Learn this amazing Chart Pattern from a Real Trader
basically I am an FnO trader, so my focus is in trading in Nifty50 stocks I generally prefer a benchmark, if my benchmark nifty is bullish then majority of my scripts or trades I trade in bullish patterns or if I feel that nifty or bank nifty has a similar pattern if it is building up then I will take majority stocks that are following the benchmark first I will do something, I will share the larger time frames so this concept will get clear there are some intraday patterns I will cover that so anyone who is watching this will understand this easily hello hello, I am Vivek Bajaj co founder of StockEdge and elearnmarkets so friends, I have got another face2face, this time it is going to be exciting and you will learn and you are going to learn the actual implementation in the market my target from this medium is that you get different information, different techniques from different experts you get a perspective so you follow your own path in the market it is very important to have your own path in the market because whenever someone has listened to someone else they have gone down so all these face2face are meant to help you design your own path this face2face will be in Hindi, the English transcript will be available I will be speaking very slow and I have also requested the same to the speaker because the topic we have today is advanced trading concept that we will listen slowly and understand the same a small disclaimer before I invite the guest I got connected to him through someone and when I talked to him it looked like he has logic he is connected to a prop trading desk a prop trading desk do not share their profit or loss because it is cumulative it is in a firm level, so it is very difficult to verify or check it but having said that I liked his thought process and his work so I told him to record it and he was like he doesn't care if people will not know him so he has hidden his face, he doesn't want people to know him, all he wants that people know his strategy so focus on what he is going to teach, and understand what he is here for, so welcome, Mr. Inder Singgh Hello Inder, Good morning I am good, how are you? Thank you for recording this sir, even though you did not wanted to show your identity, here you are I am really obliged that you want to share this concept with everyone thank you for bringing me here, I thought I have an edge, which every one has, so I thought I should share this so everyone has different strategies in the market, everyone has a different mindset, someone has an investor mindset and some have a trader mindset I believe there are points in here that can help everyone like a trader, investor, swing trader, discretionary trader everyone I will cover it slowly, I will try my best and I think anyone who even has a basic knowledge or is learning from the stock market it will be really beneficial for them yes I am also eager for this, I want to hear what you have but before we start this presentation even if you tell us little about your journey, what have you done, what are you doing then it will be better so tell us about your journey, where have you reached and what are you doing I belong from Uttarakhand, my father had a transferable job so my education was everywhere in India so I realized I get bored by static things and I like to travel I am also in this profession because there is nothing static and we do not roll we do and learn new things and that's how we grow so this is where I learnt it from, I started my graduation in 2002 then it got over in 2005, and then I worked in HSBC bank I was in sales team, and then I did my MBA in 2007 in 2009 I understood that recession is coming and we are not going to get jobs so my mentors in college told me that you should focus on trading and technical analysis because you are not going to get jobs very less chances you will get a good job so I started focusing on technical analysis and trading I used to work on share holdings, on long term and short term then I focused on technical analysis even with limited content, there were hardly any books and limited content on YouTube as well the learning process was really slow and the thought process was really cleared in the learning process the mindset is moulded really clearly so I tried different things, I was an investor so I tried it in larger timeframes with the resources I had, I tried my best to be a full time trader then 2009 onwards I gave my time on technical analysis then from 2013 onwards I became a freelancer, and then I also got in touch of many brokers so this is my journey and I have been in touch with them my other role is SIP or long term I just don't do that sorry sorry I was mute, so you don't do intraday trading? sir, I am a trader I have done everything in trading, but the investment part or the short term, which I have done personally that I have stopped because I want to do everything in trading and I cannot have a 2 sided mind set I have a trader mindset but when I do investing I do SIP or I do long term investment, I don't see any short term if you are doing trading and not doing a short term mindset so in the name of analysis it is paralysis so I think there should be a clear mindset because