Don't be overconfident on discovering the profit-making pattern, whatever maybe the situation and however strong maybe your pattern, work on Strict Stop loss. Because market is tricky and can trick you anytime. Today we will study one case of Reliance and very common pattern of triangle formation.
As you can see Reliance has formed Symmetrical triangle but it broke the triangle strongly. as per that, strategy will be to short sell (Sell first and buy afterwards) with a target equal to maximum height of triangle from the point at which stock breaks out (100 points in this case)
Triangle maximum height is 943-832=111 points approximately (shown by green line between triangle)
So, Target will be 839-111=728.(shown below the triangle as green line)
But as you can see, Stock reached till 795 low and bounced back above to give new breakout upside. In that case new target should be 111 points above the breakout point. means Reliance should give new high soon.
Lets try to understand what could have happened. Reliance was poor on chart for long time, in that case, it was bound to come around 750 as per Technical analysis. but recently all Reliance stocks are rising with Nifty and tomorrow Reliance result is scheduled. it means market is expecting good results which was getting discounted in the price of all reliance stocks before results are out in-spite of few negative news.
So, whatever maybe the case, make sure you are strict with your stop loss and should not think that your pattern is strong enough to be successful 100%.
This article is not meant to scare people but to make them realize that how stop loss is very important and how can it save your loss. So, Disciplined trading is very important and trade without any greed and fear
Happy Trading!!!!!
Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely. Trade with a discipline
As you can see Reliance has formed Symmetrical triangle but it broke the triangle strongly. as per that, strategy will be to short sell (Sell first and buy afterwards) with a target equal to maximum height of triangle from the point at which stock breaks out (100 points in this case)
Triangle maximum height is 943-832=111 points approximately (shown by green line between triangle)
So, Target will be 839-111=728.(shown below the triangle as green line)
But as you can see, Stock reached till 795 low and bounced back above to give new breakout upside. In that case new target should be 111 points above the breakout point. means Reliance should give new high soon.
Lets try to understand what could have happened. Reliance was poor on chart for long time, in that case, it was bound to come around 750 as per Technical analysis. but recently all Reliance stocks are rising with Nifty and tomorrow Reliance result is scheduled. it means market is expecting good results which was getting discounted in the price of all reliance stocks before results are out in-spite of few negative news.
So, whatever maybe the case, make sure you are strict with your stop loss and should not think that your pattern is strong enough to be successful 100%.
This article is not meant to scare people but to make them realize that how stop loss is very important and how can it save your loss. So, Disciplined trading is very important and trade without any greed and fear
Happy Trading!!!!!
Disclaimer: I am an independent trader and I may or may not trade on calls I generate. The sole purpose of blog is learning and author is not responsible for loss made on trades executed on calls generated here. So take your own trade decision wisely. Trade with a discipline
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