MY Spread Thread.

[varun]

When you plot the BN/Nifty spread in the ratio of 2:3 this is the chart you will get. (I have used a 3min chart as this method is positional and we just get/want one or two trades a day. Moreover a 3min. chart takes less space on the screen to explain.

http://prntscr.com/jk83aj


Now i have taken away the spread line and we are just left with the 2 averages of this spread line.

The 200wilder Moving average starts the trade (When it changes from Red to Green then buy gets initiated and Vice versa for sells)

You add to your positions when the 36Wilder MA changes from red to green for longs and viceversa for shorts.

You take adds only in the direction of the 1st trade. Meaning if 200Wilder MA is green and has initiated a buy then you only add to your long positions. ANd same way for shorts.

http://prntscr.com/jk84nf

I have marked the green boxes as possible adds. (when 36Wilder MA changed back to green).

This is a trend following system and that is all there is to it.

You may get back with any querry.

Thanks.

[kumudhan]

Now i have taken away the spread line and we are just left with the 2 averages of this spread line.

what do you mean by this ji? in the chart spreadline too visible thats why confused..

[kumudhan]

oh sorry for dumb quest..your charts were intrerchanged i realise now...

[varun]

Somebody had asked for BN/Nifty spread so i explained that as i was having more data of this spread. Moreover when you take position in Futures you can carry it overnight. Whereas in Cash you have to cover the shorted leg before EOD.

The broad rules for entry and exit are the same for all spreads. Entry and SL by 200 Wilder MA . Adds by 36 Wilder MA.

[kumudhan]

please give some trades you taken with examples of charts ji...to get hold of the method.

[varun]

http://prntscr.com/jk9lz3

Each Trade/ADD means going Long on 2 BN futures and shorting 3 Nifty futures.

[varun]

The Maximum risk to the trade would be when you initiate the 1st trade. This could be around 150*2 = 300 Points = 12000 rupees. Once you start getting adds and the trend matures, all your subsequent adds would be more or less risk free and so also would be the whole trade. So in summary you can get whipped only in your first trade most of the times, once you start getting ADDS, your profits would go up exponentially.

[manishdh]

Hello Sir how this value around 10218 is coming can you explain its calculation

[varun]

Manish this difference is Price of BN future - (1.5 times price of Nifty Future).

[varun]

http://prntscr.com/jko21i Manish ji this is a chart of Bank Nifty. In reply to your querry about 27000 in BN. Till the time we are above the 2 Green Bands we are still in an uptrend with this move being a vicious pull back. But for strength to resume, we first need a higher high (above 25840 as of now) followed by a higher low (meaning the price should not slip below today's low of around 25720.)

http://prntscr.com/jko68u The OBV is also suggesting the above view. Now only if we do not go below the green band and break out above it then should be ok.