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. 21st to 25th Mar 2016).

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 2016 expiry last recorded trade is 7606, 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 7629.56, Successful cross-over above 7667.69 will target rise till 7694.64-7729.38-7767.51.

DOWNTREND conformation 7582.44, Successful fall below 7544.31 will trigger fall till 7517.36-7482.62-7444.49

RANGE-BOUND trend identification: If all up move invites sale above 7667.69 and all down move invites short covering at 7544.31 level this indication is sufficient to conclude that the price action is in the range of 7667.69 to 7544.31

What trade decision one trader should take?

• Buying above 7629.56
• STOP-LOSS 7582.44,
• HEDGE by buying put option of strike below 7582.44, for initial target 7667.69

• Selling future below 7582.44
• STOP-LOSS 7629.56,
• HEDGE buy buying call option of strike above 7629.56, for initial target 7544.31 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 7629.56 cross then you buy the nifty future with 7582.44 put option long. If it achieves the 1st target 7667.69 during the day or any point during the week revise your stop loss to 7644.13 and hold the trade. If the 2nd target 7684.46 achieved, revise the stop loss to 7655.91 and hold the trade. If the 3rd target 7694.64 achieved, then trail or revise the stop loss to 7684.46. 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 7582.44 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7582.44 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.