There are many gurus online trying to teach how to trade with different styles and techniques, but every time we learn something new, we end up losing money. But, this strategy will surely help you understand, how to draw TREND LINES and TRADE IN BANKNIFTY like a PRO. Let’s start without wasting any time:
1. Find a downtrend or up-trend:
Look at the image, the blue line shows uptrend and downtrend in 1-minute time frame chart. The first step is to identify the trend and draw a line below or above it. If you are looking for your trend to break down then draw the line below the candle and if you are looking for a trend to break upwards then draw a line upwards, or if you are not sure in which way the trend has more chance to go, then draw the trendline above and below both.
2. Draw Pillars of the trend:
Once you have spotted a trend and drew trendline above or below it, the next step is to draw the pillars of the immediate hedge that has formed (Check the orange line I drew with the trendline). I personally wait for 2 hedge format to be made and from where the second hedge is taking support I draw a line there and then I take the entry after that is broken, I use this for double conformation for my entry.
3. Where to place the stop-loss:
I usually place the stop loss at the place where the hedges are getting most rejections (Check the image for the clear idea). I have added red lines in the images, which is the place where one should keep the stop loss, If your risk appetite permits, you can keep the stop-loss even a little above the current rejection point.
It gave 1:1 Risk to Reward result in the third candle itself after the breakout. As it is the 1-minute time frame, we captured almost 50+ points within 3 minutes and as the 1 lot contains 25 shares, as per new rule, we were able to make INR 2500/- in 3 minutes. (Check the image for proof)
If you are a very new trader and you want to try on paper trade and want to use few indicators, you can use Pivot Standard and you can use Exponential moving average for seeing if your decision is supported by market or not. If you want to know the setting of these indicators and if you want to know how to use it along with your trade, you can Whatsapp me and ask me by clicking on this link.