Day Trading Stocks & Futures

[TraderFriend]

re: Day trading Nifty & Banknifty Futures

 

[timepass]

re: Day trading Nifty & Banknifty Futures

Learnt something from my trader friend. It goes as under :

You have to make a guess of how high can NF go in next 3 months...and whenever you get a rally sell one NF contract and sell near the money puts. This he calls his income strategy....I did a trade on this in Oct contract and the actual figures were as under :

1) The market was at 6170 and I sold one contract NF at 6170 . Also sold 6200 put at 135.

The idea here is if the market comes down , we make 135-30=105 points. If the market goes up, and say closes at 6250....we will loose 80 points in our short future..but will make 135 points on the puts...and we carry over the NF sell at 50 points carry over difference.....and sell 6250 put at 140-150 for Nov......and continue...the only danger is if NF goes 600 points from your first sale....you have to pay 600x 50 =30,000 as negative difference...but you get 135 x3 =405 as puts premium plus 40x3 =120 so total 525 points back even if market has gone 600 points against you.....

2) I squared up my NF sale at 6140 just before RBI meet making 30 points profit plus covered my puts at 90 giving me profit of 45 points in puts so total profit was 75 points .

As I temporamentally cannot hold loosing positions, I dont intrend trading this strategy....did one trade in Oct series just to know how it works....this is a vyaj return strategy.It was fun trading it to know how the vyaj badla wallas think and work.They consider that they got a return of 525 points on investment of 600 points. I asked them where is the money coming in ? Their answer is all the money will come back after market comes down....after 300,500 or 700 points also.That is how the financers think and play.

The above figures I am writing from the memory...they could vary a little..but writing just to give the thought behind it.

I dont recommend trading this strategy....posting just for information.

Note : Hope our trader friends dont get " inspired" by this strategy and put all their loosing positions on this strategy. It needs deep pockets and a mindset to see market move 300-400 points against us....very tough on psyche.


Smart_trade

You traded the current series contract ?? I don't understand the relation between guessing the next 3 months' high and playing the current series.

There's a name for this strategy, isn't it ?? bear put spread or something. Dan can enlighten us.

I just noticed, Nifty EOD chart is showing divergence in histogram and price oscillator as well as trix. not sure of the trend!!

Kidhar ?? please mark on the chart attached or post your chart.

PS : I am not much on reading MACD.

 

[msa5678]

re: Day trading Nifty & Banknifty Futures

Learnt something from my trader friend. It goes as under :

You have to make a guess of how high can NF go in next 3 months...and whenever you get a rally sell one NF contract and sell near the money puts. This he calls his income strategy....I did a trade on this in Oct contract and the actual figures were as under :

1) The market was at 6170 and I sold one contract NF at 6170 . Also sold 6200 put at 135.


2) I squared up my NF sale at 6140 just before RBI meet making 30 points profit plus covered my puts at 90 giving me profit of 45 points in puts so total profit was 75 points .


Smart_trade

With my little knowledge of options I understand that PUT value will increase as NF falls. Then how the 45 points profit. Or have u covered the PUT after NF went above 6170.

 

[stock72]

re: Day trading Nifty & Banknifty Futures

but within first month of my trading I was trapped by short sell auction rule, shorted 300 EDUCOMP did not covered as having loss of 5-6ooo rs , waited for loss to reduce then tried to cover in last minute that too at limit price not market price, got 16000 penalty on a/c size of 60k

Iam shorted RNRL way back in 2008 ( the day it jumped 75%) not able to buy back --- broker bot in action market --lost 214k and just left with 300 rs in account ...

 

[onlinegtrash]

re: Day trading Nifty & Banknifty Futures

You have to make a guess of how high can NF go in next 3 months...and whenever you get a rally sell one NF contract and sell near the money puts. This he calls his income strategy....I did a trade on this in Oct contract and the actual figures were as under :

1) The market was at 6170 and I sold one contract NF at 6170 . Also sold 6200 put at 135.
....
Smart_trade

selling NF and PUT, isn't that simply writing a CALL ?

