While, the trend has been up, and we should give the benefit of doubt to the existing trend, the fact is that there has been intra day fluctuations that are sharp.
How do we trade in such a range?
1. If you have an mechanical system that has a proven record, stick to that. Mechanical indicators may have a few loss making trades, but they will not become emotional, will not over trade and eventually will catch the trend when the big move takes place.
2. Reduce your volumes. Now, if you have been trading with only one nifty, you cannot do that, and you can refer to the next point that might help you. But if you have been trading with two or more lots ( I hope not too many lots ), then it will be very prudent to reduce the lot size to one now and increase it to two when the breakout or breakdown take place.
3. For day trading, trade only in one direction. Wait for the set up that makes sense for that direction ( long or short) and take only those trades. This will automatically cut down number of trades. Remember though to join the trend when the breakout or breakdown takes place.
For today, signals are confusing. Dow last night was up but the structure of the price movements does not suggest a lot of strength in that up move. SGX nifty is up this morning. So, we are likely to open near 4370. There is a big resistance at 4420. So, now it is your call whether you want to wait for that to be taken out or not. On the down side there is support at 4300-4320. A number of scenarios are possible. The right thing to do - but it is tough to do it - is to take a position on one scenario, if it plays out good, else stand aside and do paper trading.
If you have any comments please write to me at stockmarket.methods.in.madness@gmail.com
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Disclaimer: The above analysis is just that - my analysis. If you choose to trade on the basis of this analysis, you will be solely responsible for the outcome of the trade - profit or loss. Please keep in mind that trading and in particular day trading is not for the novice and there is significant risk of loss of capital in trading.
I think with regards to the third point - do not trade at all if you do not think all the parameters for taking a trade as per your system have been met - as in you should be clear absolutely about your profit objectives and why you want to enter a trade and when you will absolutely get out irrespective of news noise whatever - its always better not to trade at all even if you have a small doubt
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