I’ll show you. This is the conservative part. So under this,
whenever the stochastic has crossed here, it has
gone into the buy mode, that was at level 123. So at 123, you kind of
enter all your positions, that is the conservative entry. Now why this is
conservative is because at this candle when
the price is at 123, the swing low automatically
becomes your star plus, and your risk is
very well defined. All right. And one more thing,
whenever the stochastic enters the buy mode,
most of the time, the trade works over
the next few days only. So if you take this
particular example, there are three cases here. This is box one, box
two, and box three. In box one and box three, if you see as soon
as the stochastic has entered the buy mode, the price is actually
rallied about 10 to 15%. Similarly here, the stochastic
entered the buy mode and the price rallied
about 10 to 15%. Whereas this particular
case, what happened, the stochastic
entered the buy mode but price remained flat. And over the next one month
it rallied more than 10%. So these are the two variants
that actually play out. But this buy mode
has actually happened on this candle,
if you can see it. So this particular swing
low becomes your stop loss. If you see all of the
consolidation in the price has happened above
the swing low, and then price
eventually moves up. So, again, I’ll
repeat one thing. In case you’re a beginner, do start with the
conservative entry first, and then as you graduate
to the next level, then you can move
to aggressive entry because in aggressive entry,
there is one advantage. If you’re buying as the
price is moving down, and you kind of sense that
price is going to reverse, you sort of capture the move from the low point
to the high point. So the percentage
move that you capture in an aggressive entry is more when you compare it with a
conservative entry method. But, again, if
you’re a beginner, try and take small steps first and then eventually
you should graduate to the next level. Yeah, so now we come to the
exit and stop loss part. Now exit in the strategy
is fairly simple, and it actually depends
on how discipled you remain in terms of not being too greedy when the trade stocks start to work in your favor. Again I’ll point to, I’ll point you to this fact that you are swing trading here, which is why a trade
offering you about 8 to 15% return is fair enough because that return
you’re getting over a short term period. So whenever you are taking entry in terms of aggressive
entry method, then you should be expecting
about 15 to 18% return, and you can start exiting
positions bit by bit once you start crossing
about 10 to 12% profit in your trade. For the conservative
entry method, your expectation of
profit should be somewhere around 8 to 12%, which
is why you need to exit the trade as soon as
you get about 8 to 10% in the next few days
or one or two months. You need to remember one thing, that making 20% trading return in one year is a huge deal. If you ask extremely
experienced traders, they’ll be really
happy if their overall trading portfolio or
investment portfolio delivers about 18 to 25% return. That is really good
because every four years, roughly four years,
your money would double. Do not get into
the habit of making quick gains because
that only lasts for a very short amount of time. So stop loss, I’ve
already discussed in the conservative
entry method, this recent swing low
at this point here. And this point here, this
becomes your stop loss. Stop loss for
aggressive entry method is extremely difficult
to determine on chart because it’s a judgment call. Do not forget one thing that when you are buying
here, you do not know whether price is going to
fall here till this level, or it’s gonna reverse here, which is why it
becomes a judgment call based on your experience. You need to figure out
whether the down move is going to end soon or it’s
going to continue further. This particular stop loss
for this aggressive entry, I cannot put it on presentation because it’s largely
experience-driven which is why I come to the fact that in case you do not
have enough experience, don’t feel bad. Just focus on the conservative
entry method first. And as you trade this method
for let’s say few months, you will automatically
know in individual trades whether you need to
