Mentoring Session 4, Day 1: 24 May 2021

Trading Ideas
We hope that the Day 1 of the Mentoring session was useful for you to get an insight about the
dynamics of Markets. As you must be clear that our main objective is to shorten your learning
curve in understanding the markets. If you can grasp the mood,sentiment ,pulse etc of the
market you can trade in any manner. You may buy options, sell options , scalp, take a positional
or a swing trade the options are endless. But the key thing is catching this underlying sentiment.

As we will dive deeper into concepts we shall be using some more tools to understand the
market that would enhance your skills.
In order to further facilitate your understanding we shall be sharing trading ideas that could have
been carried out during the day. These will be based upon the actual trades that were taken in
Live Market.

Opening Trade Ideas

For opening you must have a plan that is based on previous day data,World Markets and the
opening levels based upon Pre Open market data.
So let us see how how plan for today’s opening trade should have been

Previous Day Data:

For this we need to look into the previous day chart.
The above chart is of Previous Day i.e Friday 21 May 2021.
The most striking features that you must note down from this data are
● Observe the Price Candles of the last one hour and corresponding Volume Candles.
● Observe that the entire day Price was above the VWAP.
● The precise broke its PDH (Previous Day High i.e 20 May) and never went below it.
● The Price closed at its Day High.

So these figures establish the fact that the Bulls were in absolute control throughout the day and
they were most active towards the Day’s End.

Now we must have also analyse charts on a higher time frame

For this we will analyse daily time frame chart and identify major support and resistance levels

On this daily chart time frame just see what is the latest development of the previous day and
where the price is at time of closing.

● Just observe that on previous day the Price broke an important Resistance level of
34280 level and closed well above it at day’s high.
● This is a major development as from now on the 34280 level that was till now a
Resistance level would now act as a Support.
● The next major resistance is around 36500, so we may price to reach that level again.
● However, kindly note that the price region from 35000 to 36500 is a high congestion
region where prices spent a considerable time in the recent past.
SO what can you make out based on analysing Previous day Data and Data on Higher Time
Frame?
It is certainly a Bullish signal, Bulls have broken an important price level and closed well
above it near Day’s High, so they would try to take the market higher and give in their
best efforts to defend this level.

So Can you think of an opening trade on the basis of this data?

Yes we may plan for a Bullish setup right at opening but we need more confirmations.
So we shall look at 2 more data sets to finally plan a trade. We will analyse

1. World Markets
2. Pre Market Data till 9.08

If these are in favour then we can think of planning a trade and execute it at opening itself

World Markets

For World Market we shall analyse the Dow Jones Data of Previous session and Dow Futures of
present day till 9.15 AM as per IST.

Previous day Dow Jones Session (Index/Spot)

Just observe where the market opened and where it closed and how it behaved during its
session.
We see that it had a Bullish Opening , though it tapered a bit toward the end but still had a
bullish closing.

Now let us see what DOW Futures traded in the Morning before opening of our Markets
Just observe that the Dow Future opened around 34237 levels and by 9.00 AM it was around
34346, a rise of 100 points. That's bullish.

So overall it is a Bullish scenario based on World Markets too.

So now we have a Bullish view based upon our domestic market data as well as World market
data, so can we plan a Bullish setup right at opening?
Well yes we can but subject to the opening of the market.
We may have three kind of openings

● Gap Up
● Flat
● Gap Down

Now our trading plan would depend on the type of opening subject to overall Bullish scenario
Gap UP Opening
It might be possible that we may get a Gap Up Opening, in that case chasing it or taking a
Morning trade right at open will not make a sense, rather it would be sensible to wait for a good
retracement to happen to enter a trade as some overnight position holders would book their
profits and bulls would defend the up move that may be a scalping opportunity.

Flat Opening
If it is a flat opening we will have a great day to start with. Reason Bulls will try to take the
market higher right at opening and defend any down moves too.
So we can enter right at opening and scalp towards a higher level and buy on any dips.

Gap Down Opening.

This would provide an opportunity to enter right at the opening as Bulls would try to defend their
effort. However the possibility of Gap down is low given World Market levels.

So now the plan has been prepared.

The next important thing is execution that is the key. It will take you a while to develop the skill of
fast entry and exit, but once you develop it, that would be your greatest asset.

So what happened at Opening?

So today we had almost a flat opening and it was a perfect opportunity to scalp.
You should have averaged your position with every fall and just wait for one move up. It
happened beautifully in the first 2 candles itself.
Our master scalper SivaKumar Jayachandran was able to mint around 2 lakhs in the first 6
minutes itself.
These two Candles were enough for you to earn your daily target of 1% of your capital.

So I guess that the concept behind Opening trades is clear to all of you.
At the very outset we would like to tell you that Opening Trades are the most RISKY ones as
Market is very volatile at time of opening, so enter a trade when all the data point in one
direction and manage your risk accordingly.
We will talk more about Risk management in upcoming sessions.
Subsequent Trades

Now how to plan trades for the rest of the day.

Though usually we look at Open Interest Data around 10 AM and plan our trades accordingly.
Since the Open INterest concept has not been discussed in detail we will give it a skip today. In
Fact the overall Bullishness is enough to plan subsequent trades.

So now based on Previous Day data, World Markets & Market Opening what do you think
was the sentiment of the market?
But the important point is upto what levels would you remain Bullish?
It is an important aspect that you need to learn. You need to identify levels upto which
Bullishness is intact and from where the market can enter into Bearish territory.

For this I would again jump into the charts and identify key levels from where the major Bullish
activity started. This key level would be my turning point.

So we see that Yesterday the Bulls started buying from 34247 levels. This would be my key
turning point. Till this level I shall be Bullish and look for buying opportunities.

Since it is quite deep you need to have a WIDER STOPLOSS for the day.
So what do we do in Bullish scenarios? We can buy calls or write puts. But for buying calls we
need to wait for the right opportunity.
So what is the right opportunity?
Every Dip is a buying opportunity for scalping.

Till what levels I can plan this buy on Dip strategy?

Till the end of Bullish Zone.

Where is an ideal buying opportunity?

If price falls to any important levels shown by any technical indicator- VWAP, Supertrand,
VWMA, CPR, Moving Average it would be ideal to trade.

So you see there were plenty of buying opportunities when price dipped to important technical
levels.

The key thing to remember is fast execution and wider Stop Losses.

Trading Opportunity in Second Half

You can observe that in the second half of the market from 12.00 PM till 2.00 PM markets were
at a standstill. It kept on roaming in a narrow range of 200 points which is very uncommon for a
volatile index like Bank Nifty.
This happens when Options sellers are controlling the markets and eating the premiums.
These sellers would control the market, eat the premiums and then allow the market to move in
a direction. Usually the moves after such a narrow zone are quite violent and that happened
around 2.30.
There was a perfect setup around this time.

You can observe that around 2.30 after a long Congestion Price broke the range with a strong
Bullish Candle with Volumes greater than 120 K, also there was a subsequent candle with
Volume 120 K.
This concept of 2 subsequent Bullish/Bearish candles with volumes greater than 50K is a
very high probability trade and you need to enter right away and buy on every dip.
In such cases you can buy till price moves down to ST and wait for the next up move and
trail your profits.

This gave a move of around 300 points.

What else do you need from the Markets!

I guess that today's trading ideas would be an eye opener for you. We would discuss more
ideas in detail along with other concepts to facilitate your learning.
So as an exercise try to make a plan for tomorrow's opening using the same context we
discussed today.
You need to make this a daily practise to prepare a plan for tomorrow’s day.

Till then
Happy Trading

Regards

Team OI Pulse