So tomorrow is the budget 2018. Our finance minister Shri Arun Jaitley will read his budget speech tomorrow and market is likely to show wild swings both the way. In the budget days historically the markets show higher volatility. Wild swings mean wide stop losses, 1 stop loss hit can affect your margins severely. So how to survive in volatile times? Let me present my volatile market trading strategy for you that you can use tomorrow in the Indian markets.
On last year I advised using line break charts to trade the budget day. The same strategy can be utilized this year too. In fact, traders should not use normal candlestick charts on volatile times, because normal candles will produce frequent whipsaws in volatile days. Rather use advanced candles like Renko charts or line break charts to trade a wild market.
My Volatile Market Trading Strategy:
- Trade only frontline stocks or major indices like Nifty index OR Bank Nifty index.
- Avoid trading unknown stocks or counters.
- Use a 1-minute 6 line break chart.
- This setup can give you very less whipsaw and you can catch one sided major intraday moves on a volatile day.
- Keep stop losses few points below the recent swing high or swing low.
- Trade with a definite stop loss and target.
- Use less margin as your broker may lower the margin that day.
- Dont panic, keep your heads cool.
- Book profit and close your terminal once your daily profit goal is achieved. Don’t overtrade on a volatile day.
Attach the line break chart as shown below. This setup can easily be used in Zerodha Kite.
instead of a 3 line break chart, that is normal, I suggest you use a 6 line break chart on a 1-minute time frame. Once the budget speech starts as well as the market action starts, open up a buy or sell order in the direction of the line break trend.
Use this technique tomorrow and let me know how you implemented my volatile market trading strategy on budget 2018. I will be happy to answer your queries. If you don’t have Zerodha Kite click here to get it.
Indrajit is a professional blogger and trading system developer. Amibroker expert, WordPress expert, SEO expert and stock market analyst.Trading since 2002, he has started the journey of StockManiacs.net on 2008. He follows Indian and world stock markets closely.