The Bank NIFTY Index tracks the 12 most liquid and highest-capacity stocks within the banking industry. With its introduction in 2009, Bank NIFTY is now one of the most heavily traded indexes on the stock market, with many traders making a living by trading only Bank NIFTY option. As a result, a proliferation of Bank NIFTY tips and tutorials have evolved on how to trade Bank NIFTY.
The following article will provide a concise summary of two Bank NIFTY option trading strategies as well as many Bank NIFTY tips and Bank NIFTY option tips that should help you to make better future trades.
Bank NIFTY has several pros and cons. Due to its high volatility, Bank NIFTY is extremely attractive to traders looking for quick profits, as price spikes are more likely. It is this characteristic that makes it appealing to intraday traders, as any profit margin over 2-3% represents a successful day’s business. Nevertheless, Bank NIFTY is extremely risky due to this same volatility. If you cannot keep up, you are likely to lose money, and the amount of loss is amplified as well.
To get started, let’s look at how to trade Bank NIFTY and Bank NIFTY options.
1. Tip#1 – Use Stop loss indication
Start by charting a 5-minute Candle Chart. Decide at what point to begin your strategy. To pick a point, you must pick either two bullish candles or two bearish candles. A buy order must be placed at the high of the second candle if your first two candles are bullish.
Only intraday trading is allowed for this Bank NIFTY option strategy.
Upon triggering this, a stop loss order must be placed at the low of the same candle. As an alternative, if the two candles are bearish, you place a buy order at the low of the candle, with a stop-loss order placed at the high of the candle.
This strategy can also be implemented using brackets. A stop-loss order is set at 40% of your candle’s height in this case. The target here is placed at double the height of the candle because we are chasing a 1:2 ratio. For instance, if the height of the candle is 40 points, you place the target order at 80 points. It is important to note that if both candles are bullish you must focus on placing sell orders only, and vice versa for bearish candles.
2. Tip#2 – Selling and Buying Trades
There are two parts to this strategy: sell trades and buy trades:
a. Sell trade
In the event of an opening gap down (a jump to a lower price from the previous day’s close), you must wait for the chart to fill that gap. A sell order is placed when this gap is filled by a candle. Studies of trend and analysis predict that the price will drop from here. Therefore, you protect yourself by selling at the right time.
b. Buy Trade
This trading strategy for Bank NIFTY options is designed for when the market opens at a gap up. Once again, you wait for a candle to fill the gap once the market opens at a gap up and then place a buy order at that moment. It is anticipated that the price will rise, contrary to the ‘sell trade’ section of this strategy. Bank NIFTY tips state that if the gap is not filled within a day, simply wait for the gap to be filled on the following day and place your order then.
The first step in these Bank NIFTY option tips is to set your targets and stop-losses. Chart a horizontal line from the high of the closing candle to determine where to place the stop loss and target. When the market corrects to cover this gap, you will complete your buy order once your buy order has been placed. Your stop loss should be set at the low of the closing candle. A second tip is to place the target at twice the height of the candle as with the previous Bank NIFTY options trading strategy. When the candle is 50 units, you should set your target at 100 units.
You wait for the next gap if it is below 100. A 15-minute chart is useful for this.
Conclusion
Bank NIFTY is a script that is attractive to investors seeking quick profits. The script’s volatility, however, makes it riskier to invest in. Bank NIFTY options can be traded in a variety of ways. Bank NIFTY tips and Bank NIFTY trading strategies can help you make more successful trades over time. For more you can check here for best options trading tips to make more right decisions for trading.
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