Hello Friends!

1 SD formula is giving success in weekly forecast, from last 119 weeks. Below levels is the weekly level for Nifty future and bank nifty future for 135th week (i.e. 26th to 30th Dec 2016).

What is 1SD formula?

$Price\; Range=\frac{\mathrm{(Price\; *\; volatility\; *\; square\; root\; of\; day)}}{\mathrm{divide\; by\; Square\; root\; of\; 365}}$

Nifty future of Dec 2016 expiry last recorded trade is 8000.55, we are going to find the weekly trend hence days will be 7 calendar days(including Saturday+Sunday).

Trend expectation as per 1SD method

UPTREND conformation 8025.39, Successful cross-over above 8065.6 will target rise till 8094.02-8130.65-8170.85.

DOWNTREND conformation 7975.71, Successful fall below 7935.5 will trigger fall till 7907.08-7870.45-7830.25

RANGE-BOUND trend identification: If all up move invites sale above 8065.6 and all down move invites short covering at 7935.5 level this indication is sufficient to conclude that the price action is in the range of 8065.6 to 7935.5

What trade decision one trader should take?

• Buying above 8025.39
• STOP-LOSS 7975.71,
• HEDGE by buying put option of strike below 7975.71, for initial target 8065.6

• Selling future below 7975.71
• STOP-LOSS 8025.39,
• HEDGE buy buying call option of strike above 8025.39, for initial target 7935.5 is advisable.

Note:These levels are weekly levels hence hedge the position with option for better money management. For intraday, better use our 1SD paid software.

How to trade this week Nifty future levels?

On Monday or any time during the week if nifty 8025.39 cross then you buy the nifty future with 7975.71 put option long. If it achieves the 1st target 8065.6 during the day or any point during the week revise your stop loss to 8040.76 and hold the trade. If the 2nd target 8083.28 achieved, revise the stop loss to 8053.18 and hold the trade. If the 3rd target 8094.02 achieved, then trail or revise the stop loss to 8083.28. Continue this till last target is not achieved or trailing stop loss is not triggered. If trailing stop loss trigger, then close the hedging option position also.

After you initiate the buy trade
If the trend changes and stop loss 7975.71 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7975.71 call long.

If your trade is with the option hedge and future has reached the stop loss, then do not quit the trade in hurry better wait for conclusive price crossover of 0.382 retracement or for the closing session 3:15 to 3:30 then decide.

You can also implement any other option strategy by the way of writing the options to protect the future trade.

Get our complete option course to learn options.

Note:I am using the call long simple option strategy to demonstrate hedging principle in trade. However, you can write the option also and do any complex strategy to protect the trade.