EXHAUSTING SHORT SELL

PSYCHOLOGY : Every strategy should carry logical psychology to trade . If that's missing from it ,it can't survive long term . Here exhaustion is the key role of this strategy. Initial big green candle is our base to execute exhausting nature of a stock . After exhaustion ,always profit booking comes firstly  & we have to go with flow by shorting  that stock . Let's go to deep , how to select ,trade & management of this type of trade .

TRADING NATURE : Intraday short sell .

TRADING TIME : Within initial 1st hour.

TRADING TOOLS : 

1. Traditional pivot points indicator .

2. Vwap .

3. Candlesticks chart. 

4. Volume bar. 

STOCK SELECTION : For selecting stock ,you should have a f&o stock watch-list which must be updated in live market .

1. It's live selection process.

2. After 1st 15 min candles formed , select 5-7 top gainer stocks from your f&o watch-list . 

3. 1st 15 min candle should be BIG GREEN & MARUBOZU type candle .

4. Candle should closed well above pivot resistance R2 with huge volume . Higher the close ,higher the chance of exhaustion by our next set up . High volume must be happened . Higher the volume ,higher the chance of profit booking after exhausting mode active .

5. 1st 15 min  Candle should close above previous day high ( PDH ) .

6.  See the below chart . 

Here , 1st 15 min candle MARUBOZU type with huge vol & closed well above R2 ( near R3) is good set up for stock selection. 

TRADING INSTRUMENT : Cash margin short sell is best option to use here. Risky trader can afford selling atm call option or selling future contract . But derivative trading is always risky & good option for professional trader only . Beginner always practice with small account in equity cash margin only .

ENTRY METOD : After selecting process over ( should done within 5 min after 1st 15 min ) we shift our chart time frame from 15 min to 5 min . 

1. When selected stock give close below vwap in 5 min time frame , we initiate short selling at that closing price .

TRADE MANAGEMENT :

1. STOP-LOSS - Here two type of stop-loss can be placed .

A) At day's high . This practice gives you higher risk comparison to lower risk reward ratio . 

B) Above some points of entry candle's high . This practice gives you lower risk comparison to higher risk reward ratio . 

So it's purely depends on your risk appetite & most importantly your position size . 

If your position size is big ,then go with 2nd type stop-loss method . 

And for beginner with lower position size ,practice it with 1st stop-loss method . Gradually , Beginner will evaluate how to use 2nd stop-loss method to get higher return in this strategy .

Please All newbie should read the importance of position size in Intraday trading. From internet ,YouTube you can easily access this valuable knowledge. 

2.EXIT METHOD - For exit criteria ,here is simple ,you have to follow 1:1.3 risk reward ratio ( for beginner) & 1:2 risk reward ratio or higher  ( for advance). 

3. TRAILING STOP-LOSS - During trade , you have to lower your risk by simply lowering stoploss close to vwap ( but not at vwap) until you got your target by risk reward management . 

SOME IMPORTANT POINTS  :

1. This is initial hour trade ,so not force to trade after initial hour . 

2. When set up doesn't arrived , no trade practice . NO TRADING PRACTICE IS BEST WAY TO BE DISCIPLINE .

3. Tweezers Top  formation here ,gives you high probability trade . check it in 15 min time frame .

4. There is no holy-grail strategy in this market . But a discipline trader make successful a strategy by repetitive nature with good risk reward management . 

5. Always be first in execution ,it doesn't come within seven day but practice make you perfect .

6. No Gap should be happened in opening price .

Be discipline ,be profitable 

Mr. SANTANU BEZ