I am a long term investor, whatever opportunity I get be it intra or swing trading I opt everything around trading Interesting, so we will cover everything and we are recording it during day time consciously so that we can cover majority we can do it live market so let's just share the screen and we can start discussing the concept ya, so we will talk about technical analysis only and we look into charts and patterns it is already in every platform but I felt wolfewave chart pattern is different and it doesn't have much data around it the content is also very limited but then I gave time and my mindset was properly developed so every investor wants that they get bottoms so the law firms should get the right entry and exits, like how everyone wants so that I got in this pattern so these breakout patterns are used as indicators we clearly see the trendlines, we will not use any indicators here this pattern will tell us how we check the bottoms and how we check the long and short exit then we will take bullish to bullish long trends in some good rally or sharp bounce we can book it and after that, if you get a bearish treat at the top then how you retreat it, this is what we will talk about we can look at the long-term strategy to see how it can help us in the long run and if this pattern generates on a larger time frame then we have to check how this works so this will work in favor of every trader, investor, swing trader, and others so let's do a working analysis Wolfewave pattern was created by Bill Wolfe and his child Brian as indicated by Wolfe happened in all trades, trending or non trending sometimes the market is very riding bullish or bearish but a lot of times, the market is range bound that is the worst phase for a trader, they can't make profit in that situation basically I am talking about FnO traders FnO traders who buy options it is difficult for them, also who try the discretionary style but they get stuck in theta case both these patterns work in these markets, be it trending or not trending how will we cover that presently, the stunted way of trading is to wait, 5th wave price development to finish so today we will cover that wolfewave has 5 wave points but it is totally a different structure basically we will start with 5th wave in this 5th wave, basically we get bottom or top to generate any trade so is it different from elliott wave? yes it is a little complicated because it has too many rules it has too many rules and you can understand this if you practice or you will have to look too much into it to to know them properly you will understand the rules or you can generate profit from it but here there are limited rules there are no hard and fast rule because there are no particular books for that not much content is available, so whatever I am sharing it is working well for me whatever I am telling you is my observation and practice sure sure, only 2 things are used here trendline and volume so let's start, basically this is our pattern and the rules how we start so this is the rules we have to follow, and this is how we will get entry into the bottom we can make fresh positions on top as an FnO trader basically these lines tell us the trends that are needed we see that when there is a bull run or market has an increase in the rates then so generally a bearish wall is generated whenever someone is in a rally market and as an investor if we want to exit for top profit so basically we need to find a bearish wallframe if a 5th wave is being generated then it is a good chance for us to make profit and as an FnO trader, we can put short positions and the second thing is that channel is in a downtrend market so basically if we see a slowdown in the market or there is a bearish trend lot of traders want to know where will they boom their shorts and make fresh positions in your bottom how do I deploy my strategies and use my multiple funds on fresh bottoms bullish wolfewave is only created when there is a bullish trend there are a set of rules that will take time to understand and it will take time maybe you will remember it after sometime based on your passion but here there are only certain set of rules that I am telling you will you share the presentation, yes for sure so we will give the link of this presentation so you are not able to see the rule this time, maybe we will go through the content then we will understand here we are talking about wolfewave pattern and there are patterns and then certain waves there are similar features but the wave pointing matters more and we have to make entry and exits on that basis waves 3-4 must stay within the channel created by wave 1-2 then I will show you how to check in charts the waves 3-4 within the channel will have a parallel insight 3rd and 4th wave will come between 1st and 2nd wave 3rd and 4th should be highlighted at perfect symmetry the waves will have a pattern and then you will get a pattern the chart patterns will have a symmetrical shape and triangular it should not be parallel, no matter what it is and wave 3-4 should be within the channel created so these are few points that we have to keep in mind so we will cover the entry point that we have created here our entry point will be the last wave point from there we can