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. 27 Feb to 3 MAR 2017).

What is 1SD formula?

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

Nifty future of MAR 2017 expiry last recorded trade is 8956.60, 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 8981.31, Successful cross-over above 9021.3 will target rise till 9049.56-9085.99-9125.98.

DOWNTREND conformation 8931.89, Successful fall below 8891.9 will trigger fall till 8863.64-8827.21-8787.22

RANGE-BOUND trend identification: If all up move invites sale above 9021.3 and all down move invites short covering at 8891.9 level this indication is sufficient to conclude that the price action is in the range of 9021.3 to 8891.9

What trade decision one trader should take?

• Buying above 8981.31
• STOP-LOSS 8931.89,
• HEDGE by buying put option of strike below 8931.89, for initial target 9021.3

• Selling future below 8931.89
• STOP-LOSS 8981.31,
• HEDGE buy buying call option of strike above 8981.31, for initial target 8891.9 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 8981.31 cross then you buy the nifty future with 8931.89 put option long. If it achieves the 1st target 9021.3 during the day or any point during the week revise your stop loss to 8996.59 and hold the trade. If the 2nd target 9038.88 achieved, revise the stop loss to 9008.94 and hold the trade. If the 3rd target 9049.56 achieved, then trail or revise the stop loss to 9038.88. 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 8931.89 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 8931.89 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.