Quadra Safe Strategy–Part 2-i

Part 1 can be seen at Let the Charts Speak....: Quadra Safe Strategy–Part 1 
As we are now familiar with the requirements of QS Strategy, the main point to note is that
- The strategy doesn’t need the implementer to be familiar with Technical Analysis.
- Technically illiterate traders can count on this method for sizeable position trading.
Swing Candles do form a important role in deciding the entry, stoploss points.
Swing High:
Swing High is the high of that candle, whose ‘high’ is higher than the ‘high’s of the two candles on either side of it.
Swing Low:
Swing Low is the Low of that candle, whose ‘Low’ is Lower than the ‘Low’s of the two candles on either side of it.
Below is the Image showing Swing High & Swing Low.

Entry:

For entering a long position, the entry criterion is that all the three Wilder’s Moving Averages must be in the order of their number.
WMA (5) > WMA (8) > WMA (13)
i.e. the 5-WMA should be above 8-WMA, which should be in turn on top of 13-WMA.
Once the above three WMAs are in the required arrangement, it is now time to observe the 50-WMA.
50-WMA is the major trend decider.
The 50-WMA line (Green) should be moving with an upward tilt. i.e. The tip of the 50-WMA line should be moving and pointing upwards indicating a major uptrend.
A “Trigger Candle” is one during whose formation that the above setup will be formed.
The “BUY” order will be above the high of “Trigger Candle”. (GREEN Line)
The previous swing low will be the “Stop Loss” for our current position.  (RED Line)
The image below shows such an arrangement.

I try to limit one chart per post. So, the trialing stop-loss and exit points will be discussed later in part 2-ii.

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Quadra Safe Strategy–Part 1

This is one of the widely discussed strategy for positional trades. Mostly preferred by futures traders. This blog post is the summary or detailed procedure of implementing this strategy, consolidated from Savant Garde’s Thread in Traderji Forum, http://www.traderji.com/technical-analysis/68719-quadra-safe-trading-strategy-i.html
I would like to present this in parts, so that things can be kept simple and easy to understand. All efforts are made to include charts wherever necessary, but not everywhere.
Indicators Used:
1. Wilder’s Moving Average – 5

2. Wilder’s Moving Average – 8

3. Wilder’s Moving Average – 13

4. Wilder’s Moving Average – 50

WMA – 8 and WMA – 13 are used to assess the short term and medium terms, whereas WMA – 50 is used to assess the long term trend or Major trend. Nifty Futures Chart with all the above indicators and templates is shown below.

Chart Index :
Scrip – Nifty Futures
WMA – 5 – RED
WMA – 8 -  BLUE
WMA – 13 – Dark Grey
WMA – 50 – Green
Time Frame – Daily




The rules for Entry, Exit, Stop loss, Add will be discussed in the second part.
The third part explains Customizing averages and experimenting with various timeframes.
Fourth part emphasizes on trying to vary parameters in order to make it suitable for intraday.
Final and Fifth part will apply the strategy to current Nifty Futures Chart and market analysis will be done.

Pro’s:
1. Almost fool proof if rules are strictly followed.
2. Useful for long term positions (ranging from 4 to 12 weeks)
3. Preferable to utilize trading as a second source of income.
Con’s:
1. Patience needed.
2. Results may not be seen as soon as initiated.

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That “One” Missing Trade…

Psychology plays a very important role in one’s trading pursuit. No one can runaway from those decisions taken based on Greed, anxiety and fear of missing an important chance to make profits. Traders combat a variety of emotions on a daily basis. Most emotions when trading are unavoidable simply due to the fact that we are human! If we fail to deal with these emotions effectively, it can lead to catastrophic results in our trading.  The frustration of a missing trade is worth a discussion.

Every trader, young or old, would ‘ve experienced the frustration of missing that good trade more than once. The reason behind frustration is greed and anticipation about the points that “would ‘ve” been gained in case the trade is taken. That lets us forget the mere fact that we still have our money intact and the market is still available to trade.

Frustration lets you make drastic decisions viz., taking revenge on the market – the main devil that perishes all our money. The fight with the market will more or less lead to disastrous results as the trades taken emotionally are usually bad decisions or made in a hurry without sticking to the trading plan. Once the trade is made without a plan, we are literally stuck in the market as the exit plan is not considered.

This emphasizes the importance of planning before entering any trade. As Joker says in “The Dark Knight”,

“Nobody panics if everything goes according to the plan, Even if the plan is horrifying”

Simple precautions will help you not to miss on the trades you planned to take, for ex.,

- Price Alerts,

- Limit Orders,

- Market Watch criterion.  (will be elaborated later)

A successful trader never misses a planned trade. Even if he does, there is no way that emotions are going to takeover the control of his trading account, ‘coz he knows the fact that market is still available to trade tomorrow. Missing the repercussions of a “Missing Trade” is always healthier for a trader.

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Image Courtesy: Google.

So It began….!!

 

As the title says, this blog is totally aimed at providing insight into Indian stock market through technical analysis.

 

Lets begin the journey…