My Nifty Trading Setup

My trading set up consists of the following:

1. Chart time frames: weekly, daily, 1-hr, 15-min, 5-3-1

2. Check the Bollinger Bands on the weekly chart – if the BB Blast does not happen, the BB Band high is the high of the market and a reversal is expected, and similarly, the BB Band low is the low and a reversal is expected.

3. Mark levels – support and resistance – with the help of Open Interest (OI)

4. Exponential Moving Averages (EMA) – 13, 21, 55, 100

5. Volume Weighted Average Price (VWAP)

6. Supertrend – 10, 2/2.5

7. Bollinger Bands [to determine BB trap]

Other supportive indicators:

– CPR with Standard Pivots

– Moving Average Convergence/Divergence (MACD) or Relative Strength Index (RSI) [9]

– HM [Weighted Moving Average (WMA)-21, EMA-3]

– MAEE and MBEE

The content describes different phases of market structure: accumulation, advancing, distribution, and decline. It also mentions an “area of value”.

• Support and Resistance levels are important in technical analysis. Support is a level where the price tends to stop falling and start rising, while Resistance is a level where the price tends to stop rising and start falling.
• Trendlines help us identify the direction of the price movement. They are drawn by connecting the higher lows in an uptrend or the lower highs in a downtrend.
• Channels are formed when we draw parallel lines connecting the highs and lows of an uptrend or a downtrend. They provide us with a range within which the price is likely to move.

The relevant content for this request is:

- Narrow range
- Small candles
- Tight consolidation

• Look for candlestick patterns to identify potential entry points.
• Set stop loss and target profit levels as your exit strategy.

1. Is it a day to enter a short straddle/strangle – if there is strong Put and Call writing seen on the same strikes or strikes in a range of +/-100?

2. Is it a trending day – if there is strong writing on either Put or Call side, with one-sided writing and a change in OI skewed to one side, either higher Put writing only or only Call writing?

For Option Buying and Selling:

After general OI checkups:

– Don’t enter a trade in the first 15 min – look for BB trap. If BB trap is confirmed, take the trade in the direction of the candles, and set a target at the 20 SMA and SL as the previous candle low or high, depending on the direction

– Don’t buy Puts if the price is above VWAP and don’t buy Calls when the price is below VWAP

– Enter a trade only if the candle is closer to the EMA 13 or VWAP or both

– EMA 100 acts as strong support/resistance on 1 and 3 min chart (not checked on higher time frames)

– ADX should be above 20 and CCI above 100 for Long Call and -100 or lower for Long Put

Stop Loss:

– Method 1: If riding a trend, keep SL at a little lower of the 21 EMA

– Method 2: At entry, keep it lower to the entry candle or low of the previous entry candle

1st Way:

– Mark the 15 min first candle high and low and wait for the next candle to see if there is any breach of the high or low. If there is a breach on either side, take a position on that side with strict SL and Target Profit

2nd Way:

– Look for a 2 candle theory trade setup – 2 subsequent candles with volumes greater than 50k – the third candle is likely to get you enough to meet target. Trail Stop loss, don’t stay in the trade for too long, unless each subsequent candle close is above the previous

3rd Way:

– Look for regression channel breakout, wedge pattern, flag pattern, etc., while all other rules regarding VWAP, EMA are satisfied

– VWAP is powerful, take cautious decisions when the candle is near VWAP, look for rejection from VWAP before entering a naked buy trade. Usually candles would take rejection from VWAP. Near VWAP is the best entry

4th Way:

– Inside candle pattern: Big Green/Red candle, followed by an inside small Red/Green candle, indicates a bearish/bullish reversal. Can take a trade of 1:2 RR. If the above pattern appears near Supertrend, it is more effective. Stop loss can be kept at the Supertrend line. Supertrend setting to be length 1, factor 10

Option Selling:

