1 00:00:01,830 --> 00:00:07,860 So here, I'm going to tell you how you can determine the risk and reward when you take treats on the 2 00:00:07,860 --> 00:00:10,140 basis of Hemer candlestick pattern. 3 00:00:11,340 --> 00:00:19,980 See, we have seen that the candlestick patterns with filters, they will give you a high probability 4 00:00:19,980 --> 00:00:20,350 tree. 5 00:00:20,880 --> 00:00:24,930 So you expect your seven out of 10 traits to be winners. 6 00:00:25,440 --> 00:00:33,080 And of course, when we say that, we expect that two to three of our troops are going to be losers. 7 00:00:33,690 --> 00:00:41,340 So we have to not only plan for the exit in profit, but we have to decide when we are going to existing 8 00:00:41,340 --> 00:00:44,280 laws because all of them are not going to be winners. 9 00:00:44,610 --> 00:00:50,760 And we cannot just hold on to these losers hoping that the market will turn to our side. 10 00:00:50,880 --> 00:00:52,610 So, no, that does not happen in market. 11 00:00:52,620 --> 00:00:59,900 You have to learn to take trade losses if you want to survive in this game for longer. 12 00:00:59,910 --> 00:01:05,950 And so you have to prepare this mentality that there are going to be losers and there are losers. 13 00:01:05,970 --> 00:01:11,820 I am going to exit in losses and how you have two existing losses, I'm going to tell you in this particular 14 00:01:12,150 --> 00:01:12,620 video. 15 00:01:13,710 --> 00:01:17,160 So we have to find out what is going to be our restore order. 16 00:01:17,400 --> 00:01:23,130 It is reward is nothing, but this is nothing but the losses that we are going to take and the world 17 00:01:23,130 --> 00:01:25,220 is nothing but the profit that we are going to have. 18 00:01:25,770 --> 00:01:31,650 So we have to decide how we are going to take our losses and how we are going to take our profits when 19 00:01:31,650 --> 00:01:34,060 we are going to book our profit and losses. 20 00:01:34,650 --> 00:01:39,360 So once you initiate the position, so you have initiated the positions, for example, long position 21 00:01:39,360 --> 00:01:41,880 by position, we have to place a stop loss. 22 00:01:41,880 --> 00:01:42,750 Stop loss is nothing. 23 00:01:42,750 --> 00:01:47,490 But it's an order which is used to reduce your losses for the losses that happen. 24 00:01:48,030 --> 00:01:53,880 So you have to use a stop loss order below the level of loss candle. 25 00:01:54,300 --> 00:01:56,410 That is one ETR below. 26 00:01:56,490 --> 00:02:00,350 I'm going to tell you, this is an indicator, basically average range. 27 00:02:00,410 --> 00:02:07,260 It is an indicator which tells you average range of a particular stock. 28 00:02:08,130 --> 00:02:13,100 So on an average, what is the range of that stock or a period of 15 to 20 days? 29 00:02:13,440 --> 00:02:14,940 That is what it tells you. 30 00:02:15,120 --> 00:02:20,910 So in other words, it tells you how volatile that stock is and what is the range of that particular 31 00:02:20,910 --> 00:02:21,310 stock. 32 00:02:21,540 --> 00:02:26,610 So we are going to play a stop loss on the basis of ETR, which is nothing but one if they are below 33 00:02:26,610 --> 00:02:27,870 the last candle. 34 00:02:28,560 --> 00:02:35,880 So whatever it is, the low of our hammer below that, when we are away, I'm going to tell you practically 35 00:02:35,880 --> 00:02:37,550 how it is to be done on charts. 36 00:02:37,950 --> 00:02:43,860 So these are we your to play stop loss and how you are to place Target where you will exit Target will 37 00:02:43,860 --> 00:02:45,570 be next immediate resistance. 38 00:02:45,960 --> 00:02:51,710 So you should understand the concept of support and resistance again uncharged. 39 00:02:51,720 --> 00:02:54,060 I will give you an overview of that. 40 00:02:54,480 --> 00:02:59,860 So whatever is the next resistance to that particular stock, that is where we will have our target. 