Understnding Price Action - Scalping

Can one point scalping be done successfully


  • Total voters
    44
#1
Hello ,

Would like to have suggestions , how to best execute my strategy for scalping one point out of Nifty ITM options. Will be placing bracket orders on Interactive Brokers. Want to do this once a day.

1.What would be the perfect instrument (strike price / month) for max leverage and activity.
should i just see the top traded option and choose. is it better to select next month option towards the last few days before expiry. considering that somewhat higher premium(rs.200 odd) may have n easier movement of rs.1 than an option premium at rs.40 - 50 etc. how much In the Money is suitable.

2.Plese suggest how much lower should the stop loss price be.
from money management point of view / allowing space in the price from minor fluctuations. eg buying at 200 intending to sell at 201 - what should be the stop loss. 198 is too close and can get triggered easily , 190 is too low - can cause much loss.

3.how to understand the right time of day / price point / price action / buy sell gap / observe which graph to carry on the trade. Technical Indictors will not have time to develop s the objective is to get in and out within moments. max time limit is 5 - 10 minutes.

4. total capital amount = rs.20 - 30 lacs - is it possible to execute orders successfully and quickly to scalp one point - is it too big an amount to execute ?
 

jagankris

Well-Known Member
#3
The problem with this type of trading is one bad trade can wipe out 10 - 15 trades profit.......
More than that Ravi.

This requires atleast 5:1 risk reward.
And with a hit rate of even 90 percent one would end up with 40% gain.

Which is more practically and feasibily achievable with other strategies.

Ideally deciding the stop could be the toughest challenge.
If one shot price moving favor then no issues else.

Why you are particular about capturing 1 point with one bulk trade ?

One day or the another this will get noticed by the market makers and wipe out swiftly.

Go with traditional way of scalping.Increase the number of trades and also the profit target.With good MM rules.
 

saakk

Well-Known Member
#5
Hello ,

Would like to have suggestions , how to best execute my strategy for scalping one point out of Nifty ITM options. Will be placing bracket orders on Interactive Brokers. Want to do this once a day.

1.What would be the perfect instrument (strike price / month) for max leverage and activity.
should i just see the top traded option and choose. is it better to select next month option towards the last few days before expiry. considering that somewhat higher premium(rs.200 odd) may have n easier movement of rs.1 than an option premium at rs.40 - 50 etc. how much In the Money is suitable.

2.Plese suggest how much lower should the stop loss price be.
from money management point of view / allowing space in the price from minor fluctuations. eg buying at 200 intending to sell at 201 - what should be the stop loss. 198 is too close and can get triggered easily , 190 is too low - can cause much loss.

3.how to understand the right time of day / price point / price action / buy sell gap / observe which graph to carry on the trade. Technical Indictors will not have time to develop s the objective is to get in and out within moments. max time limit is 5 - 10 minutes.

4. total capital amount = rs.20 - 30 lacs - is it possible to execute orders successfully and quickly to scalp one point - is it too big an amount to execute ?
hi,
1. I don't think scalping for one point in OPTION is a good idea they are way too volatile for scalping. Go for index and currency futures, besides to trade just for one point you got go on 1 min or lesser time frame and for that you have to be very very good price action reader because price will move so fast that you wont get much time to analyze it.

2. In price action SL is derived by the price chart itself so again you should know what your are looking for unless all the trades will be random. You got to learn the setups and understand what prices are doing. Ever bar will have a clue.

3. I don't think there is any right or wrong time, if you can understand the price action you can trade any time, it just prices will move very fast at 1st and last hour of the day or at any news item, best is to avoid any position at the time of news. Once you learn to read the price action you wont need any indicators, all the information you ever require for trading is available on chart.

4. Amount you mention is way too much if you are just starting out, start with one lot (my advice) and keep 4 times the money of that margin.

These are just my views,

I scalp USDINR 5 min chart, vol. is very good, slippage is hardly there, leverage it offers very good.


Trade well
 

godfather

Well-Known Member
#6
seems interesting but in our market where we will get access to Level II quotes to track bids and asks throughout the trading session which is indeed to do scalping....we only have 5 in 5 out...:annoyed::annoyed:
details
 

jagankris

Well-Known Member
#9
jagan can you explain this............
Have a 5M trading system.
Enter the trades for a fixed points,
Say five bar breakouts.

or have a main trend say 15 minutes chart.
Pick the trades only in the direction of your main trend in the smaller time frame one is comfortable with.

13 MA or 21 MA - pullback.
 
#10
Why I feel this may work :

Let me explain the leverage position as I understand it.

ITM Option Cost around Rs.130. For 10 Lacs I can buy 7500 Units.
Even for a Delta of .5 , ie NIFTY movement of 2 points - ITM Option movement of 1 point - I Get Rs.7500 - brokerage etc profit. Which is Rs.5000+. So that is .5% of my capital in one trade a day. 200 days of trading in a year implies 100%.

Now , for a change as small as 2/6000 or (.03%) , i can get Rs.5000 a day (on 10 lac capital). Forex / Futures etc do provide good leverage but also the change in the underlying has to be greater.

Since the change is so small - I wonder if using the 'bracket order' facility - we can hope that the buy and sell get executed almost simultaneously. Even if we are very cautious and execute just one trade in 2 - 3 days. We get 100 - 150 successful executions - we are more than 60% profit in a year. More than satisfactory.

Two concerns ,
I intend to trade with a larger capital - 20 - 30 lacs - hence wonder whether this would work ok. The problem is the large size of the capital makes a difference - hence even trying with one-two lots will not give a fair idea.

Second , Finding / Feeling the right moment - Technical Indicators will not help - hence understanding the price action and finding that 1 minute every days - where we feel the market is going to hover around the price at least for that moment.
 

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