• Look at Monthly expiries to determine trend. i.e. where the put and call writing in monthly is, will give broad market boundaries for weekly expiry
• Generally Wednesday and Thursday works well – based on backtesting done. Doesn’t work on Mondays and 50:50 on Tuesday / Friday
• Don’t do straddle or strangle if market is one sided or trending one side, rather look for spreads like bull spread bear spread. Can look at CPR, to determine if Bull Put Spread or Bear Call Spread to enter
• Days when VIX is above 19 or at peak, can sell options
• Better to check VIX when entering, and wait for VIX to start falling to sell options
• Don’t enter Straddle if VIX is rising, profits on Delta would be eaten by Vega
• For straddle try achieve 1 to 2% returns nearly 1600 to 3300 profit is good and exit (per lot on a capital of 140000 approx)
• Adjustments: 1) Cut Straddle fully and shift to new ATM strikes, whenever Straddle approaches corners (or start giving loss of 1000 or more per lot) 2) Buy tight Hedges on corners if market is moving one side 3) Try moving Buy side towards the market movement side rather than shifting sell side. Because if market returns Sell side gives more loss while if we shift buy side closer to direction of market moving, in case market returns, it will give limited loss and unlimited gains
• Maintain maths – try achieve 1 or 2% gain and close trade. Maintain this daily with 4% gain every week it will will be 15 to 16% monthly return and 150% yearly (considering 10 months profitable)

Create 3 chart setup in trading view:

Say Nifty in upper chart:

And 2 charts for ATM Call and Put strikes

Get, volume, VWAP, EMA 13, 20, SMMA 20

Approach 1:

Take both CE and PE sell between 9.20 and 9.30

In 15 min decide to cut out one side of CE or PE, if;

• Cut the side which is above VWAP, EMA and SMMA
• Get on side which is consistent below all above indicators and
• Above points are supported by OI analysis, i.e., if lot of Put writing and change in OI PCR is above 1 and growing, its bullish and Time to short Put
• If strong CE and PE writing at same level or +/-100 and market range bound short both PE and CE
• Reverse the position if market reverses in half session, I.e., if short PE, square it off and other short CE

Price Action:

1. Channel breakouts (Regression Channel)
   1. Trade on breakouts
2. Draw and look for Wedge patterns for breakouts
3. Support and resistance breakouts- supported by EMA trend and cross overs

Don’t forget – Importance of 20 SMA/EMA

Option Selling / Buying – Look at VIX

Open = High / Open = Low Set up

Look at VWAP also.

Generally if Open = High, then Market will go down, provided candles are below VWAP (there may be SL hunting below VWAP, be careful)

Vice-versa for Open = Low, candles should be above VWAP, watch for SL hunting, keep SL little far off first candle high or low

Biweekly Calendar Strategy to Trade in Nifty: A Profitable Approach

Introduction:
When it comes to trading in Nifty, having a well-defined strategy can make a significant difference in your success. One such strategy is the Biweekly Calendar strategy, which allows traders to take advantage of the price movements within a two-week period. In this blog post, we will explore the steps involved in implementing this strategy and how to make adjustments based on market conditions.

Strategy Overview:
The Biweekly Calendar strategy involves entering trades on Mondays for the next week’s expiry. For example, if today is the 10th of October, you would enter trades for the 20th of October expiry. The key elements of this strategy are as follows:

1. Entry Point:

• Sell CE (Call Option) or PE (Put Option) strikes where the price is between 35 and 40 Rs.
• Buy a hedge for the next far expiry (27th October in this example) where the premium is 50 Rs on both sides.

2. Exit Point:

• Exit the trade when you reach a profit of 5-6k or a loss of 5-6k.

Adjustments:
To maximize profitability and minimize losses, it is crucial to make adjustments based on market conditions. Here are the recommended adjustments for the Biweekly Calendar strategy:

1. Booking Profits:

• When booking profits, consider both the options and the hedges.
• Move towards the direction of the market for a strike where the premium is equal to the losing side strike.

2. IV (Implied Volatility) Consideration:

• Only enter the trade if the near expiry IV is higher than the far expiry.
• For example, if the IV on 16th March is lower than the IV on 23rd March, sell the option.

Benefits of the Biweekly Calendar Strategy:

1. Time Decay Advantage:

• This strategy takes advantage of time decay, as the premium of the near expiry option erodes faster than the far expiry option.

2. Limited Risk:

• By setting a predefined exit point and considering adjustments, you can limit your potential losses and protect your capital.

3. Profit Potential:

• The strategy allows for potential profits of 5-6k per trade, which can accumulate over time.

Conclusion:
The Biweekly Calendar strategy offers a systematic approach to trading in Nifty, taking advantage of time decay and price movements within a two-week period. By following the entry and exit points, as well as making adjustments based on market conditions, traders can potentially achieve consistent profits while managing risk effectively. Remember to conduct thorough research and backtesting before implementing any trading strategy.