start trading based on aggressive entry
and setting stop loss based on a judgment call, or in case you don’t
do well with that, you can again revert back to
conservative entry method, and keep doing it till
you keep getting better. So now I come to the
position size aspect. So position size
should actually depend on the amount you wanna risk. When you’re doing
conservative entry, the calculations
are fairly simple because your stop loss would
be the recent swing low point that is I showed you a
couple of charts back. The risk should be
just 1% of the capital. This section I covered
in part two I think. So assuming your capital
is about one million, your risk will be
1% of one million, that is 10,000 per trade. So hypothetically if
your entry is 280, and stop loss is 260,
then your position size would be your
10,000, that is risk divided by 20, that is
difference of entry and stop. So I’ve given out
the formula here. So position size would
be calculated by risk divided by the difference
of entry and stop loss. Now there are many
advanced position sizing strategies that exist. They’re out of
scope of this video. But I would just like
to put it this way that entry, exit is
actually a journey that you have to take over
a period of many years. That is when you figure out your psychological
makeup as a trader. And then you would
know what sort of position sizing techniques,
what sort of entry method, what sort of exit method
kind of suits you the best which is why don’t
try to emulate anybody else’s entry,
exit, or stop loss because that is largely
extremely trader specific. One book that I would
like to recommend you guys is “Super Trader” by Van Tharp. If you can get hold of
this book, do read it, it’s a wonderful book especially
for all forms of trading, even from psychological
point-of-view, position sizing, stop losses, how you should manage your risk. It’s a beautiful book,
one of the best books that’s ever written on trading. So do get your hand on this. The moment you finish this book, you will already feel
a lot of difference in your trading which is why I strongly recommend this. So now I need to come
to a trade management and psychological
part when it comes to this trading strategy
and the strategies that we are going to discuss
in subsequent videos. So at each accumulation
point that I showed you, do not forget to
manage your risk. It’s not about
potential profits. It’s not about the potential
move that’s gonna happen. It’s only about
protecting your capital, managing your risk well. Again, like I mentioned
in the previous slide, that entry, exit, stop loss, it’s extremely a private
thing for a trader. It depends on his
psychological comfort. Be bold enough to experiment with either entry method
or the position size or the amount of risk you take. Don’t be too extravagant. Be conservative in the start. And whatever I’ve
explained to you here, this basic strategy, treat
it as a simple framework. And do not be afraid
to customize this based on your
preference as a trader or whatever limited experience
you have right now in market. Why I selected
stock as instrument? I hope it is clear till now. Because you never know when the
reversal is going to kick in in a already strong up trend which is why through stocks, you can manage your
position to, you know, you can scale in or scale out with as little as
just one stock. You cannot have this
liberty in futures or in options where lot
sizes are clearly defined. The next important thing
that I wanna focus on, realistic expectation that
you set from your trades. You might have heard
many legendary investors or traders tell you
in their interview that they’re extremely happy whenever their trading
or investment portfolio gives them about 18
to 25% per annum. Now, it’s become a
fashion these days that traders are getting used
to making quick money. Let me tell you, that
does not last for long. I’ve been in the market
for long enough to see many such traders
blowing up their account over a short term. Do remember that we are in
this for the very long term. More than profits, learn
to control your risk well. Be disciplined. And please don’t get
into a habit of posting your profit and loss
account statements online. I think trading is
the only business where people come out
and post their profit and loss statement
