INTRADAY STRATEGY - PIVOT + VWAP + EMA
Summary
TLDRThis YouTube video tutorial introduces a trading strategy for Nifty and Bank Nifty options, applicable to other indices and stocks as well. It focuses on using the Pivot Point indicator to identify resistance and support levels, alongside the Volume Weighted Average Price (VWAP) and the 20-day Exponential Moving Average (EMA) for intraday trading. The strategy is demonstrated with examples on 5-minute timeframe charts, emphasizing entry and exit points, and the importance of trading above or below the pivot point to determine bullish or bearish trends.
Takeaways
- 📈 The video discusses a trading strategy for Nifty and Bank Nifty options, which can also be applied to other indices and stocks.
- 📊 The first indicator used in the strategy is the traditional pivot point, which helps determine resistance and support levels for price movements.
- 🔍 Pivot points are technical indicators that can act as turning points and are commonly used by day traders and swing or positional traders.
- 🔢 There are various methods to calculate pivot points, including Fibonacci, Vooodi, Pivot Point Classic, Camara, and DM, each with its own method.
- 📉 The video explains how to use the pivot point indicator in conjunction with the volume-weighted average price (VWAP) and the exponential moving average (EMA) for trading decisions.
- 📊 VWAP is a technical analysis indicator that resets at the start of every new trading session and is based on the volume and prices throughout the day.
- 📈 The EMA, with a length of 20, is used to identify trends and is part of the strategy for determining entry and exit points for trades.
- 📍 If the price is above the pivot point (P level), it indicates a bullish trend, suggesting a potential long trade opportunity.
- 📉 Conversely, if the price is below the pivot point, it indicates a bearish trend, suggesting a potential short trade opportunity.
- 🚫 The video advises against entering trades on big candles as they can lead to larger stop-losses and recommends waiting for smaller candles for better entry points.
- 📝 The strategy is demonstrated with examples from the Bank Nifty chart, emphasizing the importance of the 5-minute time frame for intraday trading.
Q & A
What is the main topic of the video script?
-The main topic of the video script is a trading strategy using the pivot point indicator for trading Nifty and Bank Nifty options, which can also be applied to other indices and stocks.
What is a pivot point in trading?
-A pivot point in trading is a technical indicator used to determine the levels at which the price may face resistance and support, which can also act as turning points.
Why is the pivot point indicator important for traders?
-The pivot point indicator is important for traders as it helps identify key levels where the price may react, making it useful for both day traders and swing or positional traders depending on the time frame.
What are the different types of pivot points mentioned in the script?
-The script mentions traditional pivot points, Fibonacci, Voodi, Pivot Point Classic, Camara, and DM, each with its own calculation method.
What is the role of Volume Weighted Average Price (VWAP) in the trading strategy discussed?
-VWAP is a technical analysis indicator used on intraday charts that resets at the start of every new trading session, representing the average price a security has traded at throughout the day based on volume and prices, which helps in determining intraday price trends.
What is the significance of the exponential moving average (EMA) in the strategy?
-The exponential moving average (EMA) is used in the strategy as a trend-following indicator that smooths out price data and helps identify the direction of the trend, with a length of 20 used in the script.
How does the script suggest using the pivot point indicator for entering trades?
-The script suggests entering long trades when the price is above the pivot point and short trades when the price is below the pivot point, considering additional indicators like EMA and VWAP for confirmation.
What time frame is recommended for using the strategy in the script?
-The script recommends using a 5-minute time frame for intraday trading, although it also mentions that a 3-minute time frame can be used for faster trades.
How should traders set up the pivot point indicator in their trading platform according to the script?
-Traders should set up the pivot point indicator with the type as 'traditional', select 'daily' for the pivot time frame, and adjust other settings such as line width and label position according to their preference.
What is the entry point for a short trade according to the script?
-The entry point for a short trade is suggested to be when the price breaks the low of a red candle, which should close below both the VWAP and the 20 EMA.
How should traders determine their stop loss for trades based on the script?
-Traders should set their stop loss at the high of the red candle for short trades or consider the pivot point as a reference for placing stop loss, ensuring it's above the entry point for long trades.
