Algo trading also known as Algorithmic trading or Robot trading. Based on some algorithm we have to create some formula. Doing trading on the basis of the formula is the Algo trading. Normally our day to day trading activities is involves some algorithm. For example if X share is trading in price of Rs.304. We plan to buy this share when it comes to price level 300 and sell the share when the price reaches 308. The X share traded in the price level of 304 and fall down to our buying price level of Rs.300. We will purchase this share in our expected price. Once this share price reaches our target level, what we will think? We will sell partial quantity and keep hold remaining shares to get higher profits.

Sometimes this result will give good result and some time will give wrong results. In Algo trading there is no place for human desire and sentiments. Because our pre-programmed algorithm will buy and sell the share in our prescribed price. Buy and sell both trading process will executed by computer robots. In earlier days share trading happened between two persons directly. Once the technology develops this trading has been carried out by computers. Internet connected computer is act as medium between two persons for buying and selling the shares.Now we are in next generation of trading system. Once we fix the buying and selling price to the computer software, it will do buying and selling in our given price automatically. This is the Algo trading or Algorithm trading.

Advantages of Algorithm trading or Algo trading.

 We have very good advantage in this Algo trading. First it is not necessary to sit in front of the terminal to do trading and not required to call our broker to make a order to buy and sell. Computer software robots will do buying and selling on behalf of us. Apart from this we can identify small techniques and make an order to the robots. It will do trading as per our settings. For example if we order the robots to sell the shares in their 52week higher price, it will identify that price and sell once that share price reaches the level. Like this we have many benefits in this Algo trading.

There are many separate software to write this Algorithm. Now some of high net worth investors, some domestic institution are using this Algo trading. In coming years there is more chance that all will use this Algorithm trading. So we can conclude that because of Algo trading markets will not raise and fall drastically.

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Definition
The Bearish Harami Cross Pattern is a sign of disparity about the market’s health. Market is bullish and strong buying continues as evidenced by the long, white real body but then we see the doji. This shows that the market may not continue in uptrend.

 Important Factors:

While the Bearish Harami Pattern is not a major reversal pattern, the Bearish Harami Cross Pattern is a major bearish reversal pattern. If a harami cross appears after a long white candlestick, longs should take notice of it since harami crosses call tops very effectively.

A confirmation on the third day is required to be sure that the uptrend has reversed. This confirmation may be in the form of a black candlestick, a large gap down or a lower close on the third day.

For 3QFY2012, GAIL India (GAIL) reported a higher-than-expected performance. The company’s net sales, EBITDA and PAT increased by 34.6%, 34.6% and 12.8% yoy, respectively. During 3QFY2012, GAIL’s top line grew by 34.6% yoy to Rs 11,260cr, above our estimate of Rs 9,587cr, mainly due to strong growth in the natural gas trading, petrochemical and LPG segments. Gross revenue of the natural gas trading, petrochemical and LPG segments grew by 35.1%, 53.7% and 32.6% yoy to Rs 9,150cr, Rs 878cr and Rs 965cr, respectively. EBIT of the natural gas trading, petrochemical and LPG segments grew by 56.9%, 98.3% and 103.6% yoy to Rs 323cr, Rs 387cr and Rs 305cr, respectively. However, EBIT of the natural gas transmission and LPG transmission segments decreased by 6.7% and 8.2% yoy to Rs 621cr and Rs 78cr, respectively. Consequently, GAIL’s EBITDA increased by 34.6% yoy to Rs 1,795cr in 3QFY2012. Tax rate increased to 31.7% in 3QFY2012, compared to 28.1% in 3QFY2011. Consequently, net profit grew by 12.8% yoy to Rs 1,091cr, above our estimate of Rs 1,018cr.”

“The substantial capex slated ahead for transmission pipelines could see maximum capitalization on incremental gas production domestically. Also, any major oil/gas discovery could be a key catalyst for the stock. Over the last five years, GAIL has traded at an average one-year forward PE of 16.0x, while currently it is trading at PE of 12.0x FY2012E and 10.5x FY2013E. On P/B basis, the stock trades at 2.1x FY2012E and 1.8x FY2013E, compared to its five-year average P/BV of 2.7x. Further, considering the anticipated volume growth in the next two-three years.

