I came across this simple method to play nifty. There is a formula that defines any good system. its called KISS formula : Keep It Simple and Stupid. It has to be simple, well defined and stupid enough to not require any brain work at all.
I have been searching for such a method and came across this one.
I am reproducing the rules for the system.
Entry/Exit:
(1) Always be in a trade.
(2) Entry into long means I have also exited the short.
(3) The faster line (red ) goes above the green - > Close shorts & immediately go long.
(4) The faster line (red ) goes below the green - > Close longs & immediately go short.
Stop Loss:
An initial acceptable range for the stop depending on your comfort level can be put. As the Nifty moves in your direction , immediately put the the stop at the purchase price + brokerage as soon as possible.
Hedge your Positions Daily :
The Nifty encounters lots of gaps up and down and this could go against our positions due to many market factors / changes which take place overnight. We therefore need to hedge our positions, EVERY DAY before close.
Keep in mind hedge positions are not to make profits. It has to be used as a hedge strictly, however if the hedge position is giving a hefty profit, discretion to close the open position lies with you.
The technique I follow :- If the system is long ( & you are long 500 futures) then 10 - 15 minutes before close buy same quantity (500 in this case) just out of the money puts.
Carry over these puts. Watch the market for the first 10 - 15 minutes next day.
If the market remains long and keeps getting strong, find a good rate to close your puts. As the put was out of the money, the loss from the puts would be less, than the profit from the long.
If the market gaps down or continues going down, book profits on the puts or keep a trailing stop loss which will offset the losses incurred from the nifty long position.
Vice Versa for short positions with calls.
Remember buy "just out of the money" options, which show decent volumes. For eg ; If Nifty Cash closed @ 4380 and you are long, then you should be buying 4300 or 4350 puts.
This will always keep you tension free, what ever be the global or overnight factors.
Gaps are more dangerous than brokerage, so you need to secure yourself from them.
Position sizing :
Start off with 1 lot and gradually add another lot after every 15 days of success.
Read the system carefully and try to understand it. Make sure you paper trade for some time before you take the plunge.
You can use the charts available in ya.hoo. for this....
I have been searching for such a method and came across this one.
I am reproducing the rules for the system.
Entry/Exit:
(1) Always be in a trade.
(2) Entry into long means I have also exited the short.
(3) The faster line (red ) goes above the green - > Close shorts & immediately go long.
(4) The faster line (red ) goes below the green - > Close longs & immediately go short.
Stop Loss:
An initial acceptable range for the stop depending on your comfort level can be put. As the Nifty moves in your direction , immediately put the the stop at the purchase price + brokerage as soon as possible.
Hedge your Positions Daily :
The Nifty encounters lots of gaps up and down and this could go against our positions due to many market factors / changes which take place overnight. We therefore need to hedge our positions, EVERY DAY before close.
Keep in mind hedge positions are not to make profits. It has to be used as a hedge strictly, however if the hedge position is giving a hefty profit, discretion to close the open position lies with you.
The technique I follow :- If the system is long ( & you are long 500 futures) then 10 - 15 minutes before close buy same quantity (500 in this case) just out of the money puts.
Carry over these puts. Watch the market for the first 10 - 15 minutes next day.
If the market remains long and keeps getting strong, find a good rate to close your puts. As the put was out of the money, the loss from the puts would be less, than the profit from the long.
If the market gaps down or continues going down, book profits on the puts or keep a trailing stop loss which will offset the losses incurred from the nifty long position.
Vice Versa for short positions with calls.
Remember buy "just out of the money" options, which show decent volumes. For eg ; If Nifty Cash closed @ 4380 and you are long, then you should be buying 4300 or 4350 puts.
This will always keep you tension free, what ever be the global or overnight factors.
Gaps are more dangerous than brokerage, so you need to secure yourself from them.
Position sizing :
Start off with 1 lot and gradually add another lot after every 15 days of success.
Read the system carefully and try to understand it. Make sure you paper trade for some time before you take the plunge.
You can use the charts available in ya.hoo. for this....
