The 𝗢𝗢𝗗𝗔 𝗟𝗼𝗼𝗽, developed by military strategist #JohnBoyd, can be applied to 𝗱𝗲𝗰𝗶𝘀𝗶𝗼𝗻 𝗺𝗮𝗸𝗶𝗻𝗴 in #stockmarket. Let's break down each step:
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A detailed thread...🧵
#OODALoop
#Decisionmaking
#psychology
#tradingpsychology
(Bookmark it for later reference)
A detailed thread...🧵
#OODALoop
#Decisionmaking
#psychology
#tradingpsychology
𝟭. 𝗢𝗯𝘀𝗲𝗿𝘃𝗲:
It involves being aware of all relevant factors that could impact the market and individual stocks. 𝗦𝗶𝘁𝘂𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗔𝘄𝗮𝗿𝗲𝗻𝗲𝘀𝘀 (#SA) & 𝗠𝗮𝗿𝗸𝗲𝘁 𝗕𝗿𝗲𝗮𝗱𝘁𝗵 (MB) are very important to understand the mood of the market.
It involves being aware of all relevant factors that could impact the market and individual stocks. 𝗦𝗶𝘁𝘂𝗮𝘁𝗶𝗼𝗻𝗮𝗹 𝗔𝘄𝗮𝗿𝗲𝗻𝗲𝘀𝘀 (#SA) & 𝗠𝗮𝗿𝗸𝗲𝘁 𝗕𝗿𝗲𝗮𝗱𝘁𝗵 (MB) are very important to understand the mood of the market.
A. #SA:
Basically, you're questioning the likelihood of your strategy or set ups succeeding given the current market conditions. Almost every strategy performs better under specific market conditions. That's why it's crucial to identify the prevailing market environment.
Basically, you're questioning the likelihood of your strategy or set ups succeeding given the current market conditions. Almost every strategy performs better under specific market conditions. That's why it's crucial to identify the prevailing market environment.
This brings me to highlight @Pradipbonde Sir's old post on SA tagged below. He's the pioneer of introducing the concept of SA in trading.
More recently, SA has been explained in depth by @swing_ka_sultan bhai in his 2 part webinar. If anyone wishes to watch it, below are the links of the same. Its a must watch:
Part 1:
youtu.be
Part 1:
youtu.be
Part 2:
youtu.be
B. Market breadth (MB):
MB refers to the number of stocks participating in a market move. It provides insight into the overall health of the market & can help identify potential trend reversals or confirm the strength of a current trend.
youtu.be
B. Market breadth (MB):
MB refers to the number of stocks participating in a market move. It provides insight into the overall health of the market & can help identify potential trend reversals or confirm the strength of a current trend.
For instance, observing broad-based advances across various sectors indicates a healthy market rally, while narrow advances concentrated in a few stocks may signal weakness.
When it comes to MB, 1 stop solution has been provided to the trading community by these amazing people - @swing_ka_sultan bhai & @finallynitin bhai, @TheLogicalSwing bhai & @EquityCraze bhai.
Thanks a ton guys for making it available to us. More and more power to you all.♥️
Thanks a ton guys for making it available to us. More and more power to you all.♥️
Don't miss to checkout important market breadth links made available as below:
𝗠𝗮𝗿𝗸𝗲𝘁 𝗯𝗿𝗲𝗮𝗱𝘁𝗵 𝗼𝗻 𝗖𝗵𝗮𝗿𝘁𝗶𝗻𝗸 𝗱𝗮𝘀𝗵𝗯𝗼𝗮𝗿𝗱 by @finallynitin & @swing_ka_sultan:
chartink.com
𝗠𝗮𝗿𝗸𝗲𝘁 𝗯𝗿𝗲𝗮𝗱𝘁𝗵 𝗼𝗻 𝗖𝗵𝗮𝗿𝘁𝗶𝗻𝗸 𝗱𝗮𝘀𝗵𝗯𝗼𝗮𝗿𝗱 by @finallynitin & @swing_ka_sultan:
chartink.com
𝗣𝗲𝗿𝗰𝗲𝗻𝘁𝗮𝗴𝗲 𝗼𝗳 𝗡𝗦𝗘 𝘀𝘁𝗼𝗰𝗸𝘀 𝗮𝗯𝗼𝘃𝗲 𝗠𝗼𝘃𝗶𝗻𝗴 𝗔𝘃𝗲𝗿𝗮𝗴𝗲𝘀 𝘀𝗰𝗿𝗶𝗽𝘁 𝗳𝗼𝗿 𝗧𝗿𝗮𝗱𝗶𝗻𝗴𝗩𝗶𝗲𝘄 by @finallynitin & @TheLogicalSwing:
𝗧𝗿𝗮𝗱𝗶𝗻𝗴 𝘃𝗶𝗲𝘄 𝘀𝗰𝗿𝗶𝗽𝘁 𝗼𝗳 𝗺𝗮𝗿𝗸𝗲𝘁 𝗯𝗿𝗲𝗮𝗱𝘁𝗵 𝘄𝗶𝘁𝗵 𝟰 𝗶𝗺𝗽 𝗳𝗲𝗮𝘁𝘂𝗿𝗲𝘀 by @EquityCraze:
1. Net New 52 week Highs & Lows
2. % of stocks above Moving Averages 10, 20, 50, 200
3. 4% Advance Decline
4. Market Breadth Volume
1. Net New 52 week Highs & Lows
2. % of stocks above Moving Averages 10, 20, 50, 200
3. 4% Advance Decline
4. Market Breadth Volume
𝟮. 𝗢𝗿𝗶𝗲𝗻𝘁:
This step involves interpreting the info gathered during observation phase (step 1) to understand underlying causes & implications of the market move. Here's what to look after:
This step involves interpreting the info gathered during observation phase (step 1) to understand underlying causes & implications of the market move. Here's what to look after:
Assessing:
▶️ Market Signals - economic factors, geopolitical reasons, policy changes, etc which triggered a rally/correction.
