Intraday trading strategies (formulae)

[jadejaarjun]

Thanx 4 the Formula

 

[ggshah]

Just plot the difference between high minus 13 period exponential moving average of close and make money using this magic indicator

 

[rkkarnani]

Just plot the difference between high minus 13 period exponential moving average of close and make money using this magic indicator

Hi GG, please elaborate bit more on the strategy posted by you for the benefit of a bit less TA knowing people like me.
In what time frame do you suggested it to be used. What shall be the SL? Any target? Which stock or index works good in this strategy.
Hey, asked for a lot!!!!!
Thanks.

 

[zealous_zorba]

Re: Intraday trading strategies(formulae)

STRATEGIES ( FORMULAE ) FOR INTRADAY TRADING
by..intradaySuRe.

The intraday movements of share prices are generally governed by Support & Resistance levels. The intraday volume, OPEN, HIGH, LOW, CLOSE & previous CLOSE prices are very important & one should track these prices daily. Previous data of 3 to 5 days is what is to be maintained or tracked. And the intraday data prior to the trading day is important.

OPEN ( O ) : The opening price for the particular day.
HIGH ( H ) : The highest price for the particular day.
LOW ( L ) : The lowest price for the particular day.
CLOSE ( C ) : The closing price for the particular day.

We can calculate the support & resistance levels for the next trading day with the help of above prices. The basic formula to calculate the various support(S1,S2,S3) & resistance ( R1,R2,R3 ) levels is as follows :-

Support & Resistance Levels

R3 = H + 2 * ( B L )

R2 = B + ( H L ) or B + ( R1 S1 )

R1 = ( B * 2 ) L

BASE = B = ( H + L + C ) / 3

S1 = ( B * 2 ) - H

S2 = B ( H L ) or B ( R1 S1 )

S3 = L { 2 * ( H B ) }

Mostly traders worldwide use above formula of Support & Resistance both for intraday trading as well as Delivery based trading. The general intraday interpretation of these levels (also called as PIVOT POINTS ) is if the Share price(or market) is above the BASE one should take a Long ( i.e. Buy ) position with target of exiting (Selling) at R1, R2, R3 levels. Similarly if the Share price (or market ) is below the BASE one should take a Short ( i.e. Sell ) position with the target of exiting ( Buying ) at S1, S2, S3 levels.

YOU have to understand one more important aspect of these levels. As the price moves from one level to other the immediate lower level becomes support & immediate upper level becomes resistance. Suppose the price is above R1 than R1 becomes immediate support & R2 becomes immediate resistance of the price movement.

Before understanding the different Strategies, we will take a look at the results of a very long term study of more than 10 yrs.

Actual LOW is lower than S1.......... 43 % times.
Actual HIGH is higher than R1......... 43 % times.

Actual LOW is lower than S2......... 17 % times.
Actual HIGH is higher than R2......... 17 % times.

Actual LOW is lower than S3......... 3 % times.
Actual HIGH is higher than R3........ 3 % times.

Now just apply your mind to interpret the findings of above study to help you decide ENTRY & EXIT points for your BUY or SELL positions.

THIS FORMS THE BASIS OF YOUR UNDERSTANDING THE MARKET & INTERPRETTING IT BETTER & ALSO GRASPING MY DIFFERENT STRATEGIES.

POWER OF 3 :-
As a trader always remember 3 is a very important number.
3 sec., 3 min., 3 hrs, 3 days, 3 months , 30 % etc. and so on.

Some basics for a novice trader :
Intraday as the term itself is self explanatory is the position you take and clear on the same trading day.
As a general understanding of trading people feel that they have to first buy something to sell it later at profit.
But in intraday trading you can SELL a share even if you dont have it with you. This is termed as SHORT SELL. i.e.: You sell suppose 100 XYZ share @ Rs. 250 , here if the price comes down to say 220 and you buy back the 100 XYZ shares. Your transaction is complete. 250-220=30. And 30*100=3000 Rs is your profit.
i.e.: Short sell is exactly opposite of the buy first and sell later transaction.
SHORT SELL transaction has to be compulsorily completed by buying back the equivalent no. of shares on the same trading day.

