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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. 22nd August to 25th August).

What is 1SD formula?

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


Nifty future of h August expiry last recorded trade is 8680.10, we are going to find the weekly trend hence days will be 7 calendar days(including Saturday+Sunday).

NIFTY Future trend for 22nd August to 25th August

1 SD Price Range139.56
NIFTY8680.10
Up TrendDown Trend
0.23632.948713.048647.16
0.38253.318733.418626.79
0.569.788749.888610.32
0.61886.258766.358593.85
0.786109.698789.798570.41
0.888123.938804.038556.17
1.236172.58852.68507.6
1.618225.818905.918454.29
Trend expectation as per 1SD method
:

UPTREND conformation 8713.04, Successful cross-over above 8766.35 will target rise till 8804.03-8852.6-8905.91.

DOWNTREND conformation 8647.16, Successful fall below 8593.85 will trigger fall till 8556.17-8507.6-8454.29

RANGE-BOUND trend identification: If all up move invites sale above 8766.35 and all down move invites short covering at 8593.85 level this indication is sufficient to conclude that the price action is in the range of 8766.35 to 8593.85

What trade decision one trader should take?
:
  • Buying above 8713.04
  • STOP-LOSS 8647.16,
  • HEDGE by buying put option of strike below 8647.16, for initial target 8766.35

OR
  • Selling future below 8647.16
  • STOP-LOSS 8713.04,
  • HEDGE buy buying call option of strike above 8713.04, for initial target 8593.85 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 8713.04 cross then you buy the nifty future with 8647.16 put option long. If it achieves the 1st target 8766.35 during the day or any point during the week revise your stop loss to 8733.41 and hold the trade. If the 2nd target 8789.79 achieved, revise the stop loss to 8749.88 and hold the trade. If the 3rd target 8804.03 achieved, then trail or revise the stop loss to 8789.79. 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 8647.16 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 8647.16 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.

BANK NIFTY Future trend for 22nd August to 25th August

1 SD Price Range333.6
BANK NIFTY19427
Up TrendDown Trend
0.23678.7319505.7319348.27
0.382127.4419554.4419299.56
0.5166.819593.819260.2
0.618206.1719633.1719220.83
0.786262.2119689.2119164.79
0.888296.2419723.2419130.76
1.236412.3319839.3319014.67
1.618539.7719966.7718887.23

What trade decision one trader should take? Buy above 19554.44 with stop loss 19299.56 for initial target 19633.17. Use the 19505.73 put option buy with long future or 19966.77 call option sell with long future to hedge the trade. If you sell it at 19299.56 hedge it with 19260.2 call or sell below18887.23 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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