Tag Archives: Share Market

Investment Strategy

San-Ku  – Three Gaps Up    As mentioned in Japanese candlestick analys is, the num ber three plays a very relevant part of the investment doctrine. Many of the  signals and formations consist of a group of three individual signals. It has becom e a  deeply rooted num ber for the Japanese investment com munity whether applied to Ca ndlestick analysis or not. This

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Selling Gaps

Now turn the tables over.  The same enthusiasm demonstrated by a gap to the upside is  just as pertinent for sellers on the downside. A gap down illustrates the desire for investors to get out of a stock very quickly.  Identifying clear Candlestick “sell” signals prepares the investor for potential reversals. The Doji at the top, Dark Clouds, Bearish Engulfing patterns are obvious signals

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Gaps at the Bottom

Figure 5 – Standard Pacific Corp.  Many investors are afraid to buy after a gap up. The rationale being that they don’t like paying up for a stock that may have already moved 3%, 5%, 10% already that day. Witnessing a Candlestick “buy” signal prior to the gap up provides a basis for aggressively buying the stock. If it is at the bottom of

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Profits With Candlesticks Analysis

How Do They Produce Profits With Candlesticks? Gaps (Ku) are called windows (Mado) in Japanese Candlestick analysis. A gap or window is one of the most misunderstood technical messages. Most investment experts advise not to buy after a gap. This is true only about ten percent of the time. The other 90% of the time, the gaps will reveal powerful high profit trades. Candlestick

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Money Making Candlestick

Money Making Candlestick Formations Candlestick Line   Hammer An important bottoming candle-stick line.  The hammer and the hanging man are both the same line, that is a small real body (white or black) at the top of the session’s range and a very long lower shadow with little or no upper shadow.  When this line appears during a downtrend it becomes a bullish hammer.  For

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APPLICATION OF OPTIONS

PRICING OPTIONS An option buyer has the right but not the obligation to exercise on the seller. The worst that can happen to a buyer is the loss of the premium paid by him. His downside is limited to this premium, but his upside is potentially unlimited. This optionality is precious and has a value, which is expressed in terms of the option price.

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Option Premium Profile

PAYOFF PROFILE FOR BUYER OF CALL OPTIONS: LONG CALL A call option gives the buyer the right to buy the underlying asset at the strike price specified in the option. The profit/loss that the buyer makes on the option depends on the spot price of the underlying. If upon expiration, the spot price exceeds the strike price, he makes a profit. Higher the spot

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Future Trading

ARBITRAGE: UNDER-PRICED FUTURES. BUY FUTURES. SELL SPDT Whenever the futures price deviates substantially from its fair value, arbitrage opportunities arise. It could be the case that you notice the futures on a security you hold seem under-priced. How can you cash in on this opportunity to earn risk less profits ? Say for instance ABC Ltd., trades at Rs. 1000. One month ABC futures

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Bearish Security

SPECULATION, BEARISH SECURITY, SELL FUTURES Stock futures can be used by a speculator who believes that a particular security is over valued and is likely to see a fall in price. How can he trade based on his opinion ? In the absence of a deferral product, there wasn’t much he could do to profit from his opinion. Today all he needs to do

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Bullish Security

SPECULATION. BULLISH SECURITY. BUY FUTURES Take the case of a speculator who has a view on the direction of the market. He would like to trade based on this view. He believes that a particular security that trades at Rs. 1000 is undervalued and expect its price to go up in the next two to three months. How can he trade based on this

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