Tradevesting — Notes — 5

Class 5–3 Great Strategies

Simplify but not oversimplify at the expense of quality.

# Moving Average Strategy

• Can be applied on V40
• 3% in one trade, no stop loss, daily candle-sticks
• Can average if 10% down and sell that portion afterwards

Buy: CMP < 20 SMA < 50 SMA < 200 SMA

Sell: CMP > 20 SMA > 50 SMA > 200 SMA

• Buy or Sell next day morning
• Can buy even if you missed earlier
• Can repeat if price moves in a range

Prefer averaging than taking fresh trade in V40 companies.

This is opposite of golden and death cross strategy.

Stock market is not a business of intelligence, its a business of emotions.

Stock market theory and practicalities are different.

Operators → value buying and price action

Traders → long-term (200 SMA), mid-term (50 SMA), short-term (20 SMA)

Buy when all these traders are in loss and would support, sell when all these traders are in profit and would exit.

Don’t share your knowledge and talent unnecessarily.

# Reverse Head and Shoulder Pattern

• Can be applied on V40 & V40N
• 3% in one trade, no stop loss, daily candle-sticks
• Can average if 10% down and sell that portion afterwards
• Not at life time high

Head should be bigger than the shoulders, neckline (resistances) should be in horizontal line which denotes same operator in play.

Shoulders can be more than one on either side, complex patterns become more reliable. Shoulders size and depth can be different.

Target (regular chart) should be max depth of the head from neck.

Breakout above neckline → Green candle closing

Breakout confirmation → Next green candle closing above the highest level of previous candle

Sell as soon as the target is achieved, buy again if the stock is 10% down and sell that portion afterwards.

# Cup with Handle Pattern

• Can be applied on V40 & V40N
• 3% in one trade, no stop loss, daily candle-sticks
• Can average if 10% down and sell that portion afterwards
• Not at life time high
• Same breakout rule as above

Handle should be at the right side only, cup should be deeper than the handle, target based on max depth of the cup, can be more than one handle making complex pattern, which is more reliable (e.g. rocket and bamboo).

Operators take help of the stop-loss to buy cheap.

How to buy at the bottom of the cup or handle? Check for the fundamentals and build conviction and buy at the bottom, this comes with practice.

Time is money — use it or waste it

Sector rotation is done by operators but will be covered automatically using these strategies.

If more than one options to trade, buy whichever gives you better margin of safety (MoS).

Prefer averaging in V40 companies instead of taking fresh trade.