My answer to How can I successfully earn money by trading options of NIFTY?
Answer by Ruchir Gupta:
You need to find some one who has done it in the past, and who can guide you. As you know stock market is risky and option trading is riskier. I only Trade in Positional Nifty and Stock Options, I know the Intraday Methods as well but I save my Time for Analyzing , Researching and Training as I become tired if do Intraday and same I recommend to others, keep away from Intraday. Still if you want follow step in this answer, I gave few days back.What I am going to write has many trading lessons for positional trading, so read it carefully
There are many many factors you need to learn about.
- Options Expiry: Options have a expiry period, so if the Nifty is not trading In-The-Money , your option may expire worthless. In such cases if you know that 500 points movement you seek may take 20 days, while current expiry only left with 10 days, go and trade in the next month contract.
- Trade the Cycle: Nifty options trading cant be done every time. Means there are times when you should be aware that a Trade-able Cycle will be due after may be 7 days, dont take any position till that time. And when time comes trade the Cycle. I have shown Cycles in the below Daily Chart of Nifty, which are some what very similar in duration.
- Sit aside when there is no trend: As per Gann Methods the tops are rarely spiky meaning that there is a distribution phase on the tops and a lot of sideways movement takes place. So you should be aware on Tops that you are not stuck on sideways movement.
- 60–70% times market is sideways: you need to understand that Nifty is in sideways trend for 60–70% times. So you will have to be disciplined when trading in Nifty options on the Buy side (I am assuming you are talking about earning by buying the options and not selling, coz option selling requires capital like 10 Lacks minimum.)
- Cycle Identification: Very Simple and Effective Method. This is a real example of Nifty Check on the Nifty charts. If the market is in Bearish mode. I mean if the high made is lower than the previous high and Nifty Starts moving down breaks the previous low, this means the trend is down. Now measure the low to low number of days, suppose its 20, again measure low to low its 25, you have catched the rhythm or vibration of this cycle. You know now that there is a high probability for nifty to make a next low between 20–25 days. look to cover your shorts in this area. Same thing could be done for high to high.
- Nifty and Planets: Try to learn about the Planet Combinations which are cause of change in trend in Nifty. This may help you to prepare in advance and take position in advance. If you want you can click on this link to know more about.
- Know yourself: Ask yourself that, How much time you could dedicate to Trading? I will tell you fast decisions are usually wrong decisions. I know my temperament and hence I take time to think about a trade many days in advance before making a trade. the ticks of up and down are very addictive and people waste their entire day in front of terminal and end of day not able to take home any profits.