How to trade opening range breakout in Bank Nifty with price gaps?

How to trade opening range breakout in Bank Nifty with price gaps?


Today I am once again going to discussing
a Bank Nifty trading strategy as usual my trading strategies are very simple. And this is once again a opening range Breakout
or a ORB strategy. But this time I am going to mix and match
this opening range Breakout or ORB along with the price gaps. So if there is a price gap in the morning,
if there is a gap up or a gap down that is a trading opportunity. Because at that time the market tries to either
fill the gaps or tries to extend the gaps. And that is a nice trading opportunity for
the traders. But we will trade this gaps but we will try
to mix and match this gap trading along with the opening range breakout. So let us see how this opening range Breakout
or ORB strategy can be mixed and matched with the ORB strategy. But before that let me give you a short intro
of mine. Hello friends, I am Indrajit Mukherjee from
StockManiacs.net. If you want to grow your wealth from the stock
and commodity markets hit the subscribe button and hit the bell notification icon. You can also send me your stock market related
queries through WhatsApp in my number +91-9674321856. So friends, previously, I have done two videos
on this Bank Nifty ORB strategy. And these videos have been liked buy you a
lot. You have made lots of comments and I have
tried to answer all the comments and I have tried to answer your queries. So that strategy was very simple. We were taking a 30 minutes ORB in Bank Nifty. So we were noting the 30 minutes high and
the 30 minutes low of Bank Nifty future. And if a 5 minute candle pierces and closes
above the high or below the low of that 30 minutes high or low, we were taking a buy
or sell trade. And regarding the exit that was very simple. We were using a time exit. We were just exiting before 15 minutes of
market closed. So we are existing around 3.15 before your
broker closes the trade. So entry was very simple and exit was also
very simple. And there was a rule that we were actually
reversing our trade in case of a stop hit. So we were just reversing. Suppose we were in a buy trade and the trade
does not perform well. And it has once again trigger a short sell
trade. So we were just going to reverse our position. And we were reversing our position only once
in a day So that was the plain and simple, plain value is a strategy that I have already
shown you. So next time, in my net video I have tried
to back test in 9 years data. So that was the back test result also has
been liked by you a lot. And many of you have already started trading
this strategy. But there is a tweak now. We are trying to mix and match this ORB or
this opening range Breakout along with gap trading. So when I am mixing and matching this gap
along with the opening range Breakout. The number of trades are drastically coming
down. but I am seeing that the profitability remains
almost same. So this system is once again very much profitable. And I am getting a pretty nice curve in the
backtest. So this back test can give you a lot of confidence. So my dear friends, let us see how we can
trade this gap along with the ORB. First discuss the strategy. So the strategy is very simple. We will look for a full gap. What is full gap? Support today’s open is higher than the
high of the previous day. So this is a full gap. Today’s open is higher than the high of
the previous day or today’s open is lower than the low of the previous day. So that is a full gap. We are getting a full gap in the price and
that is our entry opportunity. If we do not get a full gap, we will actually
avoid trading as per this strategy. So what we will do? In case of a full gap day we will note the
30 minutes high or low. The first 30 minutes high or low and that
high or low has been noted. And then we will look for a 5 minutes candle
to pierced above the high or below the low. And the five minutes candle should close above
the high or below the low of that first 30 minutes candle. So in case a high is breached and the candle
closes over there, so that is a buy. And in case the low is breached and the candle
closes below there, so that is a sell, short sell. And we will exit as per the previous strategy
so we will exit just around 3.15. Just before our broker closes the trade.So
that is the exit and entry simple. And regarding the stop loss, if we are in
a buy trade, if the trade does not perform well, and it triggers a short sell once again,
so we will just reverse the position. And we will the reverse the position just
only once in a day. And in case of a short sell trade, if the
trade does not perform well and it triggers a buy trade once again, we will just reverse
the position. And we will reverse the position only once. So if first time a buy triggers and then if
a sell comes, we will take the sell only once. And after that sell if once again a buy triggers,
we will not take that buy. In case of a short sell if the short sell
does not perform well and a buy triggers, we will take that buy. But after that buy it once again a short sell
triggers, we will not take that short sell. So we will reverse just once in a day. So the strategy is pretty much simple. We are just checking the ORB in case of a
full gap day. So if there is not a full gap day, we will
just avoid trading as per this strategy. Now for the graphical representation or the
backtest, I’ll use Amibroker once again. But you do not need Amibroker to trade this
strategy. You can use Zerodha kite or Upstox Pro or
any other charting platform that can show you the charts. So do not need Amibroker to trade this at
all. So just you need to spot a full gap day and
you need to trade the strategy. Now friends, let us see how this strategy
shows in the chart. Now my dear friend, you can see this is 1
day’s price action, this is a full day’s price action. So this is a Bank Nifty Future’s 5 minutes
chart. So you can see the next day the price has
opened below the low of the previous day. So that is a full gap day. This is a full gap day. And we can see first a buy triggers, then
the buy is stopped out. And a sell triggers and that sell has actually
given you a lot of profit. So this is a full gap day. So once again the next day you can see, this
was the high of previous day, the open is above the high of the previous day. So you can see this is also a full gap day,
you have got a buy trade. And the buy has once again given you a lot
of profit. You can see the next day, the next day also
market opened above the high of the previous day. So there is also a full gap day. You got a short sell. And this short sell also given you a lot of
profits. So these kinds of profit opportunities exists
in this strategy. But you need to understand the theory first,
you need to first spot a full gap day. And then only you need to find out the ORB
or the opening range breakout. So if the opening range breaks out, whichever
direction the opening range is breaking out, you need to trade that direction. And you need to exit just at 3.15, just before
the market closes. So now let us see how the system performs
in the backtest. Now, friends I will also show you the Amibroker
formula. But do not ask the Amibroker formula in mail
or something like that. Because sending amibroker formula by mail
person by person is not possible rather you can pause the video, and you can write the
same amibroker formula in your amibroker. So you can see I am going to show you the
full Amibroker formula. So you can just pause the video, and you can
write the same formula in you amibroker. So this is the formula, I have shown you and
you can duplicate it in your amibroker. And friends, why I am not giving you the full
formula? Because if you want to learn amibroker, do
not try to collect formulas from the net rather you try to write your own amibroker formulas. So these are the backtest settings and all. The full formula I have already shown you. So now friends, we will be doing the backtesting
