Let us think about creating an indicator that shows the trend.
Thread: Parabolic SAR Indicator
Parabolic SAR (PSAR) indicator was developed by J. Welles Wilder.
#PSAR #Indicators #Definedge
Let us think about creating an indicator that shows the trend.
For trailing the stop in uptrend, indicator needs to be placed below the candle. Similarly, it should be placed above the candle for trailing in a downtrend. We will plot it using ‘dots’.
Let us define the trend as:
If Low of the candle > Stop-loss level in bull market = Trend remains bullish.
If High of the candle < Stop-loss level in bear market = Trend is bearish
The indicator rises steadily if the trend is steady. If the trend is strong the indicator should accelerate, it should move faster and stop should get trailed aggressively.
What is strong trend?
In a bullish trend if price makes a new high it is a strong bullish trend.
In a bearish trend, if price makes a new low it is a strong bearish trend.
Period?
Period for new high: since the indicator turned bullish
Period for new low: since the indicator turned bearish
Calculation of PSAR: EP, AF and PSAR
Extreme Price (EP) is calculated on every candle.
‘High’ price in bullish market and ‘Low’ price in bearish market is called as Extreme Price (EP).
If new high is made -> EP = New High price
Else
EP = Prev High
If Bearish trend
If new low is made -> EP = New Low price
Else
EP = Prev Low
Period of new high or low is explained earlier.
> Accelerate it by 0.02 if trend is steady.
> Add 0.02 to previous speed if trend is strong.
> Maximum acceleration will be 0.20.
Multiply Acceleration factor by A and add it to the previous stop-loss, you get new PSAR indicator reading.
PSAR = A x AF + Previous PSAR reading
Phase A is when indicator moving at a steady speed. Phase B is when trend is strong (New high in bull market, new low in bear market) hence, PSAR is accelerating with a greater speed (0.02 being added) during B.
Trend is bullish when price is above the PSAR, it is bearish when price is below PSAR. You can use it as a trend filtration method.
Indicator accelerates during strong trends. Hence, rising PSAR and Falling PSAR are also important.
When trend changes, the length of the stop-loss depends on the previous high or low. Avoid the signal if initial stop-loss is not affordable. Wait for the pullback pattern that provides better risk-reward trade
It can be used alone or combined with other studies to design the system.
Below are some Important things about PSAR indictor:
• Unlike many other indicators, you do not have to define the look-back period, define the acceleration factor
• It does not use method of averaging
• It uses high, low prices to determine the trend and stop-loss level
• Indicator accelerates if trend is strong
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Thread on Short straddle with adjustments:
Short straddle is non-directional strategy
Selling same strike price CALL/PUT option same underlying with same expiry.
Nifty Spot at 14353, So you can sell 14350 CE as well 14350 PE of 14 Jan. Expiry.
(1/n)
*RETWEET for max response
Bullish short straddle: Selling 14400 CE and 14400 PE of same expiry.
Bearish short straddle: Selling 14250 CE and 14250 PE of same expiry.
You can sell straddle as per your market view.
If you are natural view sell CE and PE at ATM strike.
(2/n)
Short straddle has limited profit potential (only premium) and unlimited risk without adjustment.
In Example, Short straddle of 14350, Breakeven is (14131.0-14569.0), need 1.7Lac Margin to sell straddle.
Maximum profit: 16k and Loss: Unlimited, Winning probability: 50%
(3/n)
If market staying near at 14350 then win. Probability increase slowly. Rewards also increase slowly.
Volatility(IV) is also play important role in selling straddle, Like If IV increase so straddle premium increase and IV cool off so premium casually comes down.
(4/n)
Short straddle adjustment:
https://t.co/59Lr64kEtK way to limit the overnight risk.
Convert short straddle in Ironfly, its nothing we have to add long strangle in short straddle it become Ironfly. It gives the good Risk Rewards.
(5/n)
Short straddle is non-directional strategy
Selling same strike price CALL/PUT option same underlying with same expiry.
Nifty Spot at 14353, So you can sell 14350 CE as well 14350 PE of 14 Jan. Expiry.
(1/n)
*RETWEET for max response
Bullish short straddle: Selling 14400 CE and 14400 PE of same expiry.
Bearish short straddle: Selling 14250 CE and 14250 PE of same expiry.
You can sell straddle as per your market view.
If you are natural view sell CE and PE at ATM strike.
(2/n)
Short straddle has limited profit potential (only premium) and unlimited risk without adjustment.
In Example, Short straddle of 14350, Breakeven is (14131.0-14569.0), need 1.7Lac Margin to sell straddle.
Maximum profit: 16k and Loss: Unlimited, Winning probability: 50%
(3/n)
If market staying near at 14350 then win. Probability increase slowly. Rewards also increase slowly.
Volatility(IV) is also play important role in selling straddle, Like If IV increase so straddle premium increase and IV cool off so premium casually comes down.
(4/n)
Short straddle adjustment:
https://t.co/59Lr64kEtK way to limit the overnight risk.
Convert short straddle in Ironfly, its nothing we have to add long strangle in short straddle it become Ironfly. It gives the good Risk Rewards.
(5/n)
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Collaborated with @niki_poojary
Here's what you'll learn in this thread:
1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy
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The setup uses price action to sell options for overnight theta decay.
Check Bank Nifty at 3:15 everyday.
Sell directional credit spreads with capped
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Don't trade till 9:45 Am.
Identify the highest OI on puts and calls.
Check combined premium and put a stop on individual
@jigspatel1988 3/ Open Drive (Intraday)
This is an opening range breakout setup with a few conditions.
To be used when the market opens above yesterday's day high
or Below yesterday's day's
Collaborated with @niki_poojary
Here's what you'll learn in this thread:
1. Capture Overnight Theta Decay
2. Trading Opening Range Breakouts
3. Reversal Trading Setups
4. Selling strangles and straddles in Bank Nifty
6. NR4 + IB
7. NR 21-Vwap Strategy
Let's dive in ↓
1/ STBT option Selling (Positional Setup):
The setup uses price action to sell options for overnight theta decay.
Check Bank Nifty at 3:15 everyday.
Sell directional credit spreads with capped
A thread about STBT options selling,
— Jig's Patel (@jigspatel1988) July 17, 2021
The purpose is simple to capture overnight theta decay,
Generally, ppl sell ATM straddle with hedge or sell naked options,
But I am using Today\u2019s price action for selling options in STBT,
(1/n)
@jigspatel1988 2/ Selling Strangles in Bank Nifty based on Open Interest Data
Don't trade till 9:45 Am.
Identify the highest OI on puts and calls.
Check combined premium and put a stop on individual
Thread on
— Jig's Patel (@jigspatel1988) July 4, 2021
"Intraday Banknifty Strangle based on OI data"
(System already shared, today just share few examples)
(1/n)
@jigspatel1988 3/ Open Drive (Intraday)
This is an opening range breakout setup with a few conditions.
To be used when the market opens above yesterday's day high
or Below yesterday's day's
#OpenDrive#intradaySetup
— Pathik (@Pathik_Trader) April 16, 2019
Sharing one high probability trending setup for intraday.
Few conditions needs to be met
1. Opening should be above/below previous day high/low for buy/sell setup.
2. Open=low (for buy)
Open=high (for sell)
(1/n)
