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Intraday Trading
Intraday trading refers to the action of an
individual who opens and closes a position in
Index Futures or Options in the same day.
This can be buying and selling of a CALL Option
or buying Index Futures to capitalize on a
potential rise in the index value or by shorting
Index Futures and covering the short to
capitalize on a potential drop in the Index value
or buying a PUT Option and selling the same.
What is a Stock Market Index
A stock market index is a measure of the relative
value of a group of stocks in numerical terms
It is computed from the prices of sector specific
selected stocks (typically a weighted average).
As the stocks within an index change value, the
index value changes. An index is important to
measure the performance of investments against a
relevant market index.
It is a tool used by investors and financial managers
to describe the market, and to compare the return
on specific investments.
Futures and Options
Futures : A futures contract is an agreement
between two parties to buy or sell an asset at a
certain time in the future at a certain price. All the
futures contracts are settled in cash.
Options : An Option is a contract which gives the
right, but not an obligation, to buy or sell the
underlying at a stated date and at a stated price.
While a buyer of an option pays the premium and
buys the right to exercise his option, the writer of
an option is the one who receives the option
premium and therefore obliged to sell/buy the
asset if the buyer exercises it on him.
Calls and Puts options
Calls give the buyer the right but not the
obligation to buy a given quantity of the
underlying asset, at a given price on or before a
given future date.
Puts give the buyer the right, but not the
obligation to sell a given quantity of underlying
asset at a given price on or before a given future
date.
All the options contracts are settled in cash.
How do I start trading
Futures / Options contracts in both index as well as
stocks can be bought and sold through the
registered trading members / brokers of a stock
exchange.
You are required to open an account with one of
the trading members and complete the related legal
formalities.
The trading member will allot to you an unique
client identification number. To begin trading, you
must deposit cash and / or other collaterals with
your trading member as may be stipulated by him.
Futures and Options contracts expire
It is the last day on which the contracts expire.
Futures and Options contracts expire on the last
Thursday of the expiry month.
If the last Thursday is a trading holiday, the
contracts expire on the previous trading day.
Futures and Options contracts have a maximum
of 3-month trading cycle -the near month, the
next month and the far month.
In-the-money options (ITM)
An in-the-money option is an option that would
lead to positive cash flow to the holder if it were
exercised immediately.
A Call option is said to be in-the-money when the
current price stands at a level higher than the strike
price. If the Spot price is much higher than the
strike price, a Call is said to be deep in-the-money
option.
In the case of a Put, the put is in-the-money if the
Spot price is below the strike price.
At-the-money-option (ATM)
An at-the money option is an option
that would lead to zero cash flow if it
were exercised immediately.
An option on the index is said to be at-
the-money when the current price
equals the strike price.
Out-of-the-money-option (OTM)
An out-of- the-money Option is an option that
would lead to negative cash flow if it were
exercised immediately.
A Call option is out-of-the-money when the
current price stands at a level which is less than
the strike price.
If the current price is much lower than the strike
price the call is said to be deep out-of-the money.
In case of a Put, the Put is said to be out-of-
money if current price is above the strike price.
Margins payable and Contract settlement
Margins are computed and collected on-line, real
time on a portfolio basis at the client level.
Trading members / Brokers collect the margin
upfront from the client.
All the Futures and Options contracts are
settled in cash on a daily basis and at the
expiry or exercise of the respective contracts
as the case may be.
All out of the money and at the money option
contracts of the near month maturity expire
worthless on the expiration date.
Analyse and Predict the Index Intradaygraphs.com
Electron Systems
NIFTY KPGraph
S&P CNX NIFTY - 16-05-2014 KPGraph on 16-05-2014
The rise and fall of the Index is what KP Graphs allows you to Analyse and Predict.
Major World Indices can be predicted by you. KP Graphs give you turning points for
the day and improve your trading success.
Other World Indices like NZ50, AORD, N225, TWII, SSEC, HSI, FTSE, GDAXI and
DJI are available.
The rise and fall of Index
• The rise and fall of the Index is what KP Graphs
allows you to Analyse and Predict.
• Major World Indices can be predicted by you.
• Stock Market analysis based on Moon in transit.
• KP Graphs give you turning points for the day
and improve your trading success.
• KP Graphs of NZ50, AORD, N225, TWII, SSEC,
HSI, FTSE, GDAXI and DJI can be provided.
Intradaygraphs.com
• Displays your sentiment with various Levels.
• Planets are the basis of analysis based on KP.
• Krishnamurti Paddhati of Astrology is KP.
