NIFTY Options Trading by RAJ

[Riskyman]

Rajan does it again, cuts repo rate by 25 basis pts.

Anecdotally, we know that lower interest rates need not lead to growth. Wonder why there is so much hype about a repo rate cut. Of course the markets need a trigger every now and then. Look at Japan, Europe and the US with extremely low rates and except the US, Europe and japan are languishing. Specially, Japan who invested this vicious thing called QE.

 

[timepass]

Anecdotally, we know that lower interest rates need not lead to growth. Wonder why there is so much hype about a repo rate cut. Of course the markets need a trigger every now and then. Look at Japan, Europe and the US with extremely low rates and except the US, Europe and japan are languishing. Specially, Japan who invested this vicious thing called QE.

Lower interest rate mean lower interest rates for home loans/auto loans etc. That's the reason for cheer.

 

[Riskyman]

Lower interest rate mean lower interest rates for home loans/auto loans etc. That's the reason for cheer.

Yes. Thats what Im saying. Lower interest rate for homes/auto loans doesnt really lead to higher sales thereby increasing gdp growth. What I saying is that it hasnt worked for europe and Japan. Whether lower interest rates will work for india or not, only time will tell. India traditionally has been an inflated economy with higher interest rates.

 

[singlap]

YES , reduction in interest rate by 25 points even if you calculate , do not make a huge impact on customers EMI and hence do not impact decision of buying the house.

Market makers have intentionally created a sort of a events calendar to entice retail customers in making wrong decisions. Big swings mean we are unnecessarily chasing the market and once everybody becomes long , they will take excuse of another event to give a big fall.

 

[Riskyman]

YES , reduction in interest rate by 25 points even if you calculate , do not make a huge impact on customers EMI and hence do not impact decision of buying the house.

Market makers have intentionally created a sort of a events calendar to entice retail customers in making wrong decisions. Big swings mean we are unnecessarily chasing the market and once everybody becomes long , they will take excuse of another event to give a big fall.

I have to add that if interest rates go down over a period of time by another 100 bss points then maybe it would make some impact to large borrowers of funds like infrastructure companies or other big projects. While for the common man, the impact maybe less its still a saving. One that gets off set by earning a lower interest if you kept your money in an FD or just in the bank.

Its exactly this lower rates over the next 12 months that the markets are cheerful about. Remember that the markets discount future events. And im sorry about bringing this up in an otherwise very nice thread.

 

[soumanag]

Please find below the link for a Sample Polynomial

hXXp : // www DOT 4shared DOT com/file/1qLyi_aHce/Polynomial.html

Hi Raj,

Thank you for another great concept :thumb:
Correct me if I m wrong.... so basically in your example you have plotted 1 hour NIFTY closing price and then added 1. Moving average trend line , 2. Polynomial trend lines of different degrees.
As I understood from the articles polynomial plotting gives a better prediction of the trend which is theoretically sound since we are putting more weight to the recent values (like we do in EMA compared to SMA). This is useful for determining the larger trend as it cuts out the short term price fluctuations. Can you provide some more pointers how to use this in trading?
Best
S

 

[Riskyman]

Hi Raj,

Thank you for another great concept :thumb:
Correct me if I m wrong.... so basically in your example you have plotted 1 hour NIFTY closing price and then added 1. Moving average trend line , 2. Polynomial trend lines of different degrees.
As I understood from the articles polynomial plotting gives a better prediction of the trend which is theoretically sound since we are putting more weight to the recent values (like we do in EMA compared to SMA). This is useful for determining the larger trend as it cuts out the short term price fluctuations. Can you provide some more pointers how to use this in trading?
Best
S

The lower order of the polynomials (1=straight line,2&3=a bit curvy) capture the longer term trend i.e the lower order polys are less sensitive to daily/weekly price fluctuations. While the higher poly(5&6) represent the shorter term trend. The higher polys are more sensitive to price fluctations.

Based on above you can decide which poly you want to use for your trading.

 

[healthraj]

The lower order of the polynomials (1=straight line,2&3=a bit curvy) capture the longer term trend i.e the lower order polys are less sensitive to daily/weekly price fluctuations. While the higher poly(5&6) represent the shorter term trend. The higher polys are more sensitive to price fluctations.

Based on above you can decide which poly you want to use for your trading.

Yes that is Right.

I always use Degree 1 as my Major Trend and other Polynomial degree curves as my Minor Trend. The Minor Trend will give you Reversal signals. In the Major Trend you have to Trade based on the Resistance and Support.

You can also notice that
- Minor Trend in Weekly will be more or less the Major Trend in Daily
- Minor Trend in Daily will be more or less the Major Trend in Hourly
- Minor Trend in Hourly will be more or less the Major Trend in Lower time frame

So based on what timeframe you trade like Weekly, Daily or Hourly, you will get some Pre signals in the Minor Trend since it is of a higher degree and since it is more sensitive, Since it has more parameters for controlling.

As I said before, You can always trade using ONLY The Linear Trend.

The Polynomial technique is more or less for people who wants to be in a Trade always. So always somebody is Long or Short... Or Like Trading with the FLOW.

The most important difference is the below

Using the Linear method most of the times we have to be AGGRESSIVE in taking an entry. Since we have BUY at Support and SELL at Resistance. But when it is TRENDING the SELL / BUY might not be correct. There is no Reversal signal in the Linear method

But in Polynomial curve, You will get a Reversal and then you will Get a BUY or SELL...

 

[soumanag]

First of all MAX OI is at 8500-9000. So 9000 should act as the Resistance.
To move beyond 9000, one should expect some OI buildup near 9000, which will not happen over night.

So Around 9000 one should SELL (Close Long) as long as the MAX OI CE remains at 9000.

What a spectacular fall, I bow down to Raj's analytic skills :clapping:
RESPECT
Max OI has moved to 9200 so this is profit booking by FIIs

 

[rajesh0000]

Yes. Skip the ad on the top right corner and i should take you to 4shared website. If you dont have a login, please make one and you should be able to download the file from the "download" link. Then choose "free download"

Sir,
Thanks for taking pains for checking and responding.
But sorry I am unable to get it even after many attempts and also from different browsers.
I do have a login at 4shared and had recently downloaded "Teach a man to fish..." quite easily.
Don't know where am making mistake.
Can a fresh link be provided.