2562 Theory

2652 THEORY OF DAY TRADING
( THIS IS THE BEST TO EARN AROUND 1000 RS TO 3000 RS IN DAY TRADING FOR A LIVING
)
Different people have different methods and ways of day trading.Some trade using
charts , 5 min ,30 min ,10 min some use MA,EMA,RSI,CCI, some also use many equa
tions and formulas like pivot points,woodies pivot,demark pivot points, camarill
a equations, any many more things.
I have been trading the markets with all this and come to conclusion that tradin
g market can be reffered as gentlemans gambling ,u can earn from it definately p
rovided u trade it with proper knowledge and a perfect plan and the main thing i
s that u must go in for small gains for n number of trades ,which also can be re
ffered as scalping
THE MOST IMPORTANT THINGS I TRACK IN DAY TRADING
1)Previous days range ( difference in days high and days low) the most important
2)that days high and that days low at 10:15 am after the start of markets
Thats all , earlier I used to trade using all the mentioned things like ma,rsi, adx
camarilla equations and all stuff but now I trade in a simple way of using the
days range
With my studies I have come to a conclusion the if a days range is of 85 points
say for any stock say ONGC then it will have three values for the next days for
me to trade (that calculation is done by me based on my studies )
Suppose the values I got are 36,63,92 then with this values I will trade for the
next day
Say ONGC next day opens at 785 and by 10.15 am it is at 795 neither open or the
present value of the stock is important to me ,the thing important to me is the
high and low of the stock at 10.15.now here comes three different cases which I
will explain u in detail
1)when the difference between high and low ( range ) at 10.15 is less than the f
irst value that is 36
Suppose ONGC has high of 801 and alow of 779 with a range of 22 points <36
Then if the price goes bellows 801 -36= 765 it will definitely go down 0.5 perce
nt more down to 761.2 and this will be my gains
In simple words sell stop loss order at 765 with a buy order at 761.2
Now at 10.15 if the price is at 795 it can go up also so if it goes then I have
to take in account of low at 10.15 .so if the rice goes above 779+36=815 then it
will deinately go up 0.5 percent up to 819.05
In simple words stop loss buy at 815 and sell at 819.05
If have both ur orders placed then the most important thing is that u must keep
a watch on low and high of the stock.suppose at 10.35 its at a low of 770 then u
must modify ur stop loss buy order to 770+36=806 from 815 and sell order to 810
from 819.05.in this case ur one order will be the same as the days high will be
the same that is 801.
If suppose at 10.35 the stock is at high of 805 then u must modify ur stop loss
sell order to 805-36=769 from 765 and buy at 765.2 from 761.2 down 0.5 percent .
the second order of urs will be the same as the low will be the same at 779.
If u have any one side of ur order executed with a profit then u must cancel the
other two orders .suppose u have stop loss sell and a buy order triggered then
u must cancel the other order of stop loss buy and sell order .
2)when the difference between the high and the low at 10.15 is more than 36 and
less than 63
Suppose ONGC is at high of 825 and low of 770 at 10.15
Then sell below 825-63=762 and buy at 758.2 down 0.5 percent
Buy at 770+63=833 and sell at 837.15 up 0.5 percent
Here also its important to keep a watch on the days high and low after 10.15 and
as per the above example modify ur orders if needed . If u have any one side of
ur order executed with a profit then u must cancel the other two orders .suppos
e u have stop loss sell and a buy order triggered then u must cancel the other o
rder of stop loss buy and sell order.
3)when the difference between high and low at 10.15 if more than 63 and less tha
n 92
Suppose ONGC is at high of 840 and a low of 768 at 10.15 am

