In our previous Marketshala series blog, we had discussed how to learn Intraday Trading in 30 minutes in which we had discussed about the Golden Rules of Intraday share Trading.
In another interesting session as part of the highly popular MarketShala series conducted by Elearnmarkets, Mr. Vivek Bajaj, Co-founder Elearnmarkets, and Mr. Chetan Panchamia a prolific intraday trader and trainer with many years of experience came together to decode the ACRR (Action, Confirmation, Retest, Reconfirmation ) method of intraday trading that really works when you do intraday trading.
Here is a short discussion of this session. If you want to get a practical understanding of the ACRR method of intraday share trading, watch the full video at the end of this blog.
ACRR Method of Intraday Share Trading
To understand the steps of the ACRR Method of Intraday Trading let us take an example of 5 minutes candlestick chart of Bank Nifty:
Step 1: Action
When doing intraday share trading the first 5-15 minutes is very important to analyze whether the buying or selling based action is taking place in the stock.
For this, we need to analyze the 5 minutes candlestick chart.
We can see in the first 5 minutes candlestick chart of Bank Nifty that a big bullish candle is formed that is indicating buy-side action.
If a big bearish candle is formed in the first 5 minutes candlestick then it indicates sell based action.
At the closing price of the first 5 minutes candlestick, we should draw a line as shown in the chart which will help us to determine the further steps.
Now let us come to the next step of the ACRR method i.e Confirmation.
Step 2: Confirmation
If the market sustains for the next 15-20 minutes after the closing of the first 5 minutes candlestick on the bullish side, then it indicates confirmation of the buy-side action.
This means that the buyers were successful in moving the prices above after the closing of 5 minutes candlestick.
This is shown as 2 on the above 5 minutes candlestick chart of Bank Nifty.
Step 3: Retest
If the prices of the stock sustain for a maximum of 3 candles below the line that we had drawn by taking the closing price of the first 5 minutes candle then the prices retest.
This means that the buyers who were active in the first 5 minutes candle may push up the prices again at this level.
This is shown as 3 on the above 5 minutes candlestick chart of Bank Nifty.
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If the low gets broken after the 3 candles or even with 1 candle then it means that the buying power of the buyers has reduced and the prices may fall.
Step 4: Reconfirmation
If the prices sustain and move above the line then it reconfirms the buying side action that took place in the first 5 minutes candlestick.
This is shown as 4 on the above 5 minutes candlestick chart of Bank Nifty.
We can buy at the candlestick formed above the line after the prices reconfirm and sustain.
Stop-loss can be placed at the recent low of the candle. After entering the management of the trades is important.
Example- Reliance Industries Ltd.:
Let us take another example of 5 minutes candlestick chart of Reliance Industries Ltd. to understand this method:
Step 1 – We can see that a bullish reversal candlestick is formed in the first 5 minutes which indicates buying side action.
Step 2– The prices rise after the closing of the first 5 minutes candle i.e confirmation taking place.
Step 3 – The prices fell but sustain the line which we had drawn at the closing of first 5 minutes candle i.e Retest.
Step 4 – The prices sustain and rise above the line i.e Reconfirmation.
This method does not validate when the pattern is not fully formed.
For example, from the below 5 minutes chart of Reliance Industries Ltd.we can see that a big bullish candle is formed in the first 5 minutes candle.
But the prices did not sustain after the closing of the first 5 minutes bullish candle and step 2 i.e. Confirmation did not take place.
So here the ACRR method of intraday share trading cannot be used.
You can watch the entire video here:
This is a very simple method of intraday share trading which can be used once the formation of the pattern takes place on the 5 minutes candlestick chart as discussed in the video.
This is a very rare pattern but once you have identified this pattern then you can earn a good profit from it.
Remember while doing intraday share trading trade management is also important.