Saturday, February 19, 2011

Nifty Point & Figure (PnF) Analysis - Week 100221 - 0225

Weekly Analysis:

Daily Analysis:

Hourly Analysis:


Weekly, Daily yet to resume DOWN trend. Hourly DOWN. Support 5420 - 5250. UP side resistance 5540 - 5580.

Additional Note on 19 Feb'11:
Option Gambling for Small Traders like me:

Thought of sharing this bit of my experience with you all. Buying Option can be a very effective speculative gambling under certain circumstances. This can be taken up in addition to Nifty Future trading that anyway we do. Let's take two examples from recent past (from my own experience).

Nifty-Feb-PE-5200 & Nifty-Feb-CE-5400. Both of them in last 2-3 weeks have moved from meager 10 Rs. to more than 100 Rs., giving one the opportunity to leverage 10 times benefit. Having made the case now a few points come to mind how to know what to do with which Option?

1. Decide the side of the trend you want to play. This can come from your own analysis / from some experts like iLango / any other source you rely / simply your own feeling. I shall show this won't cost you much!

2. Identify the second most important options (call & put) from the option chain. This can be found from the NSE site of option chain; e.g. as of today Nifty Spot is in  5460, therefore the most important Option Strike price should be either 5500 or 5400. At this point both call & put side it's 5500. The second important strike price on call side CE 5600 (closed @Rs. 6.55) and put side PE 5400 (closed @Rs. 28.9).

3. Buy contra in intra-day. Depending upon your side enter into any one of them (e.g. for Long enter CE 5600). The best way to enter when intraday the market moves opposite to your intended direction so that you get it at very low price. Daily volatility of option is at least 20-30% even in a dull day. But the hard constraint here the buying price should not be above Rs. 25 at any cost. This is because both of them will be OTM (Out of The Money) and therefore they have only TV (Time Value) left in them.

4. Don't close the losing position if there is no profit. Let's do some calculation now. Suppose decided to play the short side. Hence bought PE 5400. But remember the hard constraint: I will not buy until I get it at Rs. 25. And I prefer to play two lots, hence 2*50 = 100 quantities. So maximum money gambled (100*25 = 2500 + the brokerage 2*150 = 300 taking on the higher side) = Rs. 2800. We might be grossly wrong in our judgment of the market movement; i.e. market went up. We should be happily accepting the whole loss and not cut our position until the whole of the TV is eroded. But if it moves in our direction there will be at-least some 3-4 times movement. You can exit at some suitable point as per your greed :).

5. Avoid this gamble last three days of the series. As I am gambling a tiny part of my money I don't pay heed to much of the TV erosion. In fact I am banking on this TV only to get me a suitable entry. As you wait and show patience you will often find you are getting your preferred strike price at mere Rs. 10!

6. Avoid more than four trades in a month. All said and done we make money only when we are sure of the direction of market movement. Market does not change the direction that frequently in a month. Therefore, it's wise for us also not to change the direction. Either book profit and stay out or stay in and wait. This game also gives you support to your Future trading sometimes as hedge sometimes as booster!

A gamble I find worth speculating. But this is only for tiny traders like me who can't take more than 2 lots exposure in the market.


  1. Thank you for the trading plan. The tought part it to get the correct direction.

  2. @ Anonymous,

    It sounds a bit odd to call somebody "Anonymous", so would request you to sign your name.

    True the toughest part is to get the direction correct. But you can't always get it wrong. You can afford to go wrong 3-times against one single right position to break even.


  3. Your trading plan is good but any one can do best using some technical indicators. visit some bet intraday trading method.

  4. @tradersfriend,

    I am sure you must be doing great with your those formulas ... it's just that I moulded myself to some system I follow today ... trying to come off my worst days ... still a long way to go
    worst >> worse >> bad >> good >> better >> best ... a long journey :)


  5. Friend, in market making loss is necessary to gain experience and playing long. I am also made loss in trading my early 8 years after that i am trading according to technical indicators and making profit. So go on with ur effort. Have a nice day.

  6. @ traders friend,

    thanks for your good wishes ...

    Just because I follow P&F, a few solicits from my side ... :)
    it is also a technical study of market only ... it too has indicators ... people used it for several years ... it's just a bit slow ... but damn reliable, free of whipsaws, and very easy for no-brainers like me :)