for everyone to see. I have never
understood this because this directly impacts
your psychological make up in your mind
because once you post it, you get a lot of comments. People comment on
what you are doing, some like it, some don’t. So why do you invite
other’s opinion into your trading? That is something you
have to guard just like any other relationship. See, your relationship
with market has to be so pure
that it is only between you and the market that things should
be shared with. Let market be the judge
of what you are doing. Don’t let anyone tell
you whether you are a good trader or a bad trader. Look at your account
at the end of the day. If you have followed
all the rules and still made a
loss, it’s okay. Money is by product
of whatever method you are going to apply
over a long term. So it does not matter
if in short term you kind of lose some money. Do aim for consistency. In our profession,
don’t aim for fame. This is applicable in
our social media world where you do see
that a lot of traders share their PNL
statements every day. I don’t wanna criticize anyone, but I don’t think that’s
a healthy practice because that will
eventually affect your psychological level. I have shared some entry and
exit screenshots as well, but I don’t remember
me sharing any profit and loss statements
online because, again, that is extremely personal. Once or twice you can
do it, that’s fine, but please don’t
make it a habit. That’s just my
recommendation to you. So let me come to
the current phase. By current phase, what
I mean is up till now, what we saw is that
we start with Nifty then we move to
individual sector, then we have taken
individual stocks. We have looked at ICICI
Bank, Axis Bank, Yes Bank, in the phase 2009 and 2010. Well, what about now? So today is 7th August. So let us see if I have to
pick out a trade in real time, how I would do it. So this is Nifty 50. So what I see here
is that prices above 200 day moving average. Stochastic is at 79, 80 level. Beta here is one because the Nifty is the
benchmark index. So now I move to Nifty IT. Now I see that Nifty IT
is well above 200 day moving average trend is up, stochastic is not in buy mode, beta value is not
satisfied, it’s 0.45. Let’s move to realty. Beta valued is satisfied. Stochastic is not
in the buy mode. Price is below 200
day moving average. Same with Infra, price is
below 200 day moving average. Stochastic is not
in the buy zone. Let’s come to FMCG. Its price is above 200
day moving average. Beta is 0.77. It does not qualify. Pharma, price about 200 day. Beta 1.02. Well, you can look at this. Auto, price below 200
day moving average. Stochastic is good but beta
value is just about one. Media, price below 200
day moving average. Beta is not qualifying. Let’s move to other sector. Commodities, again, price
below 200 day moving average. Beta satisfies though. This is consumption, beta 0.85. Price is above 200
day moving average. This does not qualify. Let’s come to banking, yeah. So price is above 200
day moving average. Beta does qualify. Stochastic at present
is not in buy mode, but look at individual stocks. So the first stock that we are
gonna look at is Axis Bank. Price is above 200
day moving average. Stochastic is not in buy mode. Beta does qualify. Bank of Baroda, price is not
above 200 day moving average, it does not qualify. Canada Bank, price is below
200 day moving average. Beta does qualify though. Federal bank, same thing. Price below 200
day moving average. Beta does qualify. HDFC Bank is pretty interesting. It has a nice structure,
stochastic is in buy mode, but the beta is 0.76, I’ll pass on it. ICICI Bank looks
good but stochastic is not in the buy mode,
beta is decent enough. Indus Ind Bank is getting
into good structure, but again beta value is low. PNB does not qualify. It’s below the 200
day moving average. State Bank of India, well it’s
above 200 day moving average, beta also qualifies
but no entry yet. Yes Bank actually looks good. Sort of we missed an entry here. Beta is good. Stochastic I’d given a buy mode and since then it has
moved up about 6, 7%. Kotak actually
looks really good. If you see stochastic is
just about in the buy mode. Beta is not that
great, but that’s okay. Price is above 200
day moving average. So we come to Yes Bank. So actually Yes Bank
