The same Market rewards certain people,and punishes certain others..........

and yet,the Market

does nothing at all.It just IS,and it does its thing......What is it then that these certain others do
differently from others?

How do you break from the vicious cycle explained above?

First step....You have to accept that you are indeed caught up in this mess,next,there must be a
willingness and desire to leave this mentality and go to the next level.

Can it be done?Oh yes,most definitely........Don't believe all those so called professionals who tell
you that it cannot be done.But first.......the acceptance that it is your fault,the blame is all
yours,and then the strong desire to want to leave this mentality....

Rest will follow step by step.....

All the best!

Saint
LESSON 1:THE MARKET JUST IS.......

Please do not superimpose some magnificent power to the Markets........there is nothing supreme or spectacular or
dirty or disgusting about the Markets.

The Markets Just IS.................

Your heavy losses are YOUR Fault,YOUR inability to understand something about the Nature of the Markets,YOUR
inability to grab the correct entry or exit points.......The Faults are all YOURS!!Take it upon your own shoulders,and
do not blame any other external factor.

Your overall victories are YOUR Credit,like above,take it and pat yourself on your shoulders........The Market neither
takes from you or gives you,Like the Flow of the River,it just IS.

How much you can profit or Loss from the Markets is what makes you a great trader or a pathetic one..........This is
important.No amount of learning the Method is of any use if you think the Markets have a Power over your Trades.

Remember once again,..........The Markets just IS!!

LESSON 2:FEAR!!

Once again,the Markets just IS...........Every victory and defeat has its origins in our own Mind......FEAR......Fear of
losing money,fear of losing profits,Fear of not being able to proclaim that you bought at Market Bottoms and got
out at Tops,Fear of the Wife clobberring you,Fear of Old Age and the Child's College Education
Expenses..........Fear!!

Very important to realise at this initial steps.......Fear exists in the Mind that is not systematic.Fear exists in the
Mind that believes that it is the Doer,the arrogant individual who thinks that he has found a new approach that can
defeat the markets.Fear exists in the mind of the other guy who has no Plan............Figure out a way where you do
what the Markets do,and Flow with it,and there no more is conflict,there is no more trying to beat the
markets,.......you slowly realise that you diverted the battle of trying to conquer Fear by just leapfrogging over it.

To go with the Markets......to go with the Flow....and therefore to have a Systematic Plan and Trade
Fearlessly.........you need to know that exact point where the Flow has shifted directions.And for that,you need to
know the very Basics.
LESSON 3:WHAT IS A TREND?

We as Traders want to be on the right side of the Markets,.....we realise the abundance that is there already in just
sticking with the Flow of the Markets.We are not interested in trying to formulate some new fantasic concept to
beat the Markets.We just want to stick to the right direction and Go With the Flow.

We are in essence more interested in Trading the Now,the Right Now,rather than anticipate some
Future.............and for all of that,we need to know what a Trend means.

A Trend is basically the current direction in which the Market is Flowing in..............there are a few trends that we
all already know by watching some CNBC.

A.Uptrend:When you look at a Chart,and Price is making a Clear Cut Move to the Up.

B.Downtrend:When you look at a Chart,and Price is making a Clear Cut move to the Down.

c.Sideways Trend:When Price seem to go sideways on that particular Timeframe.

Within a Trend,we can have Rallies and Declines.

a.Rally:A rally is the up move that can happen within an existing uptrend or downtrend.

b.Declines:A Decline is a Down Move that happens within an existing uptrend or downtrend.

An example I had given many times just has to be repeated here........Look at your right hand with the palm facing
you.First we have the little finger.The Ring Finger takes out the high of the little finger and therefore makes a
higher high and low as compared to the little finger.The middle finger makes a higher high and higher low as
compared to the ring finger.We have therefore a rally.The index finger makes a lower high and a lower low as
compared to the middle finger.The thumb makes a lower high and low as compared to the index finger.We have
therefore a decline.

