Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

Cheatsheet for the Beginners in Technical Analysis

1 min read

Here are few points i listed down as do’s and dont in the area of Technical Analysis. This could encourage the beginners in Technical Analysis to serve in a better way. Add your valid points in the comments section and here is the Cheatsheet.

Things to avoid

1)Avoid Searching for the holy grail. “There is no secret sauce”
2)Stop searching for the paid signals. Most of them are nothing but free resource modifed and enhanced with few cosmetic changes.
3)Stop thinking that one could make money using moving average crossovers, MACD Crossovers, RSI, Oscillators,Pivots …etc. These are basic indicators to understand what a trading system is but the winning ratio is very much lower especially in intraday strategies.
4)Stop Predicting Stock Markets using indicators, these basic indicators are nothing but mathematical models which are not predictive in behaviour.
5)Stop Encouraging your friends if you made some money in this market and if you are very new to stock market.
6)Avoid Indicator Piling. Avoid using too many indicators to increase your winning ratio which actually degrades the performance of your trading system and the probability of winning.
7)Stop Practicing with your money in live market once you are done with some How to trade coaching classes.
8)Avoid Trading in Intraday and Options without having a strategy.
9)Avoid taking trade decisions by combining techincal analysis and fundamental analysis. Both are different roads which never met each other.
10)Never think of leaving your day job if you find trading as a interesting game.

 
Things to Do

1)Understand what a trading system is and try how to build a trading system rather simply following the trading signals blindly
2)Understand the nature of the trading system. Try to understand the risk involved in the trading system rather than the
predictive nature of the trading system
3)Try to understand about backtesting rather than paper trading in this live market and save more time in your observation with this stock market
4)Try to use one trading system at a time and one filter to avoid noise. Avoid piling of indicators.
5)Practice with only one timeframe at a time. Avoid taking decisions with multi timeframe. Especially more than two timeframes.
6)Practice Money management strategies and try to understand how to control your losses rather than how to create the money.
7)Test your trading strategy with few selected scripts but not with penny stocks. Practice your strategy with Indices and Top traded stocks
8)Treat trading as a business and not as a gambling game. You can beat the index averages. And you can make extraordinary profits in securities markets. But you have to strive for excellence in your analysis and in managing the trade.

Rajandran R Founder of Marketcalls and Co-Founder Algomojo. Full-Time Derivative Trader. Expert in Designing Trading Systems (Amibroker, Ninjatrader, Metatrader, Python, Pinescript). Trading the markets since 2006. Mentoring Traders on Trading System Designing, Market Profile, Orderflow and Trade Automation.

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36 Replies to “Cheatsheet for the Beginners in Technical Analysis”

  1. Good list of Do’s and Donts which are helpfully for day dreamer like me .keep posting such kind of material in the site

  2. “Try to understand about backtesting rather than paper trading”. how do I can backtest in MT4? regards.

    1. Hi,

      Try using Strategy Tested for Backtesting in MT4. But in MT4 only Expert Advisors are backtestable and not the indicators. However with indicators visual backtesting is possible. Im planning to write a short post on how to do visual backtestin using MT4 platform stay tuned

    2. Hi,

      Try using Strategy Tester for Backtesting in MT4. But in MT4 only Expert Advisors are backtestable and not the indicators. However with indicators visual backtesting is possible. Im planning to write a short post on how to do visual backtestin using MT4 platform stay tuned

  3. hi, Rajendran,
    Excellent.
    Must for a non profiting trader who wnats to be profitable as a professional trader.
    Continue with this good job.

  4. Very Very useful points Rajendran. I am sure these are not some academic points but practical points which have come out of your experience.

    1. Shankar,
      Just listed out my personal experiences and the observation from the traders whom i use to met everyday. Hope this could bring some awareness for the new born traders.

  5. I was inspired by your work and learnt some good stuff from this website and Chart school website.basically MY F Av was Ichimoku Clouds with super trend is fantastic combination.even trying to learn more about trading systems,only sad part is i cannot write a AFL code.TOugh fundamentals and technicals wont meet together…….ratinal thinking could possibly befits in the market.May be you gave many charts For Nifty Futures since u tested it…i used Super trend and Ichimoku Clouds for MCX and guess what i find its more helpful for commodity traders. Yes u rightly pointed that too many indicators will mess trader and me one of them at first.BUt with supertend and Ichimoku Clouds i completed 10 succesful trades and in which 8 are positive and 2 are negitive thats coz i messed up(may be Greedy prevails unknowingly even when i think hard not to do that :).Finally well done post and i will keep looking up for ur updates. Thx for making my dumb brain into at least what i call amateur analyst or trader 🙂

  6. This is the first time I am visiting your site, as I am just started my investment strategies. It is nice to see experienced people sharing the knowledge for us. Rally Happy! However, it makes us our expectation of more better articles from you.

