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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. 4th to 8th Jan 2016).

What is 1SD formula?

Price Range= (Price * volatility * square root of day) divide by Square root of 365


Nifty future of Jan 2016 expiry last recorded trade is 7983, we are going to find the weekly trend hence days will be 7 calendar days(including Saturday+Sunday).

NIFTY Future trend for 4th to 8th Jan 2016

1 SD Price Range114.4
NIFTY7983
Up TrendDown Trend
0.2362780107956
0.38243.78026.77939.3
0.557.28040.27925.8
0.61870.78053.77912.3
0.78689.928072.927893.08
0.888101.598084.597881.41
1.236141.48124.47841.6
1.618185.18168.17797.9
Trend expectation as per 1SD method
:

UPTREND conformation 8010, Successful cross-over above 8053.7 will target rise till 8084.59-8124.4-8168.1.

DOWNTREND conformation 7956, Successful fall below 7912.3 will trigger fall till 7881.41-7841.6-7797.9

RANGE-BOUND trend identification: If all up move invites sale above 8053.7 and all down move invites short covering at 7912.3 level this indication is sufficient to conclude that the price action is in the range of 8053.7 to 7912.3

What trade decision one trader should take?
:
  • Buying above 8010
  • STOP-LOSS 7956,
  • HEDGE by buying put option of strike below 7956, for initial target 8053.7

OR
  • Selling future below 7956
  • STOP-LOSS 8010,
  • HEDGE buy buying call option of strike above 8010, for initial target 7912.3 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 8010 cross then you buy the nifty future with 7956 put option long. If it achieves the 1st target 8053.7 during the day or any point during the week revise your stop loss to 8026.7 and hold the trade. If the 2nd target 8072.92 achieved, revise the stop loss to 8040.2 and hold the trade. If the 3rd target 8084.59 achieved, then trail or revise the stop loss to 8072.92. 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 7956 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7956 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.

BANKNIFTY Future trend for 4th to 8th Jan 2016

1 SD Price Range332.94
BANKNIFTY17087
Up TrendDown Trend
0.23678.5717165.5717008.43
0.382127.1817214.1816959.82
0.5166.4717253.4716920.53
0.618205.7617292.7616881.24
0.786261.6917348.6916825.31
0.888295.6517382.6516791.35
1.236411.5117498.5116675.49
1.618538.6917625.6916548.31

What trade decision one trader should take? Buy above 17214.18 with stop loss 16959.82 for initial target 17292.76. Use the 17165.57 put option buy with long future or 17625.69 call option sell with long future to hedge the trade. If you sell it at 16959.82 hedge it with 16920.53 call or sell below16548.31 put option. Since 0.236 price giving triggering in bank nifty because of its high base value I am changing the entry point to 0.382 price point.

Conclusion: If you look the daily price point in the chart and compare with the weekly levels we have given, you will find our calculated point worked as point of pressure some time and point of revival some time.

Refer the past performance of the 1SD weekly trend calculation (from September 2015 to September 2017)

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