Nikita Poojary

Nikita Poojary

02-10-2022

06:45

A set up which has a minimum Risk/Reward (R/R) of 1:4 This set up can be used for intraday, option selling, option buying, as well as investing. Maximum profit strategy by Subasish Pani. Bollinger band set-up: 🧡! Collaborated with @AdityaTodmal

Disclaimer: This set up will have many SL's, but the R/R is aligned in such a way that even though your batting average is lower, the gain to loss ratio is very favorable.

1/Indicator-based set-up :- Bollinger band: This set up is based on indicator named Bollinger band, however one has to work with an open mind to look at it differently.

2/What is a Bollinger band: β€’ Its an indicator defined by a set of trendlines plotted two standard deviations (positively and negatively) away from a simple moving average (SMA) of a security's price. β€’ There are three lines, a SMA (middle band) and an upper and lower band.

3/Reversal set up from extended move: The central idea of this set up is to enter for reversal trend after an extended move on one side.

4/ How to set the charts for intraday: i) Set your charts on 15 min TF. ii) Add the indicator Bollinger band (BB) in @tradingview or your broker software. iii) Change the standard deviation to 1.5 from 2: SD of 1.5 will ensure more trades than 2 SD.

5/Set up for intraday traders to go long: i) Alert Candle should close completely below the BB. iii) Ensure not even the wick of the alert candle touches the BB. iii) Entry candle: the following candle should break the high of the alert candle. iv) SL: low of the alert candle.

6/Set up for intraday traders to go short: i) Alert Candle should close completely above the BB. ii) Ensure not even the wicks touches the BB. iii) Entry candle: the following candle should break the low of the alert candle. iv) SL: High of the alert candle.

7/ This system will hit your SL's several times i) This set up will take SL several times. ii) However the R/R will make up for all the small SL's. iii) Be ready to lose 50-100 points every now and then however, whenever the trade is in your favor you can make 400-600 points.

8/ Calculation of SL's & Reward: β€’ Pls note that this is a random selection of points and random selection of wins, however I tried to skew it more towards SL hit. β€’ In case anyone can backtest and get the points will be happy to share that.

9/ SL's are part of the game: β€’ The above table is just a representation to show how traders can still be profitable if their Avg gain/ avg loss ratio is good despite lower batting average. β€’ So be happy if you have several SLs if your Avg gain/avg loss ratio is really good.

10/ Rules for option buyers: β€’ Use the same set up, and buy ATM options slight OTM options i.e. 100-200 strike away from ATM for BNF and 50-100 for NF. β€’ SL for options buying: 100 points.

11/ Rules for option sellers: β€’ Sell ATM options β€’ SL 100 points maximum. β€’ Carry it overnight only if it has decayed 10-15% during the day. β€’ If it is near cost or at a loss of 40-50 points then avoid carrying it overnight. β€’Target: 1:4.

12/ What to do when SL is beyond 100 points or the entry is away due to gap openings: β€’ Can avoid such entries entirely. β€’ Or can trade with smaller size as the SL is higher or the entry is unfavorable due to gaps cut down your usual size to 1/3rd or 1/4th of your usual size.

13/Set up for investing: i) Set your charts on weekly TF. ii) Add the indicator Bollinger band (BB) in @tradingview or your broker software. iii) Change the standard deviation to 1.5 from 2.

14/ Rules for investing: i) Alert Candle should close completely below the BB. iii) Ensure not even the wick of the alert candle touches the BB. iii) Entry candle: the following candle should break the high of the alert candle. iv) SL: low of the alert candle.

15/ Examples: β€’ Stocks which have run up like Reliance, Adani, ITC, Tata etc will work with any indicator. β€’ Lets test this set up with the duds.

16/Practice to understand the nuances of this strategy: β€’ Initially, book at your target of 1:4. β€’ Later on, as and when you understand the nuances, you can trail as per your observations. β€’ If SL is too huge just ignore the trade or reduce your position size.

Source of this Bollinger band set up:

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