iCharts Discussions

[ANS_KOL]

Dear my friends in I charts forum,
Wish you all a very happy diwali. May the festival of light make our future trading days bright and fruitful.
Here is a strategy which I found works well in an intraday scenario. Firstly this is an indicator which signifies the overbought or oversold level for scrip (I use it only for nifty or minifty future). So all we have to do is to buy at the oversold level and to sell at an overbought level if that level arrives at all.
I have very less time for intraday, so after starting trade with avinash intraday strategy I have to stop because of less time I can spend in front of the terminal.nowadays I am trading with a trend following method described by Mr. hansraj who is no more in this forum. But as most of you know the trend following methods at times are really painful when the market is choppy. That is where this strategy comes handy for me.
I don t have to spend time, I just place an order to my dealer at the overbought and oversold level with a stop loss of 50 points and my dealer covers it at a profitable price, believe me, I can not give you a proper logic for this but this is the most effective way of hedging your position in future market.
Only thing you have to do is to go to nseindia.com website, go to the previous version, and get quote for the nifty future, there in lower side of the page you will find daily volatility of the nifty, say it is 1.25% and nf closing is at 4950, then you add and subtract61.90 from the closing so, you get the figure of 5012 and 4888. Place a buy order at 4888 and place a sell order at 5012 at the beginning of the day .
One of the order will be triggered and as per my observation market , in 95% of the cases will reverse from that point ( it may go towards the trend afterwards but immediately after hitting your order it will retrace towards your favorable direction).
Remember , you are taking a trade opposite to the trend so, cut your position immediately as you find a profit which according to me is 25-30 points within 30 mins of time. And if you know the art of trailing stop loss, every possibility that you may earn more.
As a matter of fact you can not backtest it unless you are equipped with latest technology, or real time data history.
So, I suggest that you keep a 50 points stoploss , chances are remote that it will hit, but remember to book profit in time. ,
Anyways , for the next few days I will try to post the calls after trading sessions for the next day.
Hope you will find this useful. Remember to update yourself as the intraday volatility value keeps changing everyday.
HAPPY TRADING.
HAPPY DIWALI.
ANS.

[rk_a2003]

Thanks ANS!

On first look it self I felt that this strtegy is going to work.Reason is.... so many times I my self traded Intraday nifty for a few reversal points at which I felt it was overbought /Oversold . I clubbed this with Resistnce/Support levels also.( I think so many other traders also might be doing this)

But your strategy seems to be more efficient, automated with high sucess possibilities and with a sound logical base. It definetly takes out a lot of load from us.

At least for few days try to post the levels for each day.

And if any one is having the required software to back test it please do it and post the result.

Rahul! Are you there? .We miss you.

RK

[doctorshah]

dear ans
Nice strategy. Logically sounds good for the persons like us who cannot be in front of screen for long periods

[pkholla]

ans_kol: I am myself doing intra-day nifty options so will try to modify your NF strategy to call or put
looks simple and brilliant
will keep u guys posted how it works for me in call/put!
prakash holla

[rk_a2003]

Prkash!
Is there any particular reason for your trading Intraday Nifty Options?other than the reason that it requires less amout to buy them.

[pkholla]

rka2003: may i humbly ask you if i have offended you by preferring options? i started with options and am continuing with options. one simple reason is if you buy call or put your total investment is restricted to your purchase price and therefore loss if any is always restricted to that. in selling options your total loss may be POTENTIALLY unlimited if the price gets away from u. I understand in futures also your POTENTIAL (not actual) loss may be unlimited! please tell me if i am wrong or there is something i dont know

ans_kol: pl tell me if i am right:
daily vol of nf2m y'day was 1.57% close 5247 (range 5120-5247) so 5164.6-5329.4 range today for yr calc.
if we see 5100 2m call its delta was 0.583 (and range 140-210) so today range likely to be 166-280
5200 2m put delta 0.5 (range 110-170) so today range likely 65- 147
so acc to your theory we should buy put at 65 or sell it at 147 and for call buy at 166 or sell at 280

prakash holla

[rk_a2003]

You are absolutely right.Options give us maximum return on the investement, provided we are on right side.

Thanks for the reply.

RK

[ridinghood]

HI PK
NIFTY F last cose is 5229 as per icicidirect.
regs
ridinghood

[ridinghood]

HIPK
Pl let us know how u calculated nifty options range for tomorrow nd delta also.

regs
ridinghood

[vinay28]

Dear pkholla

I too trade in options. But I don't think we can readily get implied volatility (IV) values for options like for nifty as indicated by ans_kol. I calculate IV and then projected option value for intended target from calculators available on the net.

Are delta values easily available? If so, trading could be easier.

[Viktor]

Dear ANS_KOL.. where do we find daily volatility.. I could not find it on the nse website.. how did you covert the value of 1.25% volatility to 61.90... Advance thanks for explaining the strategy..

[Viktor]

Dear ANS_KOL.. as an example.. on 25th oct..
25-Oct-11,NIFTY,5191.6
Daily volatility was 0.0154 - 1.54%

I divide 154 by 2 and arrive at 77. So I add and substract 77 from 5191 to arrive at overbought and oversold values.

I am wondering whether this is the correct way.

[pkholla]

Dear all,

I roughly calculated delta for options for Oct 27 as follows:

From trading data on Oct 26:

NF Nov range = 5120 to 5247 roughly (as per I Charts ) =120 diff

5200P Nov range = 110 to 170 roughly = diff 60 so I took 0.5 delta

5100C Nov range = 140 to 210 roughly = diff 70 so i took 0.58 delta

From ans's post and 5247 close, 1.57% volatility we get:
Range for NF for 27/10 as 5164.6 BUY to 5329.4 SELL

We can extrapolate from 26/10 delta and options prices as:

52 Put 65 BUY and 147 SELL

51 Call 166 BUY and 280 SELL

My extrapolation is done as per example set by Bill Johnson in Options Trading 101 book. When we dont have official data from NSE (as per my knowledge) I think we are allowed to make BEST GUESS
Your feedback welcome and eagerly expected
Prakash Holla

[ridinghood]

hi victor
nf close price* volatility= 4950*1.25/100=61.875
regs
ridinghood

[pkholla]

Ridinghood: I looked at IChart J Premium chart for NF 2m ie NF November and roughly observed the 26/10 close as 5247. If u say NF 2m close was 5229 then I stand corrected and we can modify tomorrow's ANS tip accordingly
ALL: Please post your feedback and corrections so we can fine tune
RKA2003: May be futures are better for "just after previous month close" when options are having low delta. And maybe we can shift to Options from 12th or 15th or so when 1 month option deltas improve! Your reply on this awaited
Prakash Holla