Saturday, 20 November 2021

Day 1: Banknifty future systematic investment plan

Secrets for systematic investment in Banknifty future 

Future is a highly leveraged product. A planned and well-managed investment plan in any future instruments can give an excellent return. I did thorough backtesting for several years on banknifty. Backtesting results show the amazing potential for this type of less talked future trading strategy. These strategies are excellent for regular office goers because they need to check the market only once a day and take action based on rules. 

The strategy is based on the simple principle "Hedge with Edge."  

Rules of the trade 

 1. Define the 2%  risk of account and buy insurance to restrict the max loss to 2%.

2. Follow market structure and trade accordingly.  

3. I take the trade in the direction of the weekly and monthly trends.  

4. If the market goes against my view, I sell options to minimize the loss 

Backtest result for September 2020 when the market went my original bullish view

Banknifty future trade with hedge

Trade rules 

1. Trade banknifty future in the direction of the weekly and monthly trends. If weekly and monthly is bullish, will buy banknifty future

2. Buy an in-the-money put option with less than 30% time value.

3. Sell a call option at 20 deltas if the market trades below VWAP and  RSI in the daily time frame is below 55. 

4. Check the volatility of the market. If the market is low, I buy options and pyramid the same. If volatility is high, I sell options.

5. I add an extra lot after pullback or breakout

6. I will reinvest profit to get the benefits of compounding. 

I found this simple future trading strategy works very well for office goers. 

Banknifty Future trading with hedge


  • Bought 1 lot Nov BNF @38132
  • Bought 1 lot Nov 385000 PE

Positions Greek

  • Delta 5
  • Gamma 0.013
  • Vega 260
  • Theta -643
Payoff chart


The rationale behind the bullish trade  

  • Bank nifty weekly is still above 21 ema.  
  • As per Gann's method, a pullback can continue for 25 days. 
  • From 20th April low and 25th October high,. 38% retracement level is at 37212, and 50% retracement point is 36200.

Max loss for the position 6581

Total investment 32000 for one lot 

Adjustment plan : 

Will sell intraday call once Banknifty breaks last Friday's low. 

Please the link to reach the banknifty investing home page.

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