– [Instructor] So it'scloser to 9.
40 in the morning and PEL has caught myattention for the day.
This particular BreakoutCandle is shaping up well and I will enter in a bit.
Now this video is more focusedtowards Stock Selection.
But I don't wanna cover StockSelection from historical charts point of view that iswhy I'm doing a Live Trade here and once the trade iscomplete, I will then explain a few things with respectto Stock Selection, in terms of Price ActionTrading, in terms of Volatility, and in terms of Volume.
So let me now enter here.
So what I'll do is I'll enterin Trading View Platform and simultaneously, I willopen up positions in my own account using adifferent monitor.
So I'll set it to1000 market price.
So the executionI get is 952.
So usually I am looking forWide Range Candles on back of huge volume activity, this is how I enter trades and since this video ismore about stock selection, I will precisely point outwhy I have selected PEL for the day, that is the stock.
And I will give you some keypoints about stock selection that you can also usein your own trading.
So just focus onthe chart for now, look at this Volume here andlook at the corresponding Candle that is forming.
So it's clear that thisarea Strong Participants have entered and you'refinally seeing PEL move higher for the day.
So this combination ofPrice and Volume activity is one template that I follow in all of my LiveTrading videos.
So if you now take alook at this particular Wide Range Candle, Imean look at this Candle there is hardly any Wickpresent at the top end.
So which clearly representsthat Demand is clearly visible in the stock and for the dayone should only be looking to go long in thisparticular stock.
Now it can happen on aBreakout Candle like I've done or you can also waitfor a Retracement and wait for a betterentry opportunity.
So this particular trade Iselected based on a Price Action pattern, which actuallyevery day trader should be followingvery closely.
And I list out few more suchpatterns because these really work well when it comes to DayTrading irrespective of any stock future thatyou're trying to trade.
So the next few episodes ofthe Live Day trading series, will be about Stock Selection.
So in today's video, I'll beshowing you one of the many concepts that you canuse in Stock Selection and in the subsequent videosI will be showing you many things with respect to PriceAction, Volume, Volatility and many other factors.
So take a look at thisCandle here again, we are at day's high, about one minute leftfor the Candle to close.
So clearly if youalso concentrate onVolume clear expansion is taking place and this issomething that gives you further confidence in termsof holding position.
So currently prices at 959about seven rupees higher from my entry price and Iwouldn't be surprised to see PEL at something like 980 even 985.
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– [Instructor] So it's10.
24 in the morning and PEL is trading at 956.
We've just made a new day'shigh and then we are seeing some sort of Pullbackhappening in the stock.
So if you take a look at thisparticular Wide Range Candle, look at the correspondingvolumes, volumes were high.
And now take a lookat this small Candle and look at the volumes here.
Volumes are on the lower side.
So what is happening here, isthat based on a VSA Concept, we are seeing Demandbeing tested out.
So this is a WeakTest that is happening.
Again it's a VSA Conceptand I think usually when this test happens, it's a sign that price would eventually start moving higher.
So let us see how this playsout as the day progresses, but still there are strongsigns of Demand visible in the underlying stock.
So it's 10.
42 in themorning and price is at 966.
So again we've made a new day'shigh Candle is pretty wide.
Volumes are also coming in.
And this usually doeshappen after a Weak Test has happened on the downside.
Again this is a VSA conceptand that is why I will urge each and every one of youto start reading books on Volume Spread Analysis, because that will give you huge clues intoanticipating price movement, when it comes to Day Trading.
So I'll just check backagain, after a few minutes price is currently at 965.
So it's 10.
45 in the morningand currently prices at 970.
Again a freshday's high for PEL.
And this was bound to happen.
I also have one more tradein Kotak open, Kotak Bank and that trade is actuallynot doing that well.
So I'll have to managethat trade as well.
And I'm also seeing somesort of weakness developing in the Bank NiftyIndex at higher levels.
But that is something Iwill, I can't cover right now because I'm focusingon this PEL trade and I'll look into it at alater stage if time permits.
So if you nowconcentrate on the chart, let me just get my cursorfrom other monitor.
So look at all theseWide Range Candles that are forming on the chart, I mean clearlyprices moving higher.
And look at theVolume activity here, clear Volumeexpansion is visible.
So this Candle, currentCandle again, keep an eye on how the Volume will pan out.
There you go again pricestrying to move higher, range is expanding.
So this is something thatplays out on a daily basis in various stocks whenit comes to Day Trading.
And in case you'renew to this channel, do watch out the previous12 episodes that have done in Live Trading Series, you will get a good idea about what to look into interms of trading a Breakout or even trading Retracements which I have coveredin great detail.
