Hey folks! I hope you are safe and healthy in this COVID-19 pandemic. Every week in this weekly newsletter we are analyzing weekly trend/range based on the chart and open interest data and based on that we are selecting our nifty and banknifty option strategy for the comming week.
In every newsletter, I’m sharing some tips or the methods that a newbie can follow to be a successful trader in this share market. Today I’m sharing “Why a trading plan is important?“
Importance of a trading plan in share market
When coming into a field such as stock trading in which personal choices translate into losses or profits, acquiring a well-outlined and easy-to-follow strategy can make the difference between failure and success.
Having a strategy to be prosperous in almost any area of endeavor is highly recommended, but investing in the stocks or any other financial market with no plan is practically a certain recipe for failure.
Having targets set in advance and knowing when to come out from a trade constitutes a significant part of successful stock trading. Bear in mind, a trade has to be liquidated for a gain to be accomplished. Virtually every successful dealer in the markets is dependent upon some kind of strategy or guidelines for their achievement. Let us talk about some advantages and importance of a trading plan.
Advantages of a proper trading plan
Possessing a trading strategy before beginning to trade is similar to having a map prior to beginning to travel. Can you choose a trip without understanding how to get where you’re going?
Trading at the stocks with no trading strategy, even if you are trading in demo accounts, maybe a difficult experience once you start trading with real money.
Fundamentally, using a trading strategy helps traders handle trading in the stock market like a small business. We all know that stock trading is running a company that has a proper business strategy to increased its profit.
What’s more, the objectivity and clarity about a perfect trading plan could be a real blessing when making some quick trading decisions to make money from the most opportunities that might appear from the often fast-moving stock market.
When participating in a risky market like stock trading, It can finally be the deciding factor between success and failure if you are having sufficient confidence to come back to the market after having a loss from a trade taken emotionally. That’s what a trading plan will do for you. It will give you that confidence to repeat that same thing day after day.
Emotions Can Produce Havoc When Trading Stocks
Proper rules in the trade plan help traders maintain their trading psychology and emotional during a trade at a minimum. 1 indication of a successful trader consists of an undaunted attitude regardless of market direction. The mature trader seems to be calm no matter what the market conditions.
Common human emotions like greed, fear and trust can result in a serious problem when trading stocks, so having a good approach to managing them when they inevitably arise can help you overcome many common stock trading pitfalls. Read more about trading psychology here.
Once discipline is dropped after trading, the trader will then be significantly more inclined to trade emotionally and can potentially incur huge losses as an outcome.
Accordingly, to find the best odds of succeeding when trading stocks, remember to prepare yourself before you begin to trade by organizing your trades objectively then proceeding with your strategy as strictly and calmly as possible.
Overall, a good trading plan will help you
- Identify your goals
- Organize your market research and trading activities
- Decide when to take a position, when not to take a position and in what direction
- Manage your emotions and trading risk once you enter a position.
So I hope you know how important a trading plan is. So before you start your trading with real money, you should keep your trading plan ready. If you need my help to build a proper trading plan to trade with limited risk option hedging strategies, can hit the below button.
Nifty Weekly analysis with Nifty option strategy
I have shared in the last weekly article that 11450 – 11500 is a crucial zone that will decide further levels. Only a breakout will this zone will lead to higher levels.
Last week on Friday, we saw a breakdown from this zone in Nifty. This whole week Nifty was trading below this zone. Based on the chart, Nifty is trading in a No-trade zone right now and we can expect some range-bound activities only.
Range for the coming sessions is: 11000 – 11500. A limited risk range-bound strategy is preferable here.
Option chain analysis for Weekly Nifty option strategy
Based on option chain data, the highest Open interest stands at 11500 CE & 11400 PE, followed by 12000 CE & 11300 PE. PCR of all strikes is 1.07, which indicates a neutral market. PCR at 11300 stands at 3.47, which is acting as an immediate support level.
The Put-call ratio at 11500 stands at 0.27, which is acting as a resistance level. Equally, important indicator Option Pain is at 11400, indicating weekly expiry at 11400. A shift in option pain will provide further levels of expiry. So keep tracking max pain.