Sell below 840-92 = 748 and buy at 744.3 down 0.5 percent
Buy above 768+92= 860 and sell at 864.3 up 0.5 percent .
Same conditions apply as above methods .
OBSERVATIONS AND CONCLUSIONS
If I take in around 100 stocks then out of hundred only three to four stocks are
that will not follow the above theory in day trading .
Around 95 stocks when hit the stop loss sell or stop loss buy order go down or u
p by 0.5 percent respectively . The five stocks which have behaved opposite to t
he theory will defina tely will follow this theory the next day and also for mor
e consecutive days .This factor u must use to minimize ur losses u made on that
particular day when the stock behaved the opposite way.This ia explained in cash
management and stop losses.
Around 70 to 80 stocks go up or down 0.7 to 1.2 percent after hitting the stop l
oss buy or stop loss sell orders.( here there is a risk that the price may not g
o in a single stroke down or up but It will go.)
You must trade in those stocks which have a turnover of around 4 to 5 crores or
above daily in trading and having short selling
You must be expert in execution of orders and accurate in ur calculations
You should not panic at any time
CASH MANAGEMENT AND STOP LOSS
How I trade and put my stop losses
I take in 20 stocks for trading . I sell or buy one lakh worth of shares of a pa
rticular comp.(initial amount which I double as per the requirement )
Now suppose for a stock say ONGC I have my orders as below
Sell below price A and buy at B
Buy above price C and sell at D
NOW HERE ARISES THREE DIFFERENT CONDITIONS
1) when the sell below A order is hit , I put a stop loss of 1 percent above the
hit price A for stop loss buy .If my buy at B is hit without hitting the stop l
oss then I will make a profit of 0.5 percent .this is the best fitted condition
for the above theory.
The same condition is applicable to buy above price C and sell at price D 2)When
the sell below A order is hit , I put a stop loss of 1 percent above the hit pr
ice A for a stop loss buy.If instead of going at price B the price hits the stop
loss then I make a loss of 1 percent(rs 1000 for one lakh wirth of shares) .But
at this point I again put order sell below A and modify buy at a price 0.8 perc
ent down of price A ( not at price B which is 0.5 percent down of price A ).Now
here the value of stocks ur selling is important .If u have sold shares of one l
akh value and booked a loss of one percent then u must sell at the same price tw
o lakh worth of shares ( that is double the value ) but modify buy order at 0.8
percent down from the sell price instead of 0.5 percent down.now when buy order
is hit u will profit 1600 rs as compared to a loss of 1000 rs (after ur brokerag
e charges u still are in profit).This is one of the rare cases in the above theo
ry but u must be prepared to it. The same condition is applicable to buy above p
rice C and sell at price D.
3)when the sell below price A is hit.I put a stop loss 1 percent above the hit p
rice A for a stop loss buy.If instead of going down to price B , stop loss is tr
iggered then I make a loss of one percent . Then I be ready placing another stop
loss sell order (but the value of the shares is double)at price A ,and modify m
y buy order from 0.5 percent down from price to 0.8 percent. But if suppose the
price never comes to hit stop loss buy , then for the day I will make a loss of
one percent on one lakh worth of shares.
Now to minimize my losses on that day for a particular stock I will double my va
lue of shares to sell or buy the next day (reason if the theory fails for one da
y then for next 100 percent it will struck and will do for more consecutive days
for that particular stock).Here I make up for the loss made by me on the first
day on that stock.for e.g on 23/2 I make a loss of one thousand rs (one percent
of one lakh) short selling a particular stock .The next day I will sell or buy (
as per the above conditions) double the value on the previous day for a profit m
argin of 0.5 percent only . Here for that day my earning is rs 1000 on the two l
akh worth of shares.which will minimize my loss by done by me on the previous da
y.
I take in 20 stocks of which I get around 12 stocks with hit the price .If numbe
r three condition arises for any of these 12 stocks then I have a loss of rs 100
0 for that stock but I earn rs 11*500 for other stocks that is 5500.
So me net profit will be 5500-1000 =4500
It may be that in those some(one or two) of 11 stocks ,number two condition aris
e this may reduce my profit.
For the stock whih made a net loss ,the next day plan will make it less by half
adding to the next day profit.
Sometime I start a trade by selling or buying shares worth 50,000 and then doubl
e my amount to one lakh as per condition number 2 or 3 .
This is a theory just to earn a leaving ,a sure method of trading market.
Example:
2652 THEORY OF DAY TRADING
THE MOST IMPORTANT THINGS TO TRACK IN DAY TRADING
Previous days range (difference in days high and days low) the most importan
t
That days
PDR
F1
F2
F3
=
=
=
=
Else If
Else If
low at 10:15 am after the start of markets
PDH - PDL
0.4333 * PDR
0.7666 * PDR
1.3333 * PDR
Opening Range
If
high and that days
F1 >
Factor
F2 >
Factor
F3 >
Factor
High
Low (at 10.15 AM)
Opening Range
=
F1
Opening Range
=
F2
Opening Range
=
F3
Buy Stop Order for Long =
Intraday Low + Factor
Target for Long
Buy Price * 1.005 (0.5 % gain)
Stop for Long
Buy Price * 0.99 (1.0 % Loss)
Sell Stop Order for Short=
Intraday High - Factor
Target for Short
Sell Price * 0.005 (0.5 % gain)
Stop for Long
Sell Price * 1.005 (1.0 % Loss)

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2652 THEORY OF DAY TRADING

Suppose ONGC is at high of 840 and a low of 768 at 10.15 am

low at 10:15 am after the start of markets

high and that days

Low (at 10.15 AM)

Buy Stop Order for Long =

Intraday Low + Factor

Target for Long

Buy Price * 1.005 (0.5 % gain)

Stop for Long

Buy Price * 0.99 (1.0 % Loss)

Sell Stop Order for Short=

Intraday High - Factor

Target for Short

Sell Price * 0.005 (0.5 % gain)

Stop for Long

Sell Price * 1.005 (1.0 % Loss)

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