1. To use this calculator you need the previous day closing price and current day's prices.
Apart from this you also need the volatility value for any stock. You get this value from nseindia.com click to see
This calculator can be used at anytime after 30 mins (9:30 am) during the day. Ideal time is 9:30 - 11:30 am
2. Now let us see how to use this calculator. Lets say i want to find the values for Nifty Futures for today at 11:15 am.
3. I will first see the close price of Nifty Futures for previous day. (Close price is 4751)
4. To Find the volatility, i open the Get Quote for Nifty Future on nseindia.com. At the bottom, i see the volatilty at 1.33
5. After entering the Closing Price, volatility as seen in nseindia.com, i enter current days high and low and ltp prices.
6. I calculate the levels using the button.
7. I get the message as
Buy at / above 4796 for following Target and stoploss
Target 1 : 4813.63 Target 2 : 4829.45 Target 3 : 4845.26 Target 4 : 4876.9 Target 5 : 4892.71
Stoploss : 4782
8. The Nifty Futures made a high of 4849. Target 1, Target 2 and Target 3 were achieved.
Note: The above calculations are just an indication / suggestion based on volatility. You may include other indicators as well to confirm the prices.
How this system works
This system works on the principle of volatility. Now you might be thinking what this volatility is and how it can help us in intraday trading. Volatility means "The relative rate at which the price of a security moves up and down".
Based on volatility, we can find the possible price fluctuation of any scrip. Lets say the volatility of RELIANCE is 2.33 at any point of time. Now, i want to know where will the price be moving based on volatility. To know this i take into account the closing price of that particular scrip for the previous day.
So lets say i have closing price at 1000 and volatility is 2.33. So possibility of Reliance fluctuating is 2.33% of 1000 = 23.3. Now main question arises is how to trade based on this values. For trading, we note down the LTP of RELIANCE on next day. We generally take into account the LTP price of RELIANCE around 1-2 hrs after market open.
Say , i have noted down the LTP as 1008. And the high and low of RELIANCE for today is 1015 and 1002. I take the midpoint of 1015 and 1008. I get 1011.5. My LTP is below midPoint. So, the chances of price of RELIANCE going in downward direction is more. But, how do we decide the target?. Since LTP is below midpoint, and our fluctuating price is 23.3, the possible downside is 2015 - 23.3 = 1991.7.
Based on this values, we go short below midpoint(5011.5) for a target of 4991.7 and stoploss as high of day(5015). There are few more complex calculation involved in above calculator but underlying idea remains that mentioned here.
Live Example of this system
On 11th Feb 2010, the values for Nifty Futures were
Closing price of Previous day : 4751.
LTP at 9:30 am was 4804. High and low for 11th Feb 2010 was 4810 and 4782. Volatility was 1.33.
Based on this, the signal generated was
Buy at / above 4796 for following Target and stoploss
Target 1 : 4813.63 Target 2 : 4829.45 Target 3 : 4845.26 Target 4 : 4876.9 Target 5 : 4892.71
Stoploss : 4782
The high for Nifty Future on 11th Feb 2010 was 4849. Target 1, Target 2 and Target 3 were achieved on 11th Feb 2010.
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