a couple of days back, there was an entry. Stochastic was good, so
was price above 200 day moving average,
and the beta value had also qualified. So this was actually a
trade that was to be taken. You could’ve followed
an aggressive entry where you’ve bought
as soon as stochastic just touched about 20. It has just touched about 20. On a confirmation candle,
you would’ve gotten entries somewhere in 370 and
that was a valid entry. So based on whatever
we have seen in this particular video, what I would say is that Yes
Bank and Kotak Mahindra Bank actually qualified really
well for a swing trade. Individual sectors that you see, you can also look at
IT sector currently because prices, again,
are trending above the 200 day moving average. We are still waiting
for a retracement. But Bank Nifty, based
on the beta value, because IT sector does
not qualify based on beta, so Bank Nifty is
still the only index that is actually qualifying
in terms of beta value, in terms of
fundamental parameters, that is individual stocks. In terms of broader
market trend, Nifty 50. And in terms of individual
bank trend, Bank Nifty trend. So I’ll just sum up the key points for this particular video, again in case you have doubt and I’m expecting a
lot of doubts because this is not something
that you can master in the next few hours. You will have to
spend your own tine and you have to research
on these stocks, go back in time, take
historical charts, and try and study this. Fundamental data
is easily available that you can get it
through screener.in. So what I showed
you for 2009 to 2010 that actually works even now. Just three days back,
a trade was there in Yes Bank to be taken. I think there is a trade
in Kotak Mahindra Bank that is active as well. We need to see how that goes. So take this particular
thing that I’ve shown you as a simple strategy
or a framework. Try and build on it. You can add more filters to it. Don’t be afraid to experiment. One request that I
have is that do not try to code this
into a trading system because there are a
lot of human element components in this strategy, that is you have to
go through many charts to see which qualifies as a perfect buy signal
which does not. For example, SDFC Bank, while it did not qualify
based on beta parameters, you know what, SDFC Bank is
actually looking really good. Same with Kotak Mahindra Bank. Again, it does not
fill the bill of high beta that is 1.2 and above. But among the banking space, Kotak, HDFC, and
Yes Bank actually look really, really good from
swing trading point of view. So again this is a
top down approach. By the time you
reach to the end, that is to stocks, you
will be only selecting extremely strong stocks. So there is no
need to worry about being in stocks
which are not healthy or being in stocks which are not showing signs of moving up. So in this particular strategy, if you see stock selection is actually more important
than entry, exit, or stop loss, or the
method that I showed you through a simple indicator
like stochastics, so focus more on
stock selection, that is our beta
criteria, volume criteria, ownership criteria, and
ROE, ROCE which will automatically get
covered in peg ratio. Those have to be satisfied. Be slightly flexible. Don’t be extremely rigid
with particular figures. So the next swing
trading strategy will be released only next month by the time I’ll be
starting a new topic. The thing is that
whenever I will put out any strategy, I
actually research on it, and that is why I
require a few days to study the method well. I know this method
works really well, so there are some
changes that you can make based on your own
psychological makeup, that is totally fine. So in case you have any query,
and I’m sure you will have, do get back to me in the
comments section below and I’ll answer them
as soon as possible. Please prefer YouTube comment
section for your queries. What happens is on email, I
don’t check my email that often, so at times you might be
getting a reply from me four or five days after
you’ve posted the email, whereas the comments section, I am mostly online on YouTube, so I tend to reply to
that within a few minutes. So do let me know if
you have any doubt, and thanks a lot for
watching this video. See you next week. – [Presenter] Click on the
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47 Comments

