Live Intraday Trade 1,72,000+ Profit in Banknifty Option Trading by Intraday Hunter | 01 NOV 2022
Today, November 1st, 2022, the market opened with a significant gap, creating a challenging trading environment. The trader's initial plan was to consider buying opportunities, especially since there were no immediate stop losses nearby. However, the possibility of the market entering a sideways trend or experiencing sudden selling pressure meant that patience would be key. The market sentiment indicated a preference for buying over selling due to the strong gap up in both indices. The trader observed an initial selling candle, which was likely due to profit booking by those who had bought positions the previous day and were quick to secure gains. Despite this, the long-term preference remained on the buy side, cautious of the market's potential to become volatile and trap both buyers and sellers by playing with sentiment. The trade commenced with an initial loss of $3,000, but the trader remained disciplined, aiming for a profit target of at least $10,000. The strategy revolved around identifying key support and resistance levels, and entering trades when the market tested these points, anticipating a strong momentum move. As the market progressed, strong bullish momentum allowed the profit to grow significantly, reaching over $172,000 by the end of the trading session. This successful trade not only generated substantial profit but also recovered previous losses.
Market Open and Initial Strategy
The market opened with a noticeable gap, prompting the trader to consider buying opportunities. There were no immediate stop losses for sellers around the opening price, which usually suggests a bullish bias. However, the trader remained cautious, anticipating potential sideways movement or sudden selling pressure due to profit booking. The overall sentiment across both the Banknifty and Nifty indices strongly favored buying. The initial red candle observed right after the open was interpreted as profit booking rather than a sign of bearish reversal. Many traders who had taken long positions on the previous day would have seen an immediate profit due to the gap up and would be inclined to secure those gains quickly, fearing a potential market reversal. This rapid profit-taking often leads to a transient dip in prices.
As the speaker stated, "what happens is that many people start to fear when they are in profit, and as soon as they get an opportunity, they quickly exit. If they have a loss, they stay, but as soon as there is a profit, we try to exit quickly, fearing the market might fall."
This psychological aspect of trading influences market dynamics, creating temporary selling pressure even in an otherwise bullish market. Despite this initial selling, the preference to buy remained, but the trader decided to wait for a clearer signal, especially since there were no significant stop losses above the current price to fuel a strong upward move.
Trade Entry and Risk Management
The decision to enter a position was made with careful consideration of the market's behavior. The trader explained that initiating a buy position in the current market conditions was inherently risky and difficult. This difficulty for an experienced trader implied it would be even more challenging for the general market participants, which could lead to unpredictable movements. The strategic entry point was chosen when the market directly tested a specific level, expecting a reversal or continuation. One of the key indicators for entry was the market trading below the 41,500 level in Banknifty. If the market did not become excessively volatile and maintained a slight upward trajectory without falling back significantly, a strong upward momentum could be expected. However, the presence of a strong red candle earlier indicated that significant strength would be required for the market to breach this candle and move upward again. The trader also noted that the market was playing with sentiment, creating both buying and selling opportunities, making it difficult for traders to maintain a clear bias. The primary goal was to seize the opportunity quickly if the market started to move upward, avoiding the missed chances from the previous day due to delayed entry. The initial loss of around $3,000 was a part of the calculated risk, with the intent to exit quickly if the market turned unfavorable. The clear objective was to aim for a profit of at least $10,000, with the possibility of holding for more if the momentum continued, while clearly defining exit points for losses.
Market Volatility and Profit Growth
As the trade progressed, the market displayed significant volatility, attempting to fluctuate above and below the 41,500 level. This volatility was challenging for both buyers and sellers, making it difficult for either side to make considerable profits without experiencing fear. Initially, the profit hovered around $6,500, with Nifty showing strong signs of support, which often correlates with Banknifty's movement. As the market continued its upward trajectory, the profit surged to $38,000. This strong momentum suggested that many traders who had taken short positions after the initial breakdown and subsequent retest were likely experiencing stop-loss hits, further fueling the upward move. The key was for Banknifty to continue its momentum, ideally without Nifty moving too aggressively, as a large move in Nifty could sometimes reverse Banknifty's gains. The trader emphasized the importance of managing the position based on available options and market conditions, rather than blindly following a predefined plan. The sentiment was that the market could create traps for both buyers and sellers, making it crucial to stay focused on the current profit and not get swayed by external factors. As long as the profit continued to grow, the trader intended to remain in the position. The profit continued increasing, reaching $105,000, which was a significant milestone as it covered all prior losses from the previous day. This recovery allowed the trader to play with the profit rather than worrying about the underlying chart movements. The strategy shifted to observing the profit rather than focusing too much on individual candlestick patterns, aiming to exit only when the profit began to diminish significantly. The target was to potentially reach $200,000, leveraging the strong bullish momentum.
Trade Exit and Final Profit
The market continued to show strong bullish momentum, and the profit soared to approximately $168,000. The trader was closely watching for any signs of reversal or a decrease in the profit. While the intention was to hold for a potential $200,000, the decision was ultimately based on the current profit level rather than strict chart analysis. The immediate goal shifted from studying candlestick patterns to simply managing the existing profit. If the profit were to decline, the trader would exit the position without hesitation. Although there was an expectation for another large green candle to materialize, the market began to show signs of sideways movement. Given that a substantial profit had already been secured, the trader decided it was prudent to exit the trade. The profit stood at a very healthy level, and there was no reason to risk a significant portion of it by waiting for further gains, especially if the market showed signs of slowing down or reversing. The final decision was made to book the profit. The exit was executed around 9:55 AM. Despite potentially missing out on further upward movement, the decision was based on risk management and securing the substantial gains already made. The Nifty also contributed positively, ensuring that the overall portfolio remained in good shape. The total net profit for the day was $172,000, a highly successful outcome. This performance not only provided a substantial return but also recovered the losses incurred in previous trading sessions.
Takeaways
- Patience and Observation: Do not rush into trades immediately after market open, especially after a significant gap. Observe initial price action and understand the sentiment of profit booking versus genuine reversals.
- Sentiment-Based Trading: The market often plays with traders' sentiments, creating traps for both buyers and sellers. It's crucial to identify if the market is inducing fear or greed to make informed decisions.
- Dynamic Risk Management: Be prepared to adjust your strategy based on live market conditions. Having predefined profit and loss targets is essential, but flexibility in execution can lead to better outcomes.
- Profit-Driven Exit Strategy: Once a significant profit is achieved, shift focus from chart analysis to managing the accumulated profit. Don't let the desire for more override the importance of securing your gains.
- Inter-Market Analysis: Pay attention to related indices (e.g., Nifty and Banknifty) as their movements can influence each other. A strong performance in one might support or challenge your position in another.
References
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