Possible Trades

Trading Day: 5 June 2020

Hello everyone. In order to fasten my learning curve I shall try to do this exercise wherein I shall
look at the trading day that went by and try to identify opportunities that could possible be traded.
I expect that all the seasoned and experienced traders would review the possibilities that I see.
This would do two things, if I’m wrong then I would be saved from going down the wrong lane and
if Im correct then experts would help me to fine tune the thought process.

Although it would be in hindsight and may look rosy but I’ll try to be rational.Many would even find
it useless but I think it would help beginners like me.My ultimate objective is to develop an edge
of reading the pulse of the markets, profit is secondary at the moment. For this I need to develop
my thought process in correct manner and practise the theory. I hope wonderful kind hearted
people around me would help me in this endeavour.

For all the trades I would take into consideration following factors

1. Day’s Opening with respect to Previous Day

2. VWAP

3. Open Interest for Options and Option Chain

4. Implied Volatility

5. DOW Jones future and index in real time along with other European and Asian Markets

6. VIX

7. Volume

8. Supertrend

9. Future Open Interest

10. RSI

11. PSAR

These factors would be supplemented by

A. Trading time as there are specific Time Periods of the Day when there is higher probablilty of
price movements. One of the experts that I came across Mr. Ameya has been generous
enough to share this well researched timeframes of the day. These are

1. 9.30 to 10.30- The opening of Indian Market and during this time frame all major players place
their BTST and intraday orders during this time frame. This Time frame is also used by people
practising Market Profile Concept. Let it be TIME FRAME 1.

2. 12.13 to 12.30: Pre opening time for European Markets. Let it be TIME FRAME 2. Details are
under

Exchange Country Opening Time

Deutsche Borse Germany 12:30 PM
JSE Limited South Africa 12:30 PM
Euronext European Union 12:30 PM
SIX Swiss Exchange Switzerland 1:30 PM
BME Spanish Exchange Spain 1:30 PM
London Stock Exchange UK and Italy 1:30 PM

3. 13.23 to 13.46: Close of Asian Markets. Let it be TIME FRAME 3.

Exchange Country Open Close

Taiwan Stock Exchange Taiwan 6:30 AM 11:00 AM
Shanghai Stock
China 7:00 AM 12:30 PM
Exchange
Shenzhen Stock
China 7:00 AM 12:30 PM
Exchange
Hong Kong Stock
Hong Kong 6:45 AM 1:30 PM
Exchange
4. 14.24 to 14.46: Time period when Institutional investors: FII’s/DII’s/Mutual funds place their last
orders for the day. Let it be TIME FRAME 4.

So if anything falls within this time frame then probability would increase.

B. Any news domestic/global that would be tracked live as these may inverse the course of action
anytime.

C. Opportunity due to sudden movements: This would mostly have to do with sudden trend
reversals.

So let’s start.

Trading Opportunity 1

So kindly focus on the red candle at 9.33.

Idea behind the Trade

1. Opening was almost slightly up from Yesterday’s LTP.

2. Green Candle on opening with a drop in Future OI suggesting Covering of Short Positions.

3. Huge Volume Candles greater than 120 K on 3 min time frame consecutively for first 18
minutes.

4. Previous day analysis was Neutral

5. Above is Dow Jones Futures Chart on 5 minute Timeframe on Indian Timeframe. Dow jumped
from 26350 to 26404. Gain of 54 points till 9.30, so supportive for Bank Nifty as well.

6. VIX Opened at 29.65 and at 9.33 it was 29.24 thus decreased, so bullish.

7. RSI 69…so still Bullish.

8. Option Chain OI data I don’t have. But once I have OI tool installed I’ll use it as well. But I
remember at that moment it was not conclusive.

9. IV data—not available—OI Tool would solve this.

10. VWAP-Rising

11. Supertrend- Green/Bullish

Negative Factors: The red candle is accompanied by a big Red Volume Candle. But given the
context we may take chances. Had the volume been less than 50 K we could have had a big
position size. But clearly it is a battle going on between Bulls and bears. Bulls were very strong till
now but bears have given a sudden move, but Bulls should revert back.