  • nishansh dwivedi

    April 4, 2019

    HOW Can we find the beta value of particular sector or stock? because most of the brokers dont have that feature available. any website or something which you can recommend that would be really helpful sir.

    Reply
  • shindo wilson

    April 13, 2019

    For target price..
    1. Should we wait for 8-10% upmove or
    2. target price should be the recent swing high (just like stop loss was recent swing low) or
    3. Target price should be decided by stochastic indicator touches 80 and gives a sell signal?

    Reply
  • vetriselvan natarajan

    April 15, 2019

    Going to be my first trade using this strategy 🙂

    Will watch RS closely since it is bit downward.

    http://i68.tinypic.com/2cdfv3a.png

    Reply
  • Nitin Narang

    April 16, 2019

    sir how to include banks also for swing trading screener, because this above one can not include banks as debt to equity< 0.5 is not possible for banks…..

    Reply
  • Aishwarya Nair

    April 18, 2019

    Dear Sir,
    As per your training, I just bought Infy 9 shares today at 716.5, Its above 200 DMA, Stochastic below 20 and RSI is also hovering at 40. I am looking to keep it for like 3 months. Is my entry right? I have combined DMA, Stochastic & RSI for entry strategy. Kindly reply.
    Thanks.

    Reply
  • Trade With Trend

    April 20, 2019

    Hi Guys,

    Click Below To Subscribe & Hit Bell 🔔 Icon For Notification when a New Video is released..

    http://www.youtube.com/c/TradeWithTrend?sub_confirmation=1

    Part 1 Of Swing Trading Is Given Below.

    https://www.youtube.com/watch?v=9dbnXEEHgsc

    Tc & Be Safe.

    Reply
  • Trade With Trend

    April 20, 2019

    Link to All Swing Trading Videos Is given here. https://www.youtube.com/playlist?list=PL9myHLrE5hrPQI6ljQCNZ0KQsnvTsgENG

    Subscribe To Our Channel https://www.youtube.com/c/TradeWithTrend?sub_confirmation=1

    Telegram Broadcast Group https://t.me/TradingWithTrend

    Check Out all other videos at https://youtube.com/tradewithtrend/videos

    Kindly hit the Subscribe Button & Bell Notification Icon.

    Thanks For Watching Guys. Tc & Be Safe.

    Reply
  • I Am

    April 22, 2019

    Wow, what a fantastic series, thank you for sharing your wisdom, the universe will repay you tenfold. God has blessed you. Would it be possible to adapt this for use in down market by reversing the criteria? Thanks

    Reply
  • Basant Harpal

    April 24, 2019

    Hey i short listed stocks as per the peg ratio, debt to equity and volume, but not able to find institutional ownership and beta value.. please help me where to find this data. Relpy soon

    Reply
  • Stock Guys

    April 26, 2019

    Having followed YouTube, Twitter, Facebook, Telegram for years, and many trade gurus, I got caught into information overload situation. There is abundant information out there, but not in sequence, structure, or step-by-step method. It’s scattered everywhere and no one cares about structuring them into digestible bits and parts that a new bee trader or a new comer in trading world can absorb. All they care is to give you a glimpse of their strategies and tactics and lure you into purchasing their high end, high priced courses, mentorship and club memberships which obviously none of us can afford. Having lost into the tunnel of learning for years I was finally about to give up and thought probably this is something I can never do. I am just not ready.
    And then, I accidentally stumbled on your YouTube channel. It was like seeing the light at the end of the tunnel. I usually do not comment but yours deserve the attention and respect. Being a good trader and being a good teacher are two completely different things. You are blessed to have both. And we are blessed to have you on YouTube. Your voice is commendable and it talks about the depth of knowledge it carries. You would be already aware that you are teaching some serious stuff here and that too for free. Not many follow that path and you should feel proud and content about that. Rather, we should be proud to gain knowledge and wisdom from you.
    As the wise proverb says – “When the Student is ready, the Master will arrive”.
    Keep up the good work and may the 3 divine Goddess – Maa Durga, Saraswati and Laxmi shower their blessings on you.

    Reply
  • S. haldar

    May 4, 2019

    Sir what is your name and where do you live in? I love all your videos

    Reply
  • Yash Chaubey

    May 5, 2019

    Which MA we have to take
    1 SMA
    2 EMA
    3 WMA

    Reply
  • RAJINDER SETH

    May 5, 2019

    sir, marico looks good for swing as per moving average and stoch. please confirm whether i am right.

    Reply
  • sagar pangale

    May 5, 2019

    Which software are you using ??? I am currently analyzing stocks on investing dot com but it doesn't have beta indicator ?

    Reply
  • Yash Chaubey

    May 7, 2019

    Sir I m not finding beta of any stock
    How u use plz help me

    Reply
  • Kamil Mansuri

    May 21, 2019

    sir give me ur mail id

    Reply
  • Kamil Mansuri

    May 21, 2019

    also sir how to use tradingview plzz explain
    im using investing,com

    Reply
  • Kamil Mansuri

    May 21, 2019

    thanx for the video series on strategies

    Reply
  • Sameer Prabhu

    June 5, 2019

    Hi,

    Thanks for the video. I have below query.

    1) The PEG ratio, Debt to Equity & Mkt Cap criteria you mentioned is to be applied only for this strategy?
    2) Are the above criteria to be applied after the stock selection is done based on criteria explained in Part 3 of Swing Trading (Stock Selection)?

