Stock Trading with DP system

*****This article is not complete. A few things could be added/ improved upon in the system. I have only observed it for a few days and found that this method has potential. If you get the general idea, you can play with it in various ways yourself. It is therefore, I am putting it out here so some of you can have fun with it. I use this method when NIFTY is stuck in a narrow range. If NIFTY is trading in a big range, I focus on NIFTY only. ******

Most of the time we wonder how to select stocks. This system ensures that we select a stock that is being watched by many other traders.

Here we go.

We will trade today’s top gainers, losers and most active securities. We do not have to do any analysis or follow a strategy to pick stocks. We will leave that complicated process in the hands of expert traders. We will only check the list of what most of the traders are interested in – TODAY. To do that, we will visit NSE webpage here:

Here we can find current top 10 Gainers/ Losers. We get top 10 in each category. When you pick a stock from top G/L, make sure it has at least moved 2%. More the better because this ensures fluid which will be required if we take on BOF trades. Also, there is another tab for NIFTY Next 50, here you will get a few picks. On the left column of the page, find ‘Most Active Securities’. Here also you will find some good stocks. All in all we find  about 5 to 10 stocks/ day if not more.

We don’t have to check micro trend in daily charts because we are not trading with daily trend. We are trading current market sentiment. Since we can’t just trade setup blindly and can’t judge what’s going on in the security that we don’t follow and actively trade (like we do NIFTY), we will wait. I don’t spend time for stock analysis or maintain a watch list, therefore I think trading at the open will be risky for me. As we know, many opportunities happen in the first hour but I prefer to skip those. But don’t forget, many opportunities also happen in the after lunch session. So, whatever fight has happened in morning, dust has now settled and new plans are being created for the next battle. The most important data that we have at our hands is how price moved today.

Our focus is only on finding stocks having big range, huge volume, possibility of trend 1 day – TODAY – and we will trade acceptance and rejection of price at the DP which is the result of the morning move. The DP here most likely would be HOD/LOD/RH/RL because price would be away from PDH/PDL (not necessarily but likely). We can keep adding stocks until 10.30 -11 AM as new stocks get added to the list. Some stocks move as NIFTY moves  and some move as per their own trend for the day. Picking the ones which are moving with their own momentum can be good picks.

Even if you don’t trade, this will improve your PA skills.