Intraday Trading Strategy using 52 Week High & Low

Intraday trading is simply the trading style where you open trading positions after the markets open in the morning of any trading day and close them before the end of the day. In 24 hours markets, you simply close positions at the end of your trading day.

By definition, the price action in an intraday trade will be a fraction of the daily average traded range. Therefore, if the daily range is 100 points, your trades may target 20/30/50 points for example. In a positional trade, the ranges are relative to the period of interest and will be multiples of these numbers.

In daily trades, most brokers/markets permit trading with smaller exposure and higher leverage. So while trading a futures contract in an overnight trade, if you need a margin of Rs 1 Lakh, for intraday trading, the margin is around Rs 40000 or about 50-75% lower. Depending on your broker’s policies, you may be required to close all your intraday positions about 15 minutes to 30 minutes before the market close or they are auto closed. This may or may not cause a problem, based on your trading method.

The more important point to be noted though is that the working capital needed for intraday trades is generally much lower than for positional trades.

The second aspect is to consider the relative volatility of price moves. Just as you move from 1 minute to 5 minute to 15 minute or hourly charts, the intraday price movement gets “damped”, the time frame that you choose to trade in becomes important. Many experts suggest combining a look forward and look back approach. Which means if you trade 5 minute charts, you may get the first signs of a new trade on a 1 minute chart and use that for entry of the trade. In the same way, the bigger picture in the 15 minute and hourly charts tells you the general market sentiment – bullish and bearish and the likelihood of the trade to continue in your chosen trade direction. A long trade in a bearish market would be the territory of a scalp trader or an aggressive trader expecting a reversal, but a high risk trade in any case. Likewise a long trade in a bullish sentiment in higher time frames is a safer trade.

Probably, the most important factor that will determine your trading choice, is the amount of time you have to trade in a day. If you are a full time trader and have a trading method that works in intraday time frames, you could consider intraday trading AFTER evaluating the risks.

What are the risks that we are talking about? 

In intraday trades for Nifty futures, for a target of 25 points, if we setup stop losses of 15 points (say) and expect to trade 3-4 times in a day. Your maximum risk is 15 x 4 = 60 points or 60 x 50 units per Nifty lot = Rs 3000 per lot. Is that affordable for you? The same risk for one lot mini nifty with 20 units = 60 x 20 = Rs 1200 per lot. Assuming that you will do 15 trades in a week with a 60% success rate or 6 losing trades, or 90 points or Rs 90 x 50 = Rs 4500 for Nifty futures. Do these numbers fall in the range of your trading risk tolerance? Multiply these numbers with number of lots (contracts) that you intend to trade per trade and you get your total risk exposure. For 2 lots its Rs 9000 for Nifty futures.

If the answers are yes, then you can consider intraday trading.

We are only evaluating, whether you should trade intraday or not. But when you should stop trading, if you are making losses. That should be handled as part of your risk management Strategy.

Next step, what will it take to succeed in intraday trading? You need a trading method which will generate better than 50% successful trades so that you have the hope of making money. Combine this with the approach to treating trading as another business or profession, and you are ready to go!

We have a simple but powerful Intraday Trading Strategy for you using 52 Week High & Low data.

52 Week High Strategy For Intraday Trading:

1. Find the scripts which hit 52 Week High today
2. Filter the ones which closed 1% below the 52 Week High (Fallen after making new 52 Week High)
3. These stocks are good positional shorts, but can be used for Intraday trading on next day as well.
4. Entry – Next day opening price (or) Enter when the stock reach back to 52 Week High
5. SL – 1% from previous day’s High
6. Target – 1-3% from entry, book as per comfort

52 Week Low Strategy For Intraday Trading:

1. Find the scripts which hit 52 Week Low today
2. Filter the ones which closed 1% above the 52 Week Low (Bounced after making new 52 Week Low)
3. These stocks are good positional longs, but can be used for Intraday trading on next day as well.
4. Entry – Next day opening price (or) Enter when the stock reach back to 52 Week Low
5. SL – 1% from previous day’s Low
6. Target – 1-3% from entry, book as per comfort

Steps – Needs to be done everyday evening:

1) Go to NSE India site:
Link: https://www.nseindia.com/live_market/dynaContent/live_watch/equities_stock_watch.htm
2) Select “FNO Stocks” from the dropdown & Download the data
3) Download the filtering tool from the link and copy the downloaded data to the tool.
Link: https://drive.google.com/open?id=1S0Ms5g1I-yKmp3t4I66p_ceyogLuQi-S

Updated link – contains separate sheets for 52 Week High & Low:
https://drive.google.com/open?id=1iMEMmBPDN0Rfvr8pHu_aw6LWgViS-Ujq

4) That’s all, You are set for tomorrow with the list of stocks for both Shorts/Longs.!

Happy with the set-up? Need help in building an End-to-End Trading set-up? Then, Contact us through telegram at https://t.me/MarketSecretsTeam through telegram or Email us at admin@marketsecrets.in