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. 13th to 18th Dec 2015).

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 2015 expiry last recorded trade is 7628, 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 7661.98, Successful cross-over above 7716.99 will target rise till 7755.88-7805.99-7861.

DOWNTREND conformation 7594.02, Successful fall below 7539.01 will trigger fall till 7500.12-7450.01-7395

RANGE-BOUND trend identification: If all up move invites sale above 7716.99 and all down move invites short covering at 7539.01 level this indication is sufficient to conclude that the price action is in the range of 7716.99 to 7539.01

What trade decision one trader should take?

• Buying above 7661.98
• STOP-LOSS 7594.02,
• HEDGE by buying put option of strike below 7594.02, for initial target 7716.99

• Selling future below 7594.02
• STOP-LOSS 7661.98,
• HEDGE buy buying call option of strike above 7661.98, for initial target 7539.01 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 7661.98 cross then you buy the nifty future with 7594.02 put option long. If it achieves the 1st target 7716.99 during the day or any point during the week revise your stop loss to 7683.01 and hold the trade. If the 2nd target 7741.19 achieved, revise the stop loss to 7700 and hold the trade. If the 3rd target 7755.88 achieved, then trail or revise the stop loss to 7741.19. 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 7594.02 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7594.02 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.