How to Enter & Exit a Trend with This Powerful Indicator | LearnApp

have you ever met some of your old relatives who said Infosys and it made me a lot of money I'm sure we know people who bought shares of known companies a long time ago and made a lot of money with it so they actually rode the trend we call it Trend following and what we want we want to take it a one step further so today I'm going to talk about a simple strategy or technique you can use to follow the trend of an index or a stock for a really long period of time and if the market reverses you can actually exit so if you're ready let's get started [Music] foreign the way to actually find out a trend is to use an indicator or to use the swing high or swing low strategy I'll do this very quickly over here you already probably know this that when we have multiple swing lows so this is a swing low swing low and you have multiple swing lows moving up that is higher swing lows we know that we are in an uptrend and when one of these swing lows breaks like this we know that at this point this breakage means we are in a downtrend sorry um now what we want to do is when the Market's moving up we want to hold on to this part we want to exit here we want to re-enter here exit here if the market Falls a lot we want to exit and if the uptrend continues we want to re-enter and hold on so basically you want to exit as the market is falling and hold on as the market is rising now the problem with this is that you won't be able to recognize this the swing low because if I show you a chart like this and ask you how many swing lows do you see it might get a little difficult you may need some practice and you could go wrong so a simple objective way to identify these swing lows is an indicator we're going to talk about today and it's called The Williams fractal so this is a chart it doesn't matter which company but all I need to do is go to indicators and then open Williams fractal and add that so you'll notice you'll get a bunch of arrows over here so every time you see an up Arrow that's a swing High every time you see a down arrow that's called a swing no and it basically identifies it for you it's an objective way of identifying swing eyes and swing lows which make up a trend and this is what will give us our entry point and it will also give us our exit part but before we get to that point uh let's understand how this actually works so once you've added the Williams indicator remember the period that you'll use is two that's the calculation method and you'll get this over here the second thing you need to do is you need to add a moving average or an EMA an exponential moving average of 55 value so every 55 bars this EMA will get drawn and it's continuous as the market moves forward now as always I have picked a stock that is part of nifty 50 it is a higher time frame try not to use this on a lower time frame 15 minutes or 30 minutes because it is too low there'll be volatility and if you're new you might get overwhelmed a good way to learn this is to observe it on the monthly charts and the weekly charts and then as you get better at it you can experiment with other time frames as well but just make sure you are doing this on a nifty 50 stock or an index because you want liquidity on your site don't try this on small cap companies it might not work so now let's understand a little bit of trend theory in this video I'll be honest I can't explain everything about a trend in just one single YouTube video but if you're a starter if you're a beginner this is a good place to start understanding how a trend works so let's look at only two aspects of a trend and we'll only understand an uptrend so here's what you're going to see you're going to see the stock that is moving up I'm going to cherry pick a stock that's actually going up and they will be a moving average above it so the first thing you need is you need that we are above the EMA okay so price that's this price has to be above the exponential moving average one second you need to um I won't say buy but I'll say uptrend is after two successive or two um up arrows which are the William fractals also um called swing highs so since you're not identifying the swing guys I've drawn two triangles because that's the triangle that you see on the chart now what is going to happen is you're going to get something like this you're going to get triangle one and you're going to get triangle two whichever is the highest point of this triangle you draw a imaginary line for yourself over there as soon as price breaks that upward uh that price you are now in an uptrend so you could call this the buy area although I'm not saying you should buy here but that's where the trend has resumed and it is going to likely move upwards um and that's it so number one make sure you're above the EMA number two make sure you find two um swing highs which are indicated by two green arrows the highest point of that Arrow as soon as it's broken that's your entry point or that's your signal to know that the uptrend has begun its movement up actually before I show you this thing on the charts there's one more thing I need to tell you um about stock selection so how do you select the stock right so I'm going to call this selection over here and the best thing would be that you do this on an index okay because the index is just the pure form of the market itself but I know a lot of you want to find out individual stocks uh one way to do this is stick to um nifty 50 stocks or Nifty hundred I would say nifty 50 is better because the liquidity is higher and pick stocks that are high beta and a simple way to do this is just type Nifty stocks High beta and you'll just find a scanner and you'll get a bunch of stocks over here try to run it on nifty 50 these stocks you see around Nifty hundred and once you do this you will get a list of stocks that you can look at now even if you're an investor and you're trying to understand maybe say is cement as a sector in an uptrend or not you can use this technique to understand if