see the target and what can be done if we will see the charts then it is very easy and you will be able to understand so right now I have some patterns of nifty and bank nifty the patterns are made so we can see it I trade in FnO so I check the nifty indexes if my benchmark nifty is bullish then my scripts will be accordingly I think if nifty or bank nifty has a single pattern so I follow majority stocks that follow the benchmark first I will share some larger time frames with you so you will get a larger picture then I will cover intraday patterns, so that whoever is watching they will understand it carefully and you will understand Sir, here, it is a historical pattern prior Covid. First, I will watch past pattern after that we will watch live pattern. As I said before, that our 1st pattern This is a bullish trend.Here the price structure is bullish.As I said before, if it is a bullish market then we are looking for bearish Wolfe Wave
Here the candle makes higher high. And market moves in upward direction. Then we will try to looking for bearish Wolfe wave. that we see bearish wolfe wave and if any investor comes he can see that how can we exit at the top, if there’s any short-term trader, FnO trader, then he can see how I create shorts at the top Basically we’ve to mark wave levels at first. I’ll randomly mark the latest 3 highest peaks. Okay. During covid, this was the top, and before that it was this, and this. And if we talk about bottoms, then 3 years back this was the bottom and before that also the previous bottom was of 2018. Okay. So we can see that it’s clearly an uptrend. And if we see a bearish wolfe wave, the pattern here is, as we can see it’s bearish wolfe wave on the right-hand side and the labelling 1st, 2nd, 3rd, 4th and 5th point that is marked in front of us. So the 1st point will be on the top, the 2nd point will be at the bottom, the 3rd point, we exactly know that higher high formations form so the 3rd point will be on the high of the 1st point and 4th point, we can say that some corrections happened here aftermarket showed profit booking 4th point came in between the 1st and 2nd points and then came a rally after which the market created its new top/high. So majority of the people may see breakouts
but in this bearish Wolfe wave pattern, you either have to lock your profits or partially lock them because, in Wolfe wave trading, short opportunities are made And the trendlines of 1st and 4th point which is coming downwards that connects is approximately our target. So this is majorly about this pattern. So let’s cover it in the chart pattern Why didn’t you consider this lower high? The lower high which is approximately 2018, why didn’t you consider this 1? Sir, if we’d done this.. first I’ll tell you the levels then only I can make you understand what I’ve done. Actually I’m seeing, if I’m talking about the time during Covid, I’ll see the previous 3 tops and the top you’re talking about, if I count this top as 1 and let’s say I consider the next pattern 2nd and this is 3rd point. Okay. As we’ve ruled here on which will be our 4th point, means the 4th point which we’re seeing after the 3rd point that profit booking came in the market. but the rule in wolfe wave for 4th point is that it should be between 1st and 2nd. So it is invalid here. If the 4th point has gone below the 1st and 2nd point
then the rule that wave 3 and 4 must stay between the channel created by wave 1 and 2. So this rule is not satisfied here, the 4th point has gone extremely down even if I cover trendline here, if I connect trendline also, even if I connect 2nd and 4th then we can see an expanding wedge is forming and we want symmetric Oh okay. Got it. The 4th point has closed between 1 and 2? Yes, but it’s not forming symmetric, it’s becoming expanding which is not fulfilling our rules. Okay, so that’s the major rule. Please explain this concept again and also what is symmetric and asymmetric wedge? I can see it in this charity itself. I’m showing it together so that I can refer it. wave 3 and 4 must stay between the channel created by wave 1 and 2. So here we are seeing that our 3rd and 4th point, firstly it should be between 1st and 2nd means if you’re looking at bullish wolfe wave then the 3rd point will make a new low but if you’re looking at bearish wolfe wave then the 3rd point will make a new high. So we can see that the channel is being created
but we see that waves 1st and 2nd & wave 3rd and 4th which should highlight a perfect symmetry means in bullish or bearish wolfe wave if we connect 1st and 3rd & 2nd and 4th We would want a symmetric, triangular shape. Basically in that example, the problem was 2 and 4. Yes, when we were connecting 2 and 4 then it wasn’t symmetry That’s why I didn’t cover this point. The problem was in 1 and 3. Ideally, 3 should be below 1. The 4th point should form symmetry means if we’re forming a triangular shape then it must form somewhere at the top If 3 would’ve been below 1, then it’d have been symmetric. No sir, 3rd point should be our new high means if we refer to these patterns here and looking at bullish wolfe wave then the 3rd point will make a new low. And wave structure is those counts that if we go above 1st then only 3rd wave will form if we’re looking at the higher high formation And if we’re looking at a lower low formation, then the 3rd point will only form when it goes below the 1st. Got it. I made a mistake and got it. So here we’ve to refer to that 3rd point is valid but the 4th point isn’t because it has gone down extremely below. Even if it’s above the 2nd line, it has gone extremely below. So if we connect 2nd and 4th
