Wise Stock Investment TechniquesIntroduction: Investors often complain that i have not done enough for the. However the fact of the story is i have done a lot of works for the investors and a glimpse of that is quite visible in my FREE E-book. "Essential of Stock Trading", this too is available in

this site for FREE download. We all must understand the real problem which an investor faces almost every day.

Which stock to choose for investment from a basket of stock available in the stock market?What is the logical reasoning behind this choice?. I have tried to

answer only these two questions in this article.

However as an investor you may impliment many other good trading models for successful construction of your investment portfolio.Formula

1: Buy the stocks having low P/E ratio.Day trading mechanism devised into three categories.Formula

2: Buy the value stock or growth stock having low debt / equity ratio and high reserve and surplus.Formula

3: Buy the stock having good track record of giving bonus shares to his investors.Formula

4:Buy stock having low PEG ratio (i.e. price to earning ratio divided by annual EPS growth).Formula

5: Buy Value stock with high beta or growth stock with low beta.Formula 6: Estimate the beta of the stock for 3 month,6 month and 1 year or the expected

duration of your holding to know how muct return it will offer with specific % movement in the index.Formula

7: Try to Use the GRACH method to find the expected volatility the stcok may show during the period of your holdingLearn Intraday Trading

Introduction: If you are new to the day trading then you must be wondering which method I should follow, which software is best for day trading etc. In this process of gathering information and experiencing with new tools day traders used to lose maximum part of their money.In all my seminars and lectures I have taught proven wonderful day trading mathematical models. In this I am going to describe the simplest, no cost principle for the day traders. I will not recommend you to buy any software or tools to implement my principle.Only tool you need is a simple mathematical calculator. Most of the time day traders used to forget their finest experience in the stock market. I have pulled those finest experiences and prepared this course for you. This course is FREE to all. 

I have devised this study into two parts in part one I will describe the basic principles of day trading and in part two I will describe few examples and give you few home work. You need to do some paper trade (virtual trade) to practice this principle.

 Types of Day Trading:Day trading mechanism devised into three categories.

 Stop loss trading mechanism:In this principle trader initiate position with some stop loss in mind if the trade goes against the trader then trader exit the position with some acceptable loss. 

Swing Trading Mechanism : In this principle trader initiate positions keeping in mind that if the trade goes against the view then trader will initiate an opposite leg trade upon achieving the stop loss. Say you have bought tata steel at 450 with stop loss 435. As a swing trader your view will be if tata steel will fall to 435 you will close your existing long position and re-enter fresh short position in same counter.

 Decoupling Trading Mechanism: This principle is called advanced hedging principle. you can find more about this technique in my article on Introduction To Decoupling Method. Many mentors say about discipline and trade objective. I would say that it is practically impossible to be a 100% disciplined trader. However trade can have objective. I always say do not expect too much from market. Be objective and keep minimum exposure with the help of decoupling method or option hedging - See more at: http://www.smartfinancein.com/stock-trading-article.php#sthash.QCaZ7Utm.dpuf

Intraday Trade Using Gann Method

Introduction: I found W.D.Gann's method of geometric proportion is one of the best method for intraday trading. Though W.D.Gann was not a stock trader but after many years of experiment in stock market i found this method is one of the most successful method for day traders. Gann's Method is devised into two parts. A. Forecasting the price and time using the natural numbers , geometrical angles and specific geometrical figures. B. Forecasting the price and time based on astrological angles,formations and geometrical figures. 

How it is different from the technical analysis? In technical analysis we often use averages,drawing tools like trend lines,various oscillators and indicators to derive the future price projection which may be translated in the general terms resistances,supports,targets,stop loss. However in gann method we use harmonic rhythms. like I can say price 30 degree up from the current level or down from the current level will give me the resistance or support. If you will notice my words carefully I have not used any drawing tools or any statistical values for deriving this resistance or support.

 You must ask me, Why such assumption ? This is the wonderful discovery done by W.D.Gann. He is the man who fond that in this universe every number is associated with other numbers with some degree relationship. This conclusion he has derived after arranging the natural numbers in geometrical spiral of square, triangle, hexagon. At last i will say, we all will

agree that the price of a stock or commodity or any financial instrument irrespective of the currency it is trading in, is a number only.

