Let us imagine a scenario: You are a great fundamental Value investor and somebody walked up to you and recommended this in March 2017 based on Price Action analysis:
- Buy Titan...it's trading at all time high of 447
- Short Sun Pharma and Lupin because they are trading at 3 year Low
How would you have reacted?
Yeh kaun Pagal Admi hai - Who is this mentally retarded crazy guy?
You would have thought this guy is mental and you should do the reverse. Fundamental guys are contrarians and Value buyers.
But this crazy guy recommendation would have yielded this result
Short Sun Pharma resulted in +34% returns
Short Lupin resulted in +29% returns
Long Titan resulted in +40% returns
All in last six months
What's amazing - All these trades worked out in Classic text book fashion and here's how. Read the whole case study
It's an amazing case study that explains how suicidal it is to follow fundamentals without looking at Price Action. And also How Price Action can help one see such things clearly. It's amazing lots of times these things show up on the chart so clearly and yet our brains reject it. I am happy that I am able to influence few
@smarket Earlier I was doing Funda & Growth Analysis and then looking at Trends/Charts. Now I'm doing reverse. Saving too much time. Thanks.
— Nagegowda (@Chanti_Nag) August 14, 2017
Science of Stock Price Action
The best learning comes from experiential learning. It is with this objective - I have developed "Science of Stock Price Action" Video Book. It's a combination of concepts and then its application in real life situations. The idea is to test how concepts work and why sometimes they don't.
If you find my work interesting - I will encourage you to buy the book and access Premium Case Studies. The idea is to demonstrate live how patterns unfold and work. They succeed, they fail but the whole process is real fun. I invite you to be part of it.
Disclaimer – The state of the market notes is Deepak’s perspective on the market. The column is purely for educational purpose. Nothing contained herein is a solicitation to trade or a recommendation of a specific trade. By reading this publication you agree to make no trade relying in whole or in part on the comments of the writers