Day Trading with defined trading strategy.

For Day Traders & Swing Traders, it is important to have a view on the market. This ensures that your trades will get some advantage from a favorable market. If your view, based on world markets, key news for the day, – is negative, then you should be taking bearish positions in the market. The positions will not be taken blindly. The actual trade still needs a technical setup – for example, sell when the RSI falls below 50, or when the 20 Bar Moving Average falls below the 50 bar average, or something similar. But now, the actual trade is supported by the environment. Sometimes, your view will go wrong. That is only to be expected. Yet, the rewards of being right will far outweigh the mistakes. The most important advantage is clarity of vision during the trading day.
Friday is likely to be choppy with different undercurrents. The American markets are down so that is bearish. But, the positives are the refusal of DMK to join the cabinet (the absence of their ministers should add half a percent to the GDP growth!), the announcement of the union cabinet today (no surprises, but the market can latch on to some small change and cheer).

Index futures pause after a Range Expansion

This is the nature of the Nifty. It moves in one direction. That is the Range Expansion(RE). Then, after the RE, it pauses and consolidates. This pattern is likely to repeat itself as the market again consolidates after a 20% rally.

We do not know how long this consolidation will continue. Going by the last two ranges, it could be 8 to 15 trading days. Markets tend to become choppy inside a trading range. This is not about the Nifty alone. All stocks, futures, commodities show such choppiness when locked inside a range.

Often, traders will make large sums of money on a breakout, only to give up a lot of it when the Nifty moves in a trading range. While there are many ways to protect your capital during such consolidations, none of the ways are ‘foolproof’. The ideal method is to trade with less volume. The second approach is to begin the trade as per your trading method but exit quickly as soon as the markets give the impression of starting a trend. (In a range, a new trend will not start so the impression that ‘this is it’ is actually the point where the current move will reverse). In brief, take profits quickly!