expanding is getting formed and the rule is not getting fulfilled. I’ll go forward now. I’m seeing that if I consider the 1st point and this is my 2nd point. After this, my new top formed here because when this price went above the 1st wave then my 3rd point was generated here. And when a new high formed, the price showed a fall so I can say that it’s my third point. And after this point, the price showed profit booking, it showed corrections. So this point is getting fulfilled. My 4th point is between 2nd and 4th point. Again, the price made a new high after this so I can say it’s my 5th point. So the most important thing is that my rules should get fulfilled. Means after 1st 2nd point gets formed I’ll look at bearish wolfe wave since it’s a bullish market. I’ll try to finf bearish wolfe wave
so that I either exit or create shorts on the top. The 3rd point formed a new high, after this formation, the market had profit booking and price action created a 4th point So if I connect both these trendlines 1st and 3rd. I’m covering the rules step by step. If I look at this pattern, it’s a symmetry formation. It’s getting connected In this way, I can say that all my conditions are getting fulfilled. After this, we form a pattern and majority. We’ve to see that whenever the price action will form 5th means 1st and 3rd trendlines are rising. Whenever the price will breach it on the upside and after breaching it on the upside, the price will close below, you’ve to be alert
that if you are an investor and look at weekly, and monthly timeframes then you should be careful that if this pattern is forming and price has given the breakout on the upside or the price has risen and didn’t sustain and then the price gave the closing below that trendline. We’re talking about this trendline. Here we’ve to be alert that we’ve to book our profits here or next is, that the price goes above this. If the price doesn’t go above this and the follow up of the further candles comes as bearish then it might be a huge sell-off and what will be its targets? First, we’ve to connect the 1st and 4th line. If we’re getting a sell here
then our target will be when we’ll connect the 1st and 4th line. So we can see that the benefit for the investor is, he can lock his profits too or book partial profits here. or he can go in a smaller time frame. See what kind of structure there is. In weekly, it wasn’t clearly visible how the candles were working there. I’ll just correct these waves a little bit. Here we can see that the price breached this trendline above this candle and after breaching, this candle gave us closing below this trendline which is our 5th point. When the price went above 3rd trendline, it was 5th point for us but we’ll get the sell opportunity whenever the price went above this 5th point, this all was 5th point but when the price hits this trendline, we’ve to be prepared to either lock long-term profits or if we’ve locked this and we’re F&O traders then we'll have to wait for shorts. and our targets can be particularly below the trendlines. Basically, our 1st target will be the next trendline and if the price goes below this
so our next target will be the next trendline. So these are our two targets. As we can see, this pattern also benefits the investor. And a trader has a slight stop loss and a big profit scenario here. So I think in my experience is that if you’re a trader and want to earn profits then the only thing that matters is risk reward and not aggressiveness. The risk-reward is usually 1:5; 1:10 In the Wolfewave pattern. Interesting! In fact, I saw that at the top a bearish engulfing candle pattern was also formed. You can use all these patterns in whatever technical skills you use Whatever its inputs and the classical things are, you can mix it all here. So you can see according to the bearish engulfing that it formed here
but here you don’t know what kind of a structure/fall it’ll show. If you’re looking at short-term or intraday for a day or two, the follow-up is very important to see that how the next candles are following up with the help of which you can do more short-term trading. But the patterns, like the traders, want big targets on slight stop loss, only the patterns can give you this and I’ve adopted this pattern because only this pattern gives you an edge which every trader wants- a slight stop loss, big targets Your risk reward should be very high, the risk is limited and the reward should be high. I’ve gotten this thing from this pattern. So in this pattern, how many time intervals you can see? daily or monthly? You can see any time interval. Means, I can see it for 5 minutes? Yes. Shall we see this in 5 minutes Nifty chart? This pattern I’m seeing right now, in the beginning, I said that I majorly follow the Nifty, and Bank Nifty because these are the scripts in F&O. Can you please delete those lines once?