from 2011 to 2019. So 1.1.2011 to 31.12.2019 we will be backtesting. And as the symbol, we will take current. Current means Bank Nifty. So Bank Nifty Future we will be taking. And regarding the equity, initial equity we
will trade 2000 rupees. So we will start with 2000 rupees capital. And once again I am going to trade only one
Bank Nifty in the backtest. Why one bank nifty because if we trade one
bank nifty, if we test with one bank nifty, one piece bank nifty, one share of bank nifty,
you can understand how much points you have earned. So positions long and short. And periodicity 5 minutes. So we are using the 5 minutes timeframe. And regarding the commission or the brokerage,
we are taking 0.01%. That means 1 paisa brokerage has been calculated. And this 1 paisa brokerage will cover all
your discount broking charges along with the Government charges that I have already seen
in the various broking sites. So many people are once again commenting that
1 paisa brokerage is less. So for them, I am suggesting please go to
any brokerage calculator of any particular company like Zerodha or Upstox. So you can test with the Bank Nifty Futures. And you can see that within 1 paisa it will
cover everything. All your charges, everything will be covered. So click on ok. And we will using the same formula. You can see the name full gap ORB expiry. So because I was also testing it on the expiry
day. So, I have given this name, full gap ORB expiry. And you can see here also the formula I have
shown you, the name is full gap ORB expiry. So now I will show you the parameters. So parameters are same. Last trade time is 15 means last trade entry
time will be 3’o clock. After that, we will not allowed any trade
entry. Trade stop time that means the trade will
be stopped at 15.15, so 3.15pm as we have already discussed. And the breakout time is first half hour that
means 9.45 is the breakout time. And we are not using any stop loss or we are
not using any targets. So this is the thing. Click on ok and click on backtest. So you can see here are the reports. We can see we started with 2000 rupees capital. And here we got an ending capital 24567. So that means our net profit 22567. And as we have tested only one share of bank
Nifty. You can see one share of Bank Nifty. And we have started from 2011. And we have ended at 2019. And only one share of Bank Nifty throughout
the particular backtest period. So we had tested only with one share of bank
nifty. Because we wanted to know how much points
earned. So whatever profits has been made, as we have
tested with only one share, that is the net points earned. So we have made 22567 points. And we have got a net profit percentage, 1128%. So you can understand this 1128% whatever
net profit we have made over this 9 years that is not cumulative. Because we have not increased our trade size
along with the increase of the capital. So if we increase the trade size along with
the increase of the capital, it will be much much more. So you can see the all trades are 1255.So
total 1255 trades has been traded in the last 9 years. So you can see the number of trades has drastically
decreased. But the profitability is quite good. Then also we are getting 22000 profits in
9 years. So now, there are 45% winners, so previously
we have seen around 43% winners. So percentage of winners have increased. And we have seen that the 54% are losers. So now, we will check the charts. So as I have told you this is having a quite
good chart, it is better than the previous chart. So you can see we have started with 2000 rupees
capital. And slowly our capital has increased in 2011
2012 2013 2014 2015 2016 2017 2018 2019. And you can see not a single year, not a single
year is loser. So every year each and every year this particular
strategy has given you profits. It has given you bumper profit. But slowly you can see the profit percentage
is decreasing because the capital is increasing. So this profit is on increased capital. So whatever capital first year it was on two
thousand rupees only. So next year it is on the 40% return on the
increased capital. Next year 14% return on the increased capital. Next year 50% return on the increased capital. Next year 62% return on the increased capital. Next year 19.4% return on the increased capital. Next year 14% return on the increased capital. Next year once again 13.7% return on the increased
capital. And the last year that means in 2019 30.7%
return on the increased capital. So slowly the capital is increasing and your
profit is also is there. Now we will use some small tricks, what we
will use? We will use a stop loss. Regarding the stop loss, I am going to once
again show you the stop loss formula. So you can see here is the stop loss formula
you can use this applied stop formula. And we will use of trailing stop loss. And percentage one. So 1% trailing stop loss we will use. Now we will check how the performance comes
if you use a 1% trailing stop loss. So in this parameters window, click on use
stop loss and click it yes. Click on ok. Now we will be back testing. Let us see the result, so we can see the profit
is drastically increasing if we use a trailing stop loss. So previously we were seeing that we are getting
only 22,000 net profit. Now we are getting 27000 net profits. So 5000 more points we are getting. So 5000 more points, 5000 more profit we are
getting on only one share of bank nifty. 5000 more points my dear. So if we can tweak this strategy in simple
simple ways we can increase the profitability a lot. So you can see the winners percentage has
also increased. The winning percentage is now almost 47% and
the losing percentage has decreased. So my dear friend you can see this strategy
is once again very much profitable. And you can see the curve now. It is a nice curve. It is a super curve. No year it has given you losses. You can seeno year it has given you losses. Each and every year it has given you profits. And this is the power of a simple trading
system.You need to just stick to that trading system, not a single year starting from 2011
is loser. So each and every year it is a winner. So my dear friend, this kind of profits is
possible. So friends you have seen that you can make
this kind of profit you can make consistent profits from Bank Nifty just using this simple
system. So in this simple system we have just used
a simple tweak that we have added a gap logic along with the opening range Breakout or ORB. And it has given us superb results over the
last 9 years from 2011 to 2019. Not a single year was loser. So my dear friends this strategy is very much
powerful. So friend if you are a newbie or if you are
a professional you can still trade Bank Nifty with this simple strategy because this strategy
does not need very much monitoring. You just need to close the trade at the end
of the day. So you can just put an alert in Bank Nifty
in Zerodha Sentinel or something like that. And you can start doing your other jobs also
as per as this strategy is concerned. So you can slowly start trading Bank Nifty
as apart from your jobs or your business. And you can build a super capital for your
retirement. And you can see my dear friends you can retire
much early. If you can stick to a simple strategy that
gives profit over the years. So friends before I conclude once again I
am going to announce that before this budget on 1st February I am going to launch a special
video on budget day reading for trading the volatile market. So do not miss this video and if you are not
subscribe to me please hit the subscribe button because in that case you will not miss this
video. So friends if you like this video do not forget
to hit the like button and do not forget to share it with your friends and relatives. Because if you share someone else can also
be benefited from this video. So thanks a lot friends for watching this
video. Till the end bye bye.

