Secret Formula of Intraday Trading Techniques & Strategies

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I have 2 brothers and both dabble in the stock markets and was lucky that one of my brothers mainly invests and the other trades options actively. Intraday option trade technique started my stock market career day trading in stocks with margin and also small bits of short-term trades. So I would have to thank my brothers for introducing me to the markets.

Had a few lucky trades to begin with, but was never successful trading equity, blowing up my account a few times in the process. Most of the trades were based on guts and some on tips given on TV. How did you manage to continue trading when you made these losses and for how long? I was having a good job and that allowed me to stay active in the markets, adding trading capital from my salary at the end of every month, it was a blessing in disguise. I started trading in early and this method of trading continued till May when there was a sudden fall in the market which was a big setback not only for my day trades but also on my delivery trades, which I exited in panic.

This incident was an eye opener on how trading based on news, watching TV or on a hunch can never really be profitable unless I had the news before everyone else did. This is when I got introduced intraday option trade technique Technical Analysis and it started off with learning candlesticks. As and when I learnt more about technical analysis, I suddenly felt that it is possible to have systems based on strategies which can run like a money making machine removing all human emotions.

It also helped that I was good at shell scripting and the automation background helped me put up a few systems. You could say that I have tested over strategies from then to now. Most of the results were based on open price, but the open price intraday option trade technique you see to what you can actually get while trading the markets has intraday option trade technique huge variance.

What also adds to this are the slippages, brokerage costs and other taxes. Around the same time I intraday option trade technique got introduced to Futures and Options and found out that I was better at intraday trading and hence most of my positions were never carried overnight. This is what I have been following for the last couple of years and it has been doing well for me. Most of my trades are option trades and hence along with looking at technical charts, I also started mixing it with a strategy based on intraday option trade technique interest, implied volatility and option prices.

Basically the strategy using the data predicts which side of the option is skewed to move up, either calls or puts and also the strike price best positioned for this. Since the strategy revolves around spotting traps or option skews as mentioned above, typically most of the trades would be counter trend trades. I personally find that being long options really works well for such a counter intraday option trade technique system.

There are some gut based trades, but I mostly stick with trades given by the system that I follow. But the critical thing is intraday option trade technique accept that we as humans can make mistakes and can get carried away, intraday option trade technique it is best to keep only that much money in your trading account that you can afford to lose, especially when trading in options. When you hold options overnight, the time decay happens faster and if you trade in-the-money options, the absolute return when you are right on your trades is not much.

Also one of the things that I avoid as an option buyer is to pyramid, that is add intraday option trade technique existing open option positions as and when it goes in my favor. When intraday option trade technique buy options you are fighting time, volatility and price moves, so I personally never liked pyramiding and always lost when I did.

There are times when I do carryover options, but I reduce the size significantly. Also the option position carry forwarded is not because it has made a loss, so let us hold it to the next day hoping that it recovers. It is mainly because the gut sometime says that there is more in the trade left to play out.

Out of the money options only? That is very high leverage, are there any money management rules? Leverage is a double edged sword, but a very important part of the business. One book which was an eye opener for me was on Position Intraday option trade technique by Van Tharp. In terms of how much trading capital, I follow a unique strategy. I come up with an assumptive trading size for my intraday option trade technique based on my risk appetite, assume this is 10 lakhs.

But as and when there is profit added to this Rs 1. Usually I will withdraw profits from the trading account if the account size reaches between 2 to 3lks to bring it back to 1. Today I can afford to take this risk having a cushion of a full time job; I might change this strategy by a small bit if I were trading full time.

My trading activity picks up quite a bit as and when the market approaches expiry and is mostly in Nifty options because of the higher liquidity. It is very important to not treat this as lottery money and spend it. I look at it as a normal income and use it to supplement my financial goals. There is no system that can guarantee you return, in the last 1. It is important to understand this and hence manage your risk accordingly. Trading is like a profession, people take it lightly especially because of the low entry barrier.

To be able to reach that assumptive trading size where I can quit my job and become a full time trader. Thanks, Rajesh, for the insights and hopefully your good run in the current day challenge continues and be able to trade full time soon. Love playing poker, basketball, and guitar. Thanks Intraday option trade technique for sharing this …. It contains Lots of Value and very helpful for the people who are there in this market….

Congrats and Thanks for sharing your thoughts Rajesh!!! Wish you all the best for your future plans. Because of his natural talent he is gonna achieve greatness. I see him as a teacher. You say correctly that Full Time job is a blessing in a disguise.

Intraday option trade technique how you are able to do Day Trading with FT job? How you are able to manage daily screen time required for day trader along with FT job? How about charts-on mobile? Most of the time, the major moves happen within the first one hour of market open and again in the last one hour.

Being in software industry where you have flexible timing helps a lot here and the day is still long after market hours! For tracking other parameters on the OI and IV skew, I use the system built inside my website tripleint.

An iitan is paid atleast 30 lakhs per annum sal. He does it because he has the potential. He gets satisfaction from it. Why do you play chess? I am retired aged 61, earning a pension. And i trade options.

