Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and 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. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Nifty Hedged Futures – October Series -Long Liquidation Odds?

45 sec read

Nifty hits 18000+ levels on an intraday basis. However, the second half of the day price managed to drop from the intraday high and nifty made a pullback low from the intraday perspective. Not much enthusiasm post Nifty hitting 18000+ levels and last Friday RBI Policy announcement day Nifty traded with thin volume.

The above combination of information indicating a potentially overheated market as the commitment from the buyers are slowly reducing and rather sellers could take control of the market if the price manages to sustain below today’s late pullback low.

More time spent above the pullback low i.e above 17960 invalidates the bearish view

Downside weaker references are around 17600 and 17500 odd levels.

Top Down Analysis

QuickFlip Fat Tail and Inference

This quick flip long signal with fat tail is now almost 2.5 months old aka 353 trading hours and by any means, it is in the top 2 percentile historically. What does that mean is chances of sustainable longs continuation from hereon is a questionable one and historically most of the mean reversion happened from here. A sell signal could hit the 17500-17600 odds

How to trade the view?

In order to control the upside risk, one can consider hedging the Nifty Futures with an OTM Put option. And manage the risk appropriately.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and 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. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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