▶️ Market Sentiment - whether the rally is driven by optimism or speculation. Same way whether correction is driven by fear, uncertainty or panic.
▶️ Market Signals - economic factors, geopolitical reasons, policy changes, etc which triggered a rally/correction.
▶️ Market Sentiment - whether the rally is driven by optimism or speculation. Same way whether correction is driven by fear, uncertainty or panic.
Assessing:
▶️ Fundamentals - Usually, companies with strong fundamentals & attractive valuations would attract more institutional buying & may be more resilient during a correction.
▶️ Risks & Opportunities - identify potential risks that could derail a rally or...
▶️ Fundamentals - Usually, companies with strong fundamentals & attractive valuations would attract more institutional buying & may be more resilient during a correction.
▶️ Risks & Opportunities - identify potential risks that could derail a rally or...
..potential buying opportunities amid market turmoil.
▶️ Risk Management - During a rally book profits in overvalued assets & reallocate capital to undervalued opportunities, trail SL to protect against reversal. During correction assess risk exposure, rebalance &/or diversify.
▶️ Risk Management - During a rally book profits in overvalued assets & reallocate capital to undervalued opportunities, trail SL to protect against reversal. During correction assess risk exposure, rebalance &/or diversify.
𝟯. 𝗗𝗲𝗰𝗶𝗱𝗲:
This step is about making informed decisions based on the analysis conducted during the "observe" and "orient" steps.
Here's how this step applies to both scenarios of rally/correction:
This step is about making informed decisions based on the analysis conducted during the "observe" and "orient" steps.
Here's how this step applies to both scenarios of rally/correction:
▶️ Decision Making in a Rally:
- traders may decide to capitalize on the upward momentum by increasing their exposure to equities, especially growth stocks.
- Partially or fully booking profits in overvalued assets and reallocating capital to promising sectors.
- traders may decide to capitalize on the upward momentum by increasing their exposure to equities, especially growth stocks.
- Partially or fully booking profits in overvalued assets and reallocating capital to promising sectors.
▶️ Decision Making in a Correction:
- To reduce their exposure to equities to protect against further downside risk.
- To reallocate their PF to defensive assets such as bonds, cash, or any other debt instrument.
- To look for buying opportunities after bullish reversal signals.
- To reduce their exposure to equities to protect against further downside risk.
- To reallocate their PF to defensive assets such as bonds, cash, or any other debt instrument.
- To look for buying opportunities after bullish reversal signals.
▶️ Risk Management:
- Regardless of market direction, risk management is a crucial aspect. During a rally, trader must assess the R:R profile of their decision.
- To follow strict and tight SLs, preserve capital by staying in cash, if required.
- Regardless of market direction, risk management is a crucial aspect. During a rally, trader must assess the R:R profile of their decision.
- To follow strict and tight SLs, preserve capital by staying in cash, if required.
𝟰. 𝗔𝗰𝘁 (𝗘𝘅𝗲𝗰𝘂𝘁𝗶𝗼𝗻):
This step involves execution of the decisions by placing buy/sell orders, adjusting PF allocations or implementing hedging strategies to mitigate risk, etc.
This step involves execution of the decisions by placing buy/sell orders, adjusting PF allocations or implementing hedging strategies to mitigate risk, etc.
Post-trade analysis:
It involves evaluating trade performance, identifying strengths & weaknesses, learning from mistakes, reinforcing successful strategies, adjusting trading plans & striving for continuous improvement.
It involves evaluating trade performance, identifying strengths & weaknesses, learning from mistakes, reinforcing successful strategies, adjusting trading plans & striving for continuous improvement.
Here I would like to highlight an excellent post on execution and post trade analysis by @Anuragg_CA, undoubtedly one of the best dissection of the topic I've come across.
In summary, by following a disciplined execution process as described above, traders can navigate both market rallies & corrections more effectively & optimize their trading/investment outcomes.
Happy learning...!!!
Happy learning...!!!
That's a wrap!
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1. Follow @Chart_whispers for more such threads.
2. RT the first Tweet to share it with fellow traders.
Would appreciate it!
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