TARGET :500 Nifty points per month...!

This is just a revision of this strategy and how to trade it effectively...!

http://www.traderji.com/options/28235-good-profit-hedged-nifty-positions-straddle.html

One look at the strategy and it appears very simple. Let me assure you, its not. No method that can make money in this market is ever simple. There are rules and guidelines and adhering to these rules is the only guarantee of a decent result.

This is how i trade the system. Its not necessary that you to follow it like a book. Just try to get the general essence of the trade flow and then you can work on how to personalize it...

I trade nifty intraday and sometimes i'm very agressive. Charts are my only guide. If the chart says buy, I will buy without trying to second guess the system. Options are used as a hedge only. Profit target is 400 points from nifty and 100 points from straddle.

Normal trade duration is 15-20 days.

Overview of the system:


Straddle is a delta neutral strategy where we short equal quantity of call and put of the same strike price. This is used as a hedge for nifty positions that we carry over for the next day and try to job it for a few points intraday every day. with passage of time, the straddle looses its time value and is added to our profits.

For example...

if we short 5200 call and 5200 put, for a total of 300 points, the profit graph looks like


upper break even point : 5200 + 300 = 5500
Lower break even point : 5200 - 300 = 4900

In effect, it means if the series closes between 4900 and 5500 then i stand to gain something depending on how far price is from my strike price.

Now, we add a 3rd leg to this equation. We try to stay long above the strike price (5200) and stay short below the strike price (5200).

If we stay long above 5200, then the graph looks like :


we can see that as long as price doesnt close below the strike price, our profit remains the same.

likewise,
staying short below the strike price with the short straddle gives a similar graph but on the down side...

now the Big question comes on how to select the strike price...


I'll be carrying the positions over night, so i prefer to select strike price that's at an extreme end of the trading band. To accomplish this, i plot the keltner band of the ema-34 of the close with atr settings at 30.

then i use a fast ema as a smoothened substitute of the close. when this line crosses the bottom band from below, that's my signal that price has finally left the bottom band and will slowly move towards the upper band or the upper band will slowly come down to meet price.

I use normal stochk to time my entry date for initiation of the trading strategy...

How you trade Nifty intraday is upto you...?

I trade using my own system and many of them have been outlined in various threads...
But when the intention is to ride the trend and carry over for the next day, then i prefer using 15 min TF and exit positions only when trendlines are broken either on price or on Oscilators. If market is rangebound, then i prefer just holding the positions without bothering to job the price down...

As a hedge against gaps up or down against NF, i prefer buying OTM calls / puts. But most of the time, the cost of the hedge has to be added to the day's intraday target.

4. reserved

5. reserved

6. reserved

7. reserved

8 reserved

Dear,
please....if u don't mind, give me real time example, which you already entered or going to enter. that could be helpful in understand the system. and explain, how to choose the strike price and expire date.....
tnx,