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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. 25th to 28th April 2016).

What is 1SD formula?

Price Range= (Price * volatility * square root of day) divide by Square root of 365


Nifty future of ril 2016 expiry last recorded trade is 7915, we are going to find the weekly trend hence days will be 7 calendar days(including Saturday+Sunday).

NIFTY Future trend for 25th to 28th April 2016

1 SD Price Range131.09
NIFTY7915
Up TrendDown Trend
0.23630.947945.947884.06
0.38250.087965.087864.92
0.565.557980.557849.45
0.61881.027996.027833.98
0.786103.048018.047811.96
0.888116.418031.417798.59
1.236162.038077.037752.97
1.618212.118127.117702.89
Trend expectation as per 1SD method
:

UPTREND conformation 7945.94, Successful cross-over above 7996.02 will target rise till 8031.41-8077.03-8127.11.

DOWNTREND conformation 7884.06, Successful fall below 7833.98 will trigger fall till 7798.59-7752.97-7702.89

RANGE-BOUND trend identification: If all up move invites sale above 7996.02 and all down move invites short covering at 7833.98 level this indication is sufficient to conclude that the price action is in the range of 7996.02 to 7833.98

What trade decision one trader should take?
:
  • Buying above 7945.94
  • STOP-LOSS 7884.06,
  • HEDGE by buying put option of strike below 7884.06, for initial target 7996.02

OR
  • Selling future below 7884.06
  • STOP-LOSS 7945.94,
  • HEDGE buy buying call option of strike above 7945.94, for initial target 7833.98 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 7945.94 cross then you buy the nifty future with 7884.06 put option long. If it achieves the 1st target 7996.02 during the day or any point during the week revise your stop loss to 7965.08 and hold the trade. If the 2nd target 8018.04 achieved, revise the stop loss to 7980.55 and hold the trade. If the 3rd target 8031.41 achieved, then trail or revise the stop loss to 8018.04. 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 7884.06 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7884.06 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.

BANKNIFTY Future trend for 25th to 28th April 2016

1 SD Price Range386.29
BANKNIFTY16753
Up TrendDown Trend
0.23691.1616844.1616661.84
0.382147.5616900.5616605.44
0.5193.1416946.1416559.86
0.618238.7216991.7216514.28
0.786303.6217056.6216449.38
0.888343.0217096.0216409.98
1.236477.4517230.4516275.55
1.618625.0117378.0116127.99

What trade decision one trader should take? Buy above 16900.56 with stop loss 16605.44 for initial target 16991.72. Use the 16844.16 put option buy with long future or 17378.01 call option sell with long future to hedge the trade. If you sell it at 16605.44 hedge it with 16559.86 call or sell below16127.99 put option. Since 0.236 price giving triggering in bank nifty because of its high base value I am changing the entry point to 0.382 price point.

Conclusion: If you look the daily price point in the chart and compare with the weekly levels we have given, you will find our calculated point worked as point of pressure some time and point of revival some time.

Refer the past performance of the 1SD weekly trend calculation (from September 2015 to September 2017)

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