41 00:03:00,600 --> 00:03:03,000 So we have calculated the risk. 42 00:03:03,000 --> 00:03:07,470 We have calculated the reward and the risk reward should be at least one is to one. 43 00:03:08,400 --> 00:03:14,630 So we are taking a risk of one rupee and we are taking the word of one rupee that that should be minimum. 44 00:03:14,640 --> 00:03:15,450 So it should not be. 45 00:03:15,450 --> 00:03:18,720 We are taking a risk and reward of zero point eight. 46 00:03:18,730 --> 00:03:21,380 No, that's an unfavorable risk to reward. 47 00:03:21,480 --> 00:03:23,430 It should be at least one is to one. 48 00:03:23,940 --> 00:03:29,550 But in most of the cases you'll find that it is more than one is to one low risk of one and reward up 49 00:03:29,550 --> 00:03:31,400 maybe one point five, one point four. 50 00:03:31,410 --> 00:03:35,430 That is always good, but not be less than one is two one. 51 00:03:36,090 --> 00:03:42,000 So let's go on to those two charges that we have seen and and marquises again. 52 00:03:42,000 --> 00:03:43,410 Let's see how we can do this. 53 00:03:44,220 --> 00:03:48,300 So this is where you can see chart of Maruti Suzuki. 54 00:03:48,390 --> 00:03:51,630 The first of all, I will explain the concept of support and resistance. 55 00:03:51,870 --> 00:03:57,870 The resistance basically is a price level which resists prices to go up. 56 00:03:58,260 --> 00:04:00,240 So let's see this. 57 00:04:01,050 --> 00:04:02,970 This is a resistance to the market. 58 00:04:03,330 --> 00:04:05,550 Can you see this is the resistance. 59 00:04:05,580 --> 00:04:08,910 This level is resisting market to go. 60 00:04:10,080 --> 00:04:15,330 Further up, this is again, resistance distance, you can see the market went up and then went down 61 00:04:15,330 --> 00:04:16,040 from this level. 62 00:04:16,470 --> 00:04:21,840 So similarly, you can see this level, this level is acting as a resistance market is going up, but 63 00:04:21,840 --> 00:04:24,210 it is not going beyond this point. 64 00:04:24,630 --> 00:04:26,690 That's why it is called resistance. 65 00:04:27,030 --> 00:04:28,050 You can find this one. 66 00:04:28,350 --> 00:04:31,420 This is, again, the point from where the market is not going up. 67 00:04:31,470 --> 00:04:32,570 This is, again, a resistance. 68 00:04:32,850 --> 00:04:33,900 So these are nothing. 69 00:04:33,900 --> 00:04:36,330 But resistance is when support is involved. 70 00:04:36,330 --> 00:04:40,020 Support is where from where prices are not going down. 71 00:04:40,050 --> 00:04:44,190 So this is a support market is falling, but it is not going below this point. 72 00:04:44,460 --> 00:04:47,610 Again, the same point is become support for this. 73 00:04:48,000 --> 00:04:48,960 So this is a support. 74 00:04:49,200 --> 00:04:50,130 This is a support. 75 00:04:50,160 --> 00:04:51,060 This is a support. 76 00:04:51,630 --> 00:04:58,500 So in other words, you can say it's a price level from which the market has reversed sharply that that 77 00:04:58,500 --> 00:04:59,700 is called support. 78 00:05:00,270 --> 00:05:02,610 So this is the logic behind support and resistance. 79 00:05:02,760 --> 00:05:10,980 And we have seen in this example that we saw Whammer getting formed on this Zuki. 80 00:05:11,130 --> 00:05:12,000 This is our hammer. 81 00:05:12,780 --> 00:05:14,190 It has come in falling market. 82 00:05:14,200 --> 00:05:15,420 Next can be green. 83 00:05:15,780 --> 00:05:17,230 We can go along on this. 84 00:05:18,090 --> 00:05:21,000 So, uh, how you can determine the risk reward. 85 00:05:21,270 --> 00:05:27,270 First of all, let's find out what is the lowest point of this Candleshoe. 86 00:05:27,270 --> 00:05:30,650 So this is the low of the candle here. 87 00:05:31,260 --> 00:05:33,210 So seven thousand two hundred almost. 88 00:05:33,330 --> 00:05:33,980 This is the low. 89 00:05:34,380 --> 00:05:39,640 So we have to place our stop loss below one ETR of this low. 90 00:05:40,200 --> 00:05:42,980 So for this, we will use ETR indicator. 