 How one can do intraday trade using gann method ? Though many different approach and methods I have describe on my book on Gann Methodbut one of the simplest method is projection the price from static degree proportions. In this method we will follow the following procedure and assumption. A. we will assume the 180 degree as number 1. - See more at: http://www.smartfinancein.com/Intraday-trading-using-gann-method.php#sthash.6YJ9vkQ0.dpuf

Intraday Trading Using Gann Method

B. we will derive the resistances from the low and supports from the high in every 15 degree

interval. C In the price cross over of 30 degree in resistance side we will buy the stock and vice-

verse. Do remember we will use this method for making swing trade. That means we will close

our buy position at the sell entry point and initiate fresh short at that point. Some time we will

come across with the situation where in the buy entry and sell entry will be placed very close to

each other even equal to each other. This is called congestion band. If congestion band present

in my experiment then I will make entry on the 1st target points. Let me explain with an example

: Say I have identified day high and low of State Bank of India (SBI) as 2220 and 2176 at a

particular time and currently SBI is trading at 2187. if I wish to enter a trade based on this

procedure then I will do the following. A.Assuming 180 degree as 1 the 15 degree will be

0.0833. B.My resistances will be two square of (square root of LOW+0.0833),two square of

(square root of LOW+0.0833*2),two square of (square root of LOW+0.0833*3) and so on. In SBI

case it will be 2183.78,2191.57,2199.37,2207.19,2115.03,2222.88.Supports will two square of

(square root of HIGH-0.0833),two square of (square root of HIGH-0.0833*2),two square of

(square root of HIGH-0.0833*3) and so on. In SBI case it will be

2112.16,2204.33,2196.51,2188.71,2181. Now I will conclude my experiment with following out

come my buy entry is 2191.57 and sell entry is 2204.33. In this case the sell entry is higher than

the buy entry price and the current price also below my buy entry price. If such a situation exists

then I will place my buy entry stop loss 2183.58 and sell entry stop loss as 2112.16. 

What will be my swing trading decision in this case ? If the stop loss triggered for me after a

failed attempt of buy entry then I will close the buy trade at 2183.78 and initiate fresh short trade

at that point with stop loss for 2191.5 and targets will be 2176.06,2168.34... this is derived by

subtracting the difference of 2183.78 and 2191.5 from 2183.78. same way you can derive the

targets for the long entry if the stop loss of 2112.16 trigger. 

how to do intraday trade using fibonacci method- See more at:

http://www.smartfinancein.com/Intraday-trading-using-gann-method-page-

1.php#sthash.SknJ7pN5.dpufDay Trade Using Fibonacci Method

Fibonacci Retracement Technique proved to be the best and simple technique for day trading. The Retracement is of two types a. Growth Retracement :If the price action is rising in nature but in between some correction brings down the price and

again escalate to higher levels then we can this Retracement as a growth Retracement. The cause of growth retracement is due to profit booking, short term correction or

portfolio churning by Institutions. 

b. Decay Retracement: If the price action is in falling in nature but in between some technical bounce back. or relief rally happens due to short covering then we classify this

as a decay Retracement. The cause of decay Retracement is a correction, technical bounce back or relief rally. 

Retracement again has three trade decisive zones: Bounce back or Trend Continuation zone:If the price finds support at 50% of retracement of its prior swing of up move or resistance at 50% of retracement of its prior swing of down move then this

retracement is called bounce back price zone. 

Example: Say nifty has fallen from 4700 to 4500. The prior trend of this 4700 high was a rising trend started from 4000 then it is classified as growth retracement. Taking the 50% retracement of this high low movement of 700 points to 350 I will say if the price

finds support at 4350 then uptrend will resume and has high probability of crossing the previous high. Now the next big question is how do I will know that 4350 support is a valid support or is a mathematical eye wash for me. Support must be validated by the

volume. By simple observation if I will find the fall below 4350 invites buying and escalates the price to bit higher level then I will conclude this price is a valid support. 

