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Trading Medicine Options are a type of contract that gives the buyer the right to buy or sell a security at a specified price at some point in the future. An option holder is essentially paying a premium for the right to buy or sell the security within a certain time frame. Is option trading profitable? Options trading is a risky endeavor but can be profitable if done correctly. There is no guarantee that any particular trading strategy will be consistently successful, but a few methods have proven to be effective more often than not.
NSE:BANKNIFTYEducation
by SkyTradingZone
PCR Part - 1What is PCR in share market? A Put-Call Ratio is a technical indicator used in derivative markets. It gauges market sentiment by comparing the open interest or trading volume of put options to call options. A high ratio generally suggests a bearish outlook, while a low ratio indicates a bullish sentiment. A PCR value below 1 is indicative of the fact that more Call options are being purchased relative to the Put options which signals that investors are anticipating a bullish outlook for the markets ahead.
NSE:BANKNIFTYEducation
by SkyTradingZone
Advanced Rsi Divergence TradingRSI Divergence occurs when the Relative Strength Index indicator starts reversing before price does. A bearish divergence consists of an overbought RSI reading, followed by lower high on RSI. At the same time, price must make a higher high on the second peak, where the RSI is lower. If used correctly, RSI divergence can be profitable, providing early signals of trend reversals. However, it also carries risks, and traders should use it alongside other indicators and proper risk management strategies.
NSE:BANKNIFTYEducation
by SkyTradingZone
Technical Analysis MACD HIstogram Key Takeaways The moving average convergence divergence (MACD) is a popular momentum indicator that is used in technical analysis. The MACD is calculated by comparing exponential moving averages in a security's price. The MACD line is charted alongside a nine-day moving average of the MACD line, called the signal line, and a histogram representing the difference between these two curves. Traders use the MACD histogram to anticipate changes in market momentum. MACD analysis can still generate false price predictions. Experienced traders use additional metrics and fundamental analysis to support their forecasts. This example should demonstrate how observing the MACD histogram can help anticipate changes in trends in both short-term and long-term price momentum. It is important for traders to learn to recognize these trends and not bet against them. Fighting a trend is a sure way to get pummeled.
NSE:BANKNIFTYEducation
by SkyTradingZone
Data Trading Part -1 It proves useful for assessing the depth and liquidity of specific strikes. It aids traders to find option premium against its corresponding maturity date and strike price. Option chain serves as a warning against breakouts or sharp moves in the index. How It Works: A long straddle options strategy involves simultaneously buying a call option and a put option on the same underlying asset with the same strike price and expiration date. This strategy becomes profitable when the stock significantly shifts in one direction or another.
NSE:BANKNIFTYEducation
by SkyTradingZone
DATABASE TRADING WITH OPTION CHAINOption chain data is the complete picture pertaining to option strikes of a particular stock or index in a single frame. In the Option chain frame, the strike price is at the center and all data pertaining to calls and puts on the same strike are presented next to each other. Traders use an options chain to choose the specific option contracts that best align with their trading strategy. They can select options with the desired strike prices and expiration dates based on their market outlook. Options chains are crucial for assessing and managing risk.
NSE:BANKNIFTYEducation
by SkyTradingZone
3
Beginner to Advanced Trading Every successful investor has one thing in common, they read as many investment books as they can. Trading in the share market requires a basic knowledge of all the aspects that can influence the prices of shares, and it can be gathered by reading books regularly. Skills #1 and #2 – Research and Analysis. ... Skill #3 – Adapting Your Market Analysis to Changing Market Conditions. ... Skill #4 – Staying in the Game. ... Skills #5 and #6 – Discipline and Patience. ... Bonus Skill #7 – Record Keeping. ... In the End.
NSE:BANKNIFTYEducation
by SkyTradingZone
4
why risk management is important in tradingWithout appropriate risk management, events like this can lead to: Loss of all your trading capital or more. Losses that are too large given your overall financial position. ​Having to close positions in your account at the wrong time because you don't have enough liquid funds available to cover margin. Key Takeaways: #Trading can be exciting and even profitable if you are able to stay focused, do due diligence, and keep emotions at bay. #Still, the best traders need to incorporate risk management practices to prevent losses from getting out of control. #Having a strategic and objective approach to cutting losses through stop orders, profit taking, and protective puts is a smart way to stay in the game.
