Options day trade strategy
However, it is this same volatility that causes this script to be extremely risky. This bank nifty option strategy applies only to intraday trading. First, Chart a 5 min Candle Chart in your charting software. Next you have to pick the point at which you will commence your strategy. You must either pick a point wherein the first two candles are either both bullish or both bearish. If your first two candles are bullish, you must place the buy order at the high of the second candle.
Once this is triggered, the stop loss order must be set at the low of that same candle. Alternatively, if the two candles are bearish, you do the exact opposite and place your buy order at the low of the candle, with the stop loss order at the placed as a buy order at the thigh of the candle. One can also employ a bracket order in order to carry out this strategy.
Here we are chasing a ratio and therefore, the target is placed at double the height of the candle. For instance, if the height of the candle is 40 points, you place the target order at 80 points. It is important to note that if both candles are bullish you must focus on placing sell orders only, and vice versa if the first two candles are bearish. If the market opens at a gap down a jump to a lower price from last days close , you must wait for the chart to fill that gap.
When a candle fills this gap, you place a sell order at that point. Analysis and trend studies predict that the price is likely to drop from this point. The sell order therefore, protects you from this fall in price.
What’s the Pattern Day Trading Rule? And How to Avoid Breaking It
This bank nifty option trading strategy is designed for when the market opens at a gap up. When you notice the market opening at a gap up, you once again wait for a candle to fill that gap and then proceed to place a buy order at that point. While the gap is usually filled within a day, another one of the bank nifty tips states that if this is not the case, you simply wait for the gap to be filled in the coming days and place your orders then.
Setting your targets and stopping losses is an integral step of these bank nifty option tips. In order to gauge where the stop loss and targets must be placed, chart a horizontal line from the high of the closing candle.
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