The strategy is centered around three primary approaches to buying Nifty options, each designed to offer a 1:3 risk-to-reward ratio with 40% accuracy. The first approach involves a moving average crossover strategy. This strategy suggests using fast and slow moving averages to find crossover signals. Traders should confirm these signals with indicators such as RSI or MACD and set their entry on the subsequent candle.
The second approach uses support and resistance levels on the Nifty chart. Traders must identify key support and resistance levels and execute buy orders around support levels when bullish reversal patterns are confirmed. Oscillators like RSI can help confirm oversold conditions.
Finally, the volatility breakout strategy capitalizes on periods of increased market volatility, identified through indicators such as the Average True Range (ATR). During high volatility breakouts, buy orders are placed, ensuring stop-loss orders consider ATR calculations to mitigate risk.
The strategies
⛳️ Strategy 1: Use moving average crossover strategy
- Identify the appropriate fast and slow moving averages for crossover signals
- Track the nifty index for crossover signals on the identified moving averages
- Confirm trade signals with additional indicators like RSI or MACD
- Set the entry point on the next candle after a crossover signal
- Define the risk-to-reward ratio as 1:3 for every trade
- Place a stop-loss order at a level that represents the defined risk
- Set target prices at three times the risk amount from the entry point
- Monitor trades closely for profit-taking when conditions are met
- Adjust moving average parameters periodically based on market conditions
- Back-test the strategy on historical data to ensure its effectiveness
⛳️ Strategy 2: Employ support and resistance strategy
- Identify significant support and resistance levels on the nifty chart
- Use price action to confirm robustness of these levels
- Place buy orders near support levels with confirmed bullish reversal patterns
- Set stop-loss orders below the identified support levels
- Define the risk-to-reward ratio as 1:3 for each trade
- Establish target prices at three times the distance from the stop-loss
- Use oscillators like RSI to confirm oversold conditions at support
- Monitor market news that might affect support and resistance effectiveness
- Adjust support and resistance lines as the market continues to develop
- Regularly back-test and refine the strategy to improve accuracy
⛳️ Strategy 3: Utilise volatility breakout strategy
- Determine key volatility indicators such as ATR (Average True Range)
- Set criteria for entry based on significant increases in volatility
- Position buy orders during periods of breakout with high volatility
- Place stop-loss orders at a safe distance, incorporating ATR calculations
- Define a 1:3 risk-to-reward ratio for setting up target prices
- Exit positions as prices approach thrice the risk amount
- Avoid trading during low volatility sessions when conditions aren't met
- Use historical volatility patterns to forecast future breakouts
- Stay updated with macroeconomic news that might trigger volatility
- Reassess the strategy regularly to ensure sustained profitability
Bringing accountability to your strategy
It's one thing to have a plan, it's another to stick to it. We hope that the examples above will help you get started with your own strategy, but we also know that it's easy to get lost in the day-to-day effort.
That's why we built Tability: to help you track your progress, keep your team aligned, and make sure you're always moving in the right direction.
Give it a try and see how it can help you bring accountability to your strategy.
