While I don't recommend Day Trading, there are many who are interested in Day trading only and keep asking me what is the best way to trade Intraday. So for their benefit I am explaining one of a very effective Day Trading method . Its called pivot trading system and its simple yet extremely powerful and accurate. More often than not it delivers however key is to patiently wait for the levels before you initiate your trade.
You just need to spend couple of minute before the market opens and you will be ready to trade.To calculate pivot levels & support/resistance you need : Low, High & close of previous day.
Lets take example of Nifty. Suppose previous day low was 11500 high was 11610 & close was 11520
Now your pivot level = (11500+11610+11520)/3 = 11543
Resistance 1 = Pivot level*2 - low of day i.e, (11543*2)-11500 = 11586
Resistance 2 = Pivot + ( High-Low) i.e, 11543 + (11610-11500)= 11653
Support 1= Pivot level*2 - high of day i.e, (11543*2)-11610 = 11476
Support 2 = Pivot - ( High-Low) i.e, 11543 - (11610-11500)= 11433
Now you have all the levels you need to trade ( you should have this info ready by the time market opens). Now once market opens let it settle down for first 30-40 mins and lets say by 09.45- 09.50 AM-
a) Nifty is trading at 11520 i.e, (below Pivot level but above S1) in this case you Buy nifty once it crosses 11543 and sustain for couple of mins ( with a SL of 11476 S1) but if it starts moving down and break below 11476 (S1) then you short sell with a SL of 11543
b) Nifty is trading at 11550 ( above Pivot but below R1): in this case you buy when Nifty crosses 11586 (i.e R1) with a SL of 11543 ( pivot) and sell if Nifty break below 11543 ( pivot)
c) If Nifty opens between R1 & R2 then buy above R2 with a SL of R1 & if Nifty is trading between S1 & S2 then sell below S2 with a SL of S1
d) If nifty is trading very close to pivot point itself then wait for S1 or R1 to break before trading.
It is very simple and effective and can be used for any stock or futures ( online calculators are available to calculate pivot levels and one can use them But I listed the formula here so that you know how it works)
Practice this for few days and am sure you will find it useful and working. But like all trading rules the key rule here is the discipline. So trade with discipline.
You just need to spend couple of minute before the market opens and you will be ready to trade.To calculate pivot levels & support/resistance you need : Low, High & close of previous day.
Lets take example of Nifty. Suppose previous day low was 11500 high was 11610 & close was 11520
Now your pivot level = (11500+11610+11520)/3 = 11543
Resistance 1 = Pivot level*2 - low of day i.e, (11543*2)-11500 = 11586
Resistance 2 = Pivot + ( High-Low) i.e, 11543 + (11610-11500)= 11653
Support 1= Pivot level*2 - high of day i.e, (11543*2)-11610 = 11476
Support 2 = Pivot - ( High-Low) i.e, 11543 - (11610-11500)= 11433
Now you have all the levels you need to trade ( you should have this info ready by the time market opens). Now once market opens let it settle down for first 30-40 mins and lets say by 09.45- 09.50 AM-
a) Nifty is trading at 11520 i.e, (below Pivot level but above S1) in this case you Buy nifty once it crosses 11543 and sustain for couple of mins ( with a SL of 11476 S1) but if it starts moving down and break below 11476 (S1) then you short sell with a SL of 11543
b) Nifty is trading at 11550 ( above Pivot but below R1): in this case you buy when Nifty crosses 11586 (i.e R1) with a SL of 11543 ( pivot) and sell if Nifty break below 11543 ( pivot)
c) If Nifty opens between R1 & R2 then buy above R2 with a SL of R1 & if Nifty is trading between S1 & S2 then sell below S2 with a SL of S1
d) If nifty is trading very close to pivot point itself then wait for S1 or R1 to break before trading.
It is very simple and effective and can be used for any stock or futures ( online calculators are available to calculate pivot levels and one can use them But I listed the formula here so that you know how it works)
Practice this for few days and am sure you will find it useful and working. But like all trading rules the key rule here is the discipline. So trade with discipline.
No comments:
Post a Comment