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The deployed for today is only Rs 4500 and made a decent profit in terms of percentage by trading just 1 lot of Bank Nifty. This trade was executed early in the morning, taking advantage of the initial market momentum.
The Strategy:
1. Market Analysis: Before the market opens, analyze the pre-market trends and news that might impact the Bank Nifty index. Look for key economic indicators, company results, and global market cues.
2. Setting Up:
- Use a 1-minute timeframe chart for Bank Nifty.
- Apply indicators such as Moving Averages (MA/Supertrend etc) to identify the trend direction.
- Use Relative Strength Index (RSI)/Williams R% to gauge the momentum and potential reversal points.
3. Entry Point:
- Look for a breakout from the first 5-10 minutes of the market open. If the price breaks above the initial high with strong volume, it signals a potential upward momentum.
- Conversely, a breakdown below the initial low with strong volume indicates a potential downward momentum.
4. Executing the Trade:
- Enter the trade once the breakout or breakdown is confirmed. Ensure the price action is supported by volume to avoid false signals.
- Place a stop-loss order just below the breakout point (for a long trade) or above the breakdown point (for a short trade) to manage risk.
5. Exit Strategy:
- Set a target based on the average true range (ATR) or predefined percentage.
- Alternatively, trail your stop-loss as the price moves in your favor to lock in profits.
Catching the momentum with the right entry in the early morning can provide substantial returns, especially in a volatile index like Bank Nifty. Always ensure to conduct thorough analysis and have a robust risk management strategy in place.
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Disclaimer: Trading in the stock market involves substantial risk and is not suitable for every investor. It is important to consider your investment objectives, experience level, and risk appetite before trading in the financial markets. Always seek advice from a qualified financial advisor before making any investment decisions. The strategies mentioned above are for educational purposes and should not be construed as financial advice. Past performance is not indicative of future results.