If making BIG MONEY is your plan on the BUDGET DAY.
You need to plan it well.
THREAD: Budget 2023 -How to trade? by Subasish Pani (Power of Stocks)
Collaborated with @AdityaTodmal
You need to plan it well.
THREAD: Budget 2023 -How to trade? by Subasish Pani (Power of Stocks)
Collaborated with @AdityaTodmal
1/ Who should participate?
Beginners should avoid as the day will be highly volatile or restrict themselves to 1-2 lots.
Profitable traders over a period of 1 year should not risk more than 2-5% as per your risk appetite.
Beginners should avoid as the day will be highly volatile or restrict themselves to 1-2 lots.
Profitable traders over a period of 1 year should not risk more than 2-5% as per your risk appetite.
2/ For beginners:
Beginners can skip this day or restrict themselves with 1-2 lots as this day is going to be highly volatile.
Hence, more than the budget day, it would be better to focus on the following day i.e. expiry.
Beginners can skip this day or restrict themselves with 1-2 lots as this day is going to be highly volatile.
Hence, more than the budget day, it would be better to focus on the following day i.e. expiry.
3/ Budget day - Feb 1, 2022:
Very volatile in intra-day and the day ended with a doji formation, as the closing price was very near to the opening price.
Very volatile in intra-day and the day ended with a doji formation, as the closing price was very near to the opening price.
4/ Budget day - Feb 1, 2021:
Clear uptrending day
Clear uptrending day
5/ Budget day - Feb 1, 2020:
Volatile in the first half and clear downtrending day in the second half.
Volatile in the first half and clear downtrending day in the second half.
6/ Budget day - Feb 1, 2019:
Very volatile and both sharp upmove and downmove was witnessed
Very volatile and both sharp upmove and downmove was witnessed
7/ Budget day - Feb 1, 2018:
Extremely volatile, sharp upmove, followed by sharp downmove, followed by sharp upmove and ended with sharp downmove.
Extremely volatile, sharp upmove, followed by sharp downmove, followed by sharp upmove and ended with sharp downmove.
8/ Implied Volatility (IV):
IV is usually in the range of 16-20 near the budget. Till Jan 25 it was in the range of 13-15.
IV is expected to increase near the event. Whenever market trends on the downside IV rises. Hence historically market falls prior to budget and IV rises.
IV is usually in the range of 16-20 near the budget. Till Jan 25 it was in the range of 13-15.
IV is expected to increase near the event. Whenever market trends on the downside IV rises. Hence historically market falls prior to budget and IV rises.
9/ Findings of the 5 past budget days:
Till 12 pm market is expected to remain sideways.
Post 12pm we can expect some trend.
Don't buy any options till 12 noon on the day of budget as historically market remains sideways from 9.15 am to 12pm.
Till 12 pm market is expected to remain sideways.
Post 12pm we can expect some trend.
Don't buy any options till 12 noon on the day of budget as historically market remains sideways from 9.15 am to 12pm.
10/ Strategy 1:
From 9.15 am to 12pm one can deploy short strangle or short straddle as usually post the event IV crushes, so one can play for short volatility.
Short straddles will have the largest decay due to IV crush.
Exit this short strangle or short straddle by 12pm.
From 9.15 am to 12pm one can deploy short strangle or short straddle as usually post the event IV crushes, so one can play for short volatility.
Short straddles will have the largest decay due to IV crush.
Exit this short strangle or short straddle by 12pm.
11/ Strategy 1 trade plan:
SL for short Staraddle should be 100-150 points.
Target for short straddle : 100- 150 points.
R/R for short straddle:
Exit Short straddle by 12pm thereafter, plan for a trending move.
SL for short Staraddle should be 100-150 points.
Target for short straddle : 100- 150 points.
R/R for short straddle:
Exit Short straddle by 12pm thereafter, plan for a trending move.
12/ Strategy for Trending move:
At 11.45 pm wait for a 15 min candle, i.e. wait till 12 pm.
Mark the high and low of this 15min candle. The moment it breaks above or below plan for a CE buy or PE buy respectively.
At 11.45 pm wait for a 15 min candle, i.e. wait till 12 pm.
