Banknifty is one of the most favorite indexes traded in the Indian Stock market. one of the most volatile indexes and has rare few days where there is a low movement.

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Reasons why you should prefer trading in Banknifty derivatives

  • VOLATILITY: The volatility in Bank nifty is generally high which can benefit Day traders.
  • LIQUIDITY: Bank Nifty has a high volume normally and hence the liquidity is also good. These also help in volatility and helps in the following trend. Open Interest is also a good way to determine liquidity.
  • LEVERAGE: Brokers generally provide 2x – 3x leverage in Bank nifty option trading and hence after leverage you can buy an At The Money lot at just 4000 – 6000 Rupees.

STRATEGY – PULLBACK SCALPING

INDICATORS USED :

  1. RSI
  2. STOCHASTIC
  3. BOLLINGER BAND
  4. YOUR COMMON SENSE (-KIDDING-)

Let me help you understand how this strategy works. This is a pull-back trading strategy. Basically, we take positions when the stock is Oversold or overbought and a reversal is to come. The stochastic helps us to determine entry position. The Bollinger band helps in determining Momentum and helps gain an extra conviction.

THIS STRATEGY WORKS BEST WHEN THE BOLLINGER BAND HAS EXPLODED AND THE VOLATILITY IS HIGH.

This is not a Banknifty specific strategy and can be used in other scrips too.

INDICATOR PREREQUISITES :

  1. RSI – {65-35}
  2. STOCHASTIC { 13-4-3}
  3. BOLLINGER BANDS { NORMAL}

ENTRY CONDITIONS

  • RSI should be below 35.
  • Previous Candle close should be below the lower band of BB ( BEWARE of WICKS, ENTER only if the CLOSE IS outside the BB)
  • Stochastic should give a bullish crossover and move above 20 Levels Stochastic.
bank nifty trading strategy.

SHORT CONDITIONS

  • RSI should be above 65
  • Previous Candle close should be above the upper band of BB ( BEWARE of WICKS, ENTER only if the CLOSE IS outside the BB)
  • Stochastic should give a bearish crossover and move below 80 Levels Stochastic.
banknifty trading strategy

IMPORTANT REMINDERS –

  • No Indicator is One hundred percent accurate. Indicators should always be used in confirmation with price action.
  • No matter how many strategies you learn, how many paid courses you do, and how many indicators you use no one can teach you to control your emotions. Psychology can only be developed by trading real.
  • Never forget to journal your trades.
  • Small Losses – Big Profits.
  • Strict STOPLOSS is a must because a stop loss helps you cut losers at right time and you won’t end up holding a losing trade.

HERE is another day trading strategy with a 70% win rate.