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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. 18th to 22nd Jan 2016).
What is 1SD formula?
Nifty future of Jan 2016 expiry last recorded trade is 7443, we are going to find the weekly trend hence days will be 7 calendar days(including Saturday+Sunday).
NIFTY Future trend for 18th to 22nd Jan 2016
|1 SD Price Range||159.25|
|Up Trend||Down Trend|
Trend expectation as per 1SD method:
UPTREND conformation 7480.58, Successful cross-over above 7541.42 will target rise till 7584.41-7639.83-7700.67.
DOWNTREND conformation 7405.42, Successful fall below 7344.58 will trigger fall till 7301.59-7246.17-7185.33
RANGE-BOUND trend identification: If all up move invites sale above 7541.42 and all down move invites short covering at 7344.58 level this indication is sufficient to conclude that the price action is in the range of 7541.42 to 7344.58
What trade decision one trader should take?:
- Buying above 7480.58
- STOP-LOSS 7405.42,
- HEDGE by buying put option of strike below 7405.42, for initial target 7541.42
- Selling future below 7405.42
- STOP-LOSS 7480.58,
- HEDGE buy buying call option of strike above 7480.58, for initial target 7344.58 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 7480.58 cross then you buy the nifty future with 7405.42 put option long. If it achieves the 1st target 7541.42 during the day or any point during the week revise your stop loss to 7503.83 and hold the trade. If the 2nd target 7568.17 achieved, revise the stop loss to 7522.62 and hold the trade. If the 3rd target 7584.41 achieved, then trail or revise the stop loss to 7568.17. 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 7405.42 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7405.42 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 18th to 22nd Jan 2016
|1 SD Price Range||399.71|
|Up Trend||Down Trend|
What trade decision one trader should take? Buy above 15343.69 with stop loss 15038.31 for initial target 15438.02. Use the 15285.33 put option buy with long future or 15837.73 call option sell with long future to hedge the trade. If you sell it at 15038.31 hedge it with 14991.15 call or sell below14544.27 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.
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