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. 22nd to 25th Oct).

What is 1SD formula?

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

Nifty future of 25th Oct expiry last recorded trade is 10314, 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 10366.36, Successful cross-over above 10451.12 will target rise till 10511.02-10588.24-10672.99.

DOWNTREND conformation 10261.64, Successful fall below 10176.88 will trigger fall till 10116.98-10039.76-9955.01

RANGE-BOUND trend identification: If all up move invites sale above 10451.12 and all down move invites short covering at 10176.88 level this indication is sufficient to conclude that the price action is in the range of 10451.12 to 10176.88

What trade decision one trader should take?

• Buying above 10366.36
• STOP-LOSS 10261.64,
• HEDGE by buying put option of strike below 10261.64, for initial target 10451.12

• Selling future below 10261.64
• STOP-LOSS 10366.36,
• HEDGE buy buying call option of strike above 10366.36, for initial target 10176.88 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 10366.36 cross then you buy the nifty future with 10261.64 put option long. If it achieves the 1st target 10451.12 during the day or any point during the week revise your stop loss to 10398.76 and hold the trade. If the 2nd target 10488.39 achieved, revise the stop loss to 10424.94 and hold the trade. If the 3rd target 10511.02 achieved, then trail or revise the stop loss to 10488.39. 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 10261.64 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 10261.64 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.