Imagine you have a high-performance car, perfect sunny weather, an excellent road, and a full tank of fuel. These are ideal conditions for a drive, but what if you don’t know how to drive or, worse, are a poor driver? Driving under these circumstances would be highly risky. Conversely, if you are a skilled driver, you would prepare for a long journey by checking fuel levels, tire pressure, weather conditions, and your route. Once on the road, you would adhere to traffic rules and drive cautiously.
This analogy applies directly to trading. Before you trade, you need to prepare thoroughly to determine if trading is the right move. Once prepared, execute the trade flawlessly, and then manage it post-execution to minimize risks and maximize profits. We call this Trade Mechanics, a fundamental component of our Trading System. It encompasses three key phases: Trade Preparation, Trade Execution, and Trade Management, which we will discuss in detail in subsequent posts.
Of these three phases, Trade Preparation is the most critical. It requires extensive technical knowledge, including chart reading and the application of this knowledge. Additionally, it demands essential skills such as attention to detail, diligence, commitment, discipline, and experience. Proper trade preparation positions you to win more than half the battle, as execution and management primarily involve following established rules and maintaining discipline.
Trading in Nifty Futures involves the use of 1-hour (1H) candlestick charts. Below is a list of key 1H candlestick terminology that will be frequently referenced throughout this course. It is crucial to familiarize yourself with these terms to effectively follow and understand the material.
1H Candle Terminology | Duration (IST) | Trading Action |
C1 - 1st Candle of the day | 9:15AM - 10AM | Trade Prep starts @ 9:45 AM, Trade Execution @ 10 AM followed by Trade Management |
C2,C3 - 2nd and 3rd Candle | 10AM - 11AM, 11AM - 12AM | No Action |
C4 - 4th Candle | 12AM - 1PM | If no positions on C1, trade Prep starts @ 12:40 PM, Trade Execution @ 1PM followed by Trade Management |
C5 - 5th Candle | 1PM - 2PM | If no positions on C1 or C4, trade Preparation starts @ 1:50PM, Trade Execution @ 2PM followed by Trade Management |
C6 - 6th Candle | 2PM - 3PM | Trade Exit @ 3PM if adverse conditions |
C7 - 7th Candle | 3PM - 3:30PM | All Trades Exit @ 3:25PM. No overnight positions |
Note: Positions on C1 should be exited if any adverse candle forms on the completion of any of the candles C4, C5 or C6.
The concepts will become clearer as you proceed through the upcoming posts. Click on "Next Post" to continue to Trade Preparation.
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