Understnding Price Action - Scalping

Can one point scalping be done successfully


  • Total voters
    45

comm4300

Well-Known Member
#11
Why I feel this may work :

Even for a Delta of .5
Since you understand delta, why not write OTM/Far-OTM to gain that 1-2 points. writing OTMs would require almost the same margin amount equaling your ITM purchase (mostly).

I feel you'll increase your probability of winners.

Besides, brokers like Zerodha provide leverage for writing options intraday.

cheers.
 

onlinegtrash

Well-Known Member
#12
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%.
...
I can already see the disaster waiting to happen, sorry to pop up the hope balloon.
Imagine a day like today, if you had 10 lacs worth of put within 30 mins it would worth only 2-3 lacs, market may skip your stoploss orders occasionally botching your neat plan on paper. Pure option buyers need to endure small losses for 60-90% of the time and I don't see any plan for this losses in your plan.

Options trading is one of the biggest optical illusion in financial world, don't jump in with huge money because you 'feel'. Try the waters with small capital, prove your concept to yourself for atleast 6 months and increase the exposure.
 
#13
Since you understand delta, why not write OTM/Far-OTM to gain that 1-2 points. writing OTMs would require almost the same margin amount equaling your ITM purchase (mostly).

I feel you'll increase your probability of winners.

Besides, brokers like Zerodha provide leverage for writing options intraday.

cheers.
think about losses, before calculating the profits...
 
#14
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 ?
Looking at your questions , i m assuming you are still in beginning stages.

I would suggest you keep that nice capital in debt/hybrid MIP MF to earn short team income and from that income , you put it into trading.

you have a lot to learn.

Don't even think of trading options in the beginning.

First cash, then futures and later options.

the income you get from MF should be enough to practice trading on cash markets without losing a dime of your initial capital.

Remember , if you don't do this, you will surely lose all that capital in few months.Its not just technical and charts, you need to discipline yourself a LOT.



Good luck !!
 

travi

Well-Known Member
#15
Based on your questions, you appear to have very little experience in Theory as well. That's very risky.
To answer for the sake of answering.
Originally Posted by aces27 View Post
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.
Look at high volume strike prices and liquidity, like BN eg. 200/300 pts +/- of strike etc
Deep ITM has very less volume then ATM.
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.
SL is generally based on R:2R Risk:Reward, anything lesser and it'll amount to loss, so if your scalping 20pts, u'll have 10 pt SL.
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.
AFAIK, scalping isn't affected by time. I've seen HFT from 9:15am to 3:20pm. Last 10min has a closing price problem and therefore avoided.
Indicators won't work, you'll be moving in secs, not minutes.
That depends on your algorithms for automation and manual scalping is trend/pure price action.
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 ?
Forget 20-30L. Even in BN, you'll have 0.20-0.30 slippage for 5 Lots sometimes. Limits orders may not even work with great efficiency. Market orders will give you buy/sell price after trade is complete.
Then you calcs kick in.