Option Trade Diary from 26th April 2021

[timepass]

Here.

Here, this option looks good for buying. The pivot points and the stochastics add to your conclusions.

This option looks good for selling.

@Smart_trade has often emphasized the importance of 21ema on all timeframes.

Of course, nothing may work well on an expiry day

 

[ujjwalsaha]

Maybe you can paper trade and post your trading logic here. The comments from the members should be helpful.

Member @Raj232 had posted an option strategy somewhere where he takes an option trade when the option closes above 20sma on BB. He had included an envelope of +/- 2% or something like that. He used it to buy the options on closing above 20sma, you can use it for selling when closes fully below 20sma, with some kind of filter.

Another way would be to look for 5/21ema crossover on a small timeframe, like 3/5 minutes.

Actually I am following EMA 5/10 crossover on 5 Minutes and 15 minutes time frame and I am getting reasonable result.
But My mistake is I am not following the indicator strictly.
I will correct my mistake and will do fresh beginning after 1 week

 

[timepass]

With the options, it is difficult to follow any indicator exactly, they are so volatile. Unless your postmortem shows up some serious screw up in following your basic analysis, don't beat yourself too much. Concentrate on reducing losses.

Whipsaws happen in the market, specially in options. There is no limit to how much you can blame yourself.

 

[ujjwalsaha]

With the options, it is difficult to follow any indicator exactly, they are so volatile. Unless your postmortem shows up some serious screw up in following your basic analysis, don't beat yourself too much. Concentrate on reducing losses.

Whipsaws happen in the market, specially in options. There is no limit to how much you can blame yourself.

Concentrate on reducing losses.

I will Listen to your wise words and I really appreciate your advice.

 

[Verde]

For people with small capital, getting the direction of the market right is the only way to gain money (even with options trading).

This is true only for shares/futures.
In options even after getting the direction right you can still lose money.

This is so true.
I think I have got a reasonable indicator but the problem is I am not following it...From Friday onwards I will strictly follow my system not my gut feeling and own judgement.

Stop trading and work on your method.
A 5/10 crossover on options is only going to destroy your capital by death from a 1000 cuts.

 

[timepass]

For people with small capital, getting the direction of the market right is the only way to gain money (even with options trading)

This is so true.
I think I have got a reasonable indicator but the problem is I am not following it...From Friday onwards I will strictly follow my system not my gut feeling and own judgement.

How do check the direction of the market ? I use ADX (14) on 10/15 minutes on BNF, and if a trend is visible there (2-3 times a week), then check the EMAs on the option on 3 minute timeframe. So basically, it means checking the direction of the index first, and if a trend exists then check the direction of the option.

It's complicated with the options. Also, I don't have the guts to hold it for long. Maybe 2-3 minutes for 10-30 points scalp.

 

[badarivt]

It is very generous of timepass ji sharing a working setup for other's benefit. I personally use a Rate of Change (ROC) based indicator - Cuppock curve. I do not use it in a traditional sense. I use two curves of different periods superimposed on each other and get signals based on cross over of one curve over another. I use only ZD charts.
I also suggest to read Decision point trading. See http://niftynirvana.blogspot.com/

 

[ujjwalsaha]

Just to Summarize.
Last week, I took 3 trades. 1 small win, 1 SL triggered 1 Loss Booked
Started with 85,000.
Loss is Rs. 4100
Current capital = Rs. 80900

 

[ujjwalsaha]

This is true only for shares/futures.
In options even after getting the direction right you can still lose money.


Stop trading and work on your method.
A 5/10 crossover on options is only going to destroy your capital by death from a 1000 cuts.

Absolutely true. I can feel this after loosing some money.
That is why I once again confirming my decision that
1) I will only trade in NIFTY 50 index all my life. I wish to gain knowledge on only one instrument.
2) For Intraday daytrading I will use only Future with Stop loss ( when I am away). For intraday, never ever use options.
3) For overnight or swing trading spanning few days, I will always use option (slight ITM when the fund permits till then option value will depend on 2% of the portfolio). No future for overnight as I donot know what will happen in the night. I will only BUY Options ( weekly, monthly or leaps depends on my conviction and fund and risk taking mood). But the maximum money I will use to buy options will never exceed 2% of my trading account.
I am planning to employ 3 lacs. Hence, I can only buy 1 lot of option of Premium around Rs. 80 and can only buy and sell 1 lot of future with maximum 40 point stop-loss. ( for intraday maximum bet is 1%). Hence initially I have to stick with OTM weekly options (highest risk but I am prepared to loose all 3 lacs for learning and I hope with 2% rule I will stick longer and hopefully I will learn in the mean time)

Finally it comes down only to my accuracy in getting the direction of the market right. As there is no substitute of this. No complex strategy will work if my direction is wrong. If my direction is right, my naked long call/put option and long/short future will give profit.

So from now on, I will focus on increasing my skills for getting the direction of the market right (preferably by chart reading with 2-3 indicators. Without any indicator is my ultimate aim)

If my direction is right I earn or I loose. thats it. no complexity, delta-hedging, iron-condor etc etc etc.
wish me luck.

 

[ujjwalsaha]

Today at daily scale the candle has long upper shadow and small lower body, that means the buyer tried their best but all the buyer were defeated by the sellers. Hence, there is most chance that tomorrow market will go down. Hence, Put can be bought. 15050 Put for tomorrows expiry. Rs 65 cost