Mark the high and low of this 15min candle. The moment it breaks above or below plan for a CE buy or PE buy respectively.
13/ Strategy for Trending move continued:
SL: If you buy a PE at the breakdown of the 15min low then SL should the high of that candle.
If the length of the candle is more than 100 points, ensure you restrict your SL to 100 -150 points and plan for a tgt of 200 or 300.
SL: If you buy a PE at the breakdown of the 15min low then SL should the high of that candle.
If the length of the candle is more than 100 points, ensure you restrict your SL to 100 -150 points and plan for a tgt of 200 or 300.
14/ Range BO strategy:
Prior to 12pm if market forms a range and then gives a BO one can plan for 1:3 trade as well.
Example: Feb 1, 2019 budget
Prior to 12pm if market forms a range and then gives a BO one can plan for 1:3 trade as well.
Example: Feb 1, 2019 budget
15/ 5EMA stratgey on budget day:
5EMA strategy can work very well on the Budget day, becasue if market remians volatile then you can trade both the buy and sell signals.
However limit to 3 trades only basis 5EMA on the budget day.
5EMA strategy can work very well on the Budget day, becasue if market remians volatile then you can trade both the buy and sell signals.
However limit to 3 trades only basis 5EMA on the budget day.
16: Which strategy to follow?
Plan any one:
1. Deploy short strangle till 12noon and thereafter plan to take directional trades post a 15min candle breakout/ breakdown (11.45 to 12 pm candle).
OR
2. Plan for 5EMA trades, shorters can looks for 5EMA signal on 5mins at the top.
Plan any one:
1. Deploy short strangle till 12noon and thereafter plan to take directional trades post a 15min candle breakout/ breakdown (11.45 to 12 pm candle).
OR
2. Plan for 5EMA trades, shorters can looks for 5EMA signal on 5mins at the top.
17/ Now lets analyse on daily basis:
Currently, we witnessed a strong sell off, there are three back-to-back red candles under formation.
Currently, we witnessed a strong sell off, there are three back-to-back red candles under formation.
18/ Scenario 1:
Assuming even on Monday and Tuesday we witness another red candle forming LH- LL.
This would mean extended move on the downside.
After a 5 day back to back red candles, we might then seen a reversal/ sharp upmove where short covering might also get triggered.
Assuming even on Monday and Tuesday we witness another red candle forming LH- LL.
This would mean extended move on the downside.
After a 5 day back to back red candles, we might then seen a reversal/ sharp upmove where short covering might also get triggered.
19/ Scenario 2:
If we see two inside bars within the Friday range i.e. below 41500 and doesnt breach the low of Friday , then if during budget we see some bounce, then we can use that bounce to sell again for a new low.
If we see two inside bars within the Friday range i.e. below 41500 and doesnt breach the low of Friday , then if during budget we see some bounce, then we can use that bounce to sell again for a new low.
20/ Scenario 3:
If we see candles > 41500-41600 then strangle 43000-40300 zone.
Subasish will plan for trades under Scenario 1 & 2.
If we see candles > 41500-41600 then strangle 43000-40300 zone.
Subasish will plan for trades under Scenario 1 & 2.
21/ On weekly TF:
Immediate support: 38k
Followed by 36k, 34k and lastly 32k.
There are several supports in the weekly.
Immediate support: 38k
Followed by 36k, 34k and lastly 32k.
There are several supports in the weekly.
22/ If Scenario 2 plays out then we can plan for 38500 tgt.
On Weekly TF failed BO, however the BO target hasnt been achieved till now. Hence not planning aggressive downside and only till 38500
On Weekly TF failed BO, however the BO target hasnt been achieved till now. Hence not planning aggressive downside and only till 38500
23/ Conclusion:
1. Plan for Short straddle from 9.15 to 12 noon on the budget day.
2. Trade for directional move after breakout or breakdown of the 15min candle formed from 11.45 to 12pm.
3. Check for what the market is doing for the next two days and apply those scenarios.
1. Plan for Short straddle from 9.15 to 12 noon on the budget day.
2. Trade for directional move after breakout or breakdown of the 15min candle formed from 11.45 to 12pm.
3. Check for what the market is doing for the next two days and apply those scenarios.
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