So taking into consideration all the factors I think the sudden fall provides a scalping opportunity.

Entry Level: Should be beginning of the Next Candle at 9.36 i.e 20690

Stoploss: VWAP Levels- 20640

Target: Previous Candle High : 20784
Strike: 20500 CE
Buying Price 695

Result: Bank Nifty moved higher and touched its previous high again. 20500 strike bought at 695
gained a high of 766.95 in next 3 minutes.

So would be a Green Trade. Major thought process is sudden reversal in price against
background of Continuous Price Green Candles accompanied with Very high Buying Volumes and
increase in Future OI. All other things on the chart RSI, Supertrend also supportive.

Trading Opportunity 2
Lets concentrate on Red Candle at 9.45

It is very close to the previous trade.

It is a very big Red Candle with high Volume.

But given strong Green Candles in morning with Increase in OI and support from Dow I must
expect some fight back by the bulls.

In addition to this look at Dow. It increased.

VIX was flat so nothing from it.

Price touched the sacrosanct level VWAP for first time in the day.

It was a sudden drop in price.

Though it is a big jump I would take a trade expecting some bounce back because of fighting
back by the bulls.

So I would enter between 9.47-9.48 when price moves towards VWAP

Entry Level: Bank Nifty 20670

Stop Loss: Super Trend: 20609

Target: 20 points up move

Result: Between 9.48 and 9.49 price pulled back to a high of 20705. So that means a gain of 35
points.

If I look at strike of 20500 CE

Entry would have been around price levels of 680. It gave a high of 704.9 the next minute so a
gain of 25 Rs almost. Good for scalp.

After this I would have been cautious as the fighting between Bulls and Bears might get intense
and we should watch.

At this juncture I don’t have data but still can tell that OI court Data was not conclusive so not
taken that into consideration. But my stand would be slightly bullish for the day.

After this trade the fighting got intense. Bears again broke down the VWAP.

Trading Opportunity 3

VWAP Supertrend Crossover.

I’m not sure about this but would attempt to see this as this is something that is seen as great
opportunity.

Lets concentrate at 10.15. There occurs a VWAP Supertrend Crossover.

At this juncture as can be seen from Price charts the bears are in fighting mode as can be seen
from Big Red Candles.

But overall the Bulls have built their position. So we should respect both.

Lets have a look at DOW

It has continuously increased since beginning of Indian Markets. So it is bullish.

VIX has increased to 29.42 and with falling price it is bearish.

RSI 46: First time during the day it has entered into Bearish territory.

At 10.18 the price has moved down away from the VWAP.

So expect some action from Bears.

So I think we may be slightly bearish given crossover.

I learnt something while reading about Market Profile that during first one hour the market tries to
form Day’s Range i.e High and Low. Now if I apply that concept the Day’s High has been formed
and it is well below Yesterday’s High. So we may expect that now with Price moving down Day’s
Low should be formed.

For that it will test LOW of the day which happens to be Today’s opening price

The Black Lines represent Yesterday’s range and dotted line represents Today’s LOW till time.

So here we are summing it again.

1. DOW is against us

2. Huge Longbuiltup till 10.15 against us

1.VIX is with us

2. Big red candles trying to bring price down though less than Green candles in favour.

3. Price below VWAP in favour

4. RSI first time in Bearish territory in favour

5. Possibility of forming Day’s LOW or testing existing Low in favour

1. OI and OI spurt Neutral

So let's get short.

Entry Level: Observe Next Candle: 10.18 Candle Green with selling wick.

So entry level: 20590

Target: Day’s LOW i.e opening 20431

Stoploss: VWAP: 20665

Strike 21000 PE:

Entry Price: 807

Result: At 10.27 it got very near to 20431 and at 10.30 it crossed it.

SO Bank Nifty Move 160 points almost.

21000 PE price max at 10.30: Rs 913.35 so maximum potential of Rs 106.