A new Life, A new Career, A new Dream - I am a Trader

[timepass]

Sorry bro, Was little busy in choosing and comparing the discount brokers. Going to switch to TSO. And got the first taste of NOW trader.

NOW has got me mad for the whole evening. Ventura's pointer was too simple and straight forward. Need to learn a lot of things for NOW.

Actually NOW is very simple. The interface is like a DOS based software compared to the heavy charting softwares like Sharekhan's TT etc. But yes, even I was confounded when first faced with NOW. Check this thread of mine

http://www.traderji.com/brokers-trading-platforms/62723-zerodha-dummies.html

Ask specific questions here, you will get answers and get used to NOW.

 

[mahendraichake]

wish you good luck

 

[Happy_Singh]

Go with the flow . . . No Anticipation.

If we just follow this one thing, then no worries :thumb:


Happy

 

[Taiki]

EOD Summary

An Awesome day. I was feeling frustrated in the early hour as Nifty was moving up, and I was sitting quite with no trade as it was not a buy signal from my system. Believe me that was the most difficult time to watch Nifty riding, controlling my emotion. As per my strategy it was Sell on High, and I started doubting my strategy after seeing the hanging man in 1st hour, and the upmove after that.

But thankfully, I got a sell opportunity as Nifty faced resistance around 5685 as per my plan, Took a short position on NF at 5680, with a target of 5640. And booked at 5620.

Trade

1. Sold NF @ 5680, Stop loss = 5690, Target = 5640, Exited = 5620

Net gain = +60 Points

Thoughts and Lessons

- Need to put this in a practice - "Sit patiently till the market comes to your desired level rather than jumping into the trade straight away".

 

[jagankris]

:clapping: :clapping: :clapping:
:thumb: :thumb: :thumb:
:clap: :clap: :clap:

 

[Taiki]

Hi Jagan Bhai,

As per your suggestion I was analysing my option trades and was checking how option trades are going to help as per my current hourly setup. Here are my few doubts. It will be nice if you put your thoughts on them.

Lets say I get a Short signal as per my system, and here instead of selling Nifty FUT, i am going to trade in option. Now problem with options are selecting the correct option and time decay.

So which ITM contract will be best, becasue If I am going for deep ITM option, there bid and ask spread is larger. So getting the desired price may get difficult. Then again my system gives signal based on Nifty spot, for example I know Nifty has resistance at 5680, and support at 5640. So I have my 40 points target in my head. But lets say at that time NIfty 5800 PE is at 120. How should i know if this price is best. or if it is over valued ?? So what will be the criteria for choosing the right contract, and right price ??

Secondly on time decay, I think it would be better to short ITM CE instead of going long on ITM put. Because if the fall will not be sharp but slow, and if i had to carry my position overnight, then time decay may eat my profit. But in case of CE writing, I will be gaining if nifty falls as per my system, or stays at a particular value. Time decay will be working in my favour.

I know naked option writing is very risky. But here my short position will go in loss only if Nifty starts rising against my plan. In that case even Short FUT psoition would have gone into loss. So at stop loss I can square off my option contract.

Please suggest If this ideology would be correct to follow..

Regards
Taiki

 

[DanPickUp]

EOD Summary

- Need to put this in a practice - "Sit patiently till the market comes to your desired level rather than jumping into the trade straight away".

You are on a good way , at least the way I do value it. Just my two cents and no granted rule, as there are many ways to be successful.

If you move on on that way: Now do this in different markets, so you can/must build up a portfolio. Why? You will be tested many times and many times market not will come to your place where you sit. To have a higher hit rate when trading the way you start to do now, you are in better hands when doing it in different markets. As always: Your choice and your time.

Take care / DanPickUp

 

[jagankris]

Hi Jagan Bhai,

As per your suggestion I was analysing my option trades and was checking how option trades are going to help as per my current hourly setup. Here are my few doubts. It will be nice if you put your thoughts on them.

Lets say I get a Short signal as per my system, and here instead of selling Nifty FUT, i am going to trade in option. Now problem with options are selecting the correct option and time decay.

So which ITM contract will be best, becasue If I am going for deep ITM option, there bid and ask spread is larger. So getting the desired price may get difficult. Then again my system gives signal based on Nifty spot, for example I know Nifty has resistance at 5680, and support at 5640. So I have my 40 points target in my head. But lets say at that time NIfty 5800 PE is at 120. How should i know if this price is best. or if it is over valued ?? So what will be the criteria for choosing the right contract, and right price ??

