iCharts Discussions

[amanaujla]

Hello fellow traders,

I have been working on this system for some time. It will be real help if experts share their views on perfecting this system.

The system is for trading Options(Call/Put) on intraday basis

Setup
2 minute OHLC chart of Call/Put pair in 2 seperate windows.
Setup VR and BOS for timeperiod of 7 on both Option charts.

Select the strike price between 100 and 150 for both Call and Put. Most of the times it will be ATM option but some times it will be Out of Money too.

Buy Signal: BOS goes below -1.4
Confirmation: BOS goes above 0 and VR goes down in same bar. The important point is that VR falls and BOS goes above zero.
Further Confirmation: Wait for SAR to reverse. To further reduce whipsaws we can set the buy order 2-3 rs. above the SAR reversal point.

Initial SL: 5 Rs. or low of last 3 bars, which ever is higher.

Trailing SL: SAR-1 of last bar

When the SAR crosses your purchase price on 2 minute chart, switch to 3 minute chart and set TSL according to SAR-1 of last bar. Keep on switching to larger timeframe chart as the trade goes more in profit till you reach 5 minute chart interval.

Sell signal: Either TSL got hit, +40 point profit or Buy signal generated from opposite pair, ie if you are holding a Call and a buy signal is generated in Put. Consider this as a Sell signal for Call.

The whole system looks bit complicated but in actual practice is very simple.

Important points:
Do not enter in trade in first 45 minutes. Wait for trend to show itself.
Put the SL order immediately after your buy order is executed.
Clear your position by 3:15 PM always.
Do not complicate things by trying to find exceptions.
Do not take position on both sides of market. Clear position on one side and then take opposite position. Let system kick you out


TSL and SL considerations
As I mentioned earlier TSL is SAR-1, e.g. SAR is 103.55 then TSL will be 102 and not 102.55.
Same way when setting Buy limit order the trigger price is rounded to higher rupee, e.g. say SAR reversal is at 99.52 then Buy Trigger price is 102 and not 101.52. This will save us from getting into any whipsaws or any false signals.

Trade rejection signals
If price never hits the buy limit order and SAR reverses then cancel the previous buy signal and wait BOS to go below -1.4 again.

I will be posting the 5500 Call chart shortly.

This is my first attempt towards posting in any message board, so please point my shortcoming to help me improve.

Regards

Aman Aujla

[amanaujla]

Me again with 5500 CA, Chart

I have marked the initial buy singal with red arrows on BOS and VR.

The chart is 2 minute interval and TSL got hit as follows
2 minute chart - 113.00
3 minute chart - 113.00
4 minute chart - 110.00
5 minute chart - 109.00
Holding at 104 in 10 minute interval at present.

I will post EOD comments when market closes.

Please note that by mistake I named the image as 5100Call, but in actual it is 5500 Call.

Regards

[casper]

hii congratulation!!!

your system, believe me, my head was spinning while i was reading the description in ur 1st post

and ur 2nd post with example, when i went through that, it seemed to me as simple as basic arithmetic like 2+2=4

now i am waiting for ur more posts,specially with descriptive charts, once again congratulation !!!

[amanaujla]

Thanks casper for your interest and encouragement.

Here is second signal generated today for 5500 PUT. Please note the timing of buy signal it is just close to the point where TSL for 5500 Call got hit in earlier trade.

Entry Price = 95.65
Initial SL = 90.65
Exit Price = 113.75

First Chart shows buy signal in 2 minute interval. After following the trade and keep on increasing the chart interval to 5 minute the TSL got hit at about 2:28 PM generating profit of 18.1 points

[amanaujla]

Options traded 5500 Call and 5500 Put

5500 Call
Entry : 102.00
Initial SL : 97.00
Exit : 113.00
Exit Reason : Buy signal generated on opposite side
Result : +11.00 points
Duration of trade : 10:10 AM - 11:07 AM

5500 Put
Entry : 95.65
Initial SL : 90.65
Exit : 113.75
Exit Reason : TSL got Hit
Result : +18.10 points
Duration of trade : 11:07 AM - 2:28 PM

Anyhow system proved itself with good numbers by generating +29.10 points of profit.

Lets wait for next day and see what comes out of bag.

[shivanigautam30]

Dear Aman

What is the EOD analysis for 5500 March call option for tomorrow...

The system that u have mentioned here looks great. Need to test out probably tomorrow itself.

Any entry, exit SL points for tomorrow...

Thanks for ur time and GREAT EFFORT.

Good Luck!

5500 call

Open: 100
High: 118.15
Low: 77.15
Close: 89.85

Prev. close: 116.75

Rgds

Await ur post on this with chart.

[amanaujla]

Hi shivanigautam30,

I will watch charts tomorrow and if any signals are generated I will try to post during the trading day.

BOS/VR based trading system is useful during the day to generate buy/sell signals. Lets hope it gives us some good signals tomorrow too and thanks for your interest.

[shivanigautam30]

Thanks Aman.

Await ur response tomorrow...

Rgds

[vvsp]

Hello Aman,
Thanks for sharing your strategy. When is it ideal to shift from Initial SL to Trailing SL?
Thank you.
Prabhakar.

[amanaujla]

Hello Prabhakar,

We can wait for 5 minute SAR to reach our entry price or you can just keep on updating 3 minute SAR as TSL. 3 minute SAR as TSL will at lot of times will clear your position with nominal profit on the other hand waiting for 5 minute SAR to reach our entry price will also result in a no profit - no loss situation at some times too. This subjective trade-off is best decided by the trader himself.

If the trend is strong setting then 2 minute SAR as TSL will also generate good profits.

Human instincts play a very important role in setting the TSL and clearing your position. Sometimes I clear my position with just 5 points of profit as I grow uncomfortable with market movements although TSL is not hit.

My favourite method is that when my trade goes into +20 points of profit, I stop updating my TSL and set my sell order at +10 points of profit making sure that 10 points of profit is surely in my pocket and then wait for the market to reach a decisive point. This way I do not miss the big moves and my trade remains profitable too.

[vvsp]

Hello Aman,
Thanks for the guidance.
Prabhkar.

[amanaujla]

Hi again,

For me 18 March was a very dull day, NIFTY was stuck. Anyhow I am posting a trade signal generated by my VR/BOS system.

I will also try to post a chart today explaining how to reject fake buy signals to avoid whipsaws.

5500 Put
Entry : 148.00
Initial SL : 140.00
Exit : 166.55
Exit Reason : Day close time approached (3:15 PM)
Result : +18.55 points
Duration of trade : 2:30 PM - 3:15 PM

Please note that there not enough time to increase the chart time interval from 2 minute to 3 minute, although the TSL of 3 minute interval was also respected and never got hit.

Awaiting response from fellow traders.

[amanaujla]

Case of Fake buy signal 5500 Call

A buy signal was generated at 10:12 AM, VR went down and BOS went above 0 in same bar and SAR also reserved. A textbook buy signal from my trading system, if followed Entry price would be 66.00 and TSL got hit at 62.00 generating a net loss of 4.00 points.

Although losing 4 points is not a shark bite situation but still we can avoid these type of trades by following a very simple subjective system.

If a buy signal is generated against a long up/down trend, we should set our buy limit order according to 5 minute SAR+1. In most of cases we will be able to avoid whipsaws and protect our capital. This will also in some cases reduce the net gain, but I am more happy in protecting my capital then losing some possible gains.

The 5 minute SAR reversed at 67.00 so we can set our limit buy order at 68.00 and which never happened.

This method is subjective, we can also use 4 minute SAR instead of 5 minute SAR but the net effect will not be much different.

I will really appreciate input on this method from experts.