• Planet in a house occupies a Zodiac Sign.
• It is then part of a Star in the Zodiac Sign.
• It occupies a Sub part of the Star.
• The next division of the Sub part is sub-sub.
• Further divisions lead to finer analysis.
The Sign Star and Sub parts are shown
L1
Moon
L2
SIGN
L3
STAR
L4
SUB
Structure of KP Graphs
L1= the sentiment ( Planet )
L2= Reactive Power ( Sign-Lord )
L3= Regulator ( Star-Lord )
L4= Modulator (Sub-Lord )
L5= Sub-Modulator ( Sub-Sub-Lord)
Action of the Levels
Level Action
L1 → PLANET → Is the input
L2 → SIGN-LORD → Modifies L1
L3 → STAR-LORD → Modifies L2
L4 → SUB-LORD → Modifies L3
L5 → SUB-SUB-LORD → Modifies L4
L6 → → Modifies L5
L7 → → Modifies L6
The 6 levels in KPGraphs
L1 Level
L1 the input or
the sentiment
Trading Time
L1 and L2 Level
L1 and L2
Trading Time
L1, L2 and L3 Level
L1 L2 and L3
Trading Time
L1, L2, L3 and L4 Level
L4 modifies L3
Trading Time
L1, L2, L3 and L4 for trading time
L4 modifies L3
actions in trading
Time
L1, L2, L3, L4 and L5 for trading time
L5 in each L4 modifies L4
actions in trading Time
L1, L2, L3, L4, L5 and L6 for trading time
L6 in each L5 modifies L5 actions
in each L4 in trading Time
Interaction of Power values
Interaction is between L2 & L3, the output is acted upon by L4 with the
same rules then this output is acted upon by L5 and so on and finally
compared with L1 Power value to understand the flow of Index.
L1 is the Input power and interaction is between L2 & L3
Cases L2 L3 Explanation Action Output
+3↔+2 implies +3 is reduced to +2 Below +2
1 POS↔POS
+3↔+5 implies +5 is added to +3 Above +8
-4↔-1 implies -4 is reduced to -1 Above -1
2 NEG↔NEG
-4↔-5 implies -5 is added to -4 Below -9
+3↔-1 implies +3 is reduced by -1 Below +2
3 POS↔NEG
+3↔-5 implies +3 is reduced by -5 Below -2
-4↔+2 implies -4 is reduced by +2 Above -2
4 NEG↔POS
-4↔+5 implies -4 is reduced by +5 Above +1
Rules A to D
A1, A2, A3, A4, A5, A6, B1, B2, C1, C2, D1, D2
The above 12 rules are based on the possible combinations of the L1, L2 & L3
levels being above or below L1 and based on their polarity.
A1 A2
Rules A1 to A6 : L1, L2 and L3 are with positive power values +L1 +L1
+L2 +L3
A1. L2 is below L1 reducing it, L3 is below L2 reducing it. +L3 +L2
A2. L2 is below L1 reducing it, L3 is above L2 increasing it. A3
+L2
A4
+L2
A3. L2 is above L1 increasing it, L3 is below L1 reducing L2 and L1. +L1 +L3
+L3 +L1
A4. L2 is above L1 increasing it, L3 is below L2 reducing it and is above L1. A5 A6
A5. L2 is below L1 reducing it, L3 is above L1 increasing L2 and more than L1. +L3 +L3
A6. L2 is above L1 increasing it, L3 is above L2 increasing L2 more than L1. +L1
+L2
+L2
+L1
B1 B2
B1. L1 is negative, L2 is positive, L3 is positive & below L2 reducing it or = L2. +L2 +L3
B2. L1 is negative, L2 is positive, L3 is positive & above L2 increasing it. +L3
-L1
+L2
-L1
C1 C2
C1. L1 is positive, L2 is negative, L3 is positive and above L1 and opposing L2. +L3 +L1
C2. L1 is positive, L2 is negative, L3 is positive and below L1 reducing L2. +L1
-L2
+L3
-L2
D1 D2
D1. L1 is positive, L2 is positive but reducing L1, L3 is negative & reducing L2. +L1 +L2
+L2 +L1
D2. L2 is positive and above L1 increasing it, L3 is negative reducing L2. -L3 -L3
Rules E to H
E1, E2, F1, F2, G1, G2, H1, H2, H3, H4, H5, H6
The above 12 rules are based on the possible combinations of the L1, L2 & L3
levels being above or below L1 and based on their polarity.