We are recommending to buy this stock at price Rs. 390. Short term investor can book profit near to 415. Long term investor can hold this stock for the target upto 470.Please read our Disclaimer before investing.

1. Financial market is pro-longed bullish trend.
2. Three consecutive long black candlesticks appear.
3. Each day closes at a new low.
4. Each day opens within the body of the previous day.
5. Each day closes near or at its lows.

Explanation:

The bearish three black crows candlestick pattern is indicative of the fact that the market has been at a high price for too long and the market may be approaching a top or is already at the top. A decisive downward move is reflected by the first black candlestick. The next two days show further decline in prices due to profit taking. Bullish mood of the market cannot be sustained anymore.

The opening price of the second and third candle can be anywhrer within the previous candle body. However it is good to see the opening prices below the middle of the previous day candle.The reliability of this pattern is very high.

Acknowledging Criteria:
1. Financial market is in uptrend for many days.
2. We can see a white candlestick in the first day of the trading.
3. Then we can see a doji whose low price is higher than previous day high price.
4. Finally the third day is the black candlestick whose closing price is near to mid of the first day white candle.

Explanation:

It should be formed after a significant uptrend.First day should be bullish long white candlestick. Second day doji appears showing the diminishing power of bulls.Third day is an ideal bear candlestick proves that bears have taken over the control.Ideally which closes below mid-point of first day long candlestick. Bearish evening doji star appears when market are their over brough zone. The Doji may be more than one, two or even three. Doji’s gaps are not important. The reliability of this pattern is very high, but still a confirmation in the form of a black candlestick with a lower close or a gap-down is suggested.

Relative strength index (RSI) and Stochastic oscillator also indicates this stock is in over brought zone. So we expect small downtrend in this stock in ongoing days. We recommend to sell this stock Rs.200 or below. Keep today’s high price 219 as stop loss. Please read our Disclaimer before investing.

Acknowledging Criteria:
1. Financial market is in prolonged downtrend.
2. Then we see a small black candlestick.
3. Next day we see a white body that completely engulfs the previous day small black candle.

Explanation:

While the financial market is in downtrend, we see some selling reflected by the small real black candle of the first day. Next day shows bull power with closing price are above previous day’s open price. It clearly means the bearish trend is now losing momentum and bulls are started to take the control.

The relative size of the bodies in the first and second days is important. If the first day of the bullish engulfing pattern is characterized by a very small real body like doji, but the second day is characterized by a very long real body, this strongly indicates that the bearish power is diminishing and the disparity of white versus black body is indicative of the emerging bull power.

There is higher probability of a bullish reversal if there is heavy volume on the second real body or if the second day of the Bullish Engulfing Pattern engulfs more than one real body.

Winners and Losers: Vast fortunes can be made and lost during brief periods of trading in the equity markets. Now, what separates the winners from the losers?

The key to successful trading in the equity markets are not only attainable, they can also be learnt and taught. The successful investor exudes self-confidence, self-assurance and singleness of purpose. His handshake is solid, purposeful and firm. He looks you straight in the eye. He is well groomed and dressed.

Attitude vs Luck: The winners realize and recognize the importance of a positive mental attitude. They know that the power to achieve comes from within  and that positive motivation overcomes all obstacles to success. They are of the view that, one must have the correct attitude to recognize the opportunity for success.

We do realize that, a positive attitude cannot be replaced by the concepts of luck, positioning or political influence. Though these methods mentioned earlier also have their place in the scheme of things; and can and should be utilized to reinforce our positive mental attitude, but not replace it. In our struggle for success, a negative attitude can easily spell ruin, just as the lack of a positive attitude easily inhibits success.

Think, See and Do: To be successful, you need to emphasize on these elements. First, you must think. You must think about what you want to do and how you will do it. Next, you must see an opportunity as it develops. And lastly, you must act when the opportunity presents itself.

You must think, see and do, as these are the important elements to success.

A counter view, comforting to most people: The investor hopes for success in vague terms, he organizes for it. But, when it came to visualizing a plan of attack he was sorely lacking. Then, he did not visualize opportunities when they presented themselves. Also, because he was so intent on not missing opportunities and unsure about what opportunities he is looking for. So, he did not see the opportunities when they did present themselves. As the investor had failed to see opportunities, he could not act in order to get a successful result.