91 00:05:42,990 --> 00:05:46,260 We have to this is a trading platform which is free. 92 00:05:46,260 --> 00:05:49,380 Of course anybody can use free of course on trial. 93 00:05:49,380 --> 00:05:50,020 Virgin is there. 94 00:05:50,370 --> 00:05:55,620 So here you are to go to effects and you have this indicator average to range. 95 00:05:55,620 --> 00:06:00,240 If it is not visible you can just type average who range. 96 00:06:00,240 --> 00:06:00,990 It will come here. 97 00:06:01,560 --> 00:06:08,160 We just have to click on this and when you click on this, it will block ETR indicator. 98 00:06:08,160 --> 00:06:15,920 So it indicates what is the average range of the market over a period of 15 to 20 days. 99 00:06:16,290 --> 00:06:22,650 So we are talking about this point at this point over ETR was you can see almost 190 on the right hand 100 00:06:22,650 --> 00:06:22,860 side. 101 00:06:22,860 --> 00:06:26,050 You can see that ETR was one ninety. 102 00:06:26,310 --> 00:06:31,650 So we have to place a stop loss below this one ninety point sixty one thousand two hundred minus one 103 00:06:31,650 --> 00:06:37,340 ninety seven thousand two hundred minus one nine zero. 104 00:06:37,800 --> 00:06:45,510 So that is seven zero one zero seven zero one zero will be our stop loss. 105 00:06:45,510 --> 00:06:46,290 Seven zero. 106 00:06:48,990 --> 00:06:55,500 You can plot it and then adjust the data points, your coordinates, seven zero one zero. 107 00:06:56,160 --> 00:06:59,490 So this is where we will exit in case the market goes down. 108 00:06:59,520 --> 00:07:00,590 Let's look at red color. 109 00:07:01,050 --> 00:07:02,150 So this is my risk. 110 00:07:02,820 --> 00:07:04,060 And what will be the reward? 111 00:07:04,080 --> 00:07:05,780 As I told you, that next immediate race. 112 00:07:05,800 --> 00:07:07,600 And so what is the next immediate resistance? 113 00:07:07,620 --> 00:07:11,580 So this is basically this level is the next immediate instance. 114 00:07:11,880 --> 00:07:15,500 You can expect the market to go at least up to this level immediately. 115 00:07:15,870 --> 00:07:21,600 So let's see, uh, this is where we will exit the seven eight five eight. 116 00:07:21,660 --> 00:07:28,830 Let's make it a round figure for calculation purposes, although I don't advise to enter an exit at 117 00:07:28,830 --> 00:07:29,390 round figures. 118 00:07:29,400 --> 00:07:32,220 But yes, for our understanding, we will have this. 119 00:07:32,250 --> 00:07:34,810 So this is our profit target and make it with green. 120 00:07:35,820 --> 00:07:39,240 So we are going to enter at this point. 121 00:07:39,760 --> 00:07:40,950 This is going to be loss. 122 00:07:40,980 --> 00:07:42,550 This is going to be our target. 123 00:07:42,870 --> 00:07:44,910 Let's now calculate the risk reward here. 124 00:07:46,230 --> 00:07:50,170 You can use the risk reward tool for long and short position. 125 00:07:50,190 --> 00:07:51,880 I'm going to use it for long position. 126 00:07:52,290 --> 00:07:55,190 This is where we are going to enter to click here. 127 00:07:56,220 --> 00:08:00,460 And this is the Rizwana portion. 128 00:08:00,480 --> 00:08:06,780 So at this to this point, reward, at least to this point, and it will automatically calculate what 129 00:08:06,780 --> 00:08:07,650 is the risk reward. 130 00:08:07,830 --> 00:08:15,060 So here you can see it is the word of this one is to one point something one point I'm not able to see 131 00:08:15,110 --> 00:08:17,040 properly, but yes, it is above one. 132 00:08:17,460 --> 00:08:19,430 So this is a favorable risk to reward. 133 00:08:19,440 --> 00:08:22,890 We are taking this one and we are taking the word of more than one. 134 00:08:23,220 --> 00:08:26,250 So in this case, it is a good but we can go for it. 135 00:08:26,610 --> 00:08:29,080 So this is how you can calculate risk reward. 136 00:08:29,100 --> 00:08:32,600 Let's again calculate it for a little quickly. 