Tuesday, August 9, 2011

Volatile Markets are not good places to trade

I have been suggesting that volatile markets are not good locations to trade. Trading is done when probability is in our favor. In volatile markets, news, rumors and panic prevail. These emotions are not part of normal price movements, therefore technical analysis does not capture them.

My point is proven by the random nature of Nifty movements. On Friday, the Nifty opened lower, moved a 100 points down, then recovered 100 points back. It opened lower again on Monday, moved down, moved up 150 points then down 100 points. Chances are similar drama will be enacted today (tuesday). So, I stay away.

It is easier to suggest that markets should find a short term low in this week. This can be identified by a reduction in volatility and watching the charts.

Have Fun.


seeker said...

hi sir, im kiran..sir i need suggestion from you. I've been in market from 3 yrs practicing technical analysis. As u know that techincal analysis and its true techniks is with few people. The techniks like (sudden reversal in trend and pattern formation)which is also related to open & close, high and low. Where as open and close show sentiment & highs and lows trend. some eg for u (pantaloonr on july11,2011 & bomdye on june1,2011& ivrcl sep21,2010& drreddy july 16,2010 & cairn july23,2010 and cairn,oct7&8,2010. Not only these patterns, there are different types of patterns with different psychology. So by this u may understand my little knowledge. now im able to manage upto 175 patterns, which im going to publish thru book in coming days. sir i need ur blessing. Becoz i want to develop myself.

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