One of the most crucial skills for a successful trader is the ability to select trades objectively, without being influenced by emotions and opinions. This skill separates professional traders from the rest, placing them on par with some of the largest companies in the world—those in the business of insurance. Like these companies, successful traders must have well-defined systems and processes for selecting risk.
There are only three things to consider when you are preparing to assume risk in your trading insurance company: TRADE SELECTION, TRADE SELECTION and TRADE SELECTION. Your trades should be based on clear, well-defined chart formations and align with the prevailing trend. Implementing a filtering system to identify only the most reliable setups is essential. Additionally, flexibility is key to adapting to the ever-changing market dynamics.
Our Trade Selection Tool for Nifty Futures
We’ve developed a robust tool to aid in selecting trades on Nifty Futures, utilizing the following variables:
Longer Term (Weekly/ Daily) :
The daily trend of US indices - Dow and Nasdaq
The weekly trend of Nifty
The daily trend of Nifty
The daily trend of sister indices - Banknifty, Nifty IT and Nifty MidCap 100
Shorter Term (1H):
Setup strength of Nifty Futures as determined by the Win Ratio
Chart Pattern on the 1H candlestick chart
Support and Resistance on the 1H / 2H candlestick chart
Setup strength of sister indices - Banknifty, Nifty IT and Nifty MidCap 100
Each of these variables contributes to the decision-making process, determining whether a trade setup is viable or should be passed.
Trade Preparation Windows
Morning Trade at C1 or C2:
Overnight/Pre-9 AM Preparation:
Long-Term Variables: Determine daily and weekly trends of US indices, Nifty, and other sister indices.
Short-Term Variables:
Identify support and resistance levels on the 1H chart.
Check for chart patterns already formed or in the process of forming. Be aware of any impending breakout or breakdown from the pattern.
9:45 AM to 10 AM Preparation:
Short-Term Variables:
Once a setup is identified, assess setup strength of Nifty Futures and other sister indices by checking out the Win Ratio.
Review support and resistance for any adjustments.
Determine if C1 represents a breakout or breakdown from a chart pattern or a range that was on your radar.
Afternoon Trade at C4 or C5:
Overnight/Pre-9 AM Preparation:
Long-Term Variables: Same as Morning Trade above.
Short-Term Variables: Same as Morning Trade above.
12:40/1:40 PM to 1/2 PM Preparation:
Short-Term Variables:
Once a setup is identified, assess setup strength of Nifty Futures and other sister indices by checking out the Win Ratio.
Adjust support and resistance levels as needed based on new candles C1-C4.
Identify any new pattern or a breakout or breakdown from a chart pattern or a range based on new candles C1-C4.
In upcoming posts, we will discuss the significance of each variable in our Trade Selection Tool. The tool assigns a score to each trade, ensuring an objective and logical trade selection process. A minimum score is required to take a trade, guaranteeing that only high-quality setups are pursued.
Click on "Next Post" to learn more about the long-term input variables in our Trade Selection Tool: Trade Selection - Longer Term Trend.
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