Riding The Wave

Hi. I have been involved in the financial markets either directly or indirectly from Oct 2008 onwards. I have dabbled a bit with Intraday Nifty Futures during those initial months and then Intraday Silver Futures using VSA till end of 2012. Due to strenuous working hours that are involved in MCX Silver futures trading i decided to stop trading it as i was unable to balance things in life. Working from morning to almost midnight is never good when there are a whole lot of things which i was missing out in life.

Then in 2013 i contacted a company called Precision Technicals for an EOD stock picking software but i eventually ended up purchasing the Intraday Nifty trading software. A lot of things didn't go as expected and i ended up losing a decent amount of money in most trades during that year. Then by stroke of luck or probably spending too much time in front of charts i saw a very weird thing happen. Each time the software showed a profit during intraday tardes the longer term charts behaved in a particular way. So my curiosity got the better of me and i researched a lot and figured a few things out with a decent level of confidence in them. Also the asset in question was BankNifty. I was never really able to adjust in Nifty since the movement was very less and as a former silver trader i just couldn't get used to it so i eventually picked BankNifty which suits my style and offers very good price movement. Now the idea was to trade BankNifty Options EOD.

Almost during end of last year i made this one trade which helped me offset my losses for the entire year. This felt really good since this was the first time my efforts really paid off in BankNifty. Now it was very certain that i was going to trade this way. The one thing i forgot to consider was the frequency of the setup. After sitting on idle money for 3-4 months i realized this isn't going to work out if i have to wait that long for the next setup and during that waiting time i need to have some kind of other setups to keep me in the money. So for me to make money in BankNifty Options i had to figure out a secondary setup with a slight edge. Now the funny thing is while i was working on a secondary setup i managed to missed out on the primary one a couple of times. It's ironical how things turn out at times . But i did figure out those edges with maddening efforts.

So now here i am fully equipped in my mind and ready to trade. The asset in question is BankNifty where most of the trades are going to be in futures until an Options setup shows up. The average risk per trade is usually between 100-200 points although this is hard to define as a strict rule since volatility keeps changing. In other words i am quite comfortable risking 100-200 points per trade . The initial multiplier is going to be 100. And once i feel a bit more comfortable or profitable i will double it each time. The frequency of the setups is not too bad either. I am going to take these trades 5 mins before the market closes to capitalize on favorable gaps and also help me define Stop Loss in advance. The positions will be exited when i think price has run its course or if my initial stop triggers and in certain places if my trailing stops signals an exit. The entry price , SL and exit will be stated. Also the mentioned price levels are going to be of BankNifty Spot market and the equivalent trade will be made in either Futures or Options. And the stops and profitable exits will also be adjusted the same way. Each time there is something significant happening i will make a comment or two even if i am or not in a trade.

This positional strategy has taken a lot of tears , sweat and sacrifice of sleep. Any comments feedback are more than appreciated since i might not be able to see a lot of obvious things since i am too close to the situation.

God Bless

Hi Placebo

Nice to see you posting since a long time ago. I just went through your above post. Not much to say so far on your strategy if I understood it the way you meant to tell it. Kindly correct me if I missed the point, but you go for modified synthetic option strategy trading, aren't you?

Long synthetic call:http://www.theoptionsguide.com/synthetic-long-call.aspx
Long synthetic put: http://www.optionseducation.org/strategies_advanced_concepts/strategies/synthetic_long_put.html

and vice versa for both strategies.

Have a good start with this thread and good trading / Dan

Hi Dan

Are you DanPickUp or another Dan ?

The idea behind the options strategy is based on a technical signal indicated by chart pattern and buy options in bulk at that time. Why options at this point ? Volatility is low and expecting drastic increase in volatility in the next few days. The risk in terms of capital is also low. The profit potential is very high in my opinion. All these reasons make it a very desirable reason to trade in options during that phase.

Its a simple strategy without any advance concepts or calculations.

You got a PM about your question.

About your firs post:

As you told: Trade will be made in either Futures or Options, I thought you may have even a synthetic option strategy in your deeper mind. But your above comment just cleared that. Going long with options in a low volatile market makes sense. Good luck and I wish that your TA entry signal does the job in a proper manner. :thumb:

Take care / Dan

Price broke through the downward stride today. The last time it did that was less than a week back and then price bounced back sharply. If this behavior holds then a fresh new position will be opened tomorrow. The next day's action is the key whether any entry should be taken. As of now no open positions are held and the immediate trend is still up.

Price seems to have hit some resistance. Trend is still up but supply is increasing at higher levels. Still no open positions. I'd expect a few days of falling prices for supply to dry up and demand to pick up without price breaking any significant levels which would indicate a change in immediate trend. Waiting for a setup to materialize on lower levels or a continuation is the form of HH bars . Any sideways movement here would be extremely confusing and frustrating .

On Friday i opened a long position in BankNifty Futures at 18441 with a stop loss of 150 points . The market went down 30 points after opening. Position is still open.

Squared off my long positions today at a net profit of 70 pips. Wanted to hold the position longer but there are certain factors which make it a compelling reason to let it go. I am still bullish on BankNifty and looking for any possible setup to open a long position.

How many lots are you hitting in each trade?
Do you have multiple entire and exits or are you sticking to single order entry and exit to minimize transaction costs?

I'm entering 4 lots initially i.e Quantity 100. Also i am looking to add positions as price moves in favor and there is some indication on charts to add more lots. This time it did not so no adds were made. All my exits are made at the same point irrespective of the quantity that i carry.