NIFTY TRADING SYSTEM

NIFTY (CASH)
5 Day Chart, 5 min Bars, MACD (26,12,9) 
My system :

Entry/Exit:

(1) Always be in a trade.

(2) Entry into long means I have also exited the short.

(3) The faster line (red ) goes above the green - > Close shorts & immediately go long.

(4) The faster line (red ) goes below the green - > Close longs & immediately go short.

(5) Another method to follow now is ... >> To look for the long term trend. >> derived by when the 50 Day EMA crosses the 200 Day EMA. Trade only in the direction of the long term trend and neglect the signals which this system gives in the other direction. This method has shown to drastically reduces losses, thereby increasing profits manifold. Try it out !

Stop Loss: 

An initial acceptable range for the stop depending on your comfort level can be put. As the Nifty moves in your direction , immediately put the the stop at the purchase price + brokerage as soon as possible.

Hedge your Positions Daily :

The Nifty encounters lots of gaps up and down and this could go against our positions due to many market factors / changes which take place overnight. We therefore need to hedge our positions, EVERY DAY before close.

Keep in mind hedge positions are not to make profits. It has to be used as a hedge strictly, however if the hedge position is giving a hefty profit, discretion to close the open position lies with you.

The technique I follow :- If the system is long ( & you are long 500 futures) then 10 - 15 minutes before close buy same quantity (500 in this case) just out of the money puts.

Carry over these puts. Watch the market for the first 10 - 15 minutes next day.

If the market remains long and keeps getting strong, find a good rate to close your puts. As the put was out of the money, the loss from the puts would be less, than the profit from the long.

If the market gaps down or continues going down, book profits on the puts or keep a trailing stop loss which will offset the losses incurred from the nifty long position.

Vice Versa for short positions with calls.

Remember buy "just out of the money" options, which show decent volumes. For eg ; If Nifty Cash closed @ 3920 and you are long, then you should be buying 3900 or 3850 puts.

This will always keep you tension free, what ever be the global or overnight factors.

Also remember, you all need to coax your brokers to charge you a reasonable brokerage. Keep looking for better brokerage options. But keep in mind :

Gaps are more dangerous than brokerage, so you need to secure yourself from them.

Position sizing :

This is now modified and left to your discretion. However please remember, though some people try pyramiding, doing it in the nifty may be hazardous to your bank account. All entries and exits should preferably be done in one go.

Read the system carefully and try to understand it. Make sure you paper trade for some time before you take the plunge.