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Option Strategy By Market Arena:-

We trade in intention to end up with profit booking. And as with any other business trading too
has lot of risk and uncertainty. I am going to describe a strategy on trading. I call it as M2P
strategy.

I am trading technical past 14 yrs. and meaningful technical past 5 years. I know the patterns,
indicators, OHLC and have been into many YouTube channels for learning. What I don’t know was
there is something called phycology effect in each trade. After lost of studies I reclaimed new
mental strength and started effective trading.

So what is all about, how do we get through this stage? I avoided trading for 1 week but
could not resist opening the terminal back. That shows we are trader and whatever is we
need to achieve the goal.

3 most important what I feel in trading are as follows.

1. Volatility: We need to understand the volatility of a stock. How soon it can change its
color, how much it would run upside and downside and when.
If you know when a stock is going to shoot high or drown low, you love to happily
trade on that stock isn’t? Volatility will help you to know the reversal areas or you can
say how much the stock is going to travel in that direction.
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2. Volume: This is second important point concept. Volume is like fuel for the price action.
There is definitely a difference with a stock with 50k Volume and same stock 3k volume.
Difference is liquidity; more volume means you get more chances of execution and
movement of stock on your analyzed pattern.

3. Price: Price of stock equally important of above. You need to know is the price is cheap
enough to buy now (undervalued) or high enough to sell (over valued). We love to buy
the stock in very low price and happy if it grows high and high. But the question is how
to find the price is low at this given point of time.

After so many theories and practices I decided to find some way to know whether above
three are available in our chart and if yes how to identify them. The Volume, Volatile, Price.

Many would say and even I will accept support and resistance is the final answer. Yes correct
it’s the right way of trading. Draw triangles, Lines all over the important points and
understand the movement. But the problem started when I have to work in office and have
very little time to sit through series of stocks. During working hours, I was not able to analyze
these lines extensively and also very difficult to draw support and resistance line because you
don’t know which time frame you follow 15 min, 1 hour, Daily, Monthly, Weekly charts. It’s
always difficult to find out breakout on that levels practically. Let’s move to strategy.

The strategy.

There are few indicators which can help you to at least know the current stock status. Hunting
indicators and to make your mind fit to those is where phycology involved.

Going to present couple of indicators that we use in M2P. (If this does not suit you,
completely ignore) I am not going to explain about each indicator it would take more pages to
write.

1. Bollinger Band (Capture the Volatility)

2. MFI (Money flow Index) (Capture the Volume based Oscillator)
3. Williams % R (Capture the Price based Oscillator)

That’s it put the above indicators in your chart with below settings.
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The Setup
1. Bollinger Band(20,2) and Bollinger Band(20,3)
2. MFI as per default setting.
3. William % R as per default setting.

Just a sample to show you how it looks in my terminal (below screen shot)

You can see two bands and other 2 indicators. Just an example.

How to Trade
For Short Trade (To Sell)

1. There must be a candle closing Above Band 1 (20, 2) and must be closing clearly
outside the BAND 1. (Candle 1)
2. Either a series of candles or next candle must be bearish and closing below the Band
1.(Candle 2)
3. One more bearish candle to open and close completely inside Band 1.(Candle 3)

So the third candle is our decision candle, this candle must neither touch the band nor be
bullish candle. Should be Red candle. Now check the MFI and William % R. Both must be
overbought level.(Gray color) If either of one is not showing overbought or it’s just near the
overbought avoid taking position.
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If all the above checks are true go for short just below the low of Third Candle (Candle 3)

Confused?
Showing few examples of my trade below with circle marked.
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So it would take some time to digest this but it’s working for my trades. Let see some
examples of Long.

For Long Trade (To Buy)

1. There must be a candle closing Below Band 1 (20, 2) and must be closing clearly
outside the BAND 1. (Candle 1)
2. Either a series of candles or next candle must be Bullish and closing Above the Band
1.(Candle 2)
3. One more Bullish candle to open and close completely inside Band 1.(Candle 3)

So the third candle is our decision candle, this candle must neither touch the band nor be
Bearish candle. Should be Green candle. Now check the MFI and William % R. Both must be
oversold level.(Gray color) If either of one is not showing oversold or it’s just near the oversold
avoid taking position.

