BankNifty Intraday Trading Strategy

This post details about a intraday trading strategy for Banknifty. There are below things we need to observe to get the direction of the index.

1. SuperTrend (10,2) at 15 min time interval, Green UP, Red DOWN.
2. VWAP, Price > VWAP UP, Price < VWAP DOWN.
3. ADX(14,14) RED line above DOWN, GREEN line above UP
4. RSI(14), <50 DOWN, >50 UP
5. PSAR(.02, .2) above price DOWN, below price UP.
6. PCR ratio (on Analyst tool) rising UP, falling DOWN.
7. OI change, More calls written DOWN, more puts written DOWN.
8. Volume, is very important.
9. VIX, mostly falls when market going UP and rises when market going DOWN.

Some Observations

1. DOWN movement stops most of the time once PCR ratio goes near ~.5-~.6 or RSI near 18.
2. UP movement stops most of the time once PCR ratio goes near ~1.5-1.6 or RSI nears 85.
3. Most of the days market goes in one direction or remains sideways, very rarely it swings on both sides. 
4. If the market has lot of shorts or longs in both futures and options and it goes in opposite direction it generally swings big as there is lot of short covering or long liquidation. 
5. When the market closes at day high or day low with a big move, generally it continues in the same direction next day.
6. VWAP acts as a good support and resistance when data is clearly bullish or bearish.
7. In case of confusion between Data and technical's check data of current strike and 1 strike above and below.
8. Use Butterfly spread on expiry day based upon the point where market may end. Has a very good risk reward ratio.

Exit Strategy

1. 10:30 to 12:30 market slows down and does not moves, good time to exit half position.
2. End of the day. Generally market moves in 1 direction only.
3. When we see a large candle with big volume.
4. Stop Loss hits.
5. There is a shift in the data to the other side.
6. On Expiry day book profit around 10:30 AM, 1:00 PM, 2:00 PM and then according to above rules.

Things which can cause loss

1. Playing against the trend. (Should never happen)
2. Market goes both sides. (Happens 20% days, book profit regularly)
3. Wrong stop loss. (Will get better with experience)

Reversal Pattern