Hello Friends!

1 SD formula is giving success in weekly forecast, from last 119 weeks. Below levels is the weekly level for BANK NIFTY future and bank nifty future for 135th week (i.e. 14th to 18th Jan 2019).

What is 1SD formula?

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

Nifty future of Jan 2019 expiry last recorded trade is 27533, 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 27642.75, Successful cross-over above 27820.39 will target rise till 27945.95-28107.78-28285.42.

DOWNTREND conformation 27423.25, Successful fall below 27245.61 will trigger fall till 27120.05-26958.22-26780.58

RANGE-BOUND trend identification: If all up move invites sale above 27820.39 and all down move invites short covering at 27245.61 level this indication is sufficient to conclude that the price action is in the range of 27820.39 to 27245.61

What trade decision one trader should take?

• Buying above 27642.75
• STOP-LOSS 27423.25,
• HEDGE by buying put option of strike below 27423.25, for initial target 27820.39

• Selling future below 27423.25
• STOP-LOSS 27642.75,
• HEDGE buy buying call option of strike above 27642.75, for initial target 27245.61 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 BANK NIFTY future levels?

On Monday or any time during the week if nifty 27642.75 cross then you buy the nifty future with 27423.25 put option long. If it achieves the 1st target 27820.39 during the day or any point during the week revise your stop loss to 27710.64 and hold the trade. If the 2nd target 27898.52 achieved, revise the stop loss to 27765.52 and hold the trade. If the 3rd target 27945.95 achieved, then trail or revise the stop loss to 27898.52. 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 27423.25 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 27423.25 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.