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. 27th to Oct).

What is 1SD formula?

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

Nifty future of h to Oct expiry last recorded trade is 7896, 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 7934.32, Successful cross-over above 7996.35 will target rise till 8040.19-8096.7-8158.73.

DOWNTREND conformation 7857.68, Successful fall below 7795.65 will trigger fall till 7751.81-7695.3-7633.27

RANGE-BOUND trend identification: If all up move invites sale above 7996.35 and all down move invites short covering at 7795.65 level this indication is sufficient to conclude that the price action is in the range of 7996.35 to 7795.65

What trade decision one trader should take?

• Buying above 7934.32
• STOP-LOSS 7857.68,
• HEDGE by buying put option of strike below 7857.68, for initial target 7996.35

• Selling future below 7857.68
• STOP-LOSS 7934.32,
• HEDGE buy buying call option of strike above 7934.32, for initial target 7795.65 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 7934.32 cross then you buy the nifty future with 7857.68 put option long. If it achieves the 1st target 7996.35 during the day or any point during the week revise your stop loss to 7958.03 and hold the trade. If the 2nd target 8023.63 achieved, revise the stop loss to 7977.19 and hold the trade. If the 3rd target 8040.19 achieved, then trail or revise the stop loss to 8023.63. 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 7857.68 hits then close the option trade, future long trade and enter the fresh trade in nifty future short and 7857.68 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.