A rally therefore constitutes Higher Highs and Higher Lows(importantly,we are looking at the Higher Lows).A
decline constitutes Lower Highs and Lower Lows(importantly,in a decline,we are focussing our vision on the lower
highs).

A clear cut definition of what constitutes an uptrend and a downtrend requires the introduction of Pivots.We will do
that later...........For now,in an uptrend,rallies are more prominent than the declines.In a downtrend,the declines
are more prominent than the rallies.

Looks easy so far?Great...........but somehow,this basic Lesson many don't grasp.Make sure you do.........it is
important in all Flow and Ambush Trades later on.
LESSON 4:SOME BASICS ON PIVOTS!

Just higher highs and lows alone do not make an uptrend.Yes we have an up-move but an up-move doesn't mean
we are in an uptrend.Higher highs and lows form a rally.Lower highs and lows form a decline.

We can have declines in an uptrend.We can have rallies in a downtrend.So now that we know that a series of
higher highs is called a RALLY,how then do we define an Uptrend?An UPTREND on a particular time frame is a
series of higher pivot highs and lows on that time frame.What then is a downtrend?Nothing but a series of lower
pivot highs.

So what then is a Pivot?Okay,we are back to the "Hand" example.Whisk out your right hand again,once again
with your right palm facing you.We have our little finger.The ring finger makes a higher high and low as
compared to the little finger.The middle finger is higher high and low as compared to the ring finger.We therefore
have a RALLY.The index finger makes lower highs and lows as compared to the middle finger.The thumb makes
lower highs and lows as compared to the index finger.We therefore have a DECLINE.The middle finger with two
lower highs on both sides(ring and index)now forms a PIVOT.

Imagine we have Area A.Rally starts from Area A which is followed by a decline to an area that is higher than
Area A.We call this new area where the stock has declined to as Area B.So on so forth..Therefore Area B is higher
than Area A,Area C is higher than Area B,so on so forth.We have therefore what is called an uptrend.These areas
are pivotal areas where the stock stops its decline and rallies upwards.We refer to these turning points as pivots.

Therefore,in the above example,as each pivot is after a decline,and the pivot is the low after which the stock
takes off again,we call them PIVOT LOWS.

Right the opposite in a downtrend.The stock declines from an area and then rallies to an area lower than the
first,so on so forth.In this case every pivot is after a rally,and the pivot is that area after which the stock declines
further to new lows.

As this pivot tells us of that high after which things go back to its declining ways,we call that a PIVOT HIGH.

So,in an uptrend,we have HIGHER PIVOT LOWS.How did we come to that?Each pivot low is higher than the
previous pivot low.Therefore we call it higher pivot lows.

In a downtrend,we have LOWER PIVOT HIGHS.How did we come to that?Each pivot high is lower than the
previous pivot high.Therefore we call it lower pivot highs.

In a sideways trend,we have nearly equal pivot highs and lows.

Basically didn't want to introduce the word "Pivots" very early on.......but there really is no other way to tell what
a trend is all about.Will take some chewing,and digesting.The only way is to look at the charts and start to make
out
all the pivot highs and lows.
 As always,higher PIVOT LOWS make an uptrend........and lower PIVOT HIGHS make a downtrend.
And what we are excited about as Traders is that Point where one trend ends and the other one starts.

So far,we have gone over a Brief intro as to what a trend is........and

the exact point at which we would say that the trend has changed.

All we know now as Beginners is that an Uptrend is made up of successive higher Pivot highs and lows,the focus on
the lows.........A Downtrend is made up of Lower Pivot highs and lows,the focus being on the highs.

Successive bar higher highs and lows is called a rally,successive bar lower highs and lows is termed a Decline.

We have Rallies and Declines in both Uptrends and Downtrends.......Uptrends see more Rallies than Declines,vice
versa for Downtrends.

Now,knowing this much is enough..........enough to trade and make huge profits......You could stop it here and you
would understand the basis of Flow Trading,probably most of the Ambush style as well.

This is 90% over......................so,make sure you are thorough about it.

