Thursday, August 25, 2011

Day Trading View for Thursday

This one is easy. Today is futures and options expiry day. There is lot of intraday volatility. I never trade on big news days and the FnO expiry classifies as a big news day.

The Nifty has seen weak rallies and strong declines. This is characteristic of a bear market. Most traders are now waiting for a strong rally to (a) go long, and/or (b) sell into strength. But markets may not oblige us by following a path dictated by 'most traders'. So here are two possible scenarios:

1. The Nifty shows choppy action around 4900, building some kind of a base, then begins a sharp, sudden V shaped rally.

2. The Nifty does not make any attempts to rally. After some choppy days, eventually the Index falls below 4800 and slowly slides towards 4650.

While the markets will do what they want, I am assuming that one of these scenarios should eventually materialize.

Analysis vs Trading.
What I just gave you was analysis. Traders cannot trade on analysis, they need specific trading plans to go in the market and make money. The analysis gives you a bias. That helps. For example, the trader is looking at scenario 1 and identifies a range between 4800 to 4950. The trader uses momentum to locate overbought and oversold levels where he takes low volume intraday trades. He does not carry positions overnight while the Index is in the range. A simple plan can do wonders for your trading. Just be consistent.

1 comment:

Sasi Uppuluri said...

Sir, Here's my view:

There is a lot of build up around fed Bernarke's speech this friday. QE3 is what people here would be looking at. Can expect high volatility on Monday.

Thursday and Friday might move sideways but with good swings both on the upside and downside.