CNBCs Investor Camp,

Varanasi
Trading index futures using
channels
By Ashwani Gujral

Why the nifty?

Nifty

remains the best risk reward trade

Extreme levels in nifty correspond with key
stocks
It reduces risk because of being diversified
Lot size remains extremely managable
Its important to leash the nifty

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Types of markets
Trending

markets
Trading or cyclical markets

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Trending market

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Trending market

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Some questions?

When is the next bull market coming?

Will we go to 2000?
Has the market bottomed out?
Is this primary or a secondary rally?
If inflation goes down, mkt goes up?
If crude goes down, mkt goes up?
If we have a stable government, mkt goes up?
What if behenji is the next PM?
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The most likely answer

Bull

markets need liquidity

Major global financial institutions will take
years to recover
Dow in 1964 was at 1000, in 1980 again
1000
Dow was at 40 in 1911, again 40 in 1933
Market remains a trading market for a long
time
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The conclusion of above

We

will take longer than most people

think, to recover
Learn swing trading, if you want to remain
in the business

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Trading market

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Some definitions
Pivots

Up pivot

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Down pivot

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ABCs of stock moves

D
D

B
C
A
Trending market
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C
A
Trading market
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ABCs of trend channels

D

Uptrend

B
Profit booking line

E
C
A
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Entry line
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ABCs of trend channels

Downtrend

C Entry line

B
Profit booking line
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Rules for trend channels

Join

at least three pivots to draw a channel

Act only at range extremes
Use oscillators to identify extremes
Book profits in the direction of the market
Swing traders look for a trade opposite to the
prevailing momentum

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Ist trade

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IInd trade

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IIIrd trade

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IVth trade

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Vth trade

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VIth trade

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Lets look at all the trades now

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Exit strategy
Profit

booking

Measuring implication- width of channel

Stochastic becomes overbought/oversold
Prices get to some moving average

Loosing trade

Prices get to the other end of the channel

You loose 2% of capital or 100 points of nifty

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Taking a longer perspective

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Conclusion
It

is possible to trade any market provided

you understand its structure
Use simple techniques like trendlines and
channels
You do not need a bull or bear market to
make money

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 Thank

You

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