Nifty Intra Day Trading
Nifty Intra Day Trading
Nifty Intra Day Trading
Table of Contents
「 Introduction
This ebook is one of ongoing practical day trader training that helps active trader like
you learn how to trade effectively.
By sharing my own personal favorite NIfty stocks daytrading chart pattern setups with
you, I hope you will learn to profit as I have in the market. Trading is tough, it's hard work.
Do you remember your early trading wins? The losses? What have you learned
from them? Has it helped improve your trading? Think now of the exhilaration, the
frustration, the stops and and learning curve.
Hopefully, you've become more cautious, more accurate at clearly identifying the
chart patterns and indicators that work out. I hope you'll let me share some of
what works for me in my personal trading activities with you.
My method: most of my trades are from 2 to 15 minute round off trades done in
the 9:45-11am timeframe each trading day.
I remember my first year or two of trading - it was a lot of hard work. I read a lot
of books and visited a lot of websites, most were not nearly detailed enough to
help me when I was in front of the monitor trying to decide whether to buy or sell.
So then I tried to follow calls from tv show. Most were "buy it now" places, with a
lot of off topic conversation and a lack of real time training in the technical details
of how to day trade. I didn't know why this analyst was saying to buy a stock
where they were. Momentum trading is like gambling, and I do not gamble. Off
topic conversation, while entertaining, was not helping me become a better
trader.
So, I decided to learn how to trade my own methods. After having tested many
techniques and methods out there, and experimenting heavily for more than five years.
This ebook is a sample of my methods - you will learn some of the chart patterns
Fair enough? Even if you don't decide to get anything else I offer, I provide
this ebook to you as my gift, and hope that it will help you identify more
profitable trading setups.
Put the Trading Odds in Your Favor
There's an overwhelming amount of information that exists online for today's
active trader. Where to begin? How to get down to business? Let's "filter the
noise" out and focus on chart patterns for Nifty daytrading....
Become a technical trader - make sure you have specific reasons for every entry,
not just "it looks like it's going higher". That will have your trades fade out on you
often. Make sure to keep the tiniest of stops possible - I like to use .2 to .3 type
stops, and let the wins go from 1/2 to 1.2 or so type trades.
Trade stocks in the Rs1000-Rs3000 price range with at least 10Lk shares average daily
volume at first. Do Not trade cheap Below-Rs1000 stocks or low-volume stocks.
Do not let bad daytrades or blown stops turn into "swingtrades”
Personally, I think it's a good idea to papertrade for at least a Month prior to risking
live capital in the market, and use 100-share trades for the next 2 months etc.
Take your time - this is a profession, like any other. Rushing into trading has left
the vast majority of impatient people broke and back at a day job. Don't go there.
A few words to the wise: Be very cautious, and test out all the methods and techniques
you read about. Be sure to daytrade with a good multimonitor setup (1-2 monitors
minimum) and a fast internet connection (56k won't do) as well as a direct access
broker .
This is a profession for well-trained and prepared people only. Treat it like a "War for survival"
approach, and you will likely join the ranks of the broke. Treat the markets with respect,
learn it professionally, and your opportunities are unlimited. Please be cautious out there,
and take your time learning how to trade.
- I typically spend a lot of time waiting and watching for a chart after market hous.
_ Be always doubtful - always look for reasons to not to trade the stock.
Become sensitive, look for specific indicators.
#1) the broad market charts (Nifty) and sector charts (Banknifty,CNX Infra,CNX Reality etc).
Making new 1-day highs? 2-day highs? By 2-day,
I mean today and the previous day. Important to gauge the market
relative to previous day's trading range, trend and OHLC values (open/high/low/close).
#2) the stock chart pattern for the one you're trading,
eg cup pattern? 2day high? In trading range? short/long?
#3) time and sales for the stock: what's the story of the buy/sell
pressure?
