I am going to share my personal experience and researcher’s trick of viewing the stock market trends is the TRADING THE GAP analysis.
I have already tested this strategy in various markets including the Nifty futures stocks, Nifty equity stocks, Stock cash, Stock cash services,
We are hunting for a Trend Day, which is a very recurring pattern in the Stock Market. This is what a trend day looks like.
- 15 a.m.–9.25 a.m. – Find Stocks that have opened with a GAP up or Down of more than 2%. Out of 200 FNO stocks, you have cut down your selection criteria to 3–4 stock. There is some news in this stock, or some large investor wants to buy large quantities in this stock and hence the GAP.
- 25 a.m–9.30a.m. – There will be 3 data point available 1) Volume. 2) High 3) Low. Volume has to be higher than previous day’s volume in 10–15 mins. Now keep a buying Stop Loss above the day’s high.Example yesterday stock A closed at 100, today it opened at 103 and in the first 10 mins made a low at 102.55 and High of 103.5. As soon as it crosses its 15 minute high of 103.5 buy it.
- 30am–3.30pm– Once the Buy order is triggered, keep days low, or weighted average price as your Stop Loss. Keep the stock until it is 3.15 or your trailing stop loss is triggered.
It is very easy strategy with mind blowing results. This works on the Reverse Side as well when the stock opens down 2%, thought the results are better if you do it long only.
You have a automated Stop loss which is your weighted average price, as price of the stock increases during the day, so does your weighted average price (Stop loss). Use this system for a month, you will never faced a drop down of more than 10% in your trading career.
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This Strategy works only if you have less than 20–30 Lakhs rupees, because after that you start affected the volume of the stock; the stoploss doesn’t get triggered properly.
Incase you have any doubts on the Strategy, feel free to comment below.
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