Outlines
📈 Introduction to Trading Strategy with Pivot Points
In the first paragraph, Chitra introduces a trading strategy for Nifty and Bank Nifty options, which can also be applied to other indices and stocks. The focus is on the use of the Pivot Point indicator to identify resistance and support levels in the market. The Pivot Point is a technical indicator that helps traders determine price levels that may act as resistance or support, and can also indicate potential turning points in the market. Chitra explains the importance of understanding how the Pivot Point works and its role in both day trading and swing or positional trading. The paragraph also mentions different types of Pivot Points, such as Fibonacci, Voodi, Pivot Point Classic, Camara, and DM, each with its own calculation method. The strategy involves using the traditional Pivot Point along with the Volume Weighted Average Price (VWAP) and the Exponential Moving Average (EMA) for entry into trades.
📊 Utilizing EMA and VWAP for Intraday Trading
The second paragraph delves deeper into the strategy, explaining the use of the 20-day Exponential Moving Average (EMA) and the Volume Weighted Average Price (VWAP) in conjunction with the Pivot Point. Chitra describes how to set up these indicators on a trading platform, including the specific settings for the EMA and VWAP. The paragraph emphasizes the importance of the VWAP in intraday trading as it represents the average price a security has traded at throughout the day, based on volume and price. It also discusses the significance of the EMA in identifying trends and how these indicators can be used to find entry points for long trades when the price is above the Pivot Point, the 20 EMA, and the VWAP. The strategy is tailored for intraday trading using a 5-minute time frame, although a 3-minute time frame is also mentioned as a viable option.
📉 Applying the Strategy to Bank Nifty with Entry and Exit Points
In the third paragraph, Chitra provides practical examples of applying the trading strategy to the Bank Nifty spot chart, focusing on intraday trading with a 5-minute time frame. The paragraph illustrates how to identify bullish and bearish trends based on whether the price is trading above or below the Pivot Point. It explains the importance of waiting for a small candlestick pattern before entering a trade to set a stop loss at the high of a red candlestick for a short trade. The paragraph also demonstrates how to identify entry points for short trades, using the low of a red candlestick as the entry point, and how to set stop losses and potential profit-taking levels at the next support levels. Chitra concludes by emphasizing the importance of booking profits at achieved resistance levels and encourages viewers to like, share, and subscribe for more video content.
Mindmap
Keywords
💡Pivot Point
💡Support and Resistance
💡EMA (Exponential Moving Average)
💡VWAP (Volume Weighted Average Price)
💡Intraday Trading
💡Nifty and Bank Nifty
💡Sensex
💡F Nifty
💡Day Traders
💡Positional Traders
💡Stop Loss
Highlights
Introduction to a trading strategy for Nifty and Bank Nifty options, applicable to other indices and stocks as well.
Explanation of the Pivot Point indicator, its significance in determining resistance and support levels in trading.
Pivot Point as a technical indicator that helps identify potential turning points in price movement.
Different types of Pivot Points including Traditional, Fibonacci, Voodoo, Pivot Point, Classic Camara, and DM, each with unique calculation methods.
Combination of Pivot Point with VWAP (Volume Weighted Average Price) and EMA (Exponential Moving Average) for trade entry.
VWAP as an intraday technical analysis indicator that resets at the start of every new trading session.
Importance of VWAP in determining intraday price trends and its use by retail and professional traders.
Setting up the 5-minute time frame for intraday trading with the Pivot Point indicator.
Selection of the traditional Pivot Point type and the daily pivot time frame for intraday analysis.
Use of the 20 EMA as part of the trading strategy to identify long trade opportunities.
VWAP settings in the trading strategy, focusing on the importance of the band multiplier.
Criteria for entering long trades when price is above the Pivot Point, 20 EMA, and VWAP.
Examples of using the strategy in Bank Nifty spot charts with a 5-minute time frame.
Guidance on not entering trades on big candles due to the risk of stop loss being the high of the candle.
Entry and stop loss strategies for short trades, using the high of a red candle as the stop loss.
Identification of entry points and stop losses in relation to the Pivot Point and VWAP levels.
Demonstration of profit booking after achieving resistance levels like R1 and R2 in the strategy.
Encouragement to like, share, subscribe, and click the Bell icon for upcoming video notifications.
