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HMK alias MANOJ Profile picture
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16 Jun, 5 tweets, 2 min read
#FreeTip
Basic rule for day trading in option buying for beginners.
1) Stick to monthly atm options.
2) Suppose u have a capital of Rs 5 lacs. Your max risk appetite is 1% which is 5k. Assume u look at BNF chart and find a buy setup at 35000 ...
...
with a stop of 34900 ( 100 point difference). This essentially means that the 35000 atm options will have a stop of Rs 200 ( delta 0.5) assuming all other things are equal. So the number of lots U should typically deal with based on 1% Risk on 5 lacs capital ...
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is 5000 / 200, which is 25 , ie 1 lot. If your risk appetite is 2%, then u are allowed to take 50, ie 2 lots. Hence if option price is say, Rs 400, ur stop will be 200 and u have to deal with one lot which means your deployment is 25 x 400 = Rs 10,000....
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On the contrary if you deploy the full amount, 500000/(25x400) = 1250 , 50 lots, u r bound to lose the capital at the shortest possible time.
3) This might appear ridiculous, but this is the only way to go steady with control over risk.
Option stop difference is Rs 50 and not Rs 200 as mentioned. Simple calculation overlooked. Accordingly number of lots will increase . However concept remains unchanged.

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More from @scorpiomanojFRM

HMK alias MANOJ Profile picture
18 Jun
#Reality
Step 1) Buy 500 stock A for intraday at 200 with stop of 197.
2) Stock moves to 205 slowly after an hour and u think ur entry is great and begin taking mtm screenshots to send to your friends.
3) Then comes a big red candle straight to 200. U assume it as retracement.
.
...
4) After few minutes of hovering near your cost, it begins to fall to 198.
5) U start becoming jittery. Ur mind which was tuned to only accept profits after watching mtm in point 2, is unable to accept loss. So u move your stop to 195.
6) Stock drops to 196....
...
7) U think this is a retracement and add another 200 at 196.
8) Stock moves to 199 slowly. U feel elated and hope that it will further move up.
9) Another red candle, stock drops to 196. U start feeling nervous.
10) U remove the stop thinking that it might hit...
Read 7 tweets
HMK alias MANOJ Profile picture
12 Jun
#FreeTip
A simple illustration to analyse stocks in a very simple way:
1) Prepare a list of stocks with more than say, 400% returns last 1 year and currently above 3 digits. U will have around 30-40 NSE listed stocks.
2) Look at each stock chart just before breakout
.....
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3) Take a note book and right down against each stock, the behaviour of MAs Vis a vis the stock, for eg., 30 week MA / daily 200 ma / 150 ma, 50 ma, etc.); the behaviour of Relative Strength (RS); behaviour in terms of volume; any pattern like rectangular breakout etc.
...
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4) Might take 3 plus hours for the above exercise. Once you are done, see the common elements against all stocks. That is the edge you have knowing the behaviour of super performance stocks. U need not hold for 400%. U can atleast get 20% out of it.
....
Read 4 tweets
HMK alias MANOJ Profile picture
12 Jun
#FreeTip
The math to do before entering trading:
1) Capital Rs 10 lacs
2) Risk per stock as a % of capital :1.25%, ie Rs 12.5k
3) Per stock max allocation: 12.5%, ie Rs 1.25L
4) Risk per stock as a % of position: Max 8%-10%, ie 12.5k
5) RR - 10%:20% , 1:2 , 12.5k : 25k
...
...
6) No. of trades likely during the year : 100
7) Win % : 40%, ie 40 trades
8) Projected End capital : 10L x (1+0.20)^(40) x (1-0.10)^(60) = 26 lacs, ie 164% return
It doesn’t mean that u will necessarily reach the end capital ; U will know if your activity ...
...
during trading is statistically feasible. For Eg, during trading u observe that u are getting 1:1.5 RR and not 1:2, then , the above calc leads to -52%; U get to know your activity is economically not feasible. For Eg, u observe after a few trades that your win % is ...
Read 4 tweets
HMK alias MANOJ Profile picture
5 Sep 20
#Reality Market does not know resistances and supports in any form, like MA, pivots, fib, gann, MP,....; Market is only a flow of orders; An order in a terminal has two sides bid - ask; If ask side is taken out rightly without negotiation, it is bullish for that ....
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moment. If bid side is given out rightly without negotiation, it is bearish for that moment. An extending bullish moment has intermediate bearish moments and vice versa. Sometimes bid side orders are way higher than ask side orders. This does not necessarily mean bullish....
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A big trader who wants to buy will never negotiate. Orders of true bulls predominantly are not on bid side. These are orders that use Market orders to suck the ask price. Same logic goes with true bears.
.....
Read 8 tweets
HMK alias MANOJ Profile picture
29 Aug 20
#Research
#Stat
#Banknifty From Mar 2010 to Jan 2019
A) Open to Close abs %.
No. of trading days 2160
No. of days open to close > 1% = 750 (35%)
No. of days open to close > 2% = 247 (11.5%)
No. of days open to close > 3% = 58 (2.7%)
No. of days open to close > 4% = 13 (0.60%)
..
......
No. of days open to close > 5% = 4 (0.20%)
No. of days open to close > 6% = 2 (0.09%)
No. of days open to close > 7% = 0 (0%)
% is absolute of + / -, ie can be either up or down.
So essentially at the minimum one should ideally trade only 35% of the times intraday...
.....
B) CPR width Vs Trend
During 1% move, ie 750 times, 38% times (288 dys) CPR width was < 0.68 times 20 day average; Out of 288 dys, 89% (255 dys), PDR was < 2%.
During 2% move, ie 247 times, 37% times (92 dys) CPR width was < 0.68 times 20 day average.
....
Read 6 tweets
HMK alias MANOJ Profile picture
28 Aug 20
#Research
From Jan 1 till date - BNF
1) Total trading days 160
2) Open to Close of the day :
a) in excess of 100 points - 60 times
b) in excess of 200 points - 48 times
c) in excess of 300 points - 37 times
d) in excess of 400 points - 27 times
..
e) in excess of 500 points - 17 times
f) in excess of 600 points - 13 times
g) in excess of 700 points - 10 times
h) in excess of 800 points - 8 times
i) in excess of 900 points - 7 times
f) in excess of 1000 points - 4 times
g) in excess of 1500 points - 2 times
h) in excess of 2000 points - 1 time
In other words if a trending market is defined in terms of open to close difference of 100 points plus in BNF, 60 / 160 days , ie 37.5% dys market trended; if definition is changed as 200 points plus, 48/160 days , ie 30% dys market trended.
Read 5 tweets

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