137 00:08:32,610 --> 00:08:36,660 Now, we have seen that this is the hammer that we had formed. 138 00:08:37,690 --> 00:08:38,430 This is the low. 139 00:08:39,510 --> 00:08:49,220 Low is one five two two and eight are in this case is fifty one point one five double to minus 50. 140 00:08:49,230 --> 00:08:54,470 That is one four seven two one four seven two will be our risk. 141 00:08:55,950 --> 00:08:56,910 One four seven two. 142 00:08:56,940 --> 00:08:59,310 This is our exit point. 143 00:08:59,310 --> 00:09:00,450 And this candle is green. 144 00:09:00,450 --> 00:09:01,640 So it's goodbye. 145 00:09:02,400 --> 00:09:03,720 And next, resistance is this. 146 00:09:03,720 --> 00:09:05,890 You can see prices have reversed from this point. 147 00:09:05,890 --> 00:09:08,390 So this is our next reason we can exit at this point. 148 00:09:08,940 --> 00:09:09,870 Let's make it green. 149 00:09:10,710 --> 00:09:24,150 And we had entered at this point where the candidate on Green 201 green here, this is what is the point 150 00:09:24,150 --> 00:09:25,350 where we are going to enter. 151 00:09:26,310 --> 00:09:28,410 This is going to be the risk. 152 00:09:29,250 --> 00:09:31,080 This is going to be the reward. 153 00:09:31,080 --> 00:09:33,960 And you can see this reward of one is two five. 154 00:09:34,290 --> 00:09:38,220 So that is a, again, favorable risk to reward. 155 00:09:39,030 --> 00:09:40,020 You can take this. 156 00:09:40,020 --> 00:09:43,340 And yes, in this case, target was achieved within eight to 10 days. 157 00:09:43,800 --> 00:09:51,540 So this is how you can calculate the risk to reward ratio to determine whether you have to enter in 158 00:09:51,540 --> 00:09:53,160 this position or not. 159 00:09:53,310 --> 00:09:56,460 If it is not favorable, then you have to see. 160 00:09:56,460 --> 00:10:02,320 What we are doing logically here is that we know that our rates are going to be winners and our three 161 00:10:02,320 --> 00:10:03,640 tricks are going to be losers. 162 00:10:03,870 --> 00:10:05,440 So where does this reward of seven? 163 00:10:05,470 --> 00:10:06,630 This one is to one. 164 00:10:07,140 --> 00:10:12,720 Then in seven trades we are going to own, say, for example, seven dollars and three trades. 165 00:10:12,720 --> 00:10:14,990 We are going to lose three dollars. 166 00:10:15,840 --> 00:10:24,970 So ultimately we are going to be in plus four dollars, let's suppose brokerage and taxes of seven dollars. 167 00:10:25,170 --> 00:10:31,220 So ultimately we are going to be positive three dollars at the end of 10 trades. 168 00:10:31,230 --> 00:10:33,370 That is the logic we are using here. 169 00:10:33,750 --> 00:10:41,520 So even if it is one is to one, since our success rate is higher, our probability of success is higher 170 00:10:42,390 --> 00:10:43,980 over a long period of time. 171 00:10:44,400 --> 00:10:51,210 This kind of filter, it is going to turn your accountant green and you are going to earn money if you 172 00:10:51,210 --> 00:10:51,800 follow this. 173 00:10:52,290 --> 00:10:54,030 So I hope you have understood this logic. 174 00:10:54,810 --> 00:11:02,040 People fail using candlestick analysis because they do not use such kind of filters. 175 00:11:02,040 --> 00:11:08,160 They don't use risk reward, they don't use other filters that we have seen that in the market is falling 176 00:11:08,160 --> 00:11:09,050 and we are too. 177 00:11:09,300 --> 00:11:13,440 So they don't use these filters and then they fail using candlestick. 178 00:11:13,440 --> 00:11:19,530 And this is what now you know how to exactly trade the candlestick patterns. 179 00:11:20,250 --> 00:11:27,510 This particular filter we are going to use almost for all the for all the candlestick pattern that we 180 00:11:27,510 --> 00:11:31,710 are going to see in incoming incoming videos. 181 00:11:31,870 --> 00:11:33,720 OK, so we have understood this. 182 00:11:34,110 --> 00:11:37,230 Let's move on to the next reversal pattern.