Bank Nifty is an index of 12 highest cap and most liquid stocks in the banking sector. Launched in 2009, this index is now heavily traded in the stock market with a lot of traders specializing in Bank Nifty exclusively.
Nifty Auto Stocks List Over the years, many traders focusing on trading Bank Nifty options have devised a plethora of bank options trading strategies and the market is now flooded with Bank Nifty tips and tutorials on how to trade Bank Nifty.
This article will provide a breakdown of 2 bank nifty options trading strategies as well as several bank nifty options strategies that can potentially help you understand how to trade bank nifty and trade better in the future.
Bank Nifty has many advantages and disadvantages. On one hand, due to its high volatility, Bank Nifty is exceptionally attractive for traders who want to generate quick profits, as the chances of price bounce with this script are high. This feature also makes it more attractive for intraday traders, as a profit margin of more than 2-3% per day is a good day trading for a trader.
However, it is this same volatility that makes this script extremely risky. Simply put, the concept of ‘what goes up must come down’ goes fast, as the price is likely to move up, and if you are not present to book your profit on time or make a bad trade, The potential for loss increases, as does how much damage you can get.
Keeping this in mind, let’s take a look at how to trade bank nifty, how to trade bank nifty options as well as some bank nifty tips and bank nifty options tips.
This bank nifty options strategy is applicable for intraday trading only.
First, chart a 5 minute candle in your charting software. Next you have to choose the point at which you will start your strategy. You must either choose a point where the first two candles are either bullish or both bearish.
Nifty Auto Stocks List If your first two candles are bullish, you will need to place a buy order on top of the second candle. Once this is triggered, the stop loss order should be set at the bottom of the same candle. Alternatively, if the two candles are bearish, you do the exact opposite and place your buy order at the bottom of the candle with a stop loss order placed at the high of the candle as a buy order.
One can employ bracket orders to execute this strategy. In this case, your stop loss order is set at 40% of your candle height.
Here we are pursuing a ratio of 1:2 and hence, the target is placed at twice the height of the candle. For example, if the height of the candle is 40 points, you can place the target at 80 points. It is important to note that you should only focus on placing sell orders if both candles are bullish, and vice versa if the first two Mo candles are bearish.
This strategy is divided into two parts. Sell trades and buy trades.
Nifty Auto Stocks List If the market opens at a gap (a jump in price from the last days), you should wait for the chart to fill that gap. When a candle fills this gap, you place a sell order at that point. Analysis and trend studies predict that the price is likely to decline from this point. Therefore the sell order protects you from this drop in price.
This Bank Nifty options trading strategy is formulated when the market opens at a gap. When you see that the market is opening at a gap, you wait for a candle to fill that gap once again and then proceed to place a buy order at that point.
Unlike the ‘sell trade’ section of this strategy, the price move is predicted, allowing you to skin the game before this happens and possibly make a profit later. While the gap is usually filled within a day, one of the Bank Nifty tips states that if it is not, you wait for the gap to be filled in the coming days and then place your orders.
Nifty Auto Stocks List Setting your goals and preventing losses is an integral step in these Bank Nifty options tips. To figure out where the stop loss and target should be placed, chart a horizontal line from the top of the closing candle. This is also the point at which you place your buy order, and once the market corrects to bridge the gap, your buy order will be completed. The stop loss should be placed at the bottom of the closing candle. Similar to the previous bank nifty options trading strategy, another bank nifty option strategy is to aim at twice the height of the candle. For example, if the candle is 50 units, your target should be set to hundred.
There are some key aspects of this Bank Nifty options strategy. First, to be successful, the gap of your choice must be of 100 points or more. If it is below 100, you wait for the next gap and leave this one over. you this