Option Buy Recomendations

[TraderJunkie]

Attached is a file showing my sample trade for today and how various rules were applied. Today was such a narrow trading range day, but this is the result for today.

 

[jagankris]

Attached is a file showing my sample trade for today and how various rules were applied. Today was such a narrow trading range day, but this is the result for today.

Dear TraderJunkie,

Wish you all the best.

TC,
JK

 

[TraderJunkie]

2nd day of my system test. Here is the analysis.

-NIFTY support 1 - 5980 , NIFTY DEC 5900 CE @ 102 (calculated by option pricing calculator).

- NIFTY resistance - 5944.
---------------

THE OPENING:
The opening was positive , and I was reading the tape till 11:30, primarily ignoring what had happened till 10:00 am. Trend formation was considered from 10 am till 11:30 am. The trend was flat , but NIFTY was holding onto the early gains.

WHAT WAS THE TREND ?
1st rule - pointing towards a bullish trend (nifty holding onto more than 50% of initial move).

2nd rule - was the channel formation, with a breakout through the initial high of 6025.

3rd rule - was higher top and higher bottom formation for 2 sequences in a row.

DECISION - GO LONG
So I bought the NIFTY DEC 5900 CE @ 128.45 keeping a target of wahtever it would be at NIFTY spot 6545 (1st resitance). Stop was kept at 102 (I think this was too steep, I need to take less risk. Appropriate stop should have been at 50% of initial high , i.e @ 115-116.)

COVERED CALL
Nifty approached and crossed 6045 , I closed the call since I was happy with 20 points. Maybe was a mistake to close too soon, but on the 1st major down candle, I covered the call.

ANOTHER BUY CALL IGNORED
There was another buy signal later in the day , which I ignored thinking that th risk , reward was not in favor. I don't know if this was right to ignore the buy call.

Overall summary

- Some improvement necessary on stoploss , but also I think I squared off too early. Should have moved the SL higher. But this is a classical dilemma. My thinking was , 20 points is enough.

- Was it right to ignore the 2nd buy call ? Could have made another 20 points, but risk to reward was unfavorable.

- Attached is the chart for today.

http://img146.imageshack.us/i/niftysystemtest29thdec2.jpg/

 

[superman]

@TraderJunkie: Good system you having
Are you a full time trader ?
I see you are using google finance for your chart analysis ? Dont you use any other software like amibroker etc ?

 

[TraderJunkie]

@TraderJunkie: Good system you having
Are you a full time trader ?
I see you are using google finance for your chart analysis ? Dont you use any other software like amibroker etc ?

I use data from TAME, but for screenshot purposes I use google finance

The system is too new and I am sure has a lot of flaws too I would love to have other option traders critique it. What I do know is for sustained success it has to be some sort of a system and rules. So if together we critique and evolve each other's systems, then we will all stand to gain. When I went to my b-school for my MBA, I saw fellow aspiring traders spend tons of hours in the trading rooms developing their systems and automatically programming it. If they can do it, so can we - but it has to be a system that works in situations of trending and ranging markets equally .

So lets all put our minds together and get into the 10% of traders who actually make money from the markets and not lose it

 

[TraderJunkie]

30th dec NIFTY OPTIONS system test.

So today I had my 1st system failure.

Why did I buy the JAN 6000 PE ?

Same reasons - channel downwards, lower tops and lower bottoms. Had to cover the call at a loss. Bought at 69, covered at 61.

Later in the day there was a BUY signal so I bought the 6000 Jan CE @ 72 and covered at 95. Same reasons for buying - trend reversal.

Now I need to understand if this is the drawback of the system ? Could I have avoided buying the PE ? Also today was expiry so NIFTY was all over the place. I still ended the day with a big successful call, but the failure worries me. Is there a systemic way of catching it ?

What do you guys think ?

Attached is the screenshot for today.

http://img801.imageshack.us/i/30thdecniftytest.jpg/

 

[VJAY]

Dear Ghosh sir & everyone

[/URL] Uploaded with ImageShack.us[/IMG]

 

[TraderJunkie]

Guys I'm back from after all newyear's celebrations with my system test.

Today was a great day , caught 20 points upwards and 22 points downwards. I think the more volatile the day, more chances to capture points.

I've been following the same rules, but I've added another rule after today.

- Even if trend is upwards or downwards do not follow the trend if its closer to support or resistance levels. Instead wait to check if those levels are violated. If not, (after at-least 2 attempts, then go counter to the trend after a 3rd failed attempt).

Attached is the screenshot.

http://img513.imageshack.us/i/4thjanniftytrial.jpg/


PS: stop loss was put at 118 for the JAN CE and at 84 for the JAN PE

 

[aniket_tyagi]

Dude,

Use direct linking.

 

[TraderJunkie]

hello friends,

I was wondering if my daily posting is of any help since I was hoping for some discussion on this thread.

Maybe once the owner of this thread returns there can be some discussion. I will continue to record my tests daily but post them as a weekly analysis instead.

Thanks,
TJ