Right-click and remove. So I cover both the Nifty and Bank Nifty patterns. Since bank Nifty is the favorite of all the traders I’ll start from there. Basically if I’m a short-term trader and I want to do short-term trading, people mostly see 5m or 15m, I’ll mark this favorite here so I can track them easily this is the price action which formed in this month and we clearly see that this price action is totally bullish. Our first rule was that in the market if there’s any script that is bullish then I’ve to find bearish wolfewave. Right. My first rule was that in the market if any channel or price is running bullish or in an uptrend then I need to find bearish wolfewave. The structure of Bank Nifty in front of me was bullish in the last week, it was bullish from the start of November. So what I’ve to do here is, whatever my peak points are, means if I see the recent peak points in price action in November, then that’s the point before this point So I mark in the beginning. This is my first point and then I’ve bottom here because after this we see that a new aisle rises. Why do you use the candle and not the line chart? Yes? Why don’t you use a line chart but a candle? Does high-low matter to you or directly close? I don’t see closing, for me, high-low is important. Okay.
I only see closing when 5th point is made. It matters only around the last mandatory point when I’ve to see what the structure is. We’ll see 2-3 things here. You can also add volume and 2-3 things more which we’ll cover later. So as we see, recent is a bottom and the top before this was this point so I’m considering this as my 2nd point. Now we’ll see, when the market crossed the 3rd point here, it broke there, so as soon as the price goes above the 1st point, that is the 3rd point for me and closing doesn’t matter here. So this is the 3rd point. I'll wait for some structure to form. After the formation of 3rd point, price gave correction here and then the up move came. So you can see 2-3 patterns here. If I consider this as the 3rd point, for example, and we know that the rule after this is, that the 4th point will form between the 1st and 2nd point. So if I want, I can
After this price made the 5th point above the 3rd point so if I want I can draw a bearish wolfewave here. I connected the 1st and the 3rd point and after that, I connected the 2nd and the 4th point For the target, I’ve to connect the 1st and the 4th line. These are some sets of rules which I’m following. As we can see here, the 1st, 2nd, 3rd, 4th, and 5th patterns formed here so this candle above this candle breached the price here. The price went above this candle. but the closing was below. So this is my entry point and this is my stop loss as well. Okay.
Here, if I’m an intraday trader then I can make my shorts or if I’m a hedge trader if I do optional hedging then also I can develop my strategy here. I can develop my strategy if I’m an optional buyer also but there are some set of rules which must be followed. So here my view will be bearish and in this if you want, like I was saying I’ll add two things, how can the 5th wave be generated and where. So there’s a way, generally our 2nd and 3rd trendlines. I’ll take this price to its bottom. What do I’ve to do? I’ve to copy a parallel of this trendline here which I’ve to keep above the 3rd wave Okay. I’ve to pick its clone and draw a line parallel to 2nd and 4th, which I’ve to keep above 3rd. This means, whenever my price will make the 5th wave and goes above this it
then this zone in which we’re seeing, the price action happening above the 1st and 3rd line and the next trendline is a sweet zone. This means I’ve to be ready, that shorts can be made here If I’m a short-term trader then I'll have to book my long profit and I’ve to wait to avoid the opportunity of shorting. So this is a sweet zone. Here we’ve to wait if shorts can be made for and as we saw, the candle that has formed in this trendline has given us a surge in trade, actually, our stop loss is small and the target is between the 1st and 4th line. So like we’re seeing in the image here on the right side, if we’ve bearish then this point on the downside, 1st and 4th point, our targets could’ve been made here but there’s again one rule. This could’ve been our target if the price shows rapid action or a fast fall happens, then our targets may come soon. That’s why we can’t define here what our target will be. We can see approximately. If rapid fall comes, your targets will come soon and vice versa. You may not achieve full targets because this symmetry- 1st and 3rd line, 2nd and 4th line have been covered already. They have been completed.