And yet,the extra 10% adds the edge..............so,important to know that too.But this is the Core........everyone
knows this already,but so much importance is given to the other 10%,.........so much so that they have forgotten
to be masters of this 90%.Master this and you can trade to great profits......master this not,and however good you
are at the other 10%,it just isn't good enough.
TRENDS

As per time frames,we can classify Trends into:

A.SECULAR TRENDS
B.PRIMARY TREND
C.INTERMEDIATE TREND
D.SHORT TERM TRENDS

A.SECULAR TRENDS

Every short term trend has within it one to several intraday uptrends and downtrends.Every intermediate trend has
within it one to several short term uptrends and downtrends.Every primary trend has within it one to several
intermediate uptrends and downtrends.So too,every secular trend has within it one to several primary uptrends
and downtrends.

What we mean by Bull market is a market ina primary uptrend.What we mean by a Bear Market is a market in a
primary dntrend.

A SECULAR BULL MARKET has primary uptrends(Bull mkts)greater in magnitude and duration as compared to its
primary dntrends(Bear mkts).Expect the bull markets to unfold longer than the bear markets in a secular bull
move.

Vice versa for the SECULAR BEAR MKT.A secular bear market has primary dntrends greater in magnitude and
duration as compared to its primary uptrends.Expect the bear markets to take longer to unfold than the bull
markets in a secular bear move.

A Secular trend usually lasts about 10-25 years.

Let us get into the others tomorrow.........maybe we can also have a look at some secular trends on charts.
TRENDS

PRIMARY TRENDS :

The Primary Trends are what we in common parlance state as "Bull market" or "Bear Market".Just as a Secular
Uptrend is made up of several primary uptrends and downtrends,the Primary Uptrend is made up of several
intermediate uptrends and downtrends.Vice versa for the Primary Downtrend.

As we had discussed before,a Primary Uptrend is of greater magnitude and duration if in the broader picture,we are
also in a Secular Uptrend.A Primary Dntrend would be of shorter magnitude and duration if it happens in a Secular
Uptrend.

So too,in a Secular Downtrend,the Primary Dntrends are of greater magnitude and duration as compared to the
Primary Uptrends.

Just take a look at the two charts of the Nikkei and Sensex in the previous page to get things clear.

A Primary Trend lasts anywhere between 9mths and 2 1/2 yrs.

INTERMEDIATE TRENDS :

So too, an intermediate uptrend is made up of several short term trends.Again,if we are in a Primary Uptrend,the
Intermediate Uptrends are of greater magnitude and duration as compared to the Intermediate Dntrends.

Vice versa in a Primary Dntrend.

An intermediate trend can last anywhere between 6weeks to 9mths.

SHORT TERM TRENDS

Near term trends last from a few days to 3 weeks.

We can see near term trend from the daily charts.

More for later,..........

Trendlines

An UPTRENDLINE is a line that connects two or more LOWS,in a chart in an uptrend.

The more points that meet up to this line,the stronger this line is.This trendline acts as support,as prices blast
off,then pullback to this line before taking off again. Therefore,in an UPTRENDLINE,the 2nd point is always higher
than the 1st point,and the 3rd higher than the 2nd.
Down Trend Line

A DOWNTRENDLINE is a line that connects two or more highs in a downtrend.

Once again,the more number of points that connect,the stronger the line is.This downtrendline acts as
resistance.Each down move is followed by a pullback rally to this trendline which acts as resistance only to be met
with more selling and lower prices. In DOWNTRENDLINE,the 2nd point is always lower than the 1st,and the 3rd
lower than the 2nd.

A break in the UPTRENDLINE signals a possible change in trend.So too with the break in the DOWNTRENDLINE.
Just have a look at the image below…..nothing like a picture to make things look better
 Important to not get too academic,important to stay Visual when trendlines are
drawn..........presuming there was a freak trade that caused a long tail,plz do not connect from
there to other lows,etc........once again, go with the Eye.

