Bank Nifty Option 9.20 Trading strategy explained by Trader Ghanshyam

Trader Ghanshyam has explained a simple mechanical strategy in the Bank Nifty which he says yielded him a profit of Rs 2 Cr last expiry. He has advised that newbies should follow this strategy religiously with 1 or 2 lots for a consequtive period of 90 days.

Last week, Ghanshyam reported an earning of Rs. 1.65 crore from trading options in the Bank Nifty. He had anticipated the levels that the Bank Nifty would reach and bought call options. These yielded huge gains as the Bank Nifty met with short-covering and spurted (see Trader Ghanshyam made a profit of Rs. 1.62 Cr by trading Bank Nifty options on expiry day).

In the wake of this, he explained how technical analysis works and how one can use the charts to predict what the Bank Nifty is likely to do. We can take positions with pre-defined profit targets and stop loss. (see Bank Nifty makes predictable patterns & it is possible to predict its next level: Trader Ghanshyam).

In his latest video, Ghanshyam has explained a mechanical strategy that he follows regularly. He has stated that the strategy contributes nearly 60% to his total income. Also, he followed it on the expiry of 7th July which yielded him the gain of Rs. 1.62 crore referred to above.

Essentially, the strategy advised by Ghanshyam is that we should mark the high and low made by the Bank Nifty in the first 5 minute candle. Thereafter, if the Bank Nifty breaks either of the two levels, we should buy Puts or buy Calls depending on the direction.



We can place the stop loss at the high or low of the first candle, as the case may be. However, if the first candle is very big and the set up appears to be failing after we take the trade, we can exit with a stop loss of about 70 - 80 points.

We should avoid taking a trade if the Bank Nifty gaps up or gaps down by more than 300 points.

He has advised that at least in the initial stages, we should follow this strategy in a mechanical manner and without any application of mind. We should also keep our position size low (not more than one or two lots) so that we are not spooked out of the trade due to volatility.

Thereafter, as our experience and confidence grows, we can increase the number of lots and also make refinements to the strategy. We can also learn how to manage risk while dealing in larger quantities.