MonkeyBusiness,
Difficult to post chart for this, as prices are fluid.... So trying to explain the concept. We all know that sideways market means bars forming inside bars. More so, when the prices are in a range between the high and low of the day, especially if it is within the first hour bars. Even if after a break out in either direction, prices come back to within this range of first hour, we can expect prices to meander looking for direction, setting an opportunity for us to trade in the sideways environment meanwhile.
So this is the scenario that we can look for a scalp. If the price is up sideways (as described above) we look to buy puts as they will be cheaper, and expect the next few bars to revert (sideways) down. Add to this, we look to stack up odds in our favor. Say NiftyPE last traded is 61.50, then we would look to buy lower then the last traded price. From experience, a lower price of 200-250 can get triggered. So we can place a limit buy order at 58.50 (Execution at this price will pocket us atleast Rs. 225) Then if we are in the trade, we place a sell order immediately for 3-5 points from 61.50 So we wait for our sell order to be executed at 64.50 netting another 225 points, and a minimal 450 rupees for the trade. What is important, is to have a good risk control, so SL-M should be placed immediately when in trade, so as to ensure that the risk is never more than 250-300 at the max. But in the worst case scenario, (which will be exceptions though) out SL-M will protect us.
Would like to add here, for trading (options), screen time and experience is very important as feel for the market will come only with observations. For example, trading in sideways market close to European market is to be avoided (unless we can gauge the global market sentiments and understand risk) So here's another trick. Google for 'FTSE Open' or 'European Market Open' about half hour before they open for trade. Reuters reports expected open basis spread-betting.
And we can use this information and it can in infact work in our favor as a trade than a scalp....
So what's important in trading is to create minute edges for yourself. These small edges add up to be able to trade both profitably and with confidence. Trust this helps.
Difficult to post chart for this, as prices are fluid.... So trying to explain the concept. We all know that sideways market means bars forming inside bars. More so, when the prices are in a range between the high and low of the day, especially if it is within the first hour bars. Even if after a break out in either direction, prices come back to within this range of first hour, we can expect prices to meander looking for direction, setting an opportunity for us to trade in the sideways environment meanwhile.
So this is the scenario that we can look for a scalp. If the price is up sideways (as described above) we look to buy puts as they will be cheaper, and expect the next few bars to revert (sideways) down. Add to this, we look to stack up odds in our favor. Say NiftyPE last traded is 61.50, then we would look to buy lower then the last traded price. From experience, a lower price of 200-250 can get triggered. So we can place a limit buy order at 58.50 (Execution at this price will pocket us atleast Rs. 225) Then if we are in the trade, we place a sell order immediately for 3-5 points from 61.50 So we wait for our sell order to be executed at 64.50 netting another 225 points, and a minimal 450 rupees for the trade. What is important, is to have a good risk control, so SL-M should be placed immediately when in trade, so as to ensure that the risk is never more than 250-300 at the max. But in the worst case scenario, (which will be exceptions though) out SL-M will protect us.
Would like to add here, for trading (options), screen time and experience is very important as feel for the market will come only with observations. For example, trading in sideways market close to European market is to be avoided (unless we can gauge the global market sentiments and understand risk) So here's another trick. Google for 'FTSE Open' or 'European Market Open' about half hour before they open for trade. Reuters reports expected open basis spread-betting.
And we can use this information and it can in infact work in our favor as a trade than a scalp.... So what's important in trading is to create minute edges for yourself. These small edges add up to be able to trade both profitably and with confidence. Trust this helps.