Death Zone or trend reversal zone: In retracement principle if the price retraced more then 61.8% of its prior swing then it has remote chance of going back to its prior trend. 

Range bound or consolidation zone: if price finds support or resistance at 38.2% retracement or never crossover the 38.2% level from the50% retracement then I can

classify the retracement as a consolidation zone. - See more at: http://www.smartfinancein.com/day-trade-using-fibonacci-

method.php#sthash.Zikol3FA.dpuf

Day Trade Using Fibonacci Method

Every morning when market wake up the stock or indices make some high and low by taking the high low difference with the help of above discusses ratios we can make

fantastic trade decision. Example :Say at one point of time I found Nifty future is trading at 4565 and at that particular time the high and low recorded for the day is 4625 and low

4530. The high low difference is 95 points. This retracement happen in a raising trend henceforth the price point 4577.50(50% retracement) will act as a support or buy entry

point for the long traders. The 61.8% retracement price from the high this is 4566.29 will act as the Death zone entry point. If the price falls below that then it will achieve its 1st

target at 78.6% retracement down side from the high. 78.6% works as the 1st termination point of the death zone. After which the free fall to 1.618% of retracement is

expected. Since the current price is in the entrance point of the death zone I will advise you to sell nifty future keeping the 50% retracement price 4577.50 as stop loss for target 4550.33 the next free fall target will be 4471.29. Consider the case if Nifty is trading at 4580 which is in the entrance of the bounce back zone I will recommend buy with stop loss 4566.29 for 1st target at 4588.71 the free raise target will be calculated from the

low 4530 with ratio 1.618 on price range 95 having the termination at 4683.71.

 What will be the next calculation method if these free fall or free rise price point penetrate successfully?You need to apply the parallel projection or growth projection

principle which you can find on my book on 

Fibonacci Method. The study of fibonacci method will not get complete without studying the clusture, and phi ellipse. same way the fibonacci fan line also the finest tool one can use for short term trend analysis. you can get many more successful examples on fibonacci method success in real trade practice under the section my experiment on

fibonacci method. The key success in fibonacci swing trading technique is totally depend on you. you must understand the growth,decay retracement procedure. After which you can make an insight investigation where the current price is? if these two decission of your are in right path then i am 1000% sure that you will win that trade.

Many traders made the mistake in those two dicisive steps.The most common mistake the trader does is they buy at the death zone of growth retracement and sell at the

death zone of decay retracement. - See more at: http://www.smartfinancein.com/day-trade-using-fibonacci-method-page-1.php#sthash.N2emtyL5.dpuf

Day Trade Using Elliot Wave Principle

Introduction:After extensive research on the Elliot wave theory with an objective to simplify it to an maximum extend  so that  it can be understood by the trader community

I have come across with many issues and some simple and gentle solution. I have developed one calculator based on those achievements however this tool only attends the limited logical part of the wave theory.The wave approach of analyzing the price of stock, index or commodity starts with the cycle. This debated word “cycle” means the

occurrences of similar kind of trend in future. In wave approach the cycle is again simplified by the way of classifying it in time frames. For example the grand super cycle

is the name given to a trend which happened or reoccurs once in a decade.

Why cycle is so important for us? Answer is so simple. Say the average lifespan or life cycle of human is 70 years. This means the older generation dies or disappears in

every 70 years and new generation having the similar behavior, life style, habits fill that gap. Many such examples we are experiencing on cycle every day in our life. Hence I

can conclude with at present what ever we are experiencing in nature was being experienced by our ancestors some time in past. This may be the literary definition of cycle and sounds much philosophical.The 2nd principle followed by wave principle is

 "Every price action in a cycle is harmonic in nature". Based on these two principles Elliot gave a set of rules and guideline for constructing the price waves in a harmonic

cycle. The price trends never follow all the guidelines given by Elliot. However it follows all the rules. The price and time action rules to form a wave pattern are derived from the

Fibonacci ratio. Totally 8 different waves are being classified grouped into two categories Impulsive waves: In this category 5 waves are placed and named as 1-2-3-