Secondly on time decay, I think it would be better to short ITM CE instead of going long on ITM put. Because if the fall will not be sharp but slow, and if i had to carry my position overnight, then time decay may eat my profit. But in case of CE writing, I will be gaining if nifty falls as per my system, or stays at a particular value. Time decay will be working in my favour.

I know naked option writing is very risky. But here my short position will go in loss only if Nifty starts rising against my plan. In that case even Short FUT psoition would have gone into loss. So at stop loss I can square off my option contract.

Please suggest If this ideology would be correct to follow..

Regards
Taiki

Taiki,

You are absolutely right in saying that writing calls is better than buying Naked puts.Because it has double advantage of intrinsic value decay + time value decay.That is what professionals do - intraday.
But they play the game with huge money so it is all together a diff game.

But My suggestion would be to buy ITM options.Just an otm short straddle would be sufficient enough to counter the theta decay I guess.
A good trade when you get the trend right may give you wind fall profits.
Again your stop is 10 points so either stop will be hit if it doesn't move or sideways.

Typically
1st week or 4th week Could be beginning of a new trend/trend reversal.
Carefully observe where the trend reversals happen.
Catch trend early. .
Best trading opportunities occur usually when it is un clear.
When it is obviously clear then the profit potential decreases. .

First week will have less impact on the theta value.
Unless and until the premium is very high.Ie friday to friday.
Consider buying options.
Could be beginning of a new trend/trend reversal and if your direction is correct then a jackpot.

Second week,third week will have high decay.
Consider writing calls/puts.

4th week - expiry week.will not have much theta.
4th week is the rollover week for the Big guys.
Buy options.

Expiry day - Next month options.

If you want to carry over positions then options buying will give you wind fall profits than writing options.Gaps usually occurs in the direction of the trend.
Not in the direction of counter trend .

Linkon has a thread with short straddle and Nifty futures trading.Pls read that too.

Pls back test your setup(Manually) with options chart for at least 6 months and decide.

Pls let me know if the above points answered your queries ?

 

[jagankris]

You are on a good way , at least the way I do value it. Just my two cents and no granted rule, as there are many ways to be successful.

If you move on on that way: Now do this in different markets, so you can/must build up a portfolio. Why? You will be tested many times and many times market not will come to your place where you sit. To have a higher hit rate when trading the way you start to do now, you are in better hands when doing it in different markets. As always: Your choice and your time.

Take care / DanPickUp

Couldn't see you for the past couple of days .
Hope you are fine.
Dan pls could you confirm if my answers to his query are valid ?
Thanks in advance.

 

[Taiki]

Taiki,

You are absolutely right in saying that writing calls is better than buying Naked puts.Because it has double advantage of intrinsic value decay + time value decay.That is what professionals do - intraday.
But they play the game with huge money so it is all together a diff game.

But My suggestion would be to buy ITM options.Just an otm short straddle would be sufficient enough to counter the theta decay I guess.
A good trade when you get the trend right may give you wind fall profits.
Again your stop is 10 points so either stop will be hit if it doesn't move or sideways.

Typically
1st week or 4th week Could be beginning of a new trend/trend reversal.
Carefully observe where the trend reversals happen.
Catch trend early. .
Best trading opportunities occur usually when it is un clear.
When it is obviously clear then the profit potential decreases. .

First week will have less impact on the theta value.
Unless and until the premium is very high.Ie friday to friday.
Consider buying options.
Could be beginning of a new trend/trend reversal and if your direction is correct then a jackpot.

Second week,third week will have high decay.
Consider writing calls/puts.

4th week - expiry week.will not have much theta.
4th week is the rollover week for the Big guys.
Buy options.

Expiry day - Next month options.

If you want to carry over positions then options buying will give you wind fall profits than writing options.Gaps usually occurs in the direction of the trend.
Not in the direction of counter trend .

Linkon has a thread with short straddle and Nifty futures trading.Pls read that too.

Pls back test your setup(Manually) with options chart for at least 6 months and decide.

Pls let me know if the above points answered your queries ?

Wow, so much info, strategy, in such a small post. I think i need to read it again and again to understand the message in every sentences, and then will have to apply and test to my strategy. Thank you bro or this quick response.

By the way I have never noticed such price reversal/trending pattern during last/first week of the month. This will surely help anybody to keep the odd in their favour.

Thanks again
Regards.
Taiki