 

[jain.er]

re: Day trading Nifty & Banknifty Futures

Oh I know this phase have been in it for few months. If you put fixed SL, unless there is a market mover placing order in same direction of your trade, your SL will get hit maximum times. This is because its in tradeable range. I can understand that placing SL at pivot points have a large risk, but reward is also large. If you are well funded and can trade in two lots atleast try this. I am sure it will work out.

1)Enter in two lots for NF, if you are going for BNF you need to go into 5 min charts, entering BNF in 15 min charts is quite risky until and unless you are an expert and have the ability to reverse or get out without SL order being get hit. This happens much frequently in BNF.

2)If you are entering in NF with two lots, keep SL in case of last two candles low in 5 min chart. You can keep trailing on SL if trade moves in your direction. This is a very very basic method of setting SL but works much better than fixed SL.

3)Once trade moves in your direction, for every 10 point in your favour keep moving TSL by 10 points, for one lot and for another lot keep trailing SL on bar.

4)If you do this you may not get large profits but large losses also wont happen for sure. But you need to be well funded atleast 80000RS you need to have to face draw down periods.

5)If you lose two trades consecutively in a day stop trading for the day and do paper trades and note down the reason for taking the paper trades.

6)If you win keep trailing SL, one lot where we trail SL by fixed points will get hit before the SL gets hit for a lot where we trail based on last two candles low in case of long trades.

7)Try this and let me know. This is purely for intraday, and it was quite rewarding for me as I trade on resistance breakouts and support failures.

Wishing you success.

Hi Thl bro
Although I have stopped day trading due to my day job, but as I was going through some of the previous good posts of my friends one question popped in my mind which has been left unanswered since ages may be you might have an idea.

This is about taking entries on break of Resistance/supports/pivots

I always used to take entries using SL-M orders just as levels break, but many traders let the price break barriers and then allow them to settle and then make an entry. The first method results in a lot of failed trades and second one results in a lot of missed trades. I wonder which the correct approach

 

[comm4300]

re: Day trading Nifty & Banknifty Futures

With my little knowledge of options I understand that PUT value will increase as NF falls. Then how the 45 points profit. Or have u covered the PUT after NF went above 6170.

time value of PUT decreased despite Nifty coming down....theta decay...

 

[Smart_trade]

re: Day trading Nifty & Banknifty Futures

selling NF and PUT, isn't that simply writing a CALL ?

Here you are keeping short position in the market and pocketing 40-45 points carry over premium every month in addition to the put premium.

Smart_trade

 

[Smart_trade]

re: Day trading Nifty & Banknifty Futures

You traded the current series contract ?? I don't understand the relation between guessing the next 3 months' high and playing the current series.

There's a name for this strategy, isn't it ?? bear put spread or something. Dan can enlighten us.

Kidhar ?? please mark on the chart attached or post your chart.

PS : I am not much on reading MACD.

Yes current months futures and puts both. We have to make a view on how much NF will go up in 3 months and how much we will recover by way of put premiums and roll over premiums. If the NF goes 1000 points up...this strategy will fail.

One can call it Covered Puts strategy as in effect it is one...(like covered call in which you hold the underlying, here you hold short position in Nf.


Smart_trade

 

[DanPickUp]

re: Day trading Nifty & Banknifty Futures

@TP

As ST has told: The strategy is called: Covered put. http://www.theoptionsguide.com/covered-put-writing.aspx

Now how get an idea where Nifty could be in three months time? For this we use a probability calculator for which we need the current volatility from the underlying and of course the days ahead. That will be the most realistic approach to the next best number where Nifty could be in a certain time frame.

The strategy by itself has his advantage and disadvantage. On the upside it has in the worst case an unlimited loss potential and on the profit side the profit is limited. ST has given the math to that. If you watch the position regularly during the day, you are able to act when ever needed, means you can adjust your position according to market moves and swings. One disadvantage is surely the high margins you will face with that strategy as you are short future and short put.

Take care and happy Diwali to you / DanPickUp