4-5 . Corrective waves: in this category 3 waves are placed and named as A-B-C . The confirmation or completion of wave 2 and wave B are used by the traders to take a long and short position in a particular counter. However during the process of this journey of

completing the 

“Impulsive harmonic cyclic” pattern the wave pattern meet with many guide line or rule violations. - See more at: http://www.smartfinancein.com/day-trade-using-elliot-

wave.php#sthash.2OJndaCV.dpuf

Day Trade Using Elliot Wave Principle

These action of violation is called wave failures. Many times you would have heard from the analysts that fifth wave failure happened in so and so counter. Some time some waves used to stretch beyond its permissible guideline parameter. This phenomenon is calls wave expansion . In order to give you some experience in wave principle of trading. we have devised one simple calculator for you. which is available on our calculator section. Two different approach is being followed by the analysts to forecast the trend as per the wave principle. A.Wave count approach. Under this approach the analyst devise the long term cycle to smaller cycles.Then each wave in the long term cycle is studied and different wave patterns are placed within it.After which an wave count report is produced which includes each primary waves sub wave,sub wave patterns,number of failure waves,consequence of these failure waves. Based on this data the future long term cycle is placed and trend parameter was get set. This process require in depth understanding of the wave principle and quite difficult to do manually. Though now a days many software's are available to help you in this. B.Wave Pattern Construction Approach: Under this approach you need to construct the wave’s construction start and end points manually based on the wave rules for a prior trend. After which you need to find the failed waves or expanded waves. After this process you can forecast the trend passed on your past experience of wave construction. Do remember in this process you are not investigating the sub waves or the wave within a wave or smaller cycle wave inside the big cycle wave. However in the wave counting approach all those things are attended carefully. Also read the elliot wave calculator manual for extened set of example and explanation.Our Elliot wave calculator will help you in deriving some finest trade decision but it will not guide you in learning. If you are a beginner then you must have to learn the wave rules and cycle

rules. After which you need to under stand the 13 different wave patterns. This will completing your 1st step of learning. Then you need to study the price patterns applying the 2nd approach discussed by me . After gaining the gradual experience you can migrate to the wave count approach. you can complete your learning within few months with the help of software. But it is not impossible to master this technique without the help of software. I have published the complete wave rule and patterns on my book on Technical Analysis volume -3.you may find many more on web too - See more at: http://www.smartfinancein.com/day-trade-using-elliot-wave-page-1.php#sthash.KFF9MamM.dpuf

Date Open High Low Close Total Trd Qty

01-Jun-07 1364 1385 1356 1378.9 1908666

04-Jun-07 1400 1418.4 1390 1406.4 2182423

05-Jun-07 1400 1444.85 1393 1436.5 1808672

06-Jun-07 1445 1454 1381 1389.5 1857287

07-Jun-07 1382 1401.9 1353.25 1360.65 2148431

08-Jun-07 1331.3 1387 1321.3 1356.6 2037482

Analysis: Bullish engulf find pattern form in a down trend. The price trend of Tatasteel was

down in the previous time period. above the OHLC data is given for reference.From the above

OHLC data if you observe on  19th June 2007 the high is higher than the 18th June 2007 high

and 19th June 2007 low is lower than the 18th June 2007 low and the 19th June 2007 closing is

higher than the opening which forms a white candle and confirms the formation bullish engulfing

pattern.Pattern breakout: on 19th June 2007 the high to low price range is 617-585=32 price

units. The 78.6% (i.e. the Fibonacci retracement ratio) of the price range is 25. The pattern

breaks out will happen at a price of 617 +25= 642.  As long as the price maintain below this

price one can assume that that the throwaway can happen at any stage.Continue

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Date Open High Low Close Total Trd Qty

01-Jun-07 1364 1385 1356 1378.9 1908666

04-Jun-07 1400 1418.4 1390 1406.4 2182423

05-Jun-07 1400 1444.85 1393 1436.5 1808672

06-Jun-07 1445 1454 1381 1389.5 1857287

07-Jun-07 1382 1401.9 1353.25 1360.65 2148431

08-Jun-07 1331.3 1387 1321.3 1356.6 2037482

Analysis: Bullish engulf find pattern form in a down trend. The price trend of Tatasteel was

down in the previous time period. above the OHLC data is given for reference.From the above