The apex of both the trendlines have merged and when both the trendlines merge, the pattern becomes invalid for us. There are many rules within this. Yes. Stop loss? Sir, this 5th point is the stop loss. The candle that goes above the 1st and 3rd trendline and gives closing below this trendline is your high stop loss. So what if we keep the take profit two times the stop loss rather than waiting for it to come to lines 1 & 4? Yes, you can keep it.
Because 1:2 is more than enough in a 5 minutes or 15 minutes chart. But even if I see this 15m chart in 5m, it’s still working for me. It’s more than enough. But I consider trading to be lazy work as a technical analyst. You’ve to wait, your number of trades will be less which is a good thing that you’re an experienced trader There’ll be less patterns forming for you but whenever they’ll form, they’ll give you good profits. Do one thing, delete the drawing again. Let me simplify it some more. The Bank Nifty right now is 42,446, tell me what do i do now? Come to the latest. I’ll analyze it myself. First thing.. I’ll see the current. Let me refresh this. This is the first pattern means this is the price action. I’m covering the image of recent high, right? Yes. And you’ve not given the importance to volume.
Earlier you said that you give importance to both the price and volume. The role of volume is that when the 5th wave forms, you can consider there, that the volume bar which is forming below is that coming with the highest volume? Means we see the selling resistance many a times means that is there any sell forming around the resistance? So we can consider that its volume is supporting? This was our candlestick and below e can see that this bar is huge. Oh. So volume confirmation happened? Yes, it’ll support you that it might be the potential top. Now, can we go to the latest price action? So here the price action is showing bearishness, price action is coming down and we see it’s a bearish structure.
Why did you draw a line like this? 1, 3 and 5 is bearish. Actually, I was just showing that we’ve got a bearish trend in front of us. Oh, if you’d shown this there, you’d have drawn a downward line. If we’ve got a bearish trend, then we’ve to find a bullish wolfe wave. So our 1st point will be, the higher low formation. Our 2nd point will be the topmost point which is the top and the 3rd point will be the lower low formation which will form below the 1st point. The 4th point will form between the 1st and 2nd. So let’s cover this. Basically you try that your 1st point should be a higher low formation, which is the latest higher low. Okay. You can refer to the image of the Bearish Wolfe Wave on the right-hand side. So you keep the 1st point on top. But ideally what is the process that I shall follow? I should find the 5th point no? Ideally, you’ve to draw all the patterns according to the rules
and enter at the 5th point, according to your experience you’ll be able to steadily catch 4th and 5th also. So let’s assume that 42,350 is the 5th point. Let’s assume this once. Let’s go in reverse. This is the 5th point, let’s write 5th 42,350. Are you talking about the bottom? No, I’m talking about the top which just formed. Just right now, on the right side. This? Yes. You’re asking me to mark this the 5th point. Let’s assume. If we’re looking at the bullish wolfe wave then we need the 5th point at the bottom. Oh! That’s why I was asking you to refer to the image on the right side. If the trend in front of us is bearish then we’re looking for bullish wolfe wave and in the bullish wolfe wave 1st, 3rd and 5th point means the lower low formation will now come in the bottom. Okay. Understood. And whatever our bearish patterns are, the bounce points, or the recent tops 2nd and 4th point that’ll be on tops. So let’s consider 5th as the lower one. But this is not a good formation.
It’ll form, sir. You try, it’ll form. But 1 and 4, 4 is very high so it’ll not form. Sir, try once, it’ll form. See before this point which one is the top? This. It can be 4. I’ll do just the 4th one. Okay. I’ll mark it 4 and before this, the bottom means the 5th, I’m creating this below the 3rd. Yes. I’ll keep it here. My 3rd point is obviously below the 1st and my recent top will be the 2nd. So, sir, this top is your 2nd point. And this is your 1st point as the 3rd point is formed on the downward side. Yes, that’s correct.