Examples as below.
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Target 1: Bolinger Middle line

Target 2: Bolinger upper band line (Long) and Lower Band Line (Shorts)

SL : Below Trade taken Candle (Long) and Above trade taken candle(Short).

This works on delivery trades. I have tested this and satisfied with Day chart and Hour chart.

Less than hourly chart the patterns are not much consistent. So intraday not favorable.

This could be confusing for few days; I can support you via Whatsapp if you need clarification.

Below posting few sample charts for more clarification.

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Note : You may get very less trades but all those are more trustable trades. I have booked 2
loss out of 15 trades so far.

Not every day you will get a trade but if you get it shows good sign of profitable.

Disclaimer: Kindly check these cases with your own analysis. Ask for clarification and do
paper trades before taking real money. I am just sharing my strategy for education. Do you
study and check your chart. I am not liable for any loss in trades.
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M2P - Modified

In Past few month back I used the M2P but now I modified it due to increase accuracy levels.
I am personally using this strategy alone for trading. Over all it was yielding good result.
Though trades were less but success percentage was good.

Proof? (Few people inner mind)

Few month back trade book below. You can verify I have not made single loss.

However I am intraday trader so due to busy in that I schedule and exit early with small
profit some times.

Coming to subject, M2P has certain rules to follow which you can find in first section on how
to use it.
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Why do we need M2P Modified?

Actually this was my personal feeling to have some part modified. Take a look of below chart
of Nickel

This is 4 hours chart and we got sell signal and you can see the result it yielded good
mega profit in a weeks’ time. Yes correct but as a small retail trader we get afraid and fear
starts holding the sentiment.

After the setup has formed you can see Nickel made a dip moving down, but suddenly after 2
or 3 candles it stated moving up green candles. OH NO I AM IN SHORT!!!!!

Usual retail trader starts panic.

Though MFI was showing clear down side. It’s sell or Rise concept but who have the patience
☺
and courage? If you have then you are the iron men. Definitely not me .
Let’s take another example
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Lead - Day chart as per M2P we sell and we got good profit but the tension part (Fear) spoils
when you see big green candles next day but finally it was down and target achieved.

Thus I wanted to avoid this fear part somehow and stay with trade until target. Human
mind needs some proof to convince itself. It’s true. It’s emotional. So we want to solve this
by
showing some numbers (indicators) and keep mind calm.

Ok now what is that we are going to modify?

In modified M2P, you are free from this fear part. How? We are taking ATR help here.

ATR will always help us on understanding price action/raw price of stock. We are going to
add Super trend (5, 1) and see if it helps. Let’s see now the above 2 charts with Super Trend.
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Now you got M2P setup but sell only below the sell signal of Super Trend(5,1).

You can see the difference, the place where you took Nickel trade earlier M2P and now in
modified M2P is different. Low of Super trend sell candle never achieved until real price
started moving down. That could save that fear part and keep you away from trade until the
real price moving down.

I sold Nickel as like below picture with modified M2P. (Blue Circle)
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What it save me was I was not in trade for longer time, I entered at the place where bears took
the control. I saved all the consolidation phase.

We are going to phrase this with rules as below.

How to Trade
For Short Trade (To Sell)

Well follow same M2P no change that discussed in upper charts. But take position below the Super
Trend signal candle (5,1)

Profit booking(Changed in modified M2P)

Book profit when Williams reach/touch over sold level. (Earlier it was Bollinger middle band)

SL- Above trade candle high.

For Long Trade (To Buy)

Follow same M2P as discussed no change. But take position above the Super Trend signal
candle (5,1)

Profit booking (changed in modified M2P)

Book profit when Williams reach/touch over bought level. (Earlier it was Bollinger middle band)

SL- Below trade candle low.

Few examples below.

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Conclusion:

If this is confusing, and not able to digest do not trade with this method. Only clear mind
can stay success in trading.

Still the M2P is valid and you can trade with setup. This is just an enhancement.

I have tried this with pure equity and samples are below.
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Disclaimer: Do you study /paper trade before doing with original money. Please trade on your
risk and this study is for educational purpose only.

Thanks

NSEMCXARENA
+91 8810443928
t.me/nsemcxarena