Significant open interest buildup on both sides. Indicating a range-bound activity only. So based on the OI, the possible range for this week should be 11300 – 11500.
Keep tracking change in open interest to analyze market participant’s behavior, so that you can adjust your position accordingly. If you don’t know how to analyze open interest fo find best option trading strategy in nifty and bank nifty. Just enroll for our Option Strategies – A Mentorship Program.
Nifty weekly options Strategy: Iron Condor
Initially, you can keep a stop loss of 11300 & 11600 for this strategy. Means square off if you find nifty is giving a breakout or breakdown. Or you can do this adjustment too. ( Do not hold this strategy is loss is more than 2500₹).
If you find that Nifty is giving a breakdown and sustaining below 113000, then square off call spread and bring it down to 200 points lower levels.
The same thing you can do with put spread means if you got a breakout from 11600. You can shift your put spread to 200 points up.
If you want to learn how to find the best nifty and banknifty option strategy and its adjustments in more practical ways with live mentorship, You can enrol in our Option Strategies – A Mentorship Program.
Banknifty Weekly analysis with banknifty options strategy
After a good breakout from the range of 21000 – 23200, we saw a sharp decline on 31st August in Bank nifty. Despite this big fall, bank nifty was still holding its support level of 23200 (which was its resistance levels before breakout). but later on Friday last week, we saw that Banknifty lose its crucial support level and close below 23200.
This whole week, we saw good selling pressure and Banknifty is trading near to its 38.4% retracement level (22400) A breakdown will lead to its previous support level i.e 21000.
Now as you can see that Banknifty is trading in it’s previous range. So a limited risk tange-bound strategy is good option here.
As we are the limited risk strategies traders, we should not bother about this unclear trend. In fact, we need this type of range-bound market. So I’m expecting some good earnings in the coming sessions. So follow us on different platforms very closely for some real-time updates.
BankNifty weekly analysis based on the option chain analysis
Based on Bank nifty option chain data, the highest Open interest stands at 22500 CE & 21000 PE, followed by 23000 CE & 22000 PE. PCR of all strikes is 0.78, which indicates a neutral zone. PCR at 22000 stands at 8.31, which is acting as an immediate support level.
The Put-call ratio at 23000 stands at 0.16, which is acting as a resistance level. Equally, important indicator Option Pain is at 22500, indicating weekly expiry at 22500. A shift in option pain will provide further levels.
If you don’t know how to do the bank nifty weekly options chain analysis to find your banknifty option strategy, Just enroll for our Option Strategies – A Mentorship Program.
BankNifty option Strategy: Iron Condor
Possible adjustments for this best banknifty option strategy are:
If you find that BankNifty gives a breakdown and sustaining below 21800, then shift your Call spread to 1000 points down.
The same thing you can do with put spread means if you got a breakout from 23200. You can shift your put spread to 1000 points up.
If you want to learn this banknifty option strategy and its adjustments in more practical ways with live mentorship, You can enroll in our Option Strategies – A Mentorship Program(33% OFF).
Post your comments in the comment box if you have a query related to the Best Nifty and BankNifty option Strategy. You can ask any question related to option trading in the comment box.
If you need More real-time assistance on how to find the Nifty and Banknifty option strategy, Can take our premium subscription or open a trading account with us and you will get real-time assistance every month on the weekly Nifty and banknifty option strategy. You can contact us on WhatsApp
*( Please avoid any question like which Call or Put we should buy in the coming week).
Options Strategies – A Mentorship Program
On September 01, 2019, We have launched a new mentorship program for Option selling strategies, in which we’ll discuss how can we deploy these Options strategies? What rules we should follow before taking a trade? And what should be our adjustments if the script is moving against your prediction?
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DISCLAIMER: – we are not a SEBI research analyst. Views or the nifty and banknifty option strategy posted here only for educational purposes. There is no liability whatsoever for any loss arising from the use of this product or its contents. This product is not a recommendation to buy or sell, but rather a guideline to interpreting specified analysis methods. This information should only be used by investors and traders who are aware of the risk inherent in securities trading.