General but IMPORTANT for all :
REMEMBER INTRADAY TRADING IS A MINDGAME. There are many strategies one can apply to make profits daily in intraday trading as per my experience, observations & understanding. These strategies have been categorized or you can say designed on the basis of different TRADE TIMES, SITUATIONS, MARKETS, & SHARES. As discussed Mostly traders worldwide use above formula of Support & Resistance both for intraday trading as well as Delivery based trading short term & long term. So my advice would be to refer the support & resistance levels along with the various recommended strategies by me.
Although one can apply different strategies for different trades, I would suggest traders to select one strategy, which they are comfortable with, as per the mindset, personality & risk taking capacity.( i.e.: either BUYING strategy or SHORT SELLING strategy. A simple reason is that you cannot be two persons at one time, or you cannot have two views at a time.) Once you master one strategy, you can practice another and apply. YOU can also make profits forever by sticking to one strategy forever.
A little study or homework is compulsory to be successful and self sufficient, independent trader.
DIFFERENT TRADING STRATEGIES :-

We can categorize or divide our strategies as per different time frames & situations for better understanding.

1. MORNING 30-MINUTES STRATEGY.
2. TRADES AFTER MORNING TRADES.
3. TRADES DURING QUARTERLY RESULTS.
4. GAP OPENINGS OF MARKET.


* MORNING 30-MINUTES STRATEGY *

This strategy is based on understanding the moves of the BROKER. ( sentiments )
If you track the Close price you will wonder the Open price of the trade day is not always the same as that of the previous days Close price. It is because the major brokers (BIG TRADERS) according to the sentiments lay a trap in which small traders get trapped and run into losses. If we understand the brokers mind we can make profits 90 % times in normal market in the first 3 to 30 minutes of trading.( Remember you should close your positions in this time frame )

Take the following figures and trade plan with you on the basis of calculations given below. We will call it Brokers Strategy ( BS )

Difference between HIGH & LOW of previous day i.e.: D = ( H L )

Now BS = D / 3

BUY PRICE = ( Pr. Close BS )

SELL PRICE = ( Pr. Close + BS )

For understanding the BS one should understand the following..
STRONG SHARE or STRONG CLOSE (close price is higher than previous close) &
WEAK SHARE or WEAK CLOSE ( close price is lower than previous close )
Now on the basis of above calculations you are ready with the figures i.e.: BUY PRICE, Pr. CLOSE & SELL PRICE of STRONG SHARE & WEAK SHARE separately.

Now on trade day if STRONG share opens anywhere between Pr. Close & BUY PRICE you can BUY first & keep for sell @ SELL PRICE as your target.
The Trap :- As the broker opens the share at a price lower than Pr. Close one gets the feeling as if the share has become weak and sells it, thus falling in the trap.

On trade day if WEAK share opens at or above SELL PRICE you can SELL first & buy later @ BUY PRICE as your target.
The Trap :- As the broker opens the share at a higher price than the Pr. Close one gets the feeling that the share has become strong and buys it thus falling in the trap.

This strategy requires you to be very fast in taking decisions and accordingly positions. Furthermore One should compulsorily come out or close the position in the mentioned time frame. Life is not that easy and if you find that your position was wrong immediately square it ( close it)

Note :- The BUY PRICE as per above calculation is approximately S1
& The SELL PRICE as per above calculation is approximately R1


* Some more morning strategies :.

firstly i want to thank you for sharing invaluable information with the rest! i am new to this fraternity, and i already feel welcome! i have been reading extensively about techincal analysis, with the sole objective to become a successful intraday trader. will def try out the 30 mins strategy, for till now i had not devised any trading strategy to day trade, coz when i finally thought i had learnt enough and launched myself into day trading, i was flummoxed coz i realised many theories which sounded very convincing in paper actually dint have a place in day trading. that lead to a slump in confidence. but reading your posts def has revived it! i wanted to asked you if you have elaborated on the other day trading strategies like trades after morning trades, during quarterly results n gap openings?

 

[ggshah]

Hi GG, please elaborate bit more on the strategy posted by you for the benefit of a bit less TA knowing people like me.
In what time frame do you suggested it to be used. What shall be the SL? Any target? Which stock or index works good in this strategy.
Hey, asked for a lot!!!!!
Thanks.

For amibroker : Plot(H-EMA(c,13),"",colorred,styleline,1);


Buy : when indicator moves above zero
Sell : when indicator moves below zero

Regards.

 

[rkkarnani]

Originally Posted by rkkarnani
Hi GG, please elaborate bit more on the strategy posted by you for the benefit of a bit less TA knowing people like me.
In what time frame do you suggested it to be used. What shall be the SL? Any target? Which stock or index works good in this strategy.
Hey, asked for a lot!!!!!
Thanks.

For amibroker : Plot(H-EMA(c,13),"",colorred,styleline,1);


Buy : when indicator moves above zero
Sell : when indicator moves below zero

Regards.

Thanks for the input about Amibroker. Unfortunately I do not use Amibroker, I use Metastock. But that is not a problem. Looking forward to your input about the Time Frame for charts used and also Stop Loss to be applied. Any target or we simply reverse. Any trailing SL?
Well a lot of queires friend. Do reply if you have spare time. Thanx in advance.