  7. Sir,

    Can I know what is tick size and where can I find the tick size for stocks. Please help by providing this small piece of info.

    Thanks much,

    Rahul

  8. Hi Rajandran, I would like to oppose one point that you cannot make money with MA cross over strategy. Backtesting clearly says we can make money in Nifty if we blindly follow SMA 2,19 cross over. With Leverage of 2 you should have made 10 times money in 10 years. If you have no leverage then you would ve made 306% in 10 years which is little low. What we need is just discipline is following all signals no matter what it takes. In fact with Leverage 2, the Max DD was about 49%; How many do u think have the guts & discipline to stay with the model? In simple terms before venturing into trading people just need to really study & understand the market, create a model with clear entry/exit(SL,PT), lot size, security/portfolio & discipline to just make money. I ve revealed the secret 2/19 to make money lets see how many can follow it. You might have heard about traders called Turtles; They are Very very big commodity traders, after some years the inventor released the strategy and said its wasy to copy strategy however its tough to stick with it when the AUM falls 50% right in front of your eyes in 2 weeks. Trader needs to work/understand the adversity of the model, clear risk practice & finally discipline to adhere to it. Its easy to preach (like me) only few traders follow it, most others blow it

    1. Dear Pradeep ji,
      before I read your this comment, I was using DMA 3,19 (open) cross over. After reading your comment I change them to SMA 2,19. I am doing paper trade with SMA 2,19 cross over and find it very good. Thanks and regards,
      solanki

  9. Pradeep I do consider any trading system that gives more than 25-30% of MAX drawndown then risk involved in such trading system is very huge. And 49% of MAX DD is really huge. Risk control is the main factor which drives the trading system to achieve higher returns over a period of time consistently. And I feel a trading system with 49% drawdown is more risk prone.

  10. Dear Rajandran, I have been working on finding some good trading strategy since quite a long time now. After rigorous search through books, videos, net, backtesting, papertrade etc I now have things in place. I have an .AFL file which I do not intend to share with anyone just to keep its AFL coding a secret. Is it possible to convert the .AFL to a .DLL so my purpose is solved. Although next step would be to protect the .DLL also. Can anyone who is good with C/C++ or Visual Studio help me ?

  11. hello sirji

    very good articul. I thing Every Trader MUST KNOW there MONEY MANAGEMENT. I thing first v know our Stop Loss like 8 to 10% on our trading capital not on stock.

    Sirji UR great ONE OF THE BEST SITE V HAVE
    THANK SIR

  12. hi rajan,
    if i am following 15 min timeframe,as per u which other higher time frame i should follow??

  13. Dear Rajandran
    Any new entrant in trading shall be hopeless after reading your Dos and Donts.
    If all fundamental and technical procedures fail to earn money in the market then its
    certainly gambling and the socalled Gurus are misleading the small new learners.

  14. Dear Raj,

    i think you have done an excellent job with your webasite and its free usage andmost importantly ur kindness to help other access the fruits of your time consuming hardwork and efforts.. hats of to you.
    i would like to know which of these is a better charting software in terms usability and enabled for advanced study

  15. Hello all, well nice article. I am a option trader only trading in options. I have tried many indicators none work for me. now i am trading far better than those who provide intraday tips like capitalvia and others. Most of the time i pick bottom and top for my entry with accuracy of more that 80-85%.

    Now i am in forex with EUR/usd i am making almost 30-50 pips every day with sl of 10 pips.

    1. Hi Vinod,

      Thanks for posting. I am curious about what method you use for intraday. I will be thankfull, if you can can share it.

      Thanks & Regards,
      Anil

  16. keep up the good work.one should undergo a small course before jumping into the market. initially one should begin with equity using own strategy.

  17. Mr Rajandran R, I have been trading for last 5 years. I was using Reliable’s Falcon 7 Software for last 3 years, it seems, i have to discontinue the use as i have hit a dead end. Software was buggy, unstable and data did not match with my trading platform. I’m using India Infoline’s trader terminal. I’m planning to switch to Ami-broker. Can it be plugged to India Infoline’s real time data feed. Can we run real time scans in Ami-broker on intra-day data. How much Amibroker costs ? thanks in advance
    P Rawat

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