16th Jan 2025 Intraday Trades & Concept
A Gap-Up Start and Initial Observations
Large gap-ups (or gap-downs) can be a double-edged sword: they can either continue driving momentum in the same direction or fizzle out, leaving intraday traders with limited opportunities. I often plan to capture certain points in my trades, but when the market gaps strongly, much of that potential profit can be gone before I even get started.
Coming off a major loss the day before—where I gave back 90% of my month’s profits—I resolved to trade cautiously.
Banknifty
Banknifty opened +331.20 points gap-up above its previous close – right around the mark 49000.
Nifty
Nifty opened +64.05 points gap up hovering near 23350.
Today I ended up surrendering almost 90% of this month’s profits by the time I exited my trades. Below is a breakdown of what happened, how I ended up taking trades against my own rules, and why I plan to avoid these mistakes going forward.
Spotting a Possible Setup
Early on, I noticed a 5-minute price action signal in Banknifty, but Nifty wasn’t really following suit. If I were still trading aggressively, I might have sold 49,300 PE around ₹551.55, targeting 49,500 in the spot. But after the previous day’s losses, I decided to avoid such trades. Had I entered, I believe it would have resulted in a loss anyway, reinforcing my new rule to hold off until I recover my account to a safer level.
First Attempt: 23,300 CE Sell
Despite my resolve to be cautious, I did sell 23,300 CE at around ₹35 in Nifty—a slight in-the-money (ITM) strike—based on a 5-minute price action setup and a day-low breakdown. At that moment, 35 of the 50 Nifty stocks were positive, and in Banknifty, all 12 stocks were in green territory. This raised a red flag: if most stocks are climbing, how long could my bearish position last?
Just then, a power cut hit, forcing me to switch to a tablet. By the time I got set up again, the spot gap line I had marked on my chart was almost touched, but I wasn’t seeing the same movement in the option price. The market was reversing from the gap line, which might have been a good scalp trade if I had more quantity and had planned a strict Stop Loss. Instead, I found myself watching from the sidelines, unsure if I should stay in or exit.
Eventually, the price in the options chart reached the zone I had originally marked—my exit point if I had been in a proper scalp. This wasn’t meant to be a holding trade, especially since Banknifty wasn’t confirming the move. Without that synergy, the trade felt shaky. Meanwhile, HDFC Life shot up by 10%, illustrating the market’s mixed signals.
Another CE Sell and the Infamous ‘420’ in My PnL
I next sold 23,250 CE at around ₹34.85, labeling it a breakdown trade of the gap. However, I was not fully convinced by this setup. I placed a 10-point Stop Loss, then changed it to 15 points, planning to hold longer. A quick glance at my running profit and loss showed ₹420, which made me smile for a moment—though it didn’t keep me in the trade much longer.
As if to prove the unpredictability of the day, Banknifty kept drifting. My preference to sell Calls on a slowly rising market spelled trouble. Feeling unsettled, I exited this position at break-even, despite my Stop Loss still being intact.
Breaking My Own Rules Yet Again
Rather than stepping back, I took more trades:
- Sold 49,000 PE at ₹430.45, targeting 49,500 in the spot.
- Bought 23,300 CE at ₹18.65 on a potential breakout in Nifty, setting an 8-point SL.
When Banknifty started moving against my position, I exited. Nifty’s Stop Loss wasn’t hit, but I left that trade too, feeling uneasy. Then I re-entered Nifty with 23,300 CE buy at ₹20.10, after a bullish spike had already occurred. Despite telling myself to be conservative, I ended up jumping in after the price moved.
Banknifty eventually gave a breakout, and Nifty followed. I told myself I’d stick to an SL or a target, flipping to a 15-minute timeframe to see if there might be a future breakdown below 23,267—the day’s low. If that happened, I planned to buy a Put Option until reaching the next gap area. But my actual behavior hadn’t matched those calmer intentions so far.
The Option Buying Fiasco
I’ve been an option seller for months, so option buying feels unnatural. Still, I wanted to buy an Option around noon, given the weekly expiry in Nifty. In a moment of confusion—fueled by the spot chart showing a potential upward move—I accidentally bought a Put Option when I meant to buy a Call. The button press mishap left me in the wrong trade as the chart moved in the opposite direction. This was the second time something like this happened, highlighting how crucial focus is when placing orders.
The Day’s Finale
By the end of the session, Nifty closed at +60 points approx but closed in a red candle, thanks to the gap-up.
Banknifty on the other hand rallied approx +448.25 points closing in green candle today.
By the end of the session, I was hovering around break-even in terms of my daily capital. While I avoided the massive losses of the previous day, I also didn’t capitalize on the market’s moves as effectively as I could have. My repeated exits and accidental entries underscored a lack of clarity in my approach.
Tomorrow, I’ll be back, hopefully with fewer trade errors and a sharper focus on setups that align with my rules. For now, I’ll settle with learning from the day’s mishaps, grateful that I didn’t compound yesterday’s losses with more of the same.