NSE:BANKNIFTYEducation
by SkyTradingZone
1
Option TradingTo read an option chain, you can look for the following information: Strike price: The price at which the stock is bought if the option is exercised Premium: The price of the options contract, or the upfront fee paid by the investor Expiry dates: The dates on which the option expires, which can affect the premium Open interest (OI): The total number of outstanding option contracts that have not been settled Implied volatility (IV): A percentage that indicates the expected price fluctuations, and the level of uncertainty or risk in the market Bid: The best available price at which the option can be sold Ask: The best available price at which the option can be purchased Volume: The number of transactions that have occurred on the current trading day Net change: The net change of LTP, where a positive change indicates a rise in price and an unfavorable change indicates a decrease in price Bid qty: The number of buy orders for a specific strike price Ask qty: The number of open sell orders for a specific strike price Here are some other tips for reading an option chain: The option chain is divided into two sections, calls and puts, with calls on the left and puts on the right The current market price is displayed in the center ITM call options are usually highlighted in yellow Higher open interest usually indicates higher liquidity and market activity
NSE:BANKNIFTYEducation
by SkyTradingZone
Top 1% Trader SecretDetermine your risk capital, i.e., the total amount of money you're willing to risk in your trading. This should be money that you can afford to lose without it affecting your lifestyle. Calculate 1% of your risk capital. This is the maximum amount you're allowed to risk on any single trade. For day traders and swing traders, the 1% risk rule means you use as much capital as required to initiate a trade, but your stop loss placement protects you from losing more than 1% of your account if the trade goes against you.
NSE:BANKNIFTYEducation
by SkyTradingZone
2
How to Draw Support and Resistance Like a Pro! Support and Resistance are one of the most important aspects of technical analysis but often I see traders doing it wrongly. How to Draw Support and Resistance: Imagine you have a chart filled with SR like the one below. Do you know which levels to pay attention to? When you’re about to start, how to plot support and resistance lines? It’s filled with nothing but lines and it doesn’t seem to make much meaning of the chart at all. nah My approach to drawing Support and Resistance uses either 1 line or 2 lines. It is much cleaner and immediately tells you which area of the chart to pay attention to. I use a single line when price respect a level almost to the pip and i use 2 lines when price bounces off an area. I highlight only the key Support and Resistance of a chart meaning the obvious swing highs and lows. The intermediate SR i will not draw any lines so as to maintain my focus on the key areas. Besides, with enough screen time you can easily identify those intermediate Support and Resistance without any lines. real world… You must keep in mind of the R.S.M. formula. These three things stands for: Reaction Setup Management Now take notes because this is important… Reaction Here’s the truth: Drawing support and resistance lines aren’t the holy grail.
NSE:BANKNIFTYEducation
by EmpireCrown
Banknifty , Crude oil and Copper Divergence Divergence is a technical analysis concept that occurs when the price of an asset and a technical indicator move in opposite directions. It's a sign that the price of an asset may be reversing, and it can help traders recognize and react to price changes. Here are some things to know about divergence: #Types of divergence There are two types of divergence: negative and positive. Negative divergence happens when the price of a security is rising, but an indicator is falling. Positive divergence happens when the price of a security is falling, but an indicator is rising. #When to use divergence Divergence can help traders make decisions like tightening stop-loss or taking a profit. #How to confirm reversals Divergence can occur over a long period of time, so traders can use other tools like trendlines and support and resistance levels to confirm reversals. #When to use convergence Convergence is when the price of an asset, indicator, or index moves in the same direction as a related asset, indicator, or index
NSE:BANKNIFTYEducation
by SkyTradingZone
3
Histogram(MACD) Divergence Trading Let us discuss the MACD indicator strategy and histogram. I know being a chartist you are familiar with this tool. Hence I hope this will be a revision for you. Assuming you already know this topic, you should know that MACD Histogram is derived from MACD. To me, it is the effect of MACD (cause), without which MACD Histogram would not have been born. I hope you can relate it to the previous paragraph. If not, no problem. Carry on reading. But before proceeding further I would request you to recapitulate MACD (moving average convergence divergence). Thanks for converging your thoughts with that of mine. I am glad. It will help me to explain this article without taking the additional burden. MACD Histogram Peak-Trough Divergence By now you must have understood how the histogram dances to the tunes of prices. If one looks at it closely then one can easily identify the divergences. You will notice that a peak and trough divergence is formed with two peaks or two troughs in the MACD Histogram. Usually, it can be segregated into two parts, i.e. bullish peak and trough divergence and bearish peak and trough divergence. Alright, I will explain you in short. Bullish Peak-Trough Divergence It is formed when MACD makes a lower low and on the contrary, MACD-Histogram makes a higher low. One thing you should keep in mind, i.e., well-defined troughs define the health of a bullish peak-trough divergence. bullish peak trough divergence Bearish Peak-Trough Divergence It is formed when MACD makes a higher high and on the contrary MACD Histogram makes a lower high. One thing you should keep in mind, i.e., well-defined peaks define the health of a bearish peak-trough divergence.