all cement stocks are in an uptrend or a downtrend so don't use this as a strategy this is not a buy and sell strategy this is a way to find out what the trend is purely looking at Price action so let's see an example over here we can see this stock I've removed the stock name obviously and you can see that we are above the blue line that's above the EMA so criteria one fulfilled second you can see two triangles over here triangle one triangle two the highest of the two triangles is actually the first triangle that's the first swing high so I'll just draw a line here and we can see later on the bar breaks the high of That Swing High and the uptrend actually resumes and moves up so in this case we were actually able to find that uptrend and just looking at Price able to catch that breakout in the end it is actually just a breakout the EMA makes sure that mostly money is on the bullish side and the fractals make sure that we're actually breaking out and there's a lot of buying power and just improves our odds that's all that this is this does not predict a trend in fact I'll show you some uh moves which actually didn't work it just puts probability on your side which is what most of trading and investing actually is it's risk management and probability management now what I want to do for you hours take this example and just reverse it so we've been identifying uptrends so far what have we identified a downtrend same thing make sure we're below the EMA second make sure we uh notice a breakdown on two red candle or two red triangles upside down triangles which are two swing lows so here we can see there is a blue line that's the exponential moving average markets move down we can see two triangles that's triangle one here triangle two here remember we're looking at down triangles this time and they're red and as soon as we find the low over here so which is lower this one or this one obviously this one is lower we draw a line as soon as we break down we know that the downtrend has begun and price is likely to collapse from here and that's exactly what happens the price goes down uh and the downtrend continues um now let's see a situation where this did not work and what does that failure setup look like so over here we have uh again an uptrend we are above EMA so we're above the blue line and we have these two nice swing highs which are fractals also to triangles the highest point over here is this line and you can see the next day there was a gap up so as soon as there's a breakout the system says you're supposed to uh declare it an uptrend and at this point it's okay we're in an uptrend but that's when the market collapses and falls down now the question is for whatever reason let's say you were long and you were holding on to the stock and you expected the market to go but actually the reverse happened it fell down um what would you do in that situation well it's very simple if you're above EMA of course you were expecting an up move uptrend at some point let's suppose you bought or were already long at what point will you exit think about it if you were buying or thinking about the uptrend after these two green candles sorry candles two green fractals then as soon as you break a swing low or a down triangle that's where we exit so if you look at this chart again you'll notice although the breakout happened we broke a swing low after that the swing low is basically your stop loss as soon as the swing low breaks denoted by this red triangle that's where you exit so at this point that's why we say that the uptrend is probably not working and we're not likely to move up um I think the thing that really hurts in this example is that the market went sideways and then went up again so there's probably some re-entry happening but I just wanted to show you what a failure looks like and what an exit looks like so if you are declaring an uptrend at a swing High break you do an exit at a swing low break I have another example over here um and over here you'll notice we are um above the EMA so we're looking for a entry position are we looking for a uptrend to continue and you'll notice over here that uh we have two triangles two swing highs and we draw the line as usual the breakout happens uh that's the name of the uptrend has begun but the market reverses now here remember your stop loss is going to be the previous swing low which is right here denoted by the red triangle so you'll draw a line here and you notice we missed by just a few points the market came close to the swing low and just reversed and moved up now this case would make you feel happy that okay you were able to enter and the uptrend resumed despite falling a little bit but it could have happened that your stop loss was hit and then It reversed up don't worry this is completely normal the power that you have right now is knowing when an uptrend starts and when an uptrend is likely to not resume and I think that is very powerful think about that as a tactical advantage in your investing or trading Arsenal looking at any index in the world and saying hmm this isn't an uptrend it's likely to continue this is likely to become a downtrend I think that's pretty powerful I've always found higher time frames to work better for this so if you did this say on a 15 minute chart can you write in the comments and tell me do you think that is more confusing or do you think that is more easy because you have high beta stocks moving up and down let me know in the comments below what time frame do you think identifying an uptrend or a downtrend actually makes sense if you found this useful please say some nice encouraging words in the comments below and if you want us to keep posting hit that like button the Subscribe button just say something nice in comments I just love reading good stuff from you until then see the next video

Channel: Prateek Singh - LearnApp

Views: 95,304

Keywords: trading, technical analysis, william fractal, william fractal indicator

Id: od_Eh1GkoSU

Length: 12min 53sec (773 seconds)

Published: Sat Oct 15 2022