Thursday, December 16, 2010

Trading Nifty with Support Levels

Ravi Prasad asks:

"sir, today nifty broke down 5880 and closed below 5900. Your level of 5880 is it on end of day basis? bit confused because if the level breaks down in intraday and recovers above it then how to trade. "


My Notes:

This is a sensible question. It should really be asked from all TV anchors who insist on asking for levels. We should ask them: what happens if these levels are repeatedly crossed intraday? You may not get an answer because anchors may not have any idea of real life trading!

But we are traders. We have to ask this question, then find an actionable answer. When I suggest nifty support and resistance areas, these are derived from my analysis of end of day charts. Unless specifically stated, the idea is to wait for the close. At 3:20 PM, if the closing price appears to be very near the zone then I take a 'sense of the market' to decide if the zone is holding or breaking.

Questions on this topic are welcome.

3 comments:

Nandita said...

Respected Sir,
I am a great fan of you. These days I am watching ET Now instead of CNBC TV18 only to watch you and follow your Golden Words. In 2008 Bear Market I made huge profits by following your words and now also making substantial profits by following you + own analysis & judgement. I am a Long Term Investor( Holding Period 10 - 15 yrs ) as well as a Positional Trader in FNO specially in NIFTY.

Sir, can you please guide me whether NIFTY will surpass 6100 in Dec Series. I am holding 6000 CE Dec Series@100, Lots 25. My Break Even Point is 6100. Where is the upper end of this trading channel sir ?

Wish you BEST OF LUCK to you on your new venture @ ET NOW.

Deepti said...

Then in that case what are the traders who are in the trade supposed to do. If the support is at 5880 and the market breaks that support, the traders are supposed to cut their trades and get out or they should wait for some kind of a %age breach after the support is taken out?

gourv said...

Hello sir,
I also use the same way my SL as suggested by you above .I decide @ 3:25 just before closing.But I always face the problem "what about the days when SL is triggered in intrday day and market goes far below/above that"
I think there is now way to solve that.But only think the trader can do is follow the same rule always.Please suggest if there is a solution to it.

Regards
Gourav(TCS)