"A chart is like a map, the more information each one provides, the
better the chance of reaching your destination safely." -
Failing to use charts as part of a system: You need to see the big
picture of the market each day, eg is it a red or green day, is it a volatile
or choppy day First.... then, use the chart patterns to help you identify
profitable entries and exits. Also know the time of day patterns, eg best
trading is done from 9:40 till 11am each day.
Not trading within the reversals - get your timing right: Market has
reversal times, eg roughly every 10 minutes during the first half hour,
also 9.45am, 10:30, 11:15, 12:30pm, 2.30, 3 typical reversal times. So,
don't go long into 10-minute long run during the first half hour etc, wait
for a consolidation and cup breakout for next Buy(Long) or sell(Short) entry
Other Tips
Avoid the noise: I do neither watch the financial news nor any show on television
after 9:00 am IST. Keep your Trading room at Pin drop silence because Trading
requires strict concentration.
In your first month day trading of Nifty stocks, just focus on learning how to
correctly enter stocks making new highs over the previous day's high,
especially if these follow consolidation or bullish breakout patterns.
Limit your attempts at "bottomfishing" and "shorting tops" to zero percent your first
month, 20% max your subsequent month. If I were to give myself advice as a new
trader, this would be a top priority. Make an 80/20 rule, buy breakouts as 80% of
your trades, there are plenty of cup breakouts to trade, limit bottom bounce
attempts to no more than 20% of your trades. Try it and see! Affiliates and
personnel harmless from all liability. Past performance is not indicative of future
success. You hereby assume full responsibility for the outcomes of all of your
trading decisions.
Previous Day High Breakout Long
"Mastering the chart patterns and being able to instantly spot micro
support/resistance & trends is essential for successful day trading"
Previous Day High Breakout Long - After Cup Pattern On the Open
Let's start with our basic "power chart" that I encourage every trader to learn.
Want to trade with smart money? Professional traders know this - here I will share
the tip with you. Institutional buy programs use the previous day's
open/high/low/close data as part of their algorithms, in addition to Premarket /fair value
and other data.
Like most gems, it's easy to spot, once you know how. It's revealed here now
publicly for you. As a side note, by showing you all this one, it's validity won't
diminish - it will continue to be my favorite entry criteria.
You know a cup pattern, right? Looks like the letter U. Basic enough, you buy cup
breakouts. Here's where it gets interesting:
1. Use a Five-day 5-minute time interval candlestick chart as your primary day trading chart
& Focus it by Two-Days chart, I mean have a chart that shows today and the previous day's
trading ranges and activity, along with volume.
2. Scan through your basket of core trading stocks, and look for a stock that is about to move
above it's previous day's high for a long entry. You want to avoid buying "in the range" of the
previous day's trading for this play. This is because pro money flow isn't in as strongly. Pro
money flows into or out of stocks once they have gone over the previous days high (longs) or
under the previous days' low (shorts).
3. These trades are always executed in the 9:30am till 11am timeframe,
and last from 2 to 15 minutes max. round off.
How t o Use this Chart Pattern Correctly
Be sure to wait until the stock has cleared at least .2-3 points above
the previous days' high. For example, if SBIN’S high was 2087 yesterday
, you would wait for it to get to 2091 for the long breakout entry today.
of the way into its' range. For example, if SBIN’S has a 30-40 point
not enter late in a run, eg if the SBIN’S has already just moved
for the last 10-15 minutes in one direction without a pullback, you
should be careful about a new entry in the same direction - timing is key.
_ Use time & sales to help you gauge the buy/sell pressure prior to
any day trading entry. Chart reading is a skill that must be practiced
to help you determine the net buying in the stock. Use this to help
Of all the patterns I train traders in, this one is the single most important
to master. It is my "bread and butter" pattern that I use to help me identify a
large percentage of correct long entries for. You can go long for a stock that's
trending to make a 2day high breakout as well. By the way, a cup isn't required,
but it does add solid strength to the pattern as it is "seller tested", vs just a buying
continuation.
Day Trading Success Secret #2
Patience is needed for breakout trading. You may well go a day or two
before you see a setup like this one. Avoid the temptation to Overtrade
and try riskier intrarange trades. It's better to be bored than broke,
and you don't want to trade because you're tired of waiting for a
breakout. Simply turn off the pc and wait for the next day.
