News causes short term sharp movements which I call spikes, and Timewave can NOT predict them. After spikes are over market always resumes its normal course and does exactly what it was already set out to do. Examples are BREXIT Friday and Trump Tower.
Today as well, there will be spikes and they won’t follow any level or TSL , but Nifty after these spikes will eventually bottom out tomorrow only. Dealing with this requires great patience which unfortunately average Joe trader on the street lack and go into panic state, books losses and takes position in the opposite direction. After BREXIT Friday almost everyone was short for next 1 week at least!
Also, even if you have a successful technical strategy, your chart will completely get distorted and will not paint the correct picture. Ideally to deal with it, you shall edit the chart data such that no spikes are seen.
So for an average trader, its better to trade as per their temperament rather than fighting with it. When we already know keeping patience is tough for us, and spikes will definitely be there, what is the need to trade? Better stay out, tomorrow is another day!
So, today before 10:30 AM we will close our positions. After budget if we see a positive spike, we will short again. Otherwise skip the day, and go long tomorrow.
You can write out of the money options. Sell 8800CE and 8400PE. Becaue of high volatility today premium component in them will be high. After the event is over, premium will come down too. So buy back later. Eat the premium and enjoy!
Chances of Nifty going above 8800 and below 8400 is very low. Even if it does, it will just be a spile and will be over soon. So its a quite safe strategy. But will require large sum of margin money.
Today went short at 8613, covered at 8675 net -65 points
Net +10 points.
(Just keeping track of P&L)
Thanks in advance