Sir, this is the vital part. You have done more than half of your work after labeling the point. And now you have to connect the trendlines. When we connect the 1st and 3rd poin ts then automatically the 5th point is connected. And when we connect the 2nd and 4th points, it obviously becomes a trendline. After that, we have to make a clone of the 2nd and 4th points and place it on the 3rd point. That means in the 5th point, there is a buying opportunity. Yes, because in the bearish market, we are trying to buy the opposite trade. So, a buying opportunity is created. Yes, because they want that market to be in a bearish phase, so they get the entry at the bottom. In the bearish phase, the bottom point helps to get into the entry. So, here the bullish Wolfewave chart pattern formed. And if I see then this point does not breach the low point. Means this candlestick does not break trendlines. But there is a condition. If I draw a horizontal line in the 3rd point then the 5th point is generated as the price went down from the 3rd point.
But according to Wolfewave theory, your trendline does not hit this point. What I do, if I have a short position then I book the position as the market is ready to form a bullish trend. And then I wait. See, in the pattern, there is a simple rule, if your structure hit then you can take trade and when the structure doesn’t hit then you can wait or leave that trade. So, sir, this technique is applied only in one or two instrument. Until I have scanner that watch all instrument but this scanner can’t be automatic. It can only be done manually.
Yes and that’s the big thing. Majority of pattern we watch in nifty and bank nifty are similar. So, when wwe watch nifty chart then we found that pattern. You can check here also So,, it is downward pattern, then below that point is 5. Now, you tell me the point and I mark it.
Okay, That’s 5 and above from this point is 4th. And below of this is 3.So the same pattern is formed. Yes because they have similar trend. But here is one thing, if your benchmark becomes bearish and you watch this move earlier then we watch any strong structure is formed As before, the price action is bullish and then there is profit booking. So, that’s why bank nifty follows nifty. And it is possible only when the nifty has a strong structure. So, it is 3rd and whichever point is highest then this, it will become 2nd point.
Yes which is 18400. Oh the highest point before that point. Yes, whichever is the highest. As we are talking about that 2nd & 4th are top and 3rd & 5th are bottom. Here is bottom. So, half of the work is done & then connect 1st & 3rd. And then connect 2nd & 4th point. After that you form a clone and place it on the above of 3rd whether it is bullish or bearish Wolfewave. And this is the horizontal line of 2nd & 4th.
So, here a channel formed. Now sir, you watched the structure. These two trendlines are called the sweet zone. So, when the price is below from this zone then don’t take any fresh bullish position. And if I have short position and I want to hold the trade then I follow this trendline. Or if I follow the price action then I can hold the position at this higher point. This is the higher point so we draw a horizontal line. If the price break that high point and crossed the both trendlines then the fresh bullish position is generated. And my stop loss is the recent low. So, I wait here because if I want to take a fresh trade or by call option
or buy futures or you can make a directional strategy as per your risk capability. And deploy bull spread strategy. If I take any fresh position then my target will be the For that, I join the 1st and 4th point. And if any bullish position is formed then it is my sweet zone.And if I have a short position then this point is my trailing stop loss. And when you get your risk-reward ratio. If you take any trade at 4th point or you use any strategy or probably you hold any short position then you can trail here. And if you exit from that position then you can take bullish spread and you can get a target from that position which is the second trendline. How much trade do you take in a week? Maximum 2-3 trades are formed in a script. And what is the accuracy rate? The accuracy is around 40-50%. But the risk-reward ratio is very high.
I noticed that you are not very particular that all points matched with specific point. I only follow that if I watch this pattern in a 5 mins time frame and I get confused and I am a short-term trader then I can use the timeframe of 5 and 15 min combo. Then I can easily see that this point is bottom, after that this is top. And when the lines break then this is 3rd & 4th point. It can be possible that in 5th point you get noises. But if we apply high time frame then it clearly visible that it is 1st point & this is 2nd point. If I draw a support line, for example, if you hold bullish trade, it is your higher low formation
After that market form higher high but if your higher low break then your 3rd formed lower low. So, if you have long position the wave count is similar in that case also If I keep it simple, whenever my trade is closed at the high of last’s low then that time I also take a long position. So, what is the requirement for the formation of the wave? Sir, there is a condition that price action should come above this trendline. If any candle comes above from this trendline in that 5-15 timeframe then Then your stop loss is always at the formation, not the low of that candle. And that’s the rule. The rule of bullish Wolfe Wave is that your entry point will become your stop loss. So, it matters a lot that you do proper position sizing and proper risk management. Because it happens that sometimes your stop loss is big and sometimes our stop loss is high.