Capital is hard to replace, your time is best spent looking for successful
entries, not trading everything that "looks like buyers are there", only to
get stopped out. So, wait for breakout trades - it's worth it.
"..identify a change of trend in a market as early as possible, take your position, ride the
trend, and close your position before or shortly after the trend reverses again"
The inverse of the previous chart, we look for stocks that are trending or making cup
breakdowns below the previous days' low. As with the prior example, the basis for this
one is that the stock has triggered buy program weighting on loss of the OHLC Low value,
and is getting weaker.
2. Look for the stock to dip below the previous day's low. Also check that
the the stock has not made a "sudden drop" of 2 or more of a point, to get
under the previous days' low. As always, make sure your sector charts are
headed down and that we're in a "red day", eg sectors are negative, eg NIFTY
< -1.0% , before entering these, for added safety.
3. These trades can be done in a longer timeframe, and off known reversals,
eg shorting off a 10am reversal, or shorting into lunch selling weakness.
_ Be sure to wait until the stock has cleared at least .2-3 points below
_ Moderate these entries with the same factors as the longs in the
previous example:
a) Know the stocks' average daily trading range, and
b) Do not enter late in a run
_ Use time & sales as well, it's used for all trades, along with the
Do Not fade (go against) the trend unless you are very experienced at
reversal pivot trading and can read a stocks' MOVE on the daily
Basis. Even then, limit fades to 20% of your trade attempts max.
Breakouts are the best of all trades, and should account for 80%+ of your trading
activities. There are also those occasional fibonacci bounce plays that can be
profitable to enter, when selected carefully.
This chart pattern is presented to help you identify the best entry for a long bounce
play, again using the 2day chart.
1. In this trade, we're looking for a fast multipoint drop (over 2-3 point)
down to the previous day's low, followed by a cup pattern long reversal
bounce. You do not want to "catch a falling knife" by guessing at a bottom. Make
sure that there is a cup pattern, a decent "U" of at least 3 to 5 point off the
bottom before trying a long bounce entry. You don't want to buy a downtrending
stock til the trend is broken on cup pattern bounce off the previous days' low.
2. Look for volume and time & sales strength accompanying the reversal.
Volume reversals are powerful, the initial short covering spurs new buyers and a
short squeeze, both of which support our long entry decision.
3. Now, once in, set your trade expectation no higher than 38% (first exit) or 50%
(second exit) of the range of the drop, using these Fibonacci retracements as
guidelines for exit targets. Stocks will often fall and bounce to half their initial
range, so trail closer stops as the stock recovers to the fibo areas.
4. Your max stop loss is the previous low, once the stock has dropped past
this your reason for entering the trade is gone, and so should you be. Typically,
good trades are good from the start, and I give them very little "space",
eg. 2 or 3 points max on any single trade, often less.
Here's an example trade using SBIN
_ Bounce plays are risky - be cautious and only enter bounce back
large fast multipoint drops, not stocks that are slowly grinding
down, those are most likely shorts.
sure that there's solid buying volume on a reversal. You can only
determine this if you've been watching the time & sales for the 10
minutes of so prior to where you'd look to go long on a bounce, so
you can detect a shift in the trend, a reversal. Needs at least a year
experience, so don't try this, new traders.
_ For Nifty day trading, be sure to look for the bottom bounce off
Bounces are tricky, and require faster order routing and trailing stops
than breakout trading. Once mastered, they are a useful addition to your
trading skills, and are fun to trade, when done right.
When I was just starting out, I'd always guess at bottoms and "try to
beat the crowd in" and buy the bottom. If I had it to do over again, I'd
have just focused on breakout trading my first year, and added bounce
attempts only in next year and beyond, limiting them to just 20% of my
trade attempts.
"You cannot reasonably expect a pullback rally to climb all the way back to a
trendline that is ascending at a very steep angle"
It's a trade in which you look to short the failure of a double top to breakout.