Saint

ps:I personally do not use downtrendlines ,uptrendlines though come in handy as early profit
taking points.
Chart Patterns
Again and again,certain patterns seem to develop on our charts.And we realise that the probability of reversal or
continuation is greater with certain patterns.Not saying that the reverse cannot take place.Anything is possible and
therefore we have our stops...........but these patterns usually either reverse or continue trends.Knowing abt chart
patterns is one more weapon in our arsenal.

Two types:

a)Reversal Patterns:These patterns reverse trends.Eg.Double Top,Double Bottom,Head and Shoulders,Cup n

Handle.

b)Continuation patterns:These indicate a possble contination in trends. Eg.Triangles,Bull flag,Bear flag,Pennant

REVERSAL PATTERNS
1.Double Top :This pattern can happen on any time frame.........this halts the uptrend and starts a downtrend
in that stock or index.
-Also called as M Top,coz it resembles an "M".

-If double tops are bearish,triple tops are even more so.

-Volume is higher on the first peak,and lesser inthe 2nd peak,and starts picking up on breakdown from the 2nd
peak.

-There has to be a distance between one top and the other to qualify as a Double Top.Needs at least 3 month
difference if you are looking athe daily charts.

-Now take the trough between the two peaks.......breaking that level is confirmation of a change in trend to the
downside.

==So,summarising,let us say we are looking at the daily charts of any stock.We need to have a top put in,let us
say January,and then another top at the same area,let us say in April.The rally to the first top came in good
volumes,and then a pullback on low volumes.The rally to the second top came in relatively low volumes and then
the declines coming in relatively stronger volume.It may be a double top,but you cannot call it one till the trough
between the two tops is taken out.Then we can call it a double top.Also called as M-TOP.

-How does knowing this help us in our trading?

We have a great uptrend on good volume and a pullback on lesser volumes.....so far so good.Now the 2nd peak
formation starts to form with much lesser volume as compared to the 1st peak,and then a breakdown on high
volume........this gives us an indication to exit our longs if we are short term players as trendlines get broken to the
downside.But without confirmation,we are officially in nothing more than a sideways trend with possible fall
downwards.Now the trough gets broken and usually the stock retraces back........We are now officially in a
downtrend.The time to short has arrived.Short a half at the retracement,and short the other half below the low of
the bar that closed below the trough line.
Target :The distance between the peak of the "M" to the trough of the "M"......add that to the low of the bar that
broke the trough line.That's our target point.

2.Double Bottom:Same as above,it halts a downtrend,and starts an uptrend in that stock or index.
-also called as "W"bottom.
Trading strategy and measuring techniques are just the opposite to the above.
REVERSAL PATTERNS (CONT.)

3. Head and Shoulders Pattern

---Bearish,reversal pattern signalling the end of the current uptrend.

---Basically looks like the silhouette of a human left shoulder,head and the right shoulder.

---Like the Double Top,strong volume push prices upwards forming the "left shoulder".The pullback is on lesser
volume,then another strong rally on good volume,forming the "head"......but this time,the volume causing this
rally although forming higher prices,is now on relatively lower volume as compared to the vol. in the rally causing
the left shoulder.....as the stock pulls back to the neckline,and starts rallying again to form the rt.shoulder,now
volume is very noticeably lighter.

---The break of the neckline confirms the H & S pattern(Neckline is the line connecting the two troughs on either
side of the head).Volume expansion is noticed as the pattern confirmation takes place.......and the stock or index
is now in adown trend.(Reverse happens now......vol. expands on the down fall and decreases on a return move
up).

Trading-Wise:ENTRY:The first down day below the neckline confirms the pattern.......short as the neckline
breaks or enter short on a weak rally back to the area of the neckline.This line that was formerly strong support
now acts as a stiff resistance.Short half on that return move,and the other half below the low of the confirmatory
bar.
TARGET:First target would be.......calculate the difference from the head to neckline.Add that to the low of the
bar that confirmed the pattern.
STOP:The high of the right shoulder.