    Reply
  • Goutam Chakraborty

    June 9, 2019

    Fantastic fabulous….One who is thinking to be full time trader should view all our series…

    Reply
  • Pradeep Inani

    June 10, 2019

    Sir, please explain why you want peg ratio to be more than 2, generally peg ratio less than 1 indicates better valuation of stock from buyers perspective. Thanks.

    Reply
  • rashid khan

    June 11, 2019

    Hello sir
    Is it possible to stick to only one swing trading strategy or we have to use different strategy .How reliable is this strategy.

    Reply
  • rashid khan

    June 13, 2019

    What are free technical analysis softwares where we can set above parameters for swing trade.does zerodha kite has ??

    Reply
  • rashid khan

    June 13, 2019

    How to set 8 3 3 settings in stochastic not happening in zerodha it has 14 default settings

    Reply
  • Pankaj

    June 16, 2019

    Very impressive work mate! Very streamlined and professional approach to teach trading, rarely one comes across such stuff from Indian fellows.

    Reply
  • rashid khan

    June 24, 2019

    Sir I am confused a bit.
    First we have to find out stock list from screener.in than do top down approach.how to correlate both does we have to do trading in selected stocks only after finding trend by top down approach.i am unable to correlate both.
    In selected stocks does we have to trade in the stocks/sister stock which are trending or their related sector indices is in trend.

    Reply
  • vincent porleone

    June 26, 2019

    Thanks for your video I love the way you explain things. But I have questions what tipe of stochastic you used because stochastic slow don't have those setting. Thaks

    Reply
  • Prabhakara Dhulipalla

    June 30, 2019

    first of all thanks for your effort to keep it simple. in top down approach when you say i should start with Broad market analysis, what exactly i need to see in nifty 50? do you mean nifty 50 index is in uptrend? if so how many days should i consider? i am looking for swing trading only few days to few weeks possession. in sector performance what should i look for? is there any source that i can get raw data on these sector performance reports like we have nse bhav copy on OHLCV data. where can we get the fundamental data / equity ratios including the market capitalization data?

    Reply
  • Rajni Rajput

    July 12, 2019

    Hi, I hv selected Pidilite as per stockastics, pls advise.

    Reply
  • Rohitash Ahuja

    July 12, 2019

    Excellent content. By far the best, comprehensive trading knowledge I have seen publicly available. Pls keep it up. Your experience, research and confidence clearly reflects in the content shared.

    One thing though on Swing Trading, would be happy to know your comments on how to play "events" while swing trading? Being Neutral (means not participate in the market during the time) is what few traders recommend…what is your experience around this?

    Regards
    Rohitash

    Reply
  • Rajni Rajput

    July 12, 2019

    Trying to load pict, though not in Pidilite I took small buy pos in Infy at 725. Also did intra in Nifty sold at high unfortunately covered my option trade with 12 points profit but from there Nifty came down by 100 points. Earlier too was using stockastics but after yr teaching d way of looking stockastics just completely changed. U r doing great favour on people like us. Have a great weekend.

    Reply
  • Rajan Kombu

    July 13, 2019

    Hats off!!! Nobody can explain better than you. Thank you for step-by-step guide on trading methodologies.

    Reply
  • Rajni Rajput

    July 16, 2019

    Hi sir, I have selected Titan ( stockastics is around 9) unable to load picture. Pls advise

    Reply
  • Sujata Maitra

    July 23, 2019

    Sir i have lost huge money in futute and intraday market. Now i want to make money by swing trading. I have gone through all 5 series of videos of swing trading. And I am really learned something. Thank you very much

    Reply
  • TrueLover 2

    July 30, 2019

    मस्त !!!👍

    Reply
  • jamel hook

    August 5, 2019

    Screener.in is for Indian customers. I live in United states. What sight can I use?

