TraderParth

MANIPULATION IN NIFTY INDEX (Search And Destroy)

Education
NSE:NIFTY   Nifty 50 Index
This idea is inspired by a strategy often used by market manipulators called Search And Destroy from the book named " How To Triple Your Money Every Year with Stock Index Futures " (1984).

In this book, According to Author George Angell's Search and Destroy day is "...When both previous time high and Low would be taken out..." (p.217)

In our analysis we will understand this strategy used by market manipulators with very good example of NIFTY 50 Index.

In the above chart market on 19th March market opened Gap Down by around 100 points and created a low at 14350 and from that point and it went bullish and made a good support at that level. One can consider 14350 level as a good support because market was bearish at the time of opening and it went bullish from that particular point.

Now from 14350, market went upside and came back to that same level after taking strong resistance at physiological level of 14900
from the upside.

So if we think from the point of view of retail traders who deals in intraday trades they certainly consider that point as an support level and put their stop loss at that level for taking long trades.

But here Market Manipulators enters in the market and aggressively take price down by around 100 points and what happens next is stop loss of all the retail players were triggered at that point and now Manipulators have that enough liquidity for execution of their big trades.

At last because of big lots were bought in the market by those manipulators Automatic Rally happens and as we can see in the chart there were two Gap Ups in two days in continuation. DO you think retail traders can do this ? Definitely Not.

The term Automatic Rally means when heavy selling occurs in the market at same point to catch that liquidity high amount of buying also happens in the market and as a result of that prices goes upside.

There is a also term called Wake- off Trading. You can also relate some steps above with the phases of that concept also.

Happy Trading. :-)




Note :

Trading foreign exchange and stocks on margin carry a high level of risk and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange or stocks you should carefully consider your investment objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss in excess of your initial investment. You should be aware of all risks associated with stock and foreign exchange trading and seek advice from an independent financial divisor if you have any doubts. I am not a licensed financial advisor and this content is not financial advice.





Comments

So according to you what is the nutshell Sir ??To Stay short or long?? Well i think it is highly overly manipulated game !! Wats ur take??
+3 Reply
To stay long or short depends on market conditions and it is also not same in each and every condition. But in nutshell you can apply some common logic to find out manipulation. Again it is not that easy but after some time you will figure out what you should avoid.
+2 Reply
Good analysis.
+2 Reply
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