Step by Step Directions:
1. On your two-day chart, you look for buying up to the previous days'
high.
2. Typically, the faster the move, the faster it will attract a reversal/pivot.
So the best types of patterns are those where it shoots up say from 9:45 til 10am
and starts to fade/sell back down at 10am, right under the previous day's high,
this is where a short entry can be considered. A steep slope is preferred to a
gradual climb, which indicates a strong stock.
3. Look to short only after a small bear cup pattern on volume is seen. This
looks like an upside down , eg the letter A... let the stock lose at least 2 -3 POINTS
before firing off the short. Enter at the 2 or so under the previous days high when
you see sellers and time & sales in favor of sellside bias.
_ Don't try to guess tops or bottoms, make sure you have chart
day, a high of 2278, so the 50% fibo retrace value is 2260, at which
point the stock consolidates/chops, so we cover out the short for a nice profit.
Order Technique? Start your position with the largest size first,
then add 50% increments to it. In this example, we could for
example short our first 1000 shares SBIN at the 2278.5, then
short an additional 500 at the 2276, and cover out the whole 1500
when it starts to bounce at the 2260 or so. You would have
earned assured Intraday profit of Rs.23960 on margin of
Rs.3,20,000.(assume 10% Margin)
"Every time you look at a chart...the first two questions that should pop into your
mind are Where is support? Where is resistance?"
These are well-known, and are occurring less often (as of 2008) since the market
makers know that day traders predict them. But, they still do pop up on the
scanner now and then (I've found only 4-6 tradable opportunities each month, for
example), so they're worth learning about.
I'll share some specific tips here to help you make the most of gap open trades,
with a few subtle entry tips that should help you with these high-percentage
trading opportunities, when they do occur.
2. Look for stocks that have gapped at least a 3-4 point, over Yesterday’s close,
It's preferable to see stocks gap over 1.5% in either direction premarket, well outside
of the previous day's trading range. Then, you set your entries above the whole point
over the current gap up/down for both continuations and reversals on the open.
I do not buy stock premarket, I'll wait til the market's opened and gotten some
initial direction before deciding when to enter, eg after 9:45 am. If you're fast, you
can trade premarket and on the open.
3. Be ready to buy large gap down recoveries that are making a new cup
pattern high over the previous premarket high, or, short a premarket gap
up on a bear cup pattern breakdown under the previous premarket low
. You should be equally prepared to short continuation breakdowns as well .
Smaller gaps are generally continuations of trend but large gaps are mostly reversals.
Here is example
How to Use this Chart Pattern Correctly
_ Your second task is to watch the chart premkt and into the
The gap reversal and continuation trades are difficult to master, and, like
"buying bottoms and shorting tops", should wait until you have
successfully mastered breakout trading.
1. Identify the previous day's high, low and any "inside cup patterns" from the
FIVE days trading chart. See the cup below 232 level , in the previous trading day? I've
drawn a line to indicate this. I've drawn a second line to show the previous day's high,
which as we know, we use as resistance/exit area for current day's trading.
2. Set your current day's BUY entry trigger just above the cup pattern that was formed
in the previous day's trading. In this case, that would be just over the 232 area.
3. Be ready to exit into the Five days high, as a resistance area. In this case,
that would mean for example, I'd be selling in the 244 area.
4. "2nd move on breakout": if waiting for a breakout entry, it would be just over the
231.6, previous day's high. In this case, however, you can see that it would stop out, since it
barely made it over the previous day's high prior to retracing. So, keep both strategies,
intrarange cup breakouts, as well as 2-day high/low breakouts, in mind as you're seeking
trade opportunities. Same pattern can be utilized for Breakdowns.
Here's the chart, see if you can spot these patterns as described above:
CONGRATULATIONS!
You've seen many of the patterns I like to use. For more, contact me to help
you apply these day trading techniques.
Thanks for taking the time to study this E-book. I hope it will continue to
serve as a good reference tool for you in the months ahead.
Feel free to refer back to it anytime you wish.