Because i intraday option trade technique not yet brain dead. Money is not always the main motive. Wish you all the best for your future trading plans. I hope this article is very inspiring for all of us! My problem intraday option trade technique getting uninterrupted internet connectivity and reliable tick by tick charts for intraday trading.

I am based in Mumbai western suburbs. I use the live proprietary system developed to track OI and IV skew defined in my website tripleint. Most of the analysis is based on EOD charts, levels, traps and research is to select the right day for intraday option trade technique the trades.

During the day the live Option system and price levels are used for timing the entries. Thanks to Zerodha for publishing intraday option trade technique interview!!! For people who have been asking details on the option trading system and methodology, please visit my website at tripleint.

Thanks again for all the likes, shares and encouraging words!!! I almost have similar background as yours IIT, M. I am interested in building a trading system. Can you throw some light on how to proceed. Did you build your own trading system? Is there a mechanical way using which intraday option trade technique search for traps?

Will be very grateful of you can share your technique. Rahul — For traps, not using a mechanical way of finding it out and I have explained the details in my blog http: Under Categories you can find articles for bull and bear traps.

Please find some scholarly articles at http: Each have their own advantage and disadvantage as has been explained. The articles might help you to understand how each of the parameters of OI, IV and direction decides the option intraday option trade technique and you can intraday option trade technique decide on which strike suits best for what you are looking for.

Best wishes to you! Mr Shirish — Thanks for your message! Expecting a return of risk free rate is far too less to consider for any business and to maximize that we use the power of leverage.

Trading is to be considered more of a business and to begin with, one needs to start off only with the capital one can afford to lose. In all probability there will be multiple times when one goes bankrupt in the trading account and it is continuous learning and perseverance and might take a few years before intraday option trade technique could zero-in on the strategy and markets that one would be trading profitably.

Derivatives as a product itself is designed to factor in leverage and so handling risk: Being a personal trading account, one would not want to reveal the absolute value and that is the reason why returns are talked in terms of percentages. I have been trading from past 1. I always end up losing money just because of these traps. The most common mistake i always do is i carry my position overnight, that has killed my account literally.

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I rarely come across a trader that has not traded options. Options strategies come in many shapes and forms, but they are all intended to do one thing: Though I still trade options, I have a totally different perspective on how and when to trade them. Because of the boom in technology over the past 15 years, most of the trading done today is all electronic as opposed to picking up the phone and calling a broker or the pit.

And the economy of today is now global instead of being country specific. These factors have led the trading industry to look at the markets in a broader perspective where our markets will react with what happens in Europe or Asia. Not only this, but the markets are becoming a 24 hour market instead of just the standard 8: Since the markets are based on a 24 hour basis, we now can see how the world values our markets and get a better understanding on how our markets will perform based on how the world has traded.

I start my trading day early 5: Though equity options cannot be traded until after 8: Knowing this, by the time the U. Because of this, I like to give the market one hour before entering into an options trade. This gives the U. Looking a Chart 1, you can see the direction of the world markets and how it affects the U.

Chart 1 To trade options, I use a basic strategy. If the market is going up, I buy calls or sell puts. If the market is going down, I sell calls or buy puts. I prefer to be a seller of options rather than a buyer; however, there are some equities that move well enough in a day that buying the option pays better than selling the option and waiting for it to deteriorate.

Apple is a good example of this. Apple is one of the stocks that track very well with the E-mini for this reason I will use it as an example in this article. Though stocks have individual news and can move more at times or less , they will generally trend with the E-mini.

I then look at where the E-mini is trading based off of its open up or down and the overall direction of the market for the day, and see if Apple is trading in the same direction based off its open. If so, I will buy an at-the-money, or first strike out-of-the-money, call if heading higher, or put if heading lower. I then give the market 30 minutes to see if the direction I traded is right. If so, I place a stop at half of the value I paid for the option, i.

If the market has turned and I am not getting paid, I will get out of the position and look for another opportunity later. If the trade is going in my direction, then I will reevaluate it at 1: If the market reverses, then I get out.

If the market continues in my direction, I stay with the trade and move my stop just to the other side of the open by about 10 cents and then look to re-evaluate the trade at 2: Chart 3 shows Apple and the E-mini on May 26, The E-mini started higher and continued the trend going into 9: The closest strike would have you buying the June call on Apple. Chart 3 Chart 4 This is just one example of a stock that can be traded throughout the day.

Using the direction of the futures to get the trend shifts the odds in your favor of getting paid. There are many stocks out there, just verify that they trend with the E-mini before using them in this manner. Tom Busby is founder of DTI and a pioneer in the trading industry as a world-recognized educator. He takes a complex subject, the global markets, and puts it into an easy-to-understand language for all levels of traders and investors. He is a member of the Chicago Mercantile Exchange Group and has been a professional securities trader and broker since At Connors Research, we are using it as an overlay to many of our best strategies to make them even better -- now you can, too.

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