Success follows: Success will tend to take care of itself, if you provide the proper psychological and behavioral background for it to occur. Goals are wonderful, without them we would be lost. Yet, the road to success must be paved with behaviour, attitude, opinions and visualization. Each person has his own personal psychology and response style. There are four elements that comprise the essence of success theory:

The way in which, we as investors deal with loss and failure is just as important, if not more important, than the way in which we deal with success.Effectively controlling and channeling emotions are two very important issues in the equation for success.
Those who have been successful and continue to be successful as investors, recognize the importance of market psychology and incorporate it in their work.To be successful as an investor, you need to develop and maintain similar attitudes, behaviors and opinions.

Understanding failure: It is said that we learn more from our mistakes than our successes. Although success is important, it is equally important to understand failure and its role in shaping investor behaviour. The idea is not to punish or ridicule something done or gone wrong. But to understand it, correct it and do it right in the future, so that the rewards of being right may reinforce the winning behaviour.

The weak link: The markets offer fortunes without limit to those who master the few simple rules of profitable investing. However, the weakest link in the chain is, has been and always will be the investor himself. The investor would be well advised not to fall prey to the belief that a better investment and or trading system will make you a better investor. The world’s best investment or trading system in the hands of an incompetent, undisciplined and unsophisticated investor, will prove to be a vehicle for consistent losses and disaster. It does not matter how good your investment or trading system is, as it is you and only you who can make that system work as it is intended to. To put it into perspective, “It is not the gun that counts, but the man holding that gun”.

Consider an investment or trading system that is so profitable that it makes thousands in a short period of time. Now, consider a period of “drawdown”, which is a necessary part of the system. This drawdown is what really makes or breaks an investment or trading system.

If the investor were to limit the drawdown to what they should be, based on the trading signals generated by the system, then the system would recoup and move on to bigger and better things. On the other hand, if the investor is undisciplined and unwilling to accept losses when they should be taken according to the system; then the drawdown period will either be longer than intended. Further, the investment or trading system would deteriorate because of the investors lack of action.

Thus, the ability of an investor to cope with such periods of drawdown and paper losses will either make or break a system. No matter how good the system is, the investor himself is the weakest link in the chain. This lack of action on the part of the investor will break the back of the system and of the investor himself quicker that any unexpected adverse market event. At this point the psychology of the investor becomes most important; and attitudes, behaviour, perceptions and experience become important factors for success.

Finally, by correctly applying experience and coping with losses, the investor will either make or break the investment or trading system. There is no predetermined formula to deal with such adverse situations, but there are methods and procedures to minimize the degree of investor error; or in other words to maximize dependence on the investor’s response style.

Short-cut to learning: You can learn the various aspects and elements of successful investing in many ways.

You may undergo a long drawn psychiatric treatment that may or may not have the desired result.
You could enroll in a success motivation course that may be of some help.
You can read extensively about investment theory and practice; and develop your own system, which would include both method and procedure.
You may read autobiographies of the great investors and speculators to reinforce your investment or trading system.
You could also undertake a course to discover the perfect investment or trading system for yourself, only to discover later that it does not suit your style.

Whichever way you look at it, your focus should be on technique and investor psychology, as against market methodology or investment system which are secondary. A good investment or trading system is only 20% of the input for success. The rest of the 80% would include the following:

Effective risk management tools.
A positive mental attitude.
A personal investor style or psychology.
Discipline and structure.
Consistency and persistence.

Visualize, recognize and act: To win the war as opposed to winning one brief battle, you need to think, see and do; as has already been brought to your attention above. “You need to visualize opportunities, recognize them when they appear and most of all, consistently act on them once they present themselves”.

Winning attitudes and behaviour: Every signal generated by your investment or trading system must be considered to be the signal that will produce a vast fortune. If however, you do not look upon each investing opportunity as a significant opportunity for profit, then you would allow yourself the liberty to be dissuaded from acting on the opportunity.

No individual or course or tape or lecture or article can do for you what you can do for yourself. To develop this winning attitude and behaviour you have to work with yourself and develop your skills by yourself with your own effort. However, time is at a premium due to its limited availability, so you would have to be selective in what you study and learn. You should focus on your personal growth as an investor, with respect to various aspects to ensure that you become a successful investor.