The Best Trading System

[varunkochhar]

This chart is of OBV of Bank Nifty in 1min.time frame. The horizontal lines are the times when i took corresponding shorts in Bank Nifty. The blue line is the 200EMA of OBV. I took the first short corresponding to the green horizontal line at around 3:04 yesterday and added to my short positions at the subsequent horizontal lines. These exact points are shown by vertical lines. Next i would be posting the price charts corresponding to this OBV Chart.

 

[varunkochhar]

Sorry the 1st short i took at the red horizontal line yesterday.

 

[varunkochhar]

 

[varunkochhar]

In this pane i have posted the price charts corresponding to the shorts in the earlier OBV charts. The horizontal lines are the price of actual shorts (the rates are there on the right end of the lines.

 

[varunkochhar]

So i started with a short at 19148 yesterday and added to my positions at 19036,19095,19006,18913 and 18870 intraday today. And squared off all at 18850 in the last 15 min. today. The SL when i started yesterday was at 19175 (a mere 30 odd points) and after the 1st add i kept bringing down the SL to the Previous significant pivot high. Thus i was in profits right from the beginning (because of the gap down) but even if gap down had not happened i would have been in profits after the 1st add itself. I ended up booking 888 points (About Rs.35000) with a max risk of Rs.1200. All in a day. This is the power of compounding (adding to a winning position) AKA pyramidding.

 

[varunkochhar]

This example was just to drive home the point of Pyramidding wher with each add i was bringing down my risk without actually having to exit my position midway and thereby milking the whole move. The cue to short yesterday was OBV going below the 200EMA (Blue Line)

 

[varunkochhar]

If you observe carefully, even at the end of the day the OBV is still below the blue line. I got out of my position because i did not want to carry risk over the weekend. Since OBV is still below 200 EMA, will only look for shorts on Monday as well till we cross above 200EMA

 

[varunkochhar]

Typo mistake added at 19015 and not 19095

 

[varunkochhar]

OBV is truly a leading indicator. When price does not give a clear picture, OBV comes to the rescue as more often than not, it leads price.

 

[varunkochhar]

The reason i am such a big fan of OBV is that if you observe both the charts, one could have been misled to go long intraday today when price went above the blue line (200EMA line) at around 12:05 -12:10, but OBV never even touched, leave alone go above 200EMA the whole of today.