OHLC data if you observe on  19th June 2007 the high is higher than the 18th June 2007 high

and 19th June 2007 low is lower than the 18th June 2007 low and the 19th June 2007 closing is

higher than the opening which forms a white candle and confirms the formation bullish engulfing

pattern.Pattern breakout: on 19th June 2007 the high to low price range is 617-585=32 price

units. The 78.6% (i.e. the Fibonacci retracement ratio) of the price range is 25. The pattern

breaks out will happen at a price of 617 +25= 642.  As long as the price maintain below this

price one can assume that that the throwaway can happen at any stage.Continue

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Target: Engulfing pattern target is unlimited until and unless the price does not form any bearish reversal candle pattern in the chart. In more than 50% cases the throw away happens before giving a break out in this pattern. Volume: Volume used to be moderate in the engulfing day. Sudden rise in volume you can observe in the pattern break out day. Pattern failure: If the price moves below 585-25 = 560 then we say that the bullish engulfing pattern is a failure. What will be entry and exit point? The entry is suggested at a price above the engulfing days high having stop loss below the pattern failure price point. The target is unlimited until and unless any bearish formation does not takes place. It is also advisable to make an entry in the counter after the pattern break out happens. In the above example the pattern failure does not happen but

throwaway happens multiple times before giving a breakout on 14th July 2007.In this context the bullish trend reversal pattern means the trend is going to change from bearish to bullish. Bearish trend reversal pattern means the trend is going to change from bullish to bearish. 2. Bearish engulfing pattern:- “the first candle is a white body with low volume and the second candle is a black body with high volume totally engulf the first

body”   - See more at: http://www.smartfinancein.com/day-trade-using-technical-analysis-page-2.php#sthash.WwylFpP0.dpuf

This is also a common pattern in price time chart and strongest bearish reversal pattern. The success rate of this pattern formation is more than 80 %( i.e. in more than 80% cases the pattern use to give break out). Once the pattern is identified the next job is to find out the break out point, throwaway price, entry and exit point, pattern failure price point and target. In all candles stick reversal patterns the price target is unlimited until and unless any contradictory reversal pattern is not formed in the price time chart in the breakout direction.    Example: I have identified the formation of bearish engulfing pattern in SBI on 06th June 2007. Find out the break out point, target, pattern failure point, entry and exit point? Below the price time chart and the OHLC data is given for reference. - See more at: http://www.smartfinancein.com/day-trade-using-technical-analysis-page-3.php#sthash.0mFHfs14.dpuf

Date Open High Low Close Total Trd Qty01-Jun-07 1364 1385 1356 1378.9 190866604-Jun-07 1400 1418.4 1390 1406.4 218242305-Jun-07 1400 1444.85 1393 1436.5 180867206-Jun-07 1445 1454 1381 1389.5 185728707-Jun-07 1382 1401.9 1353.25 1360.65 214843108-Jun-07 1331.3 1387 1321.3 1356.6 2037482Analysis: Bearish engulfing pattern forms in a bull trend and indicates reversal of the bull trend. From the OHLC data it is being observed that the 6th June 2007 high is higher than the 5th June 2007 high, the 6th June 2007 low is lower than the 5th June 2007 low. The closing of the 6th June 2007 is lower than the opening. Hence it confirms the formation of bearish engulfing pattern. Pattern break out: on 6th June 2007 the high to low price range is 1454-1381=73. The 78.6% (i.e. the Fibonacci retracement ratio) of the price range is 57.37. The pattern break out will happen at a price of 1381 – 57.37= 1323.63 .  As long as the price maintains above this level one can assume that the throwaway can happen at any stage. Target: Engulfing pattern target is unlimited until and unless the price does not form any bullish reversal candle pattern in the chart. In more than 50% cases the throwaway happens before giving a break out in this pattern. Volume:volume use to be moderate in the engulfing day. Sudden rise in volume you can observe in the pattern break out day. Pattern failure: if the price

moves above 1454+57.37 = 1511.37 then we say the bearish engulfing pattern is a failure. 