One Important Condition:Once the neckline gets broken,expect a return move......but at all costs the price should
not re-break the neckline upwards.If this happens,it is called a FAILED H&S PATTERN.Like a failed breakdown,this
acts as a bear trap.....and is bullish.So get out if that neckline gets broken back upwards...

4. INVERSE H&S PATTERN

-Reverse of the above.
-reversal pattern that ends a downtrend.
-Tradewise,all reverse of above.
VOLUME and the H & S

Volume plays an important role in us calling a particular pattern a H&S.Let us go through the Volume bit.

When the left shoulder is made,in both the h&s and inverted h&s,expect strong volumes.When the head is made,it
is on (usually) decreased volumes as compared to the left shoulder.But as Rahul pointed out a key difference,the rt
shoulder on a h&s is on usually lower volumes.Volumes increase wnen necklines break,and patterns get
confirmed.And as all breakdown patterns,a break below support is accompanied by strong vols.,and then the return
rally to what is now resistance is on low volumes,followed by strong vols again,bringing the stk to newer lows.

But,in the Inverted H & S,once again,we have strong volumes in the forming of the lt shoulder.Again,we have
decreased volumes in the forming of the Head.But,here,we have increased volumes taking prices back to the
neckline,then a dip in volume as the stk tries to make the rt shoulder,and then a burst in volume taking it through
the neckline.

Summarising,H&S=Lt shoulder-Strong vols

Head-Lighter volumes
Rt shoulder-Same as or lighter than the head.
*Increase in volumes as neckline breaks to the downside.

Inverted H&S=Lt shoulder-Strong vols

Head-Lighter vols
*Increase in volumes,sometimes higher than before the formation of lt shdr
Rt shoulder-Dip in vols from the rally
*Once again,an increase in volumes breaking the stk out over the neckline.

An important thing to remember is that markets or stocks do not need strong volumes for the breakdown from the
h&s as it basically falls with its own weight,but you need strong volumes for a breakout from an Inverted h&s.

REVERSAL PATTERNS(CONT.)

5.CUP WITH HANDLE FORMATION

-also a reversal pattern,but more obvious at the bottom rather than at the top.
-basically looks like a coffee cup with a handle.
-There is a basing stage,accumulation phase(cup),then a breakout,followed by a pullback,forming what looks like a
handle.
-Breaking out of the top of the cup is confirmation of a change in trend.

-Few criteria:The cup should be more rounded than a "V".

The handle should be in the top part of the cup,not too deep.
Cup pattern should take at least 7weeks to form.
Volumes should contract in the handle and expand on b/out.

-From a trade perspective,the buy is at the area where the top of the cup is taken out.Stop:At the low of the
handle.Target:Measure the distance to the low of the cup.Add that to the breakout area.

6.REVERSE CUP N HANDLE

-Occurs at the top,rest all reverse of the above.

7.BROADENING FORMATION
-When the trendlines,from left to right,converge.....it's called a triangle.When the trendlines start from a point and
diverge as we go from left to right of the chart,that's called a Broadening Formation.
-One more interesting feature:In a triangle,volume decreases within the pattern.In a Broadening Formation,volume
expands along with wider price swings.
-This is a BEARISH pattern.
-Due to its divergence,the stock makes a high and a low,then high2 will take out previous pivot high,then prices fall
to low2,which takes out the previous pivot low.Then prices move upwards to form high3,which is higher than high2
or high1(not necessary,can even be same height at times).
-Three successive higher peaks,and two declining lower troughs complete this pattern.Confirmation is when the low
2 is taken out as prices start making new lows.
TRADING THE RISING WEDGE:

The RISING WEDGE is a reversal pattern,as always the word "usually" comes into play.

Nice one that took place in ARVIND MILLS......see the chart below.Self explanatory.We got higher pivot lows as
ARV MILLS made new highs through 2003 and 2004.But newer highs in November 2004 and later was
accompanied by lower volumes.This rising wedge took nearly a year in the making......The week ending Oct
14th ,and we got our breakdown bar(indicated in the chart with a red arrow).