Transcripts
hi friends chitra here welcome to my
YouTube channel today we are going to
learn one of the strategy that we can
use for trading Nifty and Bank Nifty
options okay you can use for other index
also that is you can use for sensex and
uh F Nifty options also you can use this
strategy you can use for stocks also all
right so before uh know knowing the
strategy I need to uh explain you how
this uh indicator will work okay so the
first indicator I'm going to use in this
uh strategy is the traditional pivote
okay using the Pivot Point okay so what
is this pivote point and how this is
helpful in our trading we need to know
that okay so pivote Point standard is a
technical indicator that is used to
determine the levels at which the price
May face this resistance and the support
okay so nothing but the resistance and
the support all right so here we can see
this is the pivote level that is the P
level and the resistance okay so why
this pivote point is uh know taking why
the price is taking support at the
pivote level so where we can look for
options buying and option uh know uh
selling how can we use that use that
levels the pivote point indicator
consist of the pivote point that is p
okay and the support level and the
resistance level this is the pivote
point resistance and the support
levels so what are the other
characteristics of the pivote point
pivote point analysis is a technique of
determine the key levels okay that the
price May react to P Point tend to
function as the support or the
resistance and can be turning points too
okay so while using the pivote points we
can easily identify where is the next
support and what is the next resistance
and from where the price can reverse
this technique is commonly used by the
day Traders and also it can be used by
the swing or the positional Traders
depends upon the time frame and we can
change the pivote point accordingly all
right the here are several methods of
identifying the exact points and what
are the other pivote points other than
the traditional they are the Fibonacci
vooodi Pivot Point Classic Camara and DM
and each time has its own calculation
method so in this strategy I'm going to
show you how can we enter into the trade
using the traditional pivote also with
the vwap and one more indicator that is
the exponential moving average all right
so we can see what is the next indicator
we are going to use in our strategy that
is called the vwap okay that is volume
weighted average price so what do you
mean by vwap it is a technical analysis
indicator used on intraday charts that
resets at the start of every new trading
session all right and it is the average
price a security has traded at
throughout the day based on what based
on the volume and the prices okay that's
why VAP is very important and we have to
use that in our intraday trading
strategy all right and weap represents a
view of the price action throughout a
single day trading session so that's why
the retailers and the professional
Traders are using the VAP that will help
them to determine the intraday price
trends so we can see the settings of the
indicator that we are going to use for
our strategy so this strategy we can use
for intraday trading that is for Nifty
and Bank Nifty and other index too you
can use for f Nifty sensex also okay so
this is the time frame I'm going to use
that is the 5 minutes time frame you can
use this in 3 minutes also as we are
doing intraday all right the first
indicator we are using here is Pivot
Point that is uh know when you go to the
indicator we can see the pivote point
standard and there you have to select
the type in under the inputs the type is
traditional so we can see the other uh
no pivote points also but we are
selecting the traditional all right
pivot time frame also we can see that
there is daily weekly monthly uh
quarterly and there are so many options
uh for other Traders so as we are doing
intraday trading so as we are doing
intraday trading here we are selecting
the time frame as daily okay so click on
daily and number of pivots back that is
15 that is uh 15 the time uh the number
is default if you want to do back test
you can change this to uh know any
number and you can do the back test okay
show labels and uh show prices so this
is the labels and prices is what this is
a Nifty chart right so the R1 label
price is
24414 so we can see the prices and as
well as the labels so the label position
is left and you can keep it uh right
also if you keep it right and if you
click on okay we can see the label price
is no changing to right so I usually
prefer to keep the label prices in the
left the line width that is this line
width is two so we have to check the
other uh all the pivots and all the
support and resistance so as we are
using the traditional pivote here this
the the P level I have kept in black in
color this is the P level this is black
in color and S1 S2 S3 S4 s so we have
the five support level uh below the
pivote and R uh R1 R2 R3 R4 R5 are the
resistance level that is five resistance
levels above the pivote levels so we
have to check everything under style we
are not changing anything that is labels
and lines is checked next we are going
to click on okay so what are the other
indicators we have used in our strategy
the next indicator is the EMA that is
exponential moving average so under
inputs the length is 20 that is we are
using the 20 moving average the source
is close all right style here we can
choose the color according to our
preference so we are using the uh EMA as
well as the VAP so EMA I have selected
the color green in color all right so we
can uh know change the line width also
according to our preference and click on
open Okay the third indicator is VAP
that is volume weighted average price
okay here uh band multiplier is one so
if you want to check all this band two
and band multiplier 3 this is how it
