NIFTY positional trade practice

LoneWolf

Well-Known Member
#1
Hello All,

This is my first venture in to positional trading. I have been planning to do this along side my intraday trades for quite some time. So I am starting this thread to practice paper trading for my positional trades real time along with my intraday live trading.

Focus is on =

1. To see if I am able to execute the positional trades live along with my real intraday live trades.
2. To learn the various aspects of positional trades by participating in real market with virtual money (RM, trade management and over night risk)
3. To test my positional strategy and improve further.

Detailed Planning

Trading contract - NIFTY
Trading Instrument - NIFTY options.

My knowledge on options so far - buy calls/Sell puts when market rises and buy puts/sell call when market falls. I have no idea about option strategies. The reason I am choosing option over futures are - I believe there will be mnay ways to trade a market instead of simply LONG/SHORT on future derivatives, and benefits of option writing in sideways market. Since I have no ideas on options strategies, sometimes my positions will be naked option, and sometimes with multiple legs. But i will use this experience to document my learning, and create a concrete strategy.

Trading Strategy - Same as my intraday trading strategy, that is trade the trading timeframe's trend (minor trend) wrt higher timeframe trend (Intermediate trend). Decide the trend, trade direction and trade areas from NIFTY spot chart and use options as an trading instrument.
Trading timeframe = 30M
Intermediate timeframe = Daily
Indicators used = 21 EMA (to give visual trend of the timeframe)
 

LoneWolf

Well-Known Member
#3
Month : Jan 2017
Date : 13 Jan 2017




From NIFTY 30m chart as of 13 Jan 2017, its showing an intermediate uptrend after breakout above 8300. As long as this uptrend is in play, my primary trade direction is on LONG side and I expect the trend to continue.



Looking closely, minor uptrend is showing buying climax after it gaps up near 8450 and forming a big bearish WRB. The subsequent candles fell under supply pressure. But the fall is being capped near the rising trend line and near 8370/80 level. There is a likely failure of minor downtrend. Bulls need to absorb all the supply coming from 8450 in order to continue the uptrend.

Paper Trade Plan = 1

There is supply coming from 8450
Out support zone is staying near 8300/8350.

As long as price stays above 8300, 8300 PUT will stay OTM and as long as price stays below 8450, 8450 CE will stay OTM. So anticipating consolidation inside this range I would take a SHORT position on both these option.

As per CMP of 8450 JAN CE = 48.90 -> 48 (Approx)
As per CMP of 8300 JAN PE = 29.70 -> 29 (Approx)

Combined premium of these two strikes = 48 + 29 = 77

Managing the Risk and Trade

Max profit, that can be earned = 77 points.

I will get maximum profit if both the strikes expire worthless means, price will expire in this range for JAN, which I do not expect. So expecting a max profit of 60% of the above target, which is around 46 points. So if net premium drops down to 30 I will consider booking profit.

Now managing the risk, I would not like the risk to be more than 30 points with a reward of 46 points (RR = 1:1.5). So if at any point my net premium rises above 107 i will close both the position.

Plus, I am creating this position target for few days of consolidation with in 8450 - 8300. If my trend outlook changes where the established position wont be supporting the market strucutre, I will consider closing/modifying the position completely/partly.

Trade Summary

Sold 1 lot, 8450 JAN CE @ 48.
Sold 1 lot, 8300 JAN PE @ 29

Net Premium received = 77 pts
Max stop loss = 33 points i.e. net premuim > 107 points
Target = 46 points i.e. net premium < 31 points.

Let us see how market is unfolding, I hope this will be a good hand on learning experience.
 
#4
bhai,
why dont u get consistently profitable in intraday and than start positional or vie versa. both the things are different and poles apart.
focus yr energy on one thing rather than opening multiple fronts.
just a suggestion.
 

LoneWolf

Well-Known Member
#5
Initiating a fresh position on JAN 8500 PE, Short at 104. Will add the thoughts and charts in evening..
 
Last edited:

LoneWolf

Well-Known Member
#6
Initiating a fresh position on JAN 8500 PE, Short at 104. Will add the thoughts and charts in evening..

Update on today's action



NIFTY managed to find support along with the rising intermediate uptrend line. When price started trending above 8400, I created a fresh short position in JAN 8500 PE. Because if this bullishness sustains then new intermediate higher high is expected and price might head towards or above 8500.

Update on Open Trades

Trade 1 :

Date : 13 Jan 2017
Sold 1 lot, 8450 JAN CE @ 48.
Sold 1 lot, 8300 JAN PE @ 29

Net Premium received = 77 pts
Max stop loss = 33 points i.e. net premuim > 107 points
Target = 46 points i.e. net premium < 31 points.

Date : 16 Jan 2017
CMP of 8450 JAN CE = 51.55
CMP of 8300 JAN PE = 22.55
Net Premium = 74.1

Unrealised P/L = 2.9 points

I will keep this position running, as I need to see how NIFTY behaves near 8450, if resistance is faced there then the range of 8450 - 8300 will hold longer and the pairs are expected to loose more premium.

Trade 2 :

Naked SHORT on 8500 JAN PE, 1 lot @ 104, SL = 115
CMP = 95
Unrealised P/L = 9 Points

I created this position for any sudden price surge in the direction of ongoing trend.
 

LoneWolf

Well-Known Member
#7
Trade 2 :

Naked SHORT on 8500 JAN PE, 1 lot @ 104, SL = 115
CMP = 95
Unrealised P/L = 9 Points

I created this position for any sudden price surge in the direction of ongoing trend.
Trailing the SL for SHORT 8500 PE to 103, Now this naked SHORT is at break even.
 

LoneWolf

Well-Known Member
#8
Trailing the SL for SHORT 8500 PE to 103, Now this naked SHORT is at break even.
Strong supply coming over 8440. Out from the naked SHORT on 8500 PE which was taken yesterday in the bullish view. Range view from 8450 - 8300 still holds, Holding the pair of 8450 CE and 8300 PE with a combined premium of 67.
 

LoneWolf

Well-Known Member
#9
Date : 17 Jan 2017



NFITY spot continues to be range bound from 8450 to 8360. Today as price faced strong supply above 8440 and fell. So i closed the naked short on JAN 8500 PE at breakeven as the bullish view got negated and price might consolidate further before picking up any direction.

But the range view for 8450 to 8300 holds good, so keeping open the 8450 CE and 8300 PE pair.

Update on Open Trades

Trade 1

Date : 13 Jan 2017
Sold 1 lot, 8450 JAN CE @ 48.
Sold 1 lot, 8300 JAN PE @ 29

Net Premium received = 77 pts
Max stop loss = 33 points i.e. net premuim > 107 points
Target = 46 points i.e. net premium < 31 points.

Date : 17 Jan 2017
CMP of 8450 JAN CE = 35.85
CMP of 8300 JAN PE = 27.60
Net Premium = 63.45

Unrealised P/L = +13.55 points

Trade 2 :

Naked SHORT on 8500 JAN PE, 1 lot @ 104, SL = 115
Closed at 104, at breakeven.
 

LoneWolf

Well-Known Member
#10
Strong bullish sentiment takes price high above 8440 again. Now price is cooling off a bit. Need to see how price is reacting in this zone of 8440 - 8460 before taking any decision on the positional pair of 8450 CE - 8300 PE

Now the pair trades at a premium of 74-75 points
 

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