Look to short below the breakdown bar with your stops at where the green arrow is placed.Once it cracks,keep
moving the stop down to the previous pivot high,so on so forth.
CONTINUATION PATTERNS:

1.SYMMETRICAL TRIANGLE

The Symmetrical triangle is a continuation pattern, meaning if the trend was largely upwards, expect the triangle
to breakout. To draw the Triangle it is necessary to have atleast 2 points for each Trend line

Volume diminishes as the pattern starts to form.

The Breakout point occurs 1/2 to 3/4 of the way through the pattern's development or time-span. The time-span
of the pattern can be measured from the apex (convergence of upper and lower lines) back to the beginning of the
lower trend line (base). A break before the 1/2 way point might be premature and a break too close to the apex
may be insignificant. After all, as the apex approaches, a breakout must occur sometime.

TRADING THE SYMMETRICAL TRAINGLE

Once a symmetrical triangle is drawn as above,what we look for is a close of Price outside the Triangle.Once this
happens,look to buy the highs over that bar............A symmetrical triangle is a continuation pattern,it is a place
where Price pauses for a rest before taking off in the same direction before the pause.

We are looking at the widest distance of the symmetrical triangle and applied to the breakout point ,we get our
target levels........mix it with our knowledge of pivot highs and milk the move to its fullest.
Ascending Triangle

The ascending triangle is a bullish formation that usually forms during an uptrend as a continuation
pattern. Regardless of where they form

Volume diminishes as the pattern forms.After breakout expect a return to support (now resistance)
and then the market continues in the direction of the breakout.
Once the breakout has occurred, the price projection is found by measuring the widest distance of
the pattern and applying it to the resistance breakout.

Descending Triangle

The decending Triangle is Bearish, however we require a prior trend to exist. After breakdown
expect a return to support (now resistance) and then the market continues in the direction of the
breakdown.Once the breakout has occurred, the price projection is found by measuring the widest
distance of the pattern and subtracting it from the resistance breakout.
The Bull Flag

The Bull Flag is yet another type of Pause in Price before a continued move upwads.It constitutes of
small lower pivot highs and lows before a breakout of the Flag resumes its previous uptrend.

Trading it just as it is,is simple.......we look to buy the breakout from the flag and add over the
close of the breakout bar.Dealing with Flags in the 60min Flow method is the same......we look to
stay out of the Flag,thereby not raising the trail stops to these miniature pivot lows,and therefore
staying out of this flag in toto.A breakout over a miniature pivot high within the flag though is our
add point.

The Bear Flag

The bear flag pattern is found in a downtrending stock. This pattern is named for the resemblance
of an inverted flag on a pole. The bear flag is a continuation pattern which only slightly retraces the
decline preceding it. The technical sell point is when price penetrates the lower trend line of the flag
area, ideally on volume expansion.

Trading it is the same as the Bull Flag in reverse.

PENNANT

Once again,like a Flag,to be considered a continuation pattern there must be evidence of a prior
trend. Flags/Pennants require evidence of a sharp advance or decline on heavy volume. These
moves usually occur on heavy volume and can contain gaps. This move usually represents the first
leg of a significant advance or decline and the flag/pennant is merely a pause.
The flagpole is the distance from the first resistance or support break to the high or low of the flag/
pennant. The sharp advance (or decline) that forms the flagpole should break a trend line or
resistance/support level. A line extending up from this break to the high of the flag/pennant forms
the flagpole.

A pennant is a small symmetrical triangle that begins wide and converges as the pattern matures
(like a cone). The slope is usually neutral. Sometimes there will not be specific reaction highs and
lows from which to draw the trend lines and the price action should just be contained within the
converging trend lines.

For a bullish flag or pennant, a break above resistance signals that the previous advance has
resumed. For a bearish flag or pennant, a break below support signals that the previous decline has
resumed.
Volumes should be heavy during the advance/decline that forms the flagpole. An expansion of
volume on break of resistance/support lends strength to this pattern.