looks like so we want only the VAP line
so I have unchecked all these lines band
multiplier 2 and multiplier 3 and I have
enabled only multiplier one here also I
have enabled only the VAP we don't want
to check all these lines because know
the chart will look clumsy as we are
using only vwap we can we can uh enable
only the vwap line and I have change the
color here also we can change the color
according to our preference so I have
selected the color blue okay and uh we
don't want to change anything other than
this Okay click on
okay we have now enabled all the
indicators so these are the three
indicators we required for our strategy
that is the traditional pivote daily uh
moving average that is 20 EMA VAP okay
so these are the three indicators we are
going to use okay now what is uh how can
we use this uh traditional pivote okay
so if the price is above that is price
is above this P level here we can see
this P right that is the pivote so if
the price is above the P
level
price price above
pivote is bullish that is uh we can
enter for the long C trade again if the
price okay price is
below below the
pivote is
bearish means uh it's weak the
particular index or the particular stock
is looking uh weak okay so these are the
uh no criteria these are the condition
we have to understand when we are
trading using the pivote it can be any
pivote whether we are using the Camara
pivot or traditional uh or CPR whatever
pivote point you are using this is the
logic okay if the price above the pivote
is bullish and price below the pivote is
bearish okay so here we can see that the
price is trading here we can see that
this is the pivote level that is
24,34 is the P level pivote point so
here the price is you know uh little far
from the pivote point but still the the
uh uh particular index is bullish
looking bullish because it's trading
above the P level all right okay so in
case we here we can see that the price
open little Gap up and after that uh we
can see that we got a breakdown that is
a red candle um we got a breakdown below
the P level so it was looking bearish
okay so this is how we have to use the
uh pivote Point okay so now why we are
using the 20 EMA and V appap we can see
that if the price is trading above the
pivote level we understood that the
particular index is looking bullish okay
but after that the price is already
above the 20 EMA and VAP in that case
you can look for a long trade
opportunities so above this uh know
Green candle you can look for a long
trade for the next Target I can say the
next Target if here we can see is R1
okay so we can book our profits at R1
and that is the resistance level so once
uh the particular level got achieved we
have to book our profits all right so we
are not looking for a short trade
opportunities here because uh we'll be
looking for long trade only if the price
is above vwap 20 MAA and above the P
level okay so again we got a know pull
back uh to the 20 MAA and above the VAP
in this small green candle we got one
more entry okay here we are not entering
because the price is below the VAP here
we got know one long trade opportunity
this small green CLE that is 1045 candle
we are entering into the long trade for
the target of R1 and R2 that also got
achieved now we can see few examples
from the bank Nifty this is a bank Nifty
spot chart okay so as we are doing
intraday this strategies for intraday
the time frame I have selected is 5
minutes you can select even 3 minutes
because 3 minutes also will give good
trades but I use usually prefer 5
minutes time frame okay so uh we already
know that if the price PR is trading
below the P level means the trend is
bearish and if the price is trading
above the P level means the trend is
bullish okay so the first 915 candle on
24th July opened in between p and S1
okay so we are waiting for the price uh
either to touch from P level or to know
or green candle stay above the P level
in order to enter into the long trade
okay so here we can see that the green
candle gave a close above the 20 M and
VAP we will not enter into the long
trade because here we can see that we'll
get a rejection from the pivote point
okay so again we can see that this
candle also but above the P level there
is no green candle so we are not going
to enter into the long trade so we got a
uh no here this uh no this candle that
is 935 candle is a red candle so this
gave the confirmation for us to enter
into the short trade so usually we
should not enter into the short trade or
long trade if you are getting any no big
candle because our SL will be the high
of this uh red candle so you should not
enter into this types of candle always
wait for the price to give a small
candle so here this is a perfect red
candle to enter into the short trade
okay so once you enter into the short
trade here this is the stop loss
okay so this is the stoploss that is
high of this red candle we can keep it
as stoploss okay so where will where
will be your entry point your entry
point will be the low of the once this
low of this red cand is taken away we
can enter into the short trade so this
is the
entry so this is the entry now click on
okay okay so this is the entry point so
this is the stoploss or we can keep the
P level as the P point that is the
pivote is near to the particular red
candle and also this red candle gave a
close below the vwap and 20 Em you can
see that okay so once you enter into the
trade if you got no good uh points after
that in the premium you can always book
your profits so from here 51889 the next
support we can see is 51231 and price
touched to that particular level and
price was continuously falling down and
below 20 EMA
okay hope this video is useful to you
please don't forget to like share and
subscribe click the Bell icon too for my
upcoming video notifications thank you
for watching
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