I will give you a surprise
- Thread starter DanPickUp
- Start date
- Status
No Sunny, P&F chart can be drawn with shorter box size too. Box size represnt the unit of movement that trader is interested in. Given chart here shows the box size of 50 and by using 3box reversal criterial, we will get new column only after 150 point move.
That very well matches with swing or positional trading style.
What if we use 3 point box size, and 3box reversal i.e. 9 points (say 10points approx) move to indicate new column.. We are now talking like a daytrader who has typical stop size of 10-15 points.
There is posiblity to use 1 box reversal approach. i.e. for every 3 points move, we will have new column.. that will certainly be choppier.. but isn't Scalper talk in those terms.
How about using 2 P&F charts, say 3 pt box, with 3 box reversal and 10point box with 3 box reversal.. and applying the concepts of multi timeframe analysis here (higher tf chart and lower tf chart).
Hope that gives you some idea about how to use the tool. TA will just give us a tool, but as a professional practitioner, we got to figures out the best way to use it.
Strength of p&f is in simplified price action trading.. Charts are clean, decision points are few but precise. it does not confuse with added complexity of time and volume variable.. Pure price action. So for someone who like simplicity, it could be great approach to use.
Happy Trading
That very well matches with swing or positional trading style.
What if we use 3 point box size, and 3box reversal i.e. 9 points (say 10points approx) move to indicate new column.. We are now talking like a daytrader who has typical stop size of 10-15 points.
There is posiblity to use 1 box reversal approach. i.e. for every 3 points move, we will have new column.. that will certainly be choppier.. but isn't Scalper talk in those terms.
How about using 2 P&F charts, say 3 pt box, with 3 box reversal and 10point box with 3 box reversal.. and applying the concepts of multi timeframe analysis here (higher tf chart and lower tf chart).
Hope that gives you some idea about how to use the tool. TA will just give us a tool, but as a professional practitioner, we got to figures out the best way to use it.
Strength of p&f is in simplified price action trading.. Charts are clean, decision points are few but precise. it does not confuse with added complexity of time and volume variable.. Pure price action. So for someone who like simplicity, it could be great approach to use.
Happy Trading
image hosting
I marked the key ref lvl and critical points... of today's nifty chart...Its a high / low PNF chart with 2 point box size...!
Try to make sense of it now...!
Hi
Trading such chart pictures can be quit interesting and profitable. Many have a problem to accept the ranges. I will show you later on other charts, which also will point in that direction, but have nothing to do with P&F. Markets trade many times in ranges. The only thing is: We have to find them in the different time frames. It is some times a search, which can take time.
Summasumma: If you use P&F and you find your box and reversal pattern that will be the pattern for the moment.
I told in the last post: That is the trick or if you want the difficulties with P&F. You have to search for what works best. So, the picture I showed looks fine with that range. If you choose an other time frame, you some time will have to search for an other tuning. There is no specific rule like many times in trading there are no rules, except money management. Just adjusting and fine tuning of the given tools and strategies we trade.
As far as I know, the most of you are future traders. Trading such chart pictures with a pure future will not open to many strategies. You will have to be creative with your money management.
Trading such charts with options and futures opens an other world. I can give you easily at least ten different strategies you can trade on such ranges:
Just some ideas which pop in my head: Back spreads, Credit Spreads, Condors,, Calendar Spreads, Butterfly's, Future spreads or pure naked option trading. Leg in with one option, start with two options, start with three options, start with four options. We now already have more than ten ways and I not even mentioned any synthetic strategies.
P&F is quit interesting for position trading with the most simple tool, like AW10 also mentioned. Agree with that 100%.
By the way: Thanks to AW10 and Linkon7 to explain and giving ideas to the Indian market. Thank you.
Today I changed the time frame to three days and I fine tuned the S&R lines. I did not change any box or reversal sizes. As you see, you get now more ranges in a shorter time frame and you have more choices to place your orders and fine tune your money management.
Tc and do some sport to keep your buddy in healthy conditions.
DanPickUp
Trading such chart pictures can be quit interesting and profitable. Many have a problem to accept the ranges. I will show you later on other charts, which also will point in that direction, but have nothing to do with P&F. Markets trade many times in ranges. The only thing is: We have to find them in the different time frames. It is some times a search, which can take time.
Summasumma: If you use P&F and you find your box and reversal pattern that will be the pattern for the moment.
I told in the last post: That is the trick or if you want the difficulties with P&F. You have to search for what works best. So, the picture I showed looks fine with that range. If you choose an other time frame, you some time will have to search for an other tuning. There is no specific rule like many times in trading there are no rules, except money management. Just adjusting and fine tuning of the given tools and strategies we trade.
As far as I know, the most of you are future traders. Trading such chart pictures with a pure future will not open to many strategies. You will have to be creative with your money management.
