Strategies and Formulae for Intraday Trading

STRATEGIES ( FORMULAE ) FOR INTRADAY TRADING

by………..intradaySuRe.

The intraday movements of share prices are generally governed by Support & Resistance levels. The intraday volume, OPEN, HIGH, LOW, CLOSE & previous CLOSE prices are very important & one should track these prices daily. Previous data of 3 to 5 days is what is to be maintained or tracked. And the intraday data prior to the trading day is important.

If we are trading on Tuesday than intraday data of previous day i.e. Monday is what we need.

It consists of:

OPEN ( O ). The opening price for the particular day.

HIGH ( H ). The highest price for the particular day.

LOW ( L ). The lowest price for the particular day.

CLOSE ( C ). The closing price for the particular day.

Some basics for a novice trader.

Intraday as the term itself is self explanatory is the position you take and clear on the same trading day.

As a general understanding of trading people feel that they have to first buy something to sell it later at profit.

But in intraday trading you can SELL a share even if you don’t have it with you. This is termed as SHORT SELL. i.e. You sell suppose 100 XYZ share @ Rs. 250. here if the price comes down to say 230 and you buy back the 100 XYZ shares. Your transaction is complete. 250-230=20. And 20*100=2000 Rs is your profit.

i.e. Short sell is exactly opposite of the buy first and sell later transaction.

Very Important: SHORT SELL transaction has to be compulsorily completed by buying back the equivalent no. of shares on the same trading day.

General but IMPORTANT for all :

There are many strategies one can apply to make profits daily in intraday trading as per my experience, observations & understanding. These strategies have been categorized or you can say designed on the basis of different TRADE TIMES, SITUATIONS, MARKETS, & SHARES. As discussed Mostly traders worldwide use PIVOT formula of Support & Resistance both for intraday trading as well as Delivery based trading short term & long term. So my advice would be to refer the support & resistance levels along with the various recommended strategies by me.

Although one can apply different strategies for different trades, I would suggest traders to select one strategy, which they are comfortable with, as per the mindset, personality & risk taking capacity.( i.e. either BUYING strategy or SHORT SELLING strategy. A simple reason is that you cannot be two persons at one time, or you cannot have two views at a time.) Once you master one strategy, you can practice another and apply. YOU can also make profits forever by sticking to one strategy forever. What becomes important is choosing / finding & separating scripts which fit your particular strategy daily. A little study or homework is compulsory to be successful and self sufficient, independent trader.

DIFFERENT TRADING STRATEGIES :-

We can categorize or divide our strategies as per different time frames & situations for better understanding.

1. MORNING 30-MINUTES STRATEGY.

2. TRADES AFTER MORNING TRADES.

3. TRADES DURING QUARTERLY RESULTS.

4. GAP OPENINGS OF MARKET.

* MORNING 30-MINUTES STRATEGY *

This strategy is based on understanding the moves in context of the Sentiments / Supply – Demand Factor or Moves of Big traders or Operators.

If you track the Close price you will wonder the Open price of the trade day is not always the same as that of the previous days Close price. It is because the Operators according to the sentiments lay a trap in which small traders get trapped and run into losses. If we understand these Dynamics we can make profits 90 % times in normal markets in the first 3 to 30 minutes of trading. ( Remember you should close your positions in this time frame )

For this strategy it is compulsory to choose shares with very high volumes for example shares in nifty or for that matter other shares with volumes above 5 lac or 10 lac

Take the following figures and trade plan with you on the basis of calculations given below. We will call it Operators Strategy ( OS )

Difference (D) between HIGH & LOW of previous day i.e. D = ( H – L )

Now OS = D / 3

BUY PRICE = ( Close – OS )

SELL PRICE = ( Close + OS )

For understanding the OS one should understand the following……..

STRONG SHARE or STRONG CLOSE (close price is higher than previous close) &

WEAK SHARE or WEAK CLOSE ( close price is lower than previous close )

Now on the basis of above calculations you are ready with the figures i.e. BUY PRICE, CLOSE & SELL PRICE of STRONG SHARE & WEAK SHARE separately.

Now on trade day if STRONG share opens anywhere between Close & BUY PRICE you can BUY first & keep for sell @ SELL PRICE as your target.

The Trap :- As the share opens at a price lower than Close one gets the feeling as if the share has become weak and sells it, thus falling in the trap.

On trade day if WEAK share opens at or above SELL PRICE you can SELL first & buy later @ BUY PRICE as your target.

The Trap :- As the share opens at a higher price than the Close one gets the feeling that the share has become strong and buys it thus falling in the trap.

This strategy requires you to be very fast in taking decisions and accordingly positions. Furthermore One should compulsorily come out or close the position in the mentioned time frame or as soon as target is achieved. Life is not that easy and if you find that your position was wrong immediately square it ( close it) Avoid putting Stop Loss, instead put orders immediately for covering

* Some more morning strategies :……………….

A ) SHORT SELL :- ( sell first & buy later )

OPEN & HIGH IS SAME….

Sell just below HIGH price if it is not breaking the high price for 3 minutes.

Example. If O-H is 110 sell @ 109 with a SL ( stop loss ) just above HIGH.

Best results are observed if :-

a) Market is Bearish ( weak )

b) O-H rate is near or above SELL PRICE i.e. ( Close + OS )

c) Weak share but O-H rate is @ or near SELL PRICE

d) If share price is not crossing above previous day’s HIGH

B ) BUYING :- ( buy first & sell later )

1. OPEN & LOW IS SAME…….. Buy just above LOW price if it is not breaking the low price for 3 minutes. Example. If O-L is 100 buy @ 101 with SL ( stop loss ) just below LOW.

Best results are observed if :-

a) Market is Bullish ( strong )

b) Close is Strong ( i.e. it is a strong share )

c) O-L is near or below Close

d) O-L rate is @ or near BUY price

2. STRONG SHARE :- ( i.e. strong close )

BUY if :-…………..

a) OPEN is @ BUY price.

b) OPEN is same as pr. Close.

c) OPEN & LOW is same, as discussed above.

d) OPEN is just above pr. Close but far below SELL price.

3) BUY if Share crosses above its intraday High price.

Best results if market is bullish. Keep the target of getting out @ SELL price, if it is showing strength & volume is more than pr. Day.

Losses. are part of intraday trading. success of 70% plus is what one should work for & refine your strategy. Hard Fact. In The game of intraday trading if you are consistently achieving 1% profit of your total intraday volume you are achieving wonders.

Greed & Fear are enemies of intraday traders.