NSE:BANKNIFTYEducation
by SkyTradingZone
2
How To Draw Support and ResistanceHorizontal Support and Resistance Levels: These are drawn using horizontal lines based on price points. Support Levels: Identify areas where the market had difficulty breaking below. These levels often have a cluster of buy orders. Resistance Levels: Represent price points where the market struggled to break above. Sellers tend to enter around these levels. Round-Number Levels (Psychological Levels): These occur around round exchange rates (e.g., 1.00, 1.10, 1.50). Traders pay attention to these levels due to their psychological significance. Trendline Support and Resistance: Draw upward or downward sloping trendlines using at least two price points. Trendlines help identify dynamic support and resistance.
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by Optionclub
ADVANCED PCR TRADING #NSE #BSE #Option'sWhat is the PCR Ratio? The PCR measures the relative trading volume of put options (bearish bets) to call options (bullish bets) in the market. It’s calculated as:PCR=Open Interest of Call Options / Open Interest of Put Options​ Interpretation: PCR > 1: Indicates bearish sentiment. More put options are being traded, suggesting traders are hedging against potential declines or speculating on downward moves. PCR < 1: Signals bullish sentiment. More call options are traded, indicating traders expect price increases or are hedging short positions. PCR = 1: Suggests a neutral sentiment where buying and selling pressures are balanced. Why PCR Matters: Sentiment Gauge: The PCR reflects market sentiment. Tracking changes helps you gauge optimism or pessimism. Contrarian Indicator: Extremely high PCR may signal excessive pessimism, potentially leading to reversals.
NSE:BANKNIFTYEducation
by Optionclub
Advanced Trading With DataBase #Nse #BseOptions Data APIs and Tools: Investopedia: Provides insights on using options data for market direction. IVolatility: Offers a deep database of options and futures prices, volatility, and analytical tools for traders and investors. Polygon: Real-time options prices, historical data, and news for major options markets. Optionistics: Offers free analysis tools, including price and volatility history, option calculators, and more. Barchart: Provides an overview of today’s options market activity and unusual options activity5.
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by Optionclub
1
Trading Management and Psychology #NSE #SMCTrading psychology is different for each trader, and it is influenced by the trader's emotions and biases. The two main emotions that are likely to impact the success or failure of a trade are greed or fear. Greed is defined as the excessive desire for profits that could affect the rationality and judgment of a trader. Trading psychology is the emotional component of an investor's decision-making process, which may help explain why some decisions appear more rational than others. Trading psychology is characterized primarily by the influence of both greed and fear. Greed drives decisions that might be too risky. Here are five ways to feel more in control of your emotions while trading. Create Personal Rules. Setting your own rules to follow when you trade can help you control your emotions. ... Trade the Right Market Conditions. ... Lower Your Trade Size. ... Establish a Trading Plan and Trading Journal. ... Relax!