What will be entry and exit point?  It is advisable to enter a short trade on the day following the engulfing day with a price above the break out point having stop loss at the pattern failure price point. The target will be unlimited until and unless it has not formed any contradictory reversal pattern. It is also advisable to make an entry after you encounter a break has happened for better result. In our case the pattern has failed to give a break out and became a failure in the future days. - See more at: http://www.smartfinancein.com/day-trade-using-technical-analysis-page-4.php#sthash.kLl57X7m.dpuf

Introduction To Decoupling MethodIntraday day trading is devised into three types. 1.Stop loss Trading Technique : In this technique trader initiate one position keeping some stop loss and exit out of the position upon getting the stop loss triggered. 2.Swing Trading Technique: In this method trader initiate one position keeping some stop loss and at the point of stop loss reverse the trade keeping opposite view. 3.Decoupling Method: In this method trader identify the indices, stocks those are showing opposite behavior and assuming this behavior will continue or vanish after some time in a day then took the position. The method of decoupling trading strategy is complex in its structure and bit complex in implementation too. However the success ratio is quite impressive. Since Decupling method is my own invention I will give some idea about this method in this article. When we talk about the decoupling the exact meaning is deviation or detachment.. for example if I choose two public sector bank stocks for my study assuming they have similar business vertical and market penetration ,I will conclude their stock price will exhibit similar behavior in a day. Provided no bad news, good news, result or any other external factors influence them. At this junction if I want to study their pricing patterns in a day in order to identify existence of the decoupling then I can take the help of followings. A. if any one technical indicator is giving buy signal for one stock and sell for the other stock then I will say decoupling exists. This phenomenon is due to the run up or sharp correction in any one of these stock. B.I can take the help of past 10 trading days beta value to know the sensitivity of both the counters and study their intraday movement. C.I can take the help of Fibonacci Retracement to identify if it suggest buying in one counter and sell in the other. D.I can take the help of Gann method to identify the opposite trading view. E.I can take the implied volatility of at the money options of the stocks to find the decoupling in volatility. - See more at: http://www.smartfinancein.com/introduction-to-decoupling-method.php#sthash.EocGP7Rd.dpuf

After analyzing this phenomenon I will initiate trade in both the counters assuming this decoupling phenomenon will vanish at some point of the day. Similar argument can be drawn for index and stock in that perticular index segment. For example if by the mean of some

mathematical simulation if I will identify X % change in any of the stock brings Y% change in any of the index then the deviation in any of the day can be called as decupling. Once we identify the decoupling then we need to investigate the cause of the decupling. If the cause is due to the trader´s temporary behavior or local in nature then we will use this opportunity as a trading opportunity. But keep in mind we are using this opportunity as a trading opportunity same time we are honoring the cause. Using the beta as the mathematical factors I have simulated hundreds of trades in the stock futures and found the success of this method even in the critical days of sharp fall and raise. All about this method you can find on my book on masters key to future and options.some of my experiments on the future trade useing the beta decoupling strategy in the month of september and october 2009 25th sept 2009 1.sell sbi fut 1 lot at 2142 and buy icici fut 1 lt at 850 max loss Rs2k profit Rs3.5k beta hedge call- closed 1st october at Rs16000 profit 29th sept 2009 2.buy sbi fut 1 lt at 2149, sell icici bank fut 1 lt at 858 max loss Rs4.5k profit Rs4.5k intraday beta hedge call-lOSS TRIGGERED 30th sept 2009 3.buy hdfc bank 1 lt at 1606 and sell icici bk 1 lt at 868 max loss Rs4k profit Rs4k intrday beta hedge call-GIVEN PROFIT buy hdfc bank fut at 1630 and sell icici bk fut at 894 max loss Rs7k profit Rs11k intraday beta hedge call -GIVEN PROFIT You can make use of our beta hedge online calculator available under the calculator section of our web site to derive many interesting trade decission.This Calculator works all kind of World market. Do read the manual associated with the calculator to know more about the beta coefficient. - See more at: http://www.smartfinancein.com/introduction-to-decoupling-method-page-1.php#sthash.SJkHlxdH.dpuf