One could trade Indian Markets in Two Ways : being a Day trader, and being a positional trader.
Considering the Gapup and the Gapdown that we are seeing it doestnot make sense for somebody to daytrade and make more sense for Positional Trading.
In case, One is thinking about day trading after a gap up or a gap down, one could follow a rule that professional traders follow which would be buy the 15 minute bar breakout buying if the 15 minute high is broken and shorting after the 15 minute low is broken.
In case one is trading on a positional basis, one could consider to trade on higher time frame of greater than 30 minutes since this would contain less noise and thus better decision making and control.
{ 3 comments… read them below or add one }
another popular method adopted by many is to fade the gap.That is to go short on gap up and going long on gap down, although one has to keep a tight stop loss.the important points of control has to be taken into account like last five days low, high etc including the value area placements as in Market profile.
Yes Manas,
Fading is an important strategy that many apply wherein the target of the trade would be yesterday’s close.
but such a strategy should be used along with the opening range breakout , seeing the market for the first fifteen minutes in case the markets gaps up or down and one could follow a rule that professional traders follow which would be buy the 15 minute bar breakout buying if the 15 minute high is broken and shorting after the 15 minute low is broken.
Fading should not be used alone and should be used in conjuction with the Opening range Breakput
Hi Manas, can you elaborate on using value area… thanks.