E1 E2
E1. L1 is negative, L2 increases negative of L1, L3 is positive, reduces L2 or overcomes L1. +L3 +L3
E2. L1 is negative, L2 is negative & reduces L1, L3 is positive reduces L2 or overcomes L1. -L1
-L2
-L2
-L1
F1 F2
F1. L1 is negative, L2 is positive, L3 is negative & below L1 opposing L2 or overcomes it. +L2 +L2
F2. L1 is negative, L2 is positive, L3 is negative & above L1 opposing L2. -L1
-L3
-L3
-L1
G1 G2
G1. L1 is positive, L2 is negative & reducing it, L3 is negative & below L2 increasing it. +L1 +L1
G2. L1 is positive, L2 is negative reduce it, L3 is negative & above L2 reducing it. -L2
-L3
-L3
-L2
H1 H2
Rules H1 to H6 : L1, L2 and L3 are with negative power values -L1 -L1
-L2 -L3
H1. L1 is negative, L2 is more negative, L3 is more negative below L2. -L3 -L2
H2. L1 is negative, L2 is more negative than L1, L3 is less negative above L2 reducing it. H3
-L2
H4
-L2
H3. L1 is negative, L2 is less negative reducing it, L3 is more negative than L1 increasing L2 -L1 -L3
H4. L1 is negative, L2 is less negative reducing it, L3 is negative below L2 increasing it. -L3
H5
-L1
H6
H5. L1 is negative, L2 is more negative, L3 is less negative reducing negative of L2 & L1. -L3 -L3
-L1 -L2
H6. L1 is negative, L2 is less negative reducing it, L3 is less negative reducing L2 & L1. -L2 -L1
Order of Levels for Rules
A1 A2 A3 A4 A5 A6
+L1 +L1 +L2 +L2 +L3 +L3 No Cases Rules Explained Action /Out
+L2 +L3 +L1 +L3 +L1 +L2 +3↔+2 implies +3 is reduced to +2 Below +2
1 POS↔POS
+L3 +L2 +L3 +L1 +L2 +L1 +3↔+5 implies +5 is more than +3 Above +5
B1 B2 C1 C2 D1 D2 -4↔-1 implies -4 is reduced to -1 Above -1
+L2 +L3 +L3 +L1 +L1 +L2 2 NEG↔NEG
-4↔-5 implies -5 is more than -4 Below -5
+L3 +L2 +L1 +L3 +L2 +L1
-L1 -L1 -L2 -L2 -L3 -L3 +3↔-1 implies +3 is reduced by -1 Below +2
3 POS↔NEG
E1 E2 F1 F2 G1 G2 +3↔-5 implies +3 is reduced by -5 Below -2
+L3 +L3 +L2 +L2 +L1 +L1 -4↔ +2 implies -4 is reduced by +2 Above -2
-L1 -L2 -L1 -L3 -L2 -L3 4 NEG↔POS
-4↔+5 implies -4 is reduced by +5 Above +1
-L2 -L1 -L3 -L1 -L3 -L2
H1 H2 H3 H4 H5 H6 Positive power is reduced by a positive whereas a negative allows
-L1 -L1 -L2 -L2 -L3 -L3 positive power to flow through between any 2 levels.
-L2 -L3 -L1 -L3 -L1 -L2 Negative power can be reduced by a negative whereas a positive will
-L3 -L2 -L3 -L1 -L2 -L1 allow the negative to flow through between any 2 levels.
CUP AND CAP PATTERNS OF L4
L4 CUP below L3
L4 is Open ended; this is a CUP formation as it allows L5 Levels to rise.
In a CUP formation the first L5 is in sync with L4 and the remaining 8 L5 levels can sequentially
rise or alternately Rise and Fall or may have any arbitrary pattern and the index will behave
according to the flow of L5 in L4. Each L5 again can form a CUP or a CAP based on L6 flow
L4 CAP above L3
L4 is Close ended; this is a CAP formation as it blocks L5 levels from rising.
In a CAP formation the first L5 is in sync with L4 and the remaining 8 L5 levels can sequentially
rise or alternately Rise and Fall or may have any arbitrary pattern and the index will behave
according to the flow of L5 in L4. Each L5 again can form a CUP or a CAP based on L6 flow
CUP AND CAP PATTERNS OF L5
L5 as a CUP
L5 as a CAP
NIFTY Intraday KPGraphs
of World Indices
India
We have 10 major World Indices apart from Nifty at
intradaygraphs.com
NZ50 AORD N225 KS11 TWII
New Zealand Australia Japan South Korea Taiwan
HSI SSEC FTSE GDAX DJI
Hong Kong China United Kingdom Germany USA
Trading Instruments
The rise and fall of the Index is what KP Graphs allows you to predict. The products to use
are Index Futures, Call Options and Put Options.
