My System - My trades.

MEAG

Active Member
Just like to share a trade with you. Axis bank inspit of all the bad press it has received and the bad results, seems to have bottomed out. The daily 36EMA is a 462.75. It closed above this level at 464.40. Technically that is a very strong signal and one can buy an out of the money call to start with. The Stop would be a close below the 36EMA in daily on any day at close of the day. This could really give you a very good positional trade and the stop is just Rs.2 away. I know fundamentally this share is not showing a good reputation but we are just speaking technical here. I feel the share bouncing up after such bad numbers, may well signify that this all has been priced in. I caught PNB in a similar fashion in March last year at around 76 after such poor results were declared (losses were declared) and rode it to Rs.130 odd levels. But pls do your due diligence before making any investment.
Varun ji,

First of all, thanks a lot for sharing and teaching your trading strategies.

I have queries regarding the positional trade in Axis bank using 36 EMA. Can you please tell:
1. How the stoploss of Rs 2 has been arrived at?
2. Considering long entry at 464.50 and 462.50 as the stop loss, what if the price falls below the stop loss level anytime during the next day? Should one exit at that point in time only or wait for the daily candle to close? If latter is the case, wouldn't it keep the stop loss level open thereby loosing the significance of the initial SL of Rs 2 ?

Regards
meag
 
Meag ji you are right in your understanding. You can keep an intraday SL of that level also but be back in position if it closes above 36EMA before end of day. Actually it is a grey area as by doing this one may encounter whips. The only way i tackle this problem is to hedge my position by selling an out of the money call (like i sold 510CE today) but i keep my SL at closing basis only. I know my risk at entering the trade, it will surely not become zero (the option price) if i were to wait till the close. Yes risk would be unmanageable if one was to buy a future, but option should not fall by that much to cause a concern.
 

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