Intraday Trading Lessons Learnt From Last Friday (07/01/2011)


You might be aware of the situation that occurred in the Indian markets last Friday. The BSE Sensex went down by 490 points along with the NSE shedding a hefty 143 points. It is true that I could make some profits because I traded with SBIN on that day. However, my other predictions (for TATASTEEL and TATAMOTORS) did not occur as anticipated.

People would take this in different manners. Most of the traders would look at the bearish market and postulate – no wonder his predictions did not work out. Let us say that I am a fighter; I like to know why my predictions did not materialize.

See, as cited in my earlier posts, my trading strategies are different. It is hard to state it as “unique”. I follow certain principles which were found (and successfully tested) by W.D. Gann. In simple terms, his predictions were always accurate. However, it did not happen likewise last Friday. So, either one of us must be wrong – either him or me.

Dear sirs; I am just a novice trader who got lucky. I met the right kind of people who advised me to stick to the trading strategies adopted by Gann. In other words, I am myself responsible for my predictions.

There is a fundamental aspect which Gann always used to proclaim. And it is nothing but the fact that there exists a unique relationship in between the price and the time of an entity. During certain intervals of time, a particular price (let us consider it as A) will act as a major resistance. The same price point A will serve as a major support point in some other time intervals. I failed to acknowledge this basic principle. Hence, my predictions for those scrips turned out to be wrong.

After understanding my mistake, I began recalculating the levels. I will speak while taking into account TATAMOTORS. 1250 was a major support according to my original (and flawed) calculation. I realized that it was a major resistance point when we take Friday into consideration. If I had known this earlier, I could have shorted at that price point and thus could have made additional profits on that day. The situation was the same when I did the calculations with TATASTEEL too.

Moral of the story: By now you may have understood why my predictions did not become fruitful on that day. I am facing a major problem now – I am fully aware of the price points; but, I am unsure whether they are supports or resistances. As mentioned, I am still learning newer concepts regarding this trading system everyday.

Come Monday (10/01/2011), I will begin posting the intraday trading levels on real-time basis. Let us see how far the market can play about with me!

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