I'd been hunting for an intraday system that is consistently profitable for so many years and have tried my luck with dozens of them. I've learnt a lot from them and finally have designed one of my own over the last one year. It's made me money in both bullish and bearish markets. Hell, It actually even survived the test of the random whipsawing markets in Feb 2018 when the budget was announced. I'm posting it here for your benefit should you choose to use it.
The system is as follows:
Step 1: Determine if today’s market trend is bearish or bullish using the daily chart of the Nifty.
Perfect Bullish Condition:
The 14 period RSI of the Daily chart of the Nifty is above 50
Overlay a 5 period EMA on this RSI. Make sure that this EMA too is above 50.
Make sure that the RSI is above the 5 period EMA of the RSI
Perfect Bearish Condition:
The RSI of the Daily chart of the Nifty is below 50
Overlay a 5 period EMA on this RSI. Make sure that this EMA too is below 50.
Make sure that the RSI is below the 5 period EMA of the RSI
Step 2: Pick the stocks you will be trading for the day before market opens
If the daily NIFTY chart is in “Perfect Bullish Condition”, run a market scan for individual stock charts that meet all parameters of the “Perfect Bullish Condition” in the Daily timeframe as well. DO NOT SEARCH FOR STOCKS THAT ARE IN “PERFECT BEARISH CONDITION”.
If the daily NIFTY chart is in “Perfect Bearish Condition”, scan for individual stock charts that meet all parameters of the “Perfect Bearish Condition” in the Daily timeframe as well. DO NOT SEARCH FOR STOCKS THAT ARE IN “PERFECT BULLISH CONDITION”.
Take all your scanner results and create a watchlist for the day. Do not trade any stocks outside this watchlist.
Step 3: Trade Timing and Entry
When you are trading a stock that is in “Perfect Bullish Condition”, switch from the daily chart to a 10 minute chart and overlay a 21 period EMA to it. Then add the RSI indicator under this chart and overlay a 5 period EMA on this RSI. Take a long position when the price crosses over the 21 period EMA and the 5 period EMA of the RSI is greater than 50. Unless both these things happen, do not take a long position.
When you are trading a stock that is in “Perfect Bearish Condition”, switch from the daily chart to a 10 minute chart and overlay a 21 period EMA to it. Then add the RSI indicator under this chart and overlay a 5 period EMA on this RSI. Take a short position when the price crosses below the 21 period EMA and the 5 period EMA of the RSI is greater than 50. Unless both these things happen, do not take a long position.
Step 4: Target and stop loss setting:
Stop loss for long positions should be placed under the low of the previous swing on the 10 minute chart. Target can simply be 1% (OR) target can be set using Fibonacci levels (OR) profits can simply be booked towards the end of the trading session at 3:15 PM. Personally, I prefer setting a 1% target and squaring off the trade once this is achieved.
Stop loss for short positions should be placed above the high of the previous swing on the 10 minute chart. Target can simply be 1% (OR) target can be set using Fibonacci levels (OR) profits can simply be booked towards the end of the trading session at 3:15 PM. Personally, I prefer setting a 1% target and squaring off the trade once this is achieved.
Things to keep in mind when using this system:
Though this system rarely ever fails me, there are no guarantees in the stock market and you may suffer losses when you trade. One must be mentally prepared for this.
Being a successful day trader takes a great deal of discipline. Follow the rules of the system very precisely without any deviations if you hope to make any profits.
Do not trade unless and until all conditions mentioned above are met. There may be days when things don’t align and you will have to sit on the side lines and wait for the perfect conditions but if you are serious about making a living from day trading, understand that capital preservation is as equally important as making profits.
I have been using this system only on the NIFTY 50 stocks, I have no idea how well this will work on stocks outside of this watchlist.
Wish all of you guys the best of luck and good fortune!
Comment if you like the system and share it with as many people as you can once you are convinced that it is working for you.
