BSEIndia: All Stock Market News: [sharetrading] trading rules

Sunday, December 27, 2009

[sharetrading] trading rules

Sometime back.. a gentleman had reqested infoon trading rules and strategy.. icould not reply earlier as I was out..

Here is one example I follow

Simple Rules to Trade Using 5 EMA(LOW-HIGH)

USE EMA -5(LOW) and EMA-5(High) instead of using 5 EMA.

Rules

If the stock/Index trading above 5 EMA(High) - trend is expected to be up with support at 5 EMA(High)and next level of support comes near 5 EMA(low)

If the stock/Index trading in between 5 EMA(low) and 5 EMA(High) trend is expected to be rangebound between 5 EMA

high and 5 EMA low with resistance at 5EMA(high) and suppport at 5 EMA (low)

If the stock/index trading below 5 EMA(low) then price is expected to be trend lower with resistance at 5 EMA low and next level of Resistance comes near 5 EMA(High)

Try applying for both Weekly and Daily Charts to know the exact trend

Its good to Catch the stock/Index at 5 EMA low- EOD with stop loss below 5 EMA-High

Rest its good to look at the 3 month Nifty chart with 5 EMA(High - Low) Indicator.

Also Implemented in our Nifty EOD Tool as displayed in the right corner of the page

to guage the EOD Supports and Resistance

The Amibroker formula to plot the 5 EMA High –low is

_SECTION_BEGIN("5 EMA High-Low");

SetChartOptions(0,chartShowArrows|chartShowDates);

_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));

Plot( Close, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );

Buy = Cross(Close,EMA( High , 5 ));

Sell = Cross(EMA( Low , 5 ),Close);

PlotShapes(IIf(Sell==1, shapeDownArrow, shapeNone), colorRed, 0,High, Offset=-20);

PlotShapes(IIf(Buy==1, shapeUpArrow , shapeNone), colorGreen, 0,Low, Offset=-20);

Plot( EMA( Low,5), "5 EMA LOW",ParamColor("Color", colorBlue ),styleNoRescale);

Plot( EMA( High,5), "5 EMA High",ParamColor("Color", colorBlue ),styleNoRescale);

_SECTION_END();

\or you can change it to..

Buy = Cross(Close,EMA( Low , 5 ));
Sell = Cross(EMA( High , 5 ),Close);

hsr

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