The last 30 minutes of trade on the Indian exchanges is full of market participants with varied and conflicting interests.
1. Most brokers square up clients’ positions at around 3.15 PM
2. Leveraged intraday participants who have taken positions during the day often wait till about 3 Pm to square up their positions. Their activity can intensify between 3 and 3.15 PM because they know that if they do not square up, their broker will.
3. MFs and ETFs may be interested to ensure a closing above VWAP to maintain their NAVs.
4. The big sharks who are aware of all of the above, try to game everyone.
5. Finally, the exchange determines the closing price at 30 minute Weighted Average Price.
So, it’s a very heady and happening cocktail that is mixed in the last 30 minutes of trade.
Your job is to drink this heady cocktail and yet remain steady and profitable.
Note that this strategy is for the last 30 minutes. You can have different strategies for the prior period.
It also works for cash stocks.
Here’s how you can do that:
5 minute candles
The ability of drawing 2 straight lines.
Screeners (formulas below)
THE TRADE SETUP
Example: KEC International.
Mark the high and low between the 2.30 PM and 3 PM candles. Include wicks if the body is short, ignore wicks if the body is long.
We see on the chart that the price is above the VWAP at 3 PM, and that is a bullish signal.
In the KEC 5 minute candles, volumes started rising along with the price. Thee volumes were above average as well (the block line in the volume section represents the 20 SMA of volume).
The 3:05 PM signaled a buy at around 265 and the stock went on to hit 274, which was a sufficient gain for the day.
Just reverse the strategy. In the sense that if the 3:05 price crosses below the Support line and the VWAP, it makes for a short.
Just play the strategy above in reverse.
Valid For BTST & BTST
This strategy works very well for BTST or STBT so long as the SHORT TERM TREND IS KNOWN.
These days (early October 2018) the market is extremely volatile and keeps swinging between high and lows, and therefore till the trend is clear, please apply this strategy for intraday.
It works for both cash and FNO stocks, and also should work for Indices (though it is not tested for Indices).
SCREENERS FOR LAST 30 MINUTES OF TRADE
You can use any of the following screeners at around 3 PM to figure out stocks to trade
DI+ crossed above 25
RSI crossed above 50
30 Minute High crossed above 20 EMA
15 Minute High Crossed above VWAP
(0) 15 minute volume crossed above (-1) 15 minute volume
1-Hour MACD Line crossed above 1-Hour Signal Line
Reverse the screeners above
(and there are many others which you may be knowing)
So go ahead try this strategy on paper trades or insignificant volumes and test its success ratio. If it works out for you, deploy it every trading day. Good luck.