Bank Nifty LDCHL Trading Strategy by Ghanshyam, his "All Time Hit Option"

One of Ghanshyam's attributes is that he has not only mastered trading but is also able to explain it in a simple manner to newbie traders.He repeatedly emphasizes that anyone can become a profitable traders if he or she is able to diligently follow one setup in a disciplined manner with focus on risk and money management. We must have the sagacity to not take random trades if the buy or sell signals are not generated in the set up.

Importance of Previous High, Low and Close

In his latest post on YouTube, Ghanshyam has explained the Bank Nifty 'LDCHL' Trading Strategy. LDCHL stands for 'Last Day Closing, High and Low'.

He has advised that we should not have any preconceived thoughts that we will buy or sell. Instead, we have to wait for the levels to be breached and only then take buy or sell trades. If the levels are not breached and the market is range-bound, we must treat it a "no-trade day".

On the Chart, we have to mark the previous day's levels of High, Low and Close. These act as vital support and resistance points.

If the Index opens below the previous day's close, the previous day's close level will act as a strong resistance. If the Index approaches this level, one of two things will happen. Either there will be a breakout from that point or a rejection.

This gives us a cue on the trade to take. We can go long on a breakout or go short on a rejection.

Similarly, if the Index opens above either the PDC or the PDL, those levels will act as a support and give us a cue on what trade to take.

As regards the stop loss, Ghanshyam advised that we can keep a stop loss of 50 to 80 points.

Keep the overall market trend in focus

Ghanshyam emphasized that we have to always be aware of the overall sentiment and trend in the market and whether our trade in with or against the trend.

For example, the market is presently in a bearish or downtrend. If the market gives a contra buy signal, we should take the trade but with only half of our regular quabtity. On the other hand, if it gives a sell signal, we can trade with our regular quantity.

Take multiple small trades to familiarize yourself with the strategy and develop confidence

Ghanshyam rightly advised that we will be able to fearlessly hold the trade till it meets the target or hits the stop loss only if the potential loss is petty and within our risk tolerance.

So, we should take a large number of small trades till we feel confident that we have a good understanding of how the market works. Thereafter, we can slowly and steadily increase our position sizing.