But I believe that only 40% rule is from trading analysis but it related to mindset, position sizing & risk management. So, use it. If stoploss become high then reduce position sizing And if you are fno trader, then you can take position according to the pattern. So, when it is bullish Wolfewave then your entry point becomes the stop loss Even I checked this on net. Information related to Wolfe wave is available in the net. If someone want to check they can. And I think it is available in the tradingview No, it is not available.
Yes, so we have to form this pattern. It cannot be generate automatically. No, it cannot be generated automatically. Yes, but if someone wants a detailed study on this pattern they can read on the internet. On the internet, there is a huge amount of information related to this wave. But sir, I told you one thing that, huge content available on the internet. But there is a rule which is wrong that lots of people make it symmetrical or parallel I understand the logic behind why you said that.
Those who make parallel patterns, it is in Elliott wave. It is present in the 3 drive pattern which is a Elliott wave & not Wolfe wave. In Wolfe wave, only symmetrical pattern work. That means, the support zone is demand zone and the selling zone is supply zone. It is like a pendulum. Here market is in bullish zone but they exit when the stop loss trigger and then the market fall. And here we can see the fall with good volume but then it is not fall down which means that seller is gone or they trail their position
Then we see that here we can enter and we earlier watch in the bullish Wolfe wave, that a candle is formed and a good volume is formed. So, when the entry is formed with a good volume then it is a confirmation that the bottom is formed. We only measured the probability of entry that bottom is formed. And if you take bullish trade then you get high risk reward ratio So, will it be applicable in the stock also? Yes, absolutely. But ideally, it will be applicable only in large cap stock. Sir, see only trade on that instrument who has high float and liquid. And if I am fno trader then we have limited scripts which have liquidity.
Suppose, nifty give a bullish view but stock is in bearish trend, then what will you do? I will apply alpha strategy. For example, I trade on Reliance and its index is oil and gases. Then I can compare with its benchmark how well Reliance performed. I don’t compare with Nifty 50,I only watch that is Reliance perform according to their index or not. If Nifty oil and gas are in bullish and reliance also have same pattern and if Nifty 50 is in bearish trend but I take bullish trend. So, when you trade in stock then you consider only stock specification. You don’t consider other benchmark and don’t change the view.
Yes sir So, in a week you take only 3-4 trades so how much position do you take in monthly? Sir, I set the target that if I trade in stock then in a month, I only take 5-10 trades. Can we trade in options also? Yes sir, we can trade in options also. Actually, in options, liquidity is reduced and here the risk-reward ratio is high. So, after that move, the liberty of that stock is reduced. So,earlier you have to filter that stock who can move 5-10%.So, you can easily exit And if I apply credit spread, means if the price went up from the 3rd point then I sell the put If you have a trading strategy then you can wait. And when you see that your trading strategy becomes invalid then you can exit from that position and that’s a debit strategy.
But there is a slight difference that in credit strategy, the risk becomes half and in debit strategy, it becomes double. Because in that strategy, whether it is bullish or bearish move As it does not matter with volatility aur beta. That’s right. It’s a good introductory video on this strategy. If you discuss more further.
No, sir that's it. And apart from that your skill and stock selection work. But the content is only that much. But I have experienced this strategy. If you are intraday trader then you can use small time frame and if you are swing trader you can use big time frame like 1 hour,4 hours or daily and that’s all skill you should know Great, Inder it was a great introduction of this form. I liked it very much. I also use this strategy in my chart as it is a great linkage between pattern and wave. And this pattern is also good. And I start reading up on this. Actually, I don’t know about that. So, now I have curiosity to learn more about. And thank you for giving this content Now obviously we learn on our own. Hopefully, we will adapt that you will adapted. We will try but thank you so much for introducing this concept.
Thank you so much for giving me this opportunity, Friends by small learning like this should make a good framework for you. Inder will make the money so adapt it and practice because you have to practice this until you think that it is fine for me.And thank you friends for watching this video and Inder thank you again for giving your time to us.
2022-11-29 01:58
