My System - My trades.

[varunkochhar]

Wisp ji you know my trading style, i would not have waited for 200EMA. I would have bought it at the BO of OBV. So a shade below Rs.4.

 

[john302928]

john ji for an instrument worth Rs.4 how would it have mattered, which pivot to use. You could have used any point once it moved above 200EMA.

Varun ji
I am not sure if the value of the instrument does really a matter for the concept.
After i posted the above chart, price and OBV were just oscillating above and below 200EMA (SL would have hit many times)and went on to make double before ending up at 0rs.
So I tried to understand how to save ourself by not entering in to this trade.
I feel trades should be executed like the ones happened today in 21400PE 13APR expiry. It moved above 200EMA and went on to make double. Initially I felt the difference between this and the chart posted is because of PDC. In the posted chart OBV was below PDC and in todays 21400PE, OBV was above PDC. But again in 21400PE today @ 11.30 and @12.30 price went above 200EMA but failed while OBC was above 200EMA and above PDC. How to recognise those 11.30 and 12.30 candles are not the legitimate though it went above 200EMA. Please throw somelight. Thanks

 

[varunkochhar]

Yes sir looks logical to me. OBV levels closing below PDC line signifies reduction in open interest. Price would normally go higher if there is an addition in open interest. This is my logical and simple reasoning. It is something like a red candle formed in price with a lower close than opening.

Manoj ji i had already answered earlier but it seems i forgot to address you. So here it is again.

 

[varunkochhar]

John ji the reason i talked about the instrument being just Rs.4 is it is out of the money option, that also on expiry day, If one buys these kind of options then how can one keep a SL in them because i as a rule base my SL on the price of the underlying (Banknifty in this case) This strike price being so far off, even a 10-20 point move in BN would affect it adversely. So if you are going for such low price options, then keep a SL of zero or some time (say 2"o'clock on expiry day) Sell half at double so as to recover your cost.

 

[manojborle]

Manoj ji i had already answered earlier but it seems i forgot to address you. So here it is again.

Thanks
It means that when obv started trading above PDC we have to exit short in CENTURYTEX case.

Is that right Varunji ?

 

[john302928]

John ji the reason i talked about the instrument being just Rs.4 is it is out of the money option, that also on expiry day, If one buys these kind of options then how can one keep a SL in them because i as a rule base my SL on the price of the underlying (Banknifty in this case) This strike price being so far off, even a 10-20 point move in BN would affect it adversely. So if you are going for such low price options, then keep a SL of zero or some time (say 2"o'clock on expiry day) Sell half at double so as to recover your cost.

Dear Varun ji Leave that 21300PE @ 4rs

Let us take 21400PE 13 apr expiry
today 21400PE, OBV was above PDC. But @ 11.30 @65rsand @12.30 @67rs price went above 200EMA but failed while OBC was above 200EMA and above PDC. How to recognise those 11.30 and 12.30 candles are not the legitimate though it went above 200EMA. Please throw somelight. Thanks

 

[varunkochhar]

Varun ji please answer this query...

Manoj ji just followed your question now. If one was short then one should have covered without fail when volumes went above the previous days PDC levels. There would be plenty of opportunities to short in the future also, why take undue stress carrying a losing position which has lost its relevance.(Meaning you had taken the position on the basis of the OBV closing below the PDC yesterday. Right. So when it goes above those levels, you should have no reason to be in the trade. It is like a sl based on OBV levels.

 

[varunkochhar]

Dear Varun ji Leave that 21300PE @ 4rs

Let us take 21400PE 13 apr expiry
today 21400PE, OBV was above PDC. But @ 11.30 @65rsand @12.30 @67rs price went above 200EMA but failed while OBC was above 200EMA and above PDC. How to recognise those 11.30 and 12.30 candles are not the legitimate though it went above 200EMA. Please throw somelight. Thanks

Sir i have already told you that i base my SL on the underlying, not on the price of the derivative,

 

[john302928]

Sir i have already told you that i base my SL on the underlying, not on the price of the derivative,

Please correct me if my understanding is correct. You would take the position first @ 11.30 thinking that it would go upside since both price and OBV were above 200EMA and keep the watchout for the swing low in underlying if it breaks down. If it breaks down the swing low in underlysing then you would book loss for that 11.30 entry and similary for 12.30 entry.

Am i right?

 

[john302928]

There was a price spike on expiry day of 30 Mar 21500CE from 3 to 130. But whole day this contract was trading below PDC. Everyone has been stressing on PDC. But this contract didnt respect the PDC but still fired like anything. What is wrong / what is right here? Can any one help me understand.