My afl collection

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shivangi77

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I HAVE BEEN FOLLOWING A VERY SIMPLE HEDGING TECHNIQUE FOR THE PAST FEW MONTHS WHICH HAS BEEN GIVING ENCOURAGING POSITIVE RESULTS. I WOULD LIKE TO SHARE THE SAME HERE.
IT IS VERY SIMPLE. AT AROUND 3.27 PM WE HAVE TO COMPUTE THE PIVOT POINT (PP) OF BANKNIFTY(I prefer spot price).... PP = (OPEN + HIGH + LOW) / 3. IF LTP AT 3.27PM IS ABOVE PP, IT IS A "BUY" SIGNAL FOR NEXT DAY AND IF LTP IS LESS THAN PP, IT IS "SELL" SIGNAL FOR NEXT DAY.
BASED ON THE ABOVE, IF BUY SIGNAL IS GENERATED, BUY 1 LOT OF BANKNIFTY AND SELL 1 LOT OF NIFTY AT THE SAME TIME AROUND 3.28-3.29PM JUST BEFORE MARKET CLOSING.
NEXT DAY WE HAVE TO EXIT FROM BOTH POSITIONS SIMULTANEOUSLY WHEN IN PROFITS...
THIS METHOD HAS BEEN GIVING VERY GOOD RESULTS AND IS A SMALL RISK HEDGING STRATEGY...
If you have any prob then mail me shivangimathur 77 @ yahoo .in
Strategy provider: Ajeet
Strategy developer: Sid
 

shivangi77

Well-Known Member

The key to making profit in this strategy is :

When you enter this trade say on day 1....on day 2 you need to exit whenever you get comfortable profits.....if the trend is up and you have bought banknifty and sold nifty on day 1, your net position will be in profit and you can hold on to the position....in this case if trend turns negative on day 2 and banknifty ltp goes below pp convincingly with good volumes, it would be advisable to exit both the positions with gain....

If the trend is in your favour throughout day 2, you can just watch your profit and keep monitoring the banknifty ltp vis-a-vis pp at every time....if at 3.27pm on day 2 also the banknifty ltp is higher than pp, you may carry forward the positions to day 3 or if your finances permit, you may buy & add 1 more lot of banknifty and sell 2 more lots of nifty.....

Again repeat the above procedure on day 3....remember to monitor banknifty ltp vis-a-vis pp at any given point of time...
 

shivangi77

Well-Known Member
those members who feel this strategy requires huge margin may trade as per following method :

When banknifty ltp at 3.28pm is above pp....buy banknifty itm call option 1 qty and buy nifty itm put option 2 qty and vice versa....

To give an example...on 21st june 2012 banknifty closed at 10036 and was above pp....one could buy 10000ce say 50 qty and buy nifty 5200pe 100 qty....nifty closed at 5174 ....

Even in this method one would be in gain....

Here the investment required would be definitely lesser....

Buy I dont trade options using this strategy as gains are just 50% as compared to futures.
 
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shivangi77

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This is the best strategy.. doing one side trade in current scenario, where with any positive and negative news, can take or bring market up and down in split of seconds.. so with this strategy, you can earn assure profit. eventhough, minimum profit but at least u are taking something home and thats the key. with more resarch and rules, you all can make this strategy a gold mine for small investors.
 
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