NSE:BANKNIFTYEducation
by Optionclub
Advanced Data Base Option's Trading #NSE #BSEInstitutional options trading refers to the buying and selling of options contracts by large entities such as banks, pension funds, hedge funds, mutual funds, and other institutional investors. These institutions accumulate funds from various investors to trade on their behalf. Options are financial derivatives that give the holder the right (but not the obligation) to buy (call option) or sell (put option) an underlying asset (such as stocks, commodities, or currencies) at a predetermined price (strike price) within a specified time frame (expiration date). Here are some key points about institutional options trading: 1.Institutional Traders vs. Retail Traders: *Institutional Traders: These traders manage accounts for institutions or groups. They trade larger volumes and have access to more exotic products, including complex options. *Retail Traders: These traders operate personal accounts and typically trade smaller sizes of assets. 2.Advantages of Institutional Trading: *Access to a wide range of financial instruments, including exotic options. *Ability to execute large trades efficiently due to their substantial funds. *Influence on market prices due to their significant trading volumes. 3.Service Providers Used by Institutional Trading Firms: * Bloomberg * Thomson Reuters * Factset * Marketwatch 4.Educational Requirements and Job Opportunities: *Becoming an institutional trader often requires a strong educational background in finance, economics, or related fields. *Job opportunities include roles in trading, risk management, and portfolio management. 5.Earnings: *Institutional traders can earn substantial salaries, but compensation varies based on experience, performance, and the institution. Remember that institutional trading strategies involve careful analysis, calculated moves, and a long-term perspective, as these traders significantly impact market dynamics.
NSE:BANKNIFTYEducation
by Optionclub
5
Advanced RSI Trading #Options The relative strength index (RSI) is a momentum indicator used in technical analysis. RSI measures the speed and magnitude of a security's recent price changes to evaluate overvalued or undervalued conditions in the price of that security. The RSI is displayed as an oscillator (a line graph) on a scale of zero to 100. The indicator was developed by J. Welles Wilder Jr. and introduced in his seminal 1978 book, New Concepts in Technical Trading Systems. The RSI can do more than point to overbought and oversold securities. It can also indicate securities that may be primed for a trend reversal or corrective pullback in price. It can signal when to buy and sell. Traditionally, an RSI reading of 70 or above indicates an overbought situation. A reading of 30 or below indicates an oversold condition.
NSE:BANKNIFTYEducation
by Optionclub
Data Base Trading Part - 5 #StocksAn option chain lists data on calls and puts, underlying prices, strike prices, expiration, and moneyness. Call option data is listed to the right of the table. Put option data is listed to the left of the table. Strike prices are listed on rows in the centre of the table. Avoid options with low liquidity; verify volume at specific strike prices. calls grant the right to buy, while puts grant the right to sell an asset before expiration. Utilise different strategies based on market conditions; explore various options trading approaches. A call option buyer stands to profit if the underlying asset, say a stock, rises above the strike price before expiry. A put option buyer makes a profit if the price falls below the strike price before the expiration.
NSE:BANKNIFTYEducation
by Optionclub
2
Data Base Trading Part = 4 #Institutions Options chain can be defined as the listing of all option contracts. It comes with two different sections: call and put. A call option means a contract that gives you the right but does not give you the obligation to buy an underlying asset at a particular price and within the option's expiration date. An option chain trading strategy can be formulated by seeing accumulations in OI (open interest) and volumes in various option strikes. You should note, here, that open interest implies the number that tells you how many options or futures contracts are presently outstanding/open, within the market.
NSE:BANKNIFTYEducation
by Optionclub
3
Data Base Trading Part - 3 #NSE #BSE What exactly is an Option Chain? It is the complete picture pertaining to all the option strikes of the Nifty in a single frame. Remember, just as there is an option chain for the Nifty, you have option chains for all the key indices traded in F&O and also for individual stocks where options trading is permitted. Tips for Trading in Bank Nifty Option Stay Informed About Economic Events and Market Trends. ... Use Technical Analysis to Identify Patterns and Trends. ... Develop a Trading Plan and Stick to It. ... Set Realistic Targets and Stop Losses. ... Use Options Greeks to Assess Risk and Return. Bank Nifty is considered one of the best indices for options trading due to its high liquidity, volatility, and significant price movements. These characteristics offer ample trading opportunities and the potential for substantial profits in a short time frame.
NSE:BANKNIFTYEducation
by Optionclub
Data Base Trading Part -2 #NSE #BSE #OptionchainTo study an option chain, focus on the current market price, displayed in the centre. Analyse the built-up data to understand market direction based on recent changes in open interest and price. ITM call options are typically highlighted in yellow, making it easier to distinguish them from other options. Nifty option chain is considered to be the best advance warning system of sharp moves or break outs in the index. So, if you see an aggressive increase in open interest in puts, it is most likely being led by the institutions who are selling puts and it hints at a support level below which the market is unlikely to fall. The reverse interpretation holds in case of call options OI movement. You can position your trades accordingly.
NSE:BANKNIFTYEducation
by Optionclub