Now let me tell you that Priceand Volume Breakout is a very simple concept to follow.
But the thing is you needto apply this concept on only those stocks thatare bound to move in the next one to two sessions.
And this is where mostof the traders struggle because Stock Selection isone topic which is not covered that much, even in books andvideos and which is why over the next five to six episodes, I will dedicate only towards the concept of Stock Selection, after I have explained the Live Trading concepts.
So just focus back on thechart, look at this Candle, so look at all Volumeactivity today.
The current Volumeactivity that you're seeing for this particular Candle hasalready surpassed the Volume activity for theentire trading session.
So this is a clear signthat as of this moment that is 10.
47 in the morning, there are no signs of Trend Reversal yet happening.
Now in the Broader Market, I can see that some sort of Retracement is happening, but just based on the Volume and Price Activity, Iwill be holding the trade.
So it's closer to10.
50 in the morning and price is currently at 982.
So what I've done is Ihave kept out exit orders in my own account again, orderdetails I'll post out later.
And price will be approachinga Round Figure Resistance Level which is of 1000 leveland usually what I've seen is that from Round FigureLevels, reversals do set in in terms of Day Trading.
So again look at thisWide Range Candle a fresh Breakout again happening onthe upside and subsequently look at the volumesthat are coming in.
So I will be exiting someof my positions pretty soon in my own account, I'vealready set out the order here.
So at this level, let mejust exit some positions.
So I have 1000 quantitieshere, I'll just exit 50% make this 500 set it tomarket, there you go.
So the executionI get is at 980.
So in my own account aswell, I have exited some bit of positions, so currentlyit's 11.
09 in the morning and price is at 981.
And we are seeing some sortof buying again emerging at lower level, but I willcheck back at a later stage, I have exited 50% positionsand gradually I will Scale Out.
So they will again, so againprices now trying to move higher 987 now, the only thingis that volumes are not yet picking up, but stillabout 30 odd seconds left for this particularCandle to finish, some sort of BullishEngulfing emerging.
So again I will checkback in couple of minutes to see what is going on.
So it's 11.
11 in themorning and again, price is trying tomake a new day's high, price is currently at 993 andI have set out exit levels between 990 and 1000 because1000 is a round figure and I don't likekeeping open positions.
There you go, so newhigh for the day for PEL.
This Candle again, 994is the price and this was on the cards based on howprice and volume was behaving in the stock today.
Again we are approaching aRound Figure Level of 1000, so I have exited mypositions in my account between 990 and 995.
And in your own tradingjournal, just take a note of this Round Figure exitconcept, because usually this concept is not coveredin books that often.
So it's 12.
m in theafternoon and we have seen precise Retracement happeningin form of these Candles from the 1000 level mark.
So I'll just exit somemore positions here.
So I just have 500 remainingout of that I'll exit 50% more, set it at marketand there you go, let us just checkthe execution price.
So it is 980.
So I hope you can see how wellthis round figure resistance concept has worked.
And this can be used inDay Trading to anticipate exit level in the market.
And this does apply acrossall the instruments.
So here let me exit theremaining quantities.
It's at 12.
24, so I just haveabout 250 left at market.
Let us see the executionPrice, so it's 983.
So now the trade is over, Iwill log out, I just have some more positions to manage.
So once the market shuts, Iwill then explain in detail about Stock Selection process.
So now that the market hasshut, let me just explain a few things about some StockSelection patterns that you should look into.
Now before we begin, do understand thatall these patterns are well known, but for somereason most of the traders don't believe these things work.
And therefore, just approachwhat I'm going to tell you with an open mind.
And you can go backto Historical Charts and see how well thesePrice Action patterns work.
So in today's trade, most ofthe Stock Selection aspect that I did was based onthese Price Action patterns.
And therefore the firstconcept that I want you to understand isthat of Inside Day.
Now pay attention here, inan Inside Day, take a look at previous session's Candle.
So this is the high point, this is the low point.
Now the currentsession that you see, In the current session, thecurrent high, is less than the previous high and thecurrent low, is higher than the previous low.
So therefore entire range ofcurrent Candle is Engulfed within the range ofthe previous session.
And that is when youget a Inside Day pattern on a daily time frame chart.
All these patternsthat I'm gonna show you are supposed to be seen on adaily time frame chart only.
So the second patternis the Outside Day.
Now Outside Day is exactlythe opposite of Inside Day.
So outside day has high, that is greater than the high of the previous session andthe low of current session is lower than the lowof previous session.
So the current Candles rangecompletely Engulfs the previous sessions Price Action and therefore this isknown as Outside Day.