Futures are high risk products resulting in unlimited loss or gains, you can buy them if you
analyse the rise of Index else sell if index is to fall. You need to square off on a daily basis.
Options have a limited loss to the extent of the premium whereas gains are unlimited.
Call option is to be used if you have analysed that the index will be rising for the next few
days or till a major changeover of level occurs. If the index is to rise then you are going long
using a Call option. The variation in call values are not linear with the index futures.
Put option is to be used if you have analysed that the index will be falling for the next few
days or till a major changeover of level occurs. If the index is to fall then you are going short
using a Put option. The variation in Put values are not linear with the index futures.
Calls and Puts values derate overnight due to Time-Value loss. It is generally preferred to
buy a Call or a Put for the current value of the index and generally termed as in-the-money
as their response to the index is faster than others.
Brokerage is a consideration along with taxes which are the fixed costs that need to be
factored for the minimum points the Call, Put or Index futures has to rise to make money.
Trading Philosophy
Philosophy : The approach to money making has to have some semblance of discipline and
a systematic plan to first make money equal to the amount you would have to invest in
buying a Call or Put or Index Futures. The next step would be to make twice the amount
then thrice and so on.
After you have made 5 times the amount required to buy a Call or Put only then you should
increase the number of Call or Puts to 2 and continue with this for some time till you gain
confidence and not be over confident to spoil all the accrued gains.
The amount required to buy 1 contract of index future has to be earned by using the Call
and Put options. The actual earnings has to be 3 times the amount required to buy 1
contract.
Please note that when a Call is bought it is to be covered by selling a Call for the same strike
price, same is true for a Put. You should never Sell a Call or Put by itself as it amounts to Call
writing or Put writing as you have not become an expert in the same.
Please do remember that our objective is to earn and keep on earning due to the index. All
other issues are not in the scope of our discussion due to lack of expertise in the said
subject of Call or Put writing.
Trading Example for Intraday
Imagine that you are going Long or Short on index futures based on our KP Graphs,
obviously you can only do this only after learning to read them in depth.
The investment for Nifty index futures currently is Rs 50,000 plus for one contract of 75. If
you are able to precisely select an entry or exit point and choose to exit after you gain 20
points within one L4 period this will give you gains of Rs 1500.00. Incidentally if there are 2
L4 levels in our KP Graphs then you could have 2 trades. We will ignore the other L4 level
and consider that you have earned Rs 1500.00 in a day on an investment of Rs 50,000.00
plus, here we will ignore the brokerage and taxes for simplicity.
If you continue to trade for 22 more days then you will have made Rs 33,000.00 which is Rs
17000.00 less than your initial input. You should continue to do this for the next 5 months
and evaluate the success rate of making money by reading our KP Graphs.
Let us not forget that so far we have calculated on the basis of only one trade of buy/sell or
sell/buy. In all probability you would try and do more such trades in other L4 periods of the
trading day. Let us also not forget that you could have made a mistake and lost some
money. Trading discipline is a must else on a wrong day everything can go wrong.
Recap :
To recap, first recover your initial input in a slow manner by trading in only one contract
then continue this for 5 to 6 months.
What Next
If your inputs have multiplied 3 to 4 times then you can consider adding one more contract
for which you should have already earned, continue 2 contracts for another 5 to 6 months.
Once you have reached a point of carelessness stop and think again about your needs first,
try to reach those milestones on a regular basis and always keep your greed on the back-
burner where it rightfully should stay all the time.
Daytrading can be a possible occupation after retirement as the market is 5 days a week
with 2 holidays in a week to attend to your other needs.
You need to ascertain your financial needs, first for cost of living then other obligations and
creating a reserve fund for backup in case of emergency or if you wish to take a month long
holiday. The other need could be for loan repayment or the EMI to be paid against capital
intensive investment or need for a home.
Caution :
Please stay away from Call and Put Options as they seem to be attractive due to less
investment compared to index futures but only index futures can give you directly
proportional returns.
In case you happen to use them the time required to earn sufficient amounts will be long
and you will need enough patience.
Who can use this service
Day Traders, Investors
Salaried Individuals
Professionals
Self Employed
House wives
Retired Individuals
Students
If you are above 18 years of age you can use this service
for enhancing your income, provided you are able to
trade during market hours without ignoring your main
occupation.
Intradaygraphs.com
The End
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