    Reply
  • sunil tambe

    September 1, 2019

    Thanks sir

    Reply
  • Dinesh Kumar

    September 1, 2019

    Great listening to your videos.

    A lot has been told by you for entry strategy but less has been talked about price target and exit strategy. Wish to hear more on that.

    It appears that the best exit strategy for swing trade is through trailing stop loss on daily candles. But when gains are high or when preceding daily candle is a long green, trailing stop loss might be a great opportunity loss. In such cases better would be turning in to trailing stop loss to lower time frames, on hrly or 2 hrly candles. Yet better strategy would be closely looking up for bearish divergences on lower time frames (hrly or 2 hrly) and sell at market price immediately, in case a bearish divergence is spotted.

    With all due respect for the monumental service you are doing through these thoroughly informative and guiding videos, it seems that you are a bit apologetic about taking that “big money” that comes once in a while in swing trading. They are celebration points. Why limit by statistical percentages?! The sky is the limit!

    Understand that you have covered divergence in some other video. But please consider entry and exit integral with divergence. For example, an entry in late January in this video could have been averted at all. From early November 2009 till late January 2010, the stock was in a trading range. The impending fall or consolidation was evident from the bearish divergence on both RSI and MACD formed between October and December 2009.

    Thanks a lot….!

    Reply
  • Dinesh Kumar

    September 2, 2019

    Have been carefully following your strategies and inputs. Just wondering whether the big moves in the following cases could have been spotted in time and profited off, with the tools patterns and indicators discussed. More so because some of the moves are even defying the bearish divergences. If time permits please elucidate upon them which would be of great help for your keen followers.

    Asian Paints in Mid-July’19

    Bajaj Finance in Mid-May’19

    Bajaj Finserv in Mid-Feb’19

    BPCL in Mid-Feb’19

    HPCL in Feb-Mar’19

    IOC in Feb-Mar’19

    Colgate Palmolive ongoing trend

    HDFC AMC fabulous move from Feb’19 to till date

    HDFC Bank in Mar’19

    ICICI Bank in Feb-Mar’19

    Interglobe in Mar’19

    Kotak Bank in Mar-May’19

    Marico in Aug’19

    Pidilite in Feb-Mar’19

    Piramal in Feb-Mar’19

    Reliance in Jan-Mar’19

    SBI in Feb-Mar’19

    Shree Cement in Fab-May’19

    Siemens in Feb-Jun’19

    TCS high swings throughout the year.

    Titan Nov’18 – Jun’19

    UPL Nov’18 – Jun’19

    Reply
  • Senthilkumar Sugumaran

    September 29, 2019

    Thank you so much for the projection, sir! This really helped me to understand better about Swing trading. However, I could not figure out a way to find the average volume for 252 days(any screener?) and Institutional ownership data? Please advise. Is the shareholding pattern section of money control site is the place to find the institutional ownership data? Please clarify this doubt!

    Reply
  • Lalchand Balotia

    October 2, 2019

    Bro How To find the Trend of a Particular Sector? To find The Trend of Market we have to check the trend of nifty 50?

    Reply
  • Lalchand Balotia

    October 2, 2019

    your relationship with market should be private., ❤️

    Reply
  • Lalchand Balotia

    October 2, 2019

    sir if stock and sector both in Upper trend but stochastic is not qualified so should we trade?

    Reply
  • amandeep kundu

    October 18, 2019

    Dear Sir

    Please can you share beta value code on tradingview dot com

    Reply
  • Kunzat Dorje

    October 29, 2019

    another great work! your instructions better than i'v seen before many thnx to u!

    Reply
  • schubertpeter79

    November 12, 2019

    very good video. when u say there are much advanced trading strategies too, would u be so kind to share just one of those?

    Reply
  • Vivek Sheth

    November 17, 2019

    Sir thank you so much for the efforts you have been doing for us. Your method of explaination is very good. Thanks again.

    Reply

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