by - P K Chaudhary (ceo nifty t3 terminal)
Dear all Nifty T3 Terminal reader,
Today my view is not based on any technicality only based on sentiment basis. As i promised last week market movement how to catch up will be my main agenda in next week. First of all we will have to understand why market moves in certain range in very long span of time.
If you all people just imagine for example today potato is CMP is Rs. 20.00 per kg when new fasal is cut it is sold upto Rs. 7.00 per kg. but during nov to jan it is sold upto Rs. 20.00 per kg and if calculate average rate of potato that will around Rs. 12.00 per kg.
Just think this factor what will happen if you find rage Rs. 3.00 per kg that is never happened in past lower range is not broken 99% time.
If we consider upper range it is broken after a certain period of time not every year if you analyzed with past data you will found upper range is almost broken approximately after 4 year.
Now very important factor in how should trade index?
Very simple analyze past 4 years data try to catch up lower & upper range just calculate average price of index number. For example if we analyze last 4 year index data we found 2250 (low of 2007-2008) in lower side & 6338 upper side if you calculate average rate of index that will be around 4200 is fare value of index plus one more think is also very important on a historical basis 10% annual return is also to be added. Approximately 400 point per year 400X4 1600 point & add 4200+1600 = 5800 is fare value in EOY 2012.
Now the question should you buy at 5800 nifty No…..No……No……. why because again here you have to calculate next 4 year average simply add 2000 point upside & 2000 point in down side. So next 4 year your fare range will be 3800 to 7800.
Try to buy Index if you get opportunity 25% discount from right value of index which is 5800 & 4000 is your volatility range so simply subtract 1000 point from current fare value 5800 – 1000 = 4800 & safe exit level is 6800.
So simply we can say :
if buy at 4800 then downside risk in any situation is 3800 menace 1000 point risk.
If we buy at 5800 that will not be losing trade but you will get less return of your investment & waiting period will be longer.
If you are buying above 5800 simply you are paying little extra of average price of index on average basis.
Now very important factor will you get to buy nifty at 4800 I think yes because in index can move from 6338 to 2257 & IInd time 6338 to 4551. So why not 5670 to 4800 ?
One more things we should not miss where we can short the index. I always believe shoring index always risky trade for any index in world. In my opinion 5800 is center level of index for next 4 years average we can see 2000 plus minus point from CMP so some trader want to execute risky trade at 5800 place stop loss above .618% of range 4000 point that will approximately 6250 & wait for level 4800 to come.
If same method is done in nifty monthly level you people can get success 90% time.
I hope my view will help lot of trader all over world.
Happy Diwali & Trading to all Nifty T3 Terminal readers.
Waiting for your comments.
disclaimer
Dear all Nifty T3 Terminal reader,
Today my view is not based on any technicality only based on sentiment basis. As i promised last week market movement how to catch up will be my main agenda in next week. First of all we will have to understand why market moves in certain range in very long span of time.
If you all people just imagine for example today potato is CMP is Rs. 20.00 per kg when new fasal is cut it is sold upto Rs. 7.00 per kg. but during nov to jan it is sold upto Rs. 20.00 per kg and if calculate average rate of potato that will around Rs. 12.00 per kg.
Just think this factor what will happen if you find rage Rs. 3.00 per kg that is never happened in past lower range is not broken 99% time.
If we consider upper range it is broken after a certain period of time not every year if you analyzed with past data you will found upper range is almost broken approximately after 4 year.
Now very important factor in how should trade index?
Very simple analyze past 4 years data try to catch up lower & upper range just calculate average price of index number. For example if we analyze last 4 year index data we found 2250 (low of 2007-2008) in lower side & 6338 upper side if you calculate average rate of index that will be around 4200 is fare value of index plus one more think is also very important on a historical basis 10% annual return is also to be added. Approximately 400 point per year 400X4 1600 point & add 4200+1600 = 5800 is fare value in EOY 2012.
Now the question should you buy at 5800 nifty No…..No……No……. why because again here you have to calculate next 4 year average simply add 2000 point upside & 2000 point in down side. So next 4 year your fare range will be 3800 to 7800.
Try to buy Index if you get opportunity 25% discount from right value of index which is 5800 & 4000 is your volatility range so simply subtract 1000 point from current fare value 5800 – 1000 = 4800 & safe exit level is 6800.
So simply we can say :
if buy at 4800 then downside risk in any situation is 3800 menace 1000 point risk.
If we buy at 5800 that will not be losing trade but you will get less return of your investment & waiting period will be longer.
If you are buying above 5800 simply you are paying little extra of average price of index on average basis.
Now very important factor will you get to buy nifty at 4800 I think yes because in index can move from 6338 to 2257 & IInd time 6338 to 4551. So why not 5670 to 4800 ?
One more things we should not miss where we can short the index. I always believe shoring index always risky trade for any index in world. In my opinion 5800 is center level of index for next 4 years average we can see 2000 plus minus point from CMP so some trader want to execute risky trade at 5800 place stop loss above .618% of range 4000 point that will approximately 6250 & wait for level 4800 to come.
If same method is done in nifty monthly level you people can get success 90% time.
I hope my view will help lot of trader all over world.
Happy Diwali & Trading to all Nifty T3 Terminal readers.
Waiting for your comments.
disclaimer
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