NF Swing Trading using Fractal AFL

[oldtrader]

Dear Oldtraderji
In option trading its clear about target.But what about initial stop?
Regards

Initial stop for the Option will be TSL of the fractal. I will post one example for the same.

Had you taken the long on 16th May with Nifty Futures you would have ended with a loss of 7866.6-7821.3=45.3 points.

If you had entered options instead of Futures you would have lost 52.00-36.15=15.85 points.

So you see the risk gets reduced by almost 1/3rd.

Hope the above clarifies the entry and exit criteria. Still I would suggest fellow traders to post their trades here after execution , so that any error in judgement can be rectified at the right time.

 

[aaru]

Initial stop for the Option will be TSL of the fractal. I will post one example for the same.

Had you taken the long on 16th May with Nifty Futures you would have ended with a loss of 7866.6-7821.3=45.3 points.

If you had entered options instead of Futures you would have lost 52.00-36.15=15.85 points.

So you see the risk gets reduced by almost 1/3rd.

Hope the above clarifies the entry and exit criteria. Still I would suggest fellow traders to post their trades here after execution , so that any error in judgement can be rectified at the right time.

correct.., loss is small, profits are small too.. and 50 bucks strike usually are OTM in the start of the month.., theta decays faster in sideways.. so better would be near ATM

 

[oldtrader]

correct.., loss is small, profits are small too.. and 50 bucks strike usually are OTM in the start of the month.., theta decays faster in sideways.. so better would be near ATM

I don't have much idea about option Greeks. If you are in the know how of options. Please suggest some suitable option for the trade under discussion.

 

[niftytaurus]

Initial stop for the Option will be TSL of the fractal. I will post one example for the same.

Had you taken the long on 16th May with Nifty Futures you would have ended with a loss of 7866.6-7821.3=45.3 points.

If you had entered options instead of Futures you would have lost 52.00-36.15=15.85 points.

So you see the risk gets reduced by almost 1/3rd.

Hope the above clarifies the entry and exit criteria. Still I would suggest fellow traders to post their trades here after execution , so that any error in judgement can be rectified at the right time.

Hi
I dont want to offend or trying to discourage..but just want to share my views as fellow trader that you will not perceive wrong notions in trading it real time.
first its not right mathematically & practically to compare looses of two different instrument by counting points..I am telling you with my experience with real trading..if market moves same movement..you will always get much loss in percentage%..test it even for one month..
we calculate profit /loss in percentage..so please calculate above trade in percentage term..Out of money options will always give more loss in percentage term..
this wrong notion comes from thought that buying option is minimum loss trade/instrument..ex. we buy option of 5000 rs & if it get expire worthles..the loss is just rs 5000..but calculate it..you loss 100%..
please take it in right spirit..as my intention is to just share my experience..
thanks

 

[oldtrader]

Hi
I dont want to offend or trying to discourage..but just want to share my views as fellow trader that you will not perceive wrong notions in trading it real time.
first its not right mathematically & practically to compare looses of two different instrument by counting points..I am telling you with my experience with real trading..if market moves same movement..you will always get much loss in percentage%..test it even for one month..
we calculate profit /loss in percentage..so please calculate above trade in percentage term..Out of money options will always give more loss in percentage term..
this wrong notion comes from thought that buying option is minimum loss trade/instrument..ex. we buy option of 5000 rs & if it get expire worthles..the loss is just rs 5000..but calculate it..you loss 100%..
please take it in right spirit..as my intention is to just share my experience..
thanks

Thanks for sharing your thoughts.

I think you have read only the part of the discussion. Actual idea was to accomodate traders who don't want to risk around 50k of margin required for Nifty Futures. The option trade will be only 5k in comparision. True the option value decays over a period of time, but we are not going to hold so long that the decay shows its effect. The fractal on 7 min TF is a fast moving system, with around 10 signals per month.

 

[niftytaurus]

Thanks for sharing your thoughts.

I think you have read only the part of the discussion. Actual idea was to accomodate traders who don't want to risk around 50k of margin required for Nifty Futures. The option trade will be only 5k in comparision. True the option value decays over a period of time, but we are not going to hold so long that the decay shows its effect. The fractal on 7 min TF is a fast moving system, with around 10 signals per month.

Hi
I have read all the posts in your thread..your thread is very useful to make a robust mechanical system..I am really thankful for that you have sharing your system with other members..I am taking so many useful information from your thread..thanks for that
I want to make it clear that I am not arguing or any intrest in proving myself right..I just want to share what I learnt after spending my lot of time & a huge money..so i am just sharing that experience..
But still My points is same..I have read all posts so I read whole discussion also..but still points is same..my point is we should not count losses/profit in
terms of points of TWO DIFFERENT INSTRUMENTS...option value doesnt depends on ONLY time decay..option value depends on 7 other factors also...
so I understand the trade who have low capital can trade this..But still the statement that Losses of option is 1/3 in comparison of future is not with terms of maths..
person who bought future of 50k..he looses 45*75=3375 rs..its 6.75% of his capital..person who buy 3750 premium option will loose some 32% of his capital..so in percentage term, option buyer will loose more in every condition..please test it atleast for one month & see ..you will see huge differnec in profit/loss in % terms..& if that trade happens in expiry week, he will loose more & if same trade happens on expiry, he may loose 100% of its capital..
hope you got my point
thanks

 

[oldtrader]

Hi
I have read all the posts in your thread..your thread is very useful to make a robust mechanical system..I am really thankful for that you have sharing your system with other members..I am taking so many useful information from your thread..thanks for that
I want

I thought you were replying in the context of the single post. I have understood your points and have framed certain conditions to avoid those issues. If you have some more ideas please add.

1. Purchase options costing around rs. 50 at the time signal triggers.

2. There should be a minimum of 15 days left for the expiry of the option being purchased.

3. Sell the purchsed option if you are getting nearly double the purchase price and buy a new option.

 

[vikas2131]

Buy signal triggered today ???

 

[suri112000]

I thought you were replying in the context of the single post. I have understood your points and have framed certain conditions to avoid those issues. If you have some more ideas please add.

1. Purchase options costing around rs. 50 at the time signal triggers.

2. There should be a minimum of 15 days left for the expiry of the option being purchased.

3. Sell the purchsed option if you are getting nearly double the purchase price and buy a new option.

third point points that we trailing the stop in a sense....right?

 

[oldtrader]

third point points that we trailing the stop in a sense....right?

Yes, in a way . Basically we are getting break even, since we are purchasing the new option with the profits accrued, we will not loose anything even if the option goes down to zero.