Many a times we would have noticed the market trading range bound without much movement, however post 2 PM we have seen many times, market move in one sided direction when the day high or day low is broken.
It could be due to various reason like, the news that comes in during market hours, Geo political events that affect other international markets which in turn affects Indian markets or its the time European markets opens up and fresh inflows occur.
What if we could ignore all the noise till 2 pm, and then trade the day high or low breakouts. It would be much easier for traders, as we don’t need to sit in front of terminal all the time, we just place the orders at 2 pm and carry on with our work.
So the rules of the game is
- Check Bank Nifty day high and day low at 2 PM
- Buy when day high is crossed and Short when day low is crossed, exit at 3:20 PM or when stop loss is hit.
- Place SL-M orders for both Buy(day high as entry ) & Sell (day low as entry) at 2 PM and relax.
When market starts trending after 2pm, it could trigger any of the order and the other order will act as a stop loss. or you can also keep a fixed stop loss of 0.5%. In the above example, on 26th April 2018, Bank Nifty crossed the day high after 2PM, which triggered Buy order and by 3:20 PM, the position has been squared off in profit.
Here’s another example, on March 6th 2018, Bank Nifty broke its day low after 2 PM and ended up with huge profits by 3:20 when we closed the intraday position.
And remember, not every trades end up in profits. Sometimes, you need to face losses as well but those are limited. In the below trade, after initial buy trigger, it hit stop loss and short trade was triggered which ended up in minimal loss by end of the day when position was squared off.
I have tested this scenario with last 9 years of historical data (From 2010–2018).
Here’s the backtest results. The system has given more than 17,000 points in last 9 years. Most of the best successful traders have winning ratio of less than 50%, even in this system we just have 48% winning ratio. But that doesn’t matter.
Max loss in a trade has not exceeded more than -130 points. Risk reward ratio is also good. Out of more than 2200 trading days, only 50% of the time trade has triggered. I haven’t considered transaction cost & slippages, so we need to deduct some % from over all profits and which in turn could increase draw down slightly higher.
Remember Bank Nifty was trading around 10000 few years before, if we face 100 points loss, it is -1% of Bank Nifty value. However, if we face the same 100 points loss now when Bank Nifty is trading around 26000, it is just 0.4%. So maximum draw down, I have calculated in points wise and % wise.
The monthly profit seems to be consistent, where when we have bigger volatility days, profits are really huge.
And look at the yearly profits, seems to be a great result. However, year 2017 seems to be bad, a flat year when index made more huge movement in 2017 and when mutual fund made high returns in 2017, this strategy under performed. Its mainly because of drastic reduction in volatility last year, remember volatility is the friend of day traders, we need huge movements to make high returns. But still in less than 6 months in 2018, the returns are spectacular.
You can download historical backtest results from here
This strategy is good for beginners, day traders with minimal capital, where they can trade with a fixed target and make some quick bucks.
If you are a aggressive trader with capital less than 50 lakhs, who can handle these fluctuations and consistently enter the traders with strict discipline, then there is some edge out there with this strategy. Go ahead and try it out.
If we traded his #TradingStrategy every day, it has returned more than 7600 points since the inception of #BankNifty weekly expiry, i.e from 2016 June to till date. with max drawdown of -900 points.
If you dig deep, you can observe that Long trades has returned more returns than Short trades, that too on #expirydays, short trades has given negative returns.
Another impressive thing is, if you traded this strategy only on #banknifty #expiryday, you end up making 1747 points from only 48 trades with average 36 points profits per trade with only 300 points #drawdown
The actual idea to this trading system was posted in a facebook group by a fellow member Mr. Manoj. I just analyzed the info with our historical data sets and published the information here.
We have developed the bot to send Instant order alert, which would send alert at 2 PM to our Telegram channel. User can just click on it to place the order in their trading account.
We have added this strategy to our Fully automated platform as well. Where user just need to login to this platform and update their lot size, the bot would automatically place entry, stop loss orders for them. Recommend capital 3 lacs per lot. It is available for free to all users who open AliceBlue account with Squareoff referral link https://squareoffbots.com/aliceblue
If you liked this article, please do share share it (Whatsapp, Twitter) with other Traders/Investors.
21 comments on “ORB 2 PM—Intraday Bank Nifty Strategy”
Sir, What is the timeframe for this strategy?
I want treding
is this strategy still working ? did you have backtesting of last 6 months or 1 year
Yes, you can check the live performance in our algo dashboard. http://squareoffbots.com/
What is risk and reward ratio of this strategy.
Hi, What software/vendor did you use to get the backtest result for this?
Hi, What software/data vendor did you use to get the backtest result for this?
Its inhouse tool
Thanks for reply. can you at least tell me from where can I source historical data that goes back to 2010.
Good Evening Kiru,
Should we trade in Bank Nifty Futures or BNF options ,also should stop loss of 0.5% should be of Bank Nifty futures chart or options chart (Call or Put as per market ) .
It should be on futures and 0.5% SL is based on futures
Does this strategy have Trailing Stop loss?
Can I use this strategy for BN Weekly option
very good and useful information for a bank nifty options trader. who want to trade with a proper strategy.
Which Option Strike price should select how much stop loss ?
ATM options, stop loss should be based on futures levels.
i’am a fresher. i want intraday trading in bank nifty. i need your suggestion ! how to do, what to do?