Thursday, December 1, 2011

Standing in front of a running train

A big gap up (130+ points in Nifty) has come about for the Index. Traders who are long have the pleasure of seeing their positions in large profits. Yet, what about traders who are short? The Nifty short term trend will be up, after this gap. The Index has opened above 4900 giving a breakout from a 4700 - 4900 trading range.

If the trader has PUT options to catch the primary bear trend, then no action is required. Inside a bear market, there will be many upside corrections. The PUTs are a positional trade. But, Short term traders have to protect their capital. Going against the trend is not a good idea. Having a swing trading short position will be like standing in front of a running train. Not a good idea! Traders who are short should use the 15 minute range to exit. As I write this at 12:09 PM, this range has held. If prices go above the high of the first 15 minutes, close your short positions.

What about the trader who does not have any position? Since the trend is up, it is wise to go with the flow.Again, a dip to 4900 or nearby is the preferred location for going long.

8 comments:

srinivas said...

How to trade in gap up or gap down markets?

Disha Advisory said...

4900 is the VILLAN last time and now looks like Hero...But personally I feel It should 4860 cash which is important as after DIWALI not 5000 But 4900 was important...other rational we may take for BULLs to sustain...Trader should start thinking that as like chinease central bank, on 16th december If RBI paused/reduced interest rate then sbi should also accompanies RELIANCE...and I personally belive to drag the market RELATIVELY reliance is important than SBI for intire this year. I say RELIANCE/NIFTY are acting like JUDWA...both broken from 200 dma ie. Rs. 900 for Reliance and 5400 for NIFTY.I hope this much rational will help to take decision-Rushabh Shastri

divyesh said...

What ever the circumstance or CRR changed in china....!
i Feel great opportunity to sell Nifty at this level with S/L of 5033 on closing bases...!
i sold at 4992.35...!
Any one is there....?
Our GDP down 2%...!
Congress is underpressure of Anaa...!
S&P had reduce ratings of American banks....!
Bear will be back as he is at near his support line 5033 50DMA...!
If not than only a loss of 40 points...!

divyesh said...

Nifty has retressed 50% from 28/10/11 (5402) to 13/11/11 (4632). Today's high is 5015.05. Now it has resistance of 50% retresement & 50 EDMA...
Let us see what happened Tomorrow...!

Kuldeep.rk said...

Sir,
Do you follow Gold? It has taken support on Daily trend line & giving higher lows on hourly chart.
In my view, inititating long corresponding to $ 1744-50 & stop below $ 1738 can give a good trade with target $1785-88.
Would like to know your thoughts plz...
rgds,
kuldeep

Kuldeep.rk said...

Agree with Divyesh. If NF now reaches 4700 again, it will form H&S with neck line 4700. head 5400... brk dn target 4000.

Rushabh Shastri said...

Enjoy, Market requires behavioural study sometime with technical too...heads up sir

ameet said...

hiii