Trading such charts with options and futures opens an other world. I can give you easily at least ten different strategies you can trade on such ranges:
Just some ideas which pop in my head: Back spreads, Credit Spreads, Condors,, Calendar Spreads, Butterfly's, Future spreads or pure naked option trading. Leg in with one option, start with two options, start with three options, start with four options. We now already have more than ten ways and I not even mentioned any synthetic strategies.
P&F is quit interesting for position trading with the most simple tool, like AW10 also mentioned. Agree with that 100%.
By the way: Thanks to AW10 and Linkon7 to explain and giving ideas to the Indian market. Thank you.
Today I changed the time frame to three days and I fine tuned the S&R lines. I did not change any box or reversal sizes. As you see, you get now more ranges in a shorter time frame and you have more choices to place your orders and fine tune your money management.
Tc and do some sport to keep your buddy in healthy conditions.
DanPickUp
PNF chart doesnt give additional information. On the contrary, it just reduces the price chart to simple and precise action level. It helps in decision making process if the inputs are linear. Multi dimensional info normally leads to hesitation and the desire to wait for confirmation ensures poor trade location.
It simply identifies the swing for u and keeps it simple and stupid...!
It simply identifies the swing for u and keeps it simple and stupid...!
I have compiled important discussion & created PDF out of it.
https://skydrive.live.com/redir.asp...sid=2995AFAFC91B329A!131&authkey=rRqPYeBES4Q$
& then under Strategy folder
I will agaiin add once more 7 pages added here.
https://skydrive.live.com/redir.asp...sid=2995AFAFC91B329A!131&authkey=rRqPYeBES4Q$
& then under Strategy folder
I will agaiin add once more 7 pages added here.
Hi Dan,
The advanced options strategies you have mentioned like credit spreads, calendar spreads, condors etc.. are not very popular/appropriate in Indian options market for one important reason.
Generally, all the brokers block the full margin(1 lot of futures contract equivalent) for writing an option in India even if you are doing it for creating the SPREAD position.(hedged)
For example, assume that for nifty@5600,
5400 put = 40
5300 put = 25
If i sell a credit spread for NIFTY like 5400(short)/5300(long) put for net credit of 15 pts, then the margin will be approx 30,000(for 5400 short position) + 1250(for 5300 long position). Total = 31,250 Rs.
Now i expect market to go up and keep this 15 pts credit(750rs) with me @ expiry. So investment 31,250/- and expected return is 750/- (approx 2%).
This poor risk:reward ratio in Indian market because of brokers blocking high margins is stopping traders playing with advanced options strategies in India.
But in other country exchanges(say US), the broker should have blocked only (spread diff*lotsize), which is 100*50 = 5000. Then the same position expected return will be 15% which is quite attractive.
May be because of this reason, We are trying to capitalize only on futures trading and not because of unawareness i guess.
However, please continue explaining the possibilities of these options strategies in pnf. If not in India market, we can try in other markets where margin requirements are much less for spreads(atleast i have account with US broker firm )
Btwn, You are doing great job on organized way of explaining things. Keep up the good work. :clapping:
Thanks,
...summasumma
The advanced options strategies you have mentioned like credit spreads, calendar spreads, condors etc.. are not very popular/appropriate in Indian options market for one important reason.
Generally, all the brokers block the full margin(1 lot of futures contract equivalent) for writing an option in India even if you are doing it for creating the SPREAD position.(hedged)
For example, assume that for nifty@5600,
5400 put = 40
5300 put = 25
If i sell a credit spread for NIFTY like 5400(short)/5300(long) put for net credit of 15 pts, then the margin will be approx 30,000(for 5400 short position) + 1250(for 5300 long position). Total = 31,250 Rs.
Now i expect market to go up and keep this 15 pts credit(750rs) with me @ expiry. So investment 31,250/- and expected return is 750/- (approx 2%).
This poor risk:reward ratio in Indian market because of brokers blocking high margins is stopping traders playing with advanced options strategies in India.
But in other country exchanges(say US), the broker should have blocked only (spread diff*lotsize), which is 100*50 = 5000. Then the same position expected return will be 15% which is quite attractive.
May be because of this reason, We are trying to capitalize only on futures trading and not because of unawareness i guess.
However, please continue explaining the possibilities of these options strategies in pnf. If not in India market, we can try in other markets where margin requirements are much less for spreads(atleast i have account with US broker firm
)Btwn, You are doing great job on organized way of explaining things. Keep up the good work. :clapping:
Thanks,
...summasumma
- Status
Similar threads
-
Budget 2014-15 'a damp squib'; no major surprises: Experts
- Started by shyam.trivedi
- Replies: 0
-
I'm Surprised: NSE world No. 1 in equity trades- Started by internet_fanbboy
- Replies: 1
-
-
-