 

[sankar17f]

Hi rkkarnani
instead of one moving average indicator we can draw two lines 1) 13 period EMA High and 2) 13 period EMA Close over price chart. when price moves over higher ema (blue) line we buy and when price moves down lower ema (red) line we sell. for ami broker
Plot(EMA(H,13),"",colorBlue,styleLine|styleThick);
Plot(EMA(C,13),"",colorRed,styleLine|styleThick);

 

[sankar17f]

i am using this system for some time may be useful.it uses 10 period EMA High and 8 period EMA low.



SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() );
Plot(EMA(H,10),"",colorBlue,styleLine|styleThick);
Plot(EMA(L,8),"",colorRed,styleLine|styleThick);

 

[HHPPREMM]

I happened to read this site today.It is very informative.

Now regarding Mr.Intradaysure's BS formula.I request you to pl.give me some extra guidance.I did the foll.for EDUCOMP Share:
15 Dec 2008 H=2193 L=1956.85 PR.CL=2088.35 So the 2193-1956.85 result divided by 3 =78.7166
So the Buy=2088.35-78.7166=2009.63 and Sell=2088.35-78.7166=2167.00.
Op on 16 Dec 2008 o=2115,80 h=2325 l=2101.15.As per yr formula if the nxt day op is between pr.cl and Buy price the one shd buy but in this case it is 2115 above the Buy 2009.63 and pr.cl.2088.35 then what I shd do.& 2nd querry if the op is below the Buy price wt shd b the plan.

I hv heard that shrewd brokers ususlly manipulate prices at Pivot point levels so that the Intraday dealers plan get upset.Is it true?

May I request to all members and Senior members and Moderators to pl.tell me which is the best software for NSE+BSE Stocks,4rm where it is available with tutorial help and at what price.

This forum is full of very helpful and highly informed and learned people and all your efforts r very much laudable and a fantastic guidance to novie like me who want to learn the intricacy of this Market.
A million thanks in advance

 

[gaspy]

DIFFERENT TRADING STRATEGIES :-

We can categorize or divide our strategies as per different time frames & situations for better understanding.

1. MORNING 30-MINUTES STRATEGY.
2. TRADES AFTER MORNING TRADES.
3. TRADES DURING QUARTERLY RESULTS.
4. GAP OPENINGS OF MARKET.

* MORNING 30-MINUTES STRATEGY *

This strategy is based on understanding the moves of the BROKER. ( sentiments )
If you track the Close price you will wonder the Open price of the trade day is not always the same as that of the previous days Close price. It is because the major brokers (BIG TRADERS) according to the sentiments lay a trap in which small traders get trapped and run into losses. If we understand the brokers mind we can make profits 90 % times in normal market in the first 3 to 30 minutes of trading.( Remember you should close your positions in this time frame )

Take the following figures and trade plan with you on the basis of calculations given below. We will call it Brokers Strategy ( BS )

Difference between HIGH & LOW of previous day i.e.: D = ( H L )

Now BS = D / 3

BUY PRICE = ( Pr. Close BS )

SELL PRICE = ( Pr. Close + BS )

For understanding the BS one should understand the following..
STRONG SHARE or STRONG CLOSE (close price is higher than previous close) &
WEAK SHARE or WEAK CLOSE ( close price is lower than previous close )
Now on the basis of above calculations you are ready with the figures i.e.: BUY PRICE, Pr. CLOSE & SELL PRICE of STRONG SHARE & WEAK SHARE separately.

Now on trade day if STRONG share opens anywhere between Pr. Close & BUY PRICE you can BUY first & keep for sell @ SELL PRICE as your target.
The Trap :- As the broker opens the share at a price lower than Pr. Close one gets the feeling as if the share has become weak and sells it, thus falling in the trap.

On trade day if WEAK share opens at or above SELL PRICE you can SELL first & buy later @ BUY PRICE as your target.
The Trap :- As the broker opens the share at a higher price than the Pr. Close one gets the feeling that the share has become strong and buys it thus falling in the trap.

Note: For this strategy Preferably take shares with high volumes & less volatility(not operator driven stocks). This strategy will not work in GAP OPENINGS. This strategy requires you to be very fast in taking decisions and accordingly positions. Furthermore One should compulsorily come out or close the position in the mentioned time frame. Life is not that easy and if you find that your position was wrong immediately square it ( close it)
REMEMBER TO CLOSE POSITION WITHIN THE TIME-FRAME MENTIONED
FEEDBACKS WELCOME

Have you the probability of winner trades of this technique.? Because, your technique gives, the buy level, the target, if you have the probability of winners it's easier to put a stop .