The Simplest Swing Trading Strategy For Beginners (with Zero Experience)
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This video discusses about how derivative data in conjunction with price action can be of great help to the option traders in Indian stock markets.
It has been found based on historical analysis, that the moves which are supported or backed by strong Open interest participation have a sound probability of sustenance. Validating a breakout in Nifty/Banknifty in conjunction with Open Interest will help in trading breakouts confidently.
How do you scale these comparisons, as different price trajectories and price levels prevail in different indices, like Nifty or BankNifty. Similarly for stocks as underlying on NSE in the derivatives segment, the price levels and price trajectories vary.
This applies to Open Interest too. Here, the concept of price percentile is effective,
Price OI Percentile
Price Move along with participation (Open Interest Increment) has More Probability of Sustaining
If Price Percentile is greater than 90 (+) Open Interest Percentile is greater than 90 --- Price is Recent High + OI Recent High….
Probability of Breakout Sustaining after Such Move Much Higher
If Price Percentile lesser than 10 (+) Open Interest Percentile is greater than 90 --- Price is Recent Low + OI Recent High….
Probability of Breakdown Sustaining after Such Move Much Higher
In this video, Quantsapp approaches the nuance of breakout by use of derivative data, along with technical price action. Not just price action, but also derivative data like open interest action, helps in gauging the herdism in the trade and if the breakout is indeed sustainable or not.
Be a data driven trader!
Prasanna Jadhav is a certified options specialist with a wealth of knowledge and research in technology and financial markets. His knowledge of options trading and insights are very helpful , establishing himself as one of the top expert for acquiring insights into Equity Derivatives Trading.
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