So when it comes to stockselection from Price Action trading point of view, InsideDay and Outside are two of the most common patternsthat I use in order to initially shortlist a set of stocks.
Now along with InsideDay and Outside Day.
There are alsoNarrow Range 7 and Narrow Range four sessions.
Now this I have explained inone of the VWAP Trading videos I will link up that video here, so do take a look at thatvideo after you're done with this particular video.
And there is alsoone detailed video on Day Trading Stock Selection, do watch this video as well.
I've outlined about sevensteps that are required, in order to shortlist stocks.
Now one of thecommon misconceptionsaround Outside Day and Inside Day isthat these patterns don't work well in real time and these only workon hindsight basis.
Well let me tell you mostof the trades that I do, those stocks are eitherforming an Outside Day or an Inside Day pattern, or they qualify based on the Narrow Range seven orNarrow Range four conditions.
So it is not that thesepatterns have stopped working.
It is just a commonmisconception andyou have to stop believing in this.
So if you focus on thisparticular snapshot, look at how well Outside Dayhas led to Range Expansion on the downsideand then Inside Day has led to an RangeExpansion on the upside.
So this is not a coincidence, an Outside Day simply indicates that Volatility orlet's say range is expanding in the market and thereforemovement is likely to happen.
Whereas Inside Day just tellsyou that overall Volatility is contracting and aphase of Volatility expansion will begin.
So these two concepts arebased on underlying principles of how Price Action worksin market and therefore, these patterns willnever stop working.
Yes it might be that wewill get some whipsaws when it comes to OutsideDay or Inside Day, but that is absolutely fine, because let alone Price Action or any other indicator thatyou follow, whipsaws are one thing that you cannotavoid in trading.
So let us now move on to theexample of PEL where I will explain this insidethe concept to you.
So this was the sessionwhere I went along in PEL.
So before that, if you lookat this particular session, this was the thirdconsecutive Inside Day, with respect to thisparticular Candle here.
So take a look at thisrange of the Candle.
I've marked it intwo black lines, so this was dayone of Inside Day, this is day two of InsideDay and this was the day when I shortlisted the stockfor the next trading session, because this was the thirdconsecutive Inside Day session.
So what this was tellingme was that Volatility was contracting and thatprice was going to move either on the upsideor on the downside.
So currently, in today'ssession price actually closed somewhere near 962, 965.
And with what is going onin terms of these Inside Day formation, let me tellyou that PEL would be good for Day Trading forremainder of the week, because range hascontracted a lot and we will see sustainedmovement happening.
Now if you take a look atthis particular Candle.
So this candle was actuallythe sixth Candle with respect to Inside Day, if you takethis Candle as a reference.
So again high and low ofthis candle is marked here.
So this is first Inside Day, second, third, fourth, fifth and sixth Inside Day.
So what you're seeing is aclusters of many Inside Day trading patterns, happening within these reference Candlesticks.
So when this happens on astock, you can be certain that within one to threesessions, the stock will move either on the upsideor on the downside.
Now again if you take a lookat daily time frame chart of PEL, one more thingthat I like to see is, what kind of Wicks and Tailsare visible on the Candles.
Now if you take a lookat these Candles here, look at the Long Wick here, again a Long Wick here, followed by three Tails here.
You can also seeLong Wicks here.
So what Wicks and Tail tellsyou is that, there is clear presence of Strong Participantsin the underlying counter.
And hence these counterswill move in the short-term.
Now do not underestimate theimportance of Wicks and Tail in a Candlestick chart, because these clearly tell you the presence ofStrong Participants.
And once you know thatparticipants that are present in a counter are prettystrong ones, both on the buy and the sell side, then letme tell you 90% of that stock will see a movement withinone to three sessions.
So along with thePrice Action Pattern, another filter that I use is, I like to see the kind of Wick and Tail that ispresent on a Candle on a daily time frame chart.
So today I did one moretrade that is Kotak, along with Bank Nifty and itwas not a coincidence again that this was the sessionthat I shortlisted Kotak that is yesterday andthis was today's session.
So look at yesterday's session.
It was again an Inside Day, with respect to thisparticular Candle.
And when it comes to Tailand Wicks, look at how many Long Tail and Long WickCandle you can spot on Kotak.
So this clearly tells me thatwithin one to three sessions, this stock will move.
And at times I justhave to wait for one day and at times it takesabout four sessions, for a stock to move andthat is completely fine.
So once I start seeingNarrow Range patterns, Inside Day patterns, Outside Day patterns, followed by all theseWicks and Tails that I spot on a daily time framechart, I do give that stock one to three daysto move because thatis a usual time span when that stock starts moving.
