Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

Nifty Futures shows a Highly Emotional Market

44 sec read

Nifty likely to open gap up today around 9940 levels which is perfectly normal for a bull market sentiment. But then historical charts shows increased risk on long holdings as Nifty Futures have 10 unfaded gaps in 2017 alone and 12 unfaded gaps since 2016 which indicates that new buyers are coming up at every gap up scenarios and every pullbacks. Street is now anticipating 10,000 the psychological 5-Digit magical figure.

refernce lines indicates unfaded gaps since Mar 2016.

What I can learn from Exponential Gaps

Exponential Gaps indicates momentum buyers are piling on to the trade at every gap ups. Animal Spirits lifts the market higher and higher thereby creating a euphoric environment. Too many animal spirits are dangerous for the trend persistence and the reversal odds are high.

Why does that Matters?

From a traders perspective it makes a little sense but it matters a lot from a short term or medium term investors perspective. An Emotional Buyers market is sort of overbought market where an short term/medium term investor rarely benefit in the given scenario. statistically, the odds of closing the gaps favor a lot. Chasing the trend as current junction might not be a wise decision though.

Rajandran R Creator of OpenAlgo - OpenSource Algo Trading framework for Indian Traders. Building GenAI Applications. Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Building Algo Platforms, Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in

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