iCharts Discussions

[SwingTrader]

[drsuhask]

Respected ST Sir,
This is regarding the png images posted by Shekharinvest & his query about pivots which should be used as pivot A or B. Accordingly last pivot to initiate bearish trade was on 13th Dec 2013. On this day we would have initiated diagonal - Long 6100 PUT at around Rs.121 & Short 5900 PUT at around Rs.44 . This position will be in loss now ( 6100 PUT @ Rs.52 & 5900 PUT @ Rs.11) if we consider Pivot A to reverse the trade. But if we consider Pivot B for at least squaring of the position, we would have squared off 6100 PUT @ Rs.78 & 5900 PUT @ 20 on 20th Dec. 2013 with loss of Rs.19 ( around loss of 25%).
Please let us have your opinion on this.

[SwingTrader]

krish_pm,

Here is the P/L table for the Jan 2008 trade. The signal triggered on 16th Jan 2008.

As per the strikes selection guidelines the diagonal combo selected would have been LONG FEB08 6000 PUT + SHORT JAN08 5800 PUT. Here is the P/L table for this diagonal:



The trade was profitable but the volatility explosion did not help the trade as both options were near the money and the strong down move would have increased the implied volatility of near month options big time due to the crash type scenario. An OTM diagonal would have benefited but the strike selection guidelines would not have allowed us to take the position. P/L table of OTM diagonal is posted below.

Do note that options exploded 300-500% within days whereas our diagonal hit a max profit of only 14%. It is important to realize that diagonal will give profits only in this range : between 10-40%. So traders looking for huge returns should not trade diagonals the way I suggest. The method suggested here are for those looking to keep grabbing consistent 10-15% returns frequently.

OTM Diagonal (LONG FEB08 5900 PUT + SHORT JAN08 5700 PUT)

This OTM diagonal is just for illustration. This diagonal's hedge % was below 30% and would not have been selected.



Even though the diagonal closed in profits and at one point was up 57%, at one point the loss in the trade was -36% and I would have exited the trade on this day itself.

The hedge % is very important for diagonal and can't be ignored. Following the hedge % guideline keeps the risk low.

[SwingTrader]

[vinay28]

a query ST on your chart and trade. Is this the best combination (tf and EMAs) you have found? The reason I am asking is that the short triggered as per you looks like a classic case of "stop hunting". Is that also the reason why some positional traders use a 2 hr chart?

[SwingTrader]

[amolghodekar]

Many Thanks ST.

Just one more doubt. How you decide the month for the option combination. I mean say for e.g. if the signal is triggered in first two weeks of last expiry, then select next month for long and current month for short. Could you please throw some light on this.
Because in latest trade, short was triggered on 16-Jan-2013, and after this some 6-7 trading days were remaining for expiry. Then which month's combination we should have selected?

..Amol

[amitagg]

[vinay28]

thanks ST

[traderindian]

[bpsingh]

ST,

This is in respect to your reply of 27 Dec 2013 in response to post of vishyvaranasi of same date. You stated that you were waiting for pivot at "A" (NS 6326) to cross for long entry. Today NS in first hourly bar crossed it but on closing basis close is lower than 6326. In the process a new pivot at 6343, lets call it C) has been formed.
Now, from today onwards, for a long entry would you consider A (NS 6326) or C (NS 6343) as a pivot to cross on closing basis. If yes, if further higher pivot gets formed in similar circumstaces later, will your entry point for long continue to move higher. Similarly, if new pivot is lower (lower high), will the entry pivot be newest/latest one?

[SwingTrader]

[SwingTrader]

[krish_pm]

ST sir,

Thank you for the P/L table Jan 2008.

For May 2009, The LONG was triggered in 04-May-2009.


I calculated the below diagonals. The Diagonal LONG JUN09 3700 CALL + SHORT MAY09 3900 CALL meets 32.89 % hedge


but it gave maximum loss on 18-May-2009 -83.77% and Max Profit on 21-May-2009 26.34%



LONG JUN09 3700 CALL + SHORT MAY09 3900 CALL hedge was 32.89 % Max Profit 26.34 % Max Loss -83.77 %

LONG JUN09 3600 CALL + SHORT MAY09 3800 CALL hedge was 39.42 % Max Profit 21.37 % Max Loss -21.78 %

LONG JUN09 3500 CALL + SHORT MAY09 3700 CALL hedge was 46.34 % Max Profit 13.56 % Max Loss -17.98 %

LONG JUN09 3400 CALL + SHORT MAY09 3600 CALL hedge was 51.93 % Max Profit 20.24 % Max Loss -16.05 %

LONG JUN09 3300 CALL + SHORT MAY09 3500 CALL hedge was 57.94 % Max Profit 17.55 % Max Loss -4.54 %


Sir , Please give your suggestion. Is all the diagonals are rejected one?


Thank you

Krish

[SwingTrader]