So all the concepts aboutInside Day or Outside Day or let's say with respectto Tail and Candle Wicks, are the fundamental thingson which Price Action works and therefore these thingscan never stop working.
So for the time being when itcomes to Price Action filters, take a look into Inside Day, Outside Day, Narrow Range Days, and then take a look at thisconcept of spotting Long Wicks and Long Tails on Candles.
And then just seehow Stock Selection improves over a period of time.
So once I had determinedthat PEL was set to move on that particular session that is within oneto three sessions, look at what Ispotted on the chart.
Now price initially gapped up.
So gap in itself was aBullish sign for the day.
And then I got these threecandles with Long Wicks on the upside.
So this clearly told me thatthere was some sort of supply clearly visible on thechart and even the Volume that came in all the threeCandles was significant.
Now look what happenedon the next Candle.
When I got this breakoutCandle and I was spotting this on real time basis.
I had a previous context inmind that there was some strong sellers out there who weretrying to take prices lower, but eventually theycould not do so.
And hence there were somestrong buyers who entered in the market anddrove the price higher.
So this concept is known asChange of Polarity concept, where at any given pointof time, sellers or buyers are clearly evident.
And then suddenly you seestock moving in the opposite direction due to presenceof some strong buyers in the market, that isin this particular case.
Also take into note thatas this Candle was forming, look at the Volume expansionthat started happening.
So this Volume thatdeveloped on this particular Breakout Candle, this wasactually the highest Volume that was traded overthe last two sessions.
So again this change of polarityconcept worked really well.
And this was actually asign that strong buyers were entering in the stockand one should have taken long positions here.
So irrespective of whatmethod you have for your own Day Trading, do take intoaccount volumes because volumes is what tells you, whatkind of move is happening in the market and whatsort of participants are present during that time.
And this is actually crucialamount of information.
And I hope by now inthe last 12 episodes, you have seen how simpleinteraction between Price and Volume can lead to somehigh probability trades that actually dowork in real time.
So just take a look atthe overall structure as this trade was developing.
So after we got this WideRange Bullish Candle, price actually did consolidate andlook at where this hammer was forming on the chart, it was exactly atthe VWAP Indicator.
And by the time this hammerwas forming on the chart, the structure of VWAP Indicatorhad improved quite a bit.
So as Day Traders, once you have a gap, once you have a BreakoutCandle, always take into account what is happening near theVWAP Indicator or it may be any other indicator that you follow.
There are some of you whouse simple moving averages you don't use VWAPIndicator that is also fine, but you need to take intoaccount what is happening in and around a movingaverage or a VWAP Indicator to determine what is going onin terms of overall structure.
I prefer using VWAP becauseI have explained many a times that VWAP is one indicator thatis used across institutions as well and someday I willexplain that part in detail.
But that is why one of themain things I like to do is, I like to spot rejectionacross VWAP indicator in order to determine whatis going on on the chart.
So this Price Action Patternsthat were playing out on the chart were on theback of a structure where PEL had clearly formedmultiple Inside Days within a large Candle here.
And also the day I selectedthis, this was also the third consecutive Inside Daysession that was visible.
And do not forget the importanceof all these Long Wicks and Tails that clearly toldyou that Strong Participants were present in the stock.
So therefore again this isa confluence of many factors at play here and this iswhat you have to learn in Day Trading, nothing is independent, everything is connected, butyou need to have limited data points so that when thesesort of Candles are developing in real time, you can connectall the dots and initiate either a long tradeor a short trade.
So over the years, I havedetermined that the most rewarding Price ActionPatterns are Inside Day, Outside Day andNarrow Range setups.
There is one more patterncalled a Candlestick kicker.
I have done a video onthat, do check that as well, because that is also one ofthe most rewarding Price Action Patterns with respectto Stock Selection, that is Day Tradingand even Swing Trading.
So if you spot multiple InsideDay, Outside Day patterns that actually lead tohigh probability setups and therefore always startby looking for multiple Inside, Outside Day patterns, because this actually works really, really well.
In this particular video, what we saw was that Stock Selection I did based onInside Day structures, but there will be videos whereI'll show you how I decide on the Stock Selectionmethod simply based on Volume patterns and even on volatility.
Again I don't wanna coverthis on historical charts and I will only do Live Tradingepisodes so that you can get insight into how this patternconnects with entry and exit.
So do watch thesevideos on VWAP Indicator and the Live Trading episodes.
These will certainly helpyou get better at short-term trading and Day Trading.
So kindly consider hittingthe like button and sharing this video if you findthe content useful, thanks a lot forwatching this video guys.
Take care and be safe.