12 thoughts on “How to trade opening range breakout in Bank Nifty with price gaps?”

  • Sir I am unable to find out difference bet. original ORB entry and gapup/dn entry point. You hv explained well about full gap up/dn but entry is same. Whether to trade or not when there is simple gap up/dn ?

  • Is it just break out, or I have to wait for closing price of 5 minute candle to be above or below the 30 minutes range ?

  • Hello Sir, I should thank you for the efforts that you put in to produce a strategy, back-test it and share it with the public. Hats off to you for all the generosity! .. I have a question – The example that you showed for a couple of dates i.e. Dec 26th & Dec 27th where we saw a full gap up/down – neither the BankNifty Charts on Zerodha Kite nor the quotes on nseindia.com website shows a gap up or gap down for Dec 27th. I am wondering how the chart on the AmiBroker showed a huge gap up on Dec 27th. Just want to clarify because I am afraid if the backtested data that you showed might be erroneous.

  • I opened account at upstox from your link but did not got OTP for Hot Tips…Before opening account I got calls from yourside but after account opened I called and sms you but no response….

  • Sir , 1% stop loss means, that is from where we enter the trade right? if buy change to sell, we have to change the stop loss right sir?

  • Indrajeet sir, you are a very honest and knowledgeable expert . Thank you for providing your research and insight FREE to all. I have a suggestion, please start an Algo service and many like me will happily subscribe. Thank you and wish you the best for all the
    Good work you are doing.

  • Beautiful strategy Indrajeet. Can we not put target at say 100 pts or 200 pts above entry price to book profit rather than blind exit at 3.15 pm? This way we will be more in profit because many times in last half hour drastic changes happen and we lose all potential profit. If by 3.15 it doesnt hit target than exit at 3.15 pm anyway. You dont think that will be more profitable? Because we dont lose much that way. Please reply.

  • Sir, am from down south of country. Great view about BN. Keep rock. Have one question, shall we use this pivot point (classics) for other equity scrips.

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