Updates:

1. March 2026 onwards, I changed the capital per lot from 3.5 lacs to 3.3 lacs. The system's performance and my improvement in execution gave me the confidence to increase slight leverage. Actual margin required per lot is ~2.2 lacs, so this is still a good buffer.

2. The last 3 months' performance (Apr-Jun) looks average, nothing major. However, the numbers don't tell the real story. System has been in a drawdown since mid-April; no new equity curve high. Time DD hurts a lot more than one can ever imagine and the current period has been one of longest since I started. Test of patience.

Some thoughts on DD:
One week in May and another in June saw DD touching 7%. Interestingly, if someone started trading this system fresh in April 2026, he would already have seen max DD of ~14%! In system trading, this phenomenon is widely known as start-date bias, curve dependency, or sequence of returns risk. The timing of when capital is deployed fundamentally shifts the percentage returns and trajectory of the equity curve. Not to mention the difference in psychological impact on two traders using the exact same strategy but starting at different times. The math is something like this:

Trader A (starts into DD): If a trader starts with 10 lacs and immediately hits a 50% drawdown, his capital shrinks to 5 lacs. To simply break even and return to 10 lacs, he now requires a 100% gain on the remaining capital.

Trader B (starts just when system is recovering from DD): If another trader starts with 10 lacs at the absolute bottom of that same drawdown, he skips the 50% loss completely. As the system recovers to its previous peak, he captures that 100% upward move, doubling the account to 20 lacs while Trader A is still sitting at zero net returns.

Alas, if only one could foresee the right time to enter/start a trading system
I can't foresee this, but I have started plotting the equity curve chart with a moving average in an attempt to identify areas that could signal possible peaks and troughs. Here's the chart (till date) for this system since Nov '24, currently trying to break out to new highs. I plan to increase my capital deployed to this system and will refer this chart to pick a good time for that.

Is it possible to achieve 8 to 10% ROI per month by trading long options? If we take Nifty as an example, one will only need about '40 points per month' if allocated capital is 30,000 per lot (more than double the required margin) for an ATM option trading around 200. Sounds simple and easy but quite the opposite in reality.

Main challenges are:

• not getting the direction right (low win rate)
• theta decay (sideways markets)
• not making money even though direction is right (falling IVs)

Here are some thoughts on improving the chances to hit the 8-10% target.

Method 1: Trade only when volatility expansion is likely.

Option buyers need:

1. Direction
2. Speed
3. Volatility

The best environments are:

• Breakouts from consolidation (e.g. TTB, Turtle)
• Range expansions (e.g. Catapult, Diagonal TTB)
• Major support/resistance breaks (e.g. Anchor S/R)
• Gap-and-go days (e.g. AFT, Super, T20)
• Event-driven moves

The worst environments are:

• Inside days (e.g. triangles)
• Choppy ranges (e.g. short and alternating X/O columns, frequent bull & bear traps)
• Low-volatility sideways markets (e.g. Bollinger Band, Donchian Channel)
• Expiry afternoons

2-5 quality trades per month are enough to fill the coffers.

Method 2: Think in R-multiples rather than points.

Instead of "I need 30 points", think "I risk 10 points to make 30 points".
A 1:3 risk-reward structure means half the battle is won.

Three losses = -30
One winner = +30
You break even.
Two winners = +60
Net = +30

Building a system with favourable setups can be easier and faster using this approach.

Method 3: Focus on expectancy.

Let's assume:

• 10 trades/month
• Win rate = 45%
• Average win = 40 points
• Average loss = 15 points

Wins:

• 4.5 × 40 = 180

Losses:

• 5.5 × 15 = 82.5

Net:

• +97.5 points

This can outperform a 70% win-rate system with poor risk-reward.

Method 4: Use longer-dated options.

Current week expiry options can decay brutally. Also, gamma can take out stop loss levels frequently if the direction goes wrong.

Instead consider:

• Next week expiry
• Monthly expiry
• At-the-money or slightly in-the-money

Advantages:

• Lower theta decay
• More forgiving
• Less emotional pressure

Method 5: Trade the first hour or the last hour.

Often the cleanest moves occur in the first hour (9:15–10:15) or the last hour (2:30–3:30).

The middle of the day often generates:

• False breakouts
• Premium decay
• Noise

Method 6: Track market regime.

Months of gains get destroyed by trading trend-following setups in non-trending conditions.

Trending market

• Buy calls on pullbacks
• Buy puts on breakdowns

Sideways market

• Trade less
• Reduce size
• Sometimes don't trade at all (see method 7 below)

There are many popular ways to identify the market regime → combining Donchian Channel and Moving Averages, D-Smart / MAST clouds, multi-timeframe analysis etc.

Method 7: Have a "No Trade" strategy.

Often money is made by avoiding bad trades/environments.

Don't trade when:

• Nifty is inside yesterday's range.
• VIX is collapsing.
• Market opens in the middle of a multi-day range.
• Major support and resistance are too close.

Method 8: Scale out profits.

Let's say entry is at 200.
Book 50% at 220.
Book another portion at 240.
Let the remainder run with a trailing stop.
This allows occasional trend days to pay for several small losses.

To summarize, a good framework would be:

1. Buy only when a clear trend or breakout exists.
2. Risk no more than 1% of capital per trade.
3. Seek at least 1:2.5 risk-reward.
4. Book partial profits when market allows.
5. Skip low-volatility days.
6. Aim for 2–5 high-quality trades a month.
7. Accept that some months will be +20%, some 0%, and some -5%.

The Paradox

Those who stop trying to make 10% every month and avoid forcing trades during poor conditions, can often end up averaging close to 10% at the end of the year

Much discussion happening nowadays around sideways markets. My system is in drawdown since April first week. The max DD so far is still under 7% but the time DD is the real test of patience. While revisiting some popular quotes by renowned traders, I thought of going deeper into the quote – “The best trades work almost immediately”. The thought of participating only in the profitable trades is very compelling but can it be practically done? Idea is to see how I can imbibe this philosophy in my system so that drawdowns are extremely small and the returns are generous.

Obviously, I put my AI companion to work. Here’s a summary (don’t worry, not AI slop) that may help trigger ideas for fellow traders.

Basic idea:

• Strong trades show urgency.
• Weak trades hesitate, chop, or reverse quickly.
• Capital should be concentrated in asymmetric moves, not in “hope trades.”

Approach:

• Use very tight initial risk
• Cut quickly
• Allow winners to expand
• Trail loosely after confirmation

Realistic Expectation:
Many small losses, few medium wins, occasional huge winners. A strong system might produce:

• Win rate: 30–45%
• Avg. Winner <> Avg. Loser = 2:1 to 5:1
• Profit Factor: 1.5 to 2.2

Hidden Cost / Challenges:

• Noise / volatility spikes
• Stop hunts
• False breakouts before continuation
• Surviving psychologically - frequent scratches, repeated small losses, long flat periods, frustration

Practical ideas to tackle the challenges and make this approach work:

1. Two-Stage Entry Structure

• Initial probe position.
• Confirmation add-on later.
  Example:
  • Enter 25–40% size on breakout.
  • Keep wider stop than usual.
  • Add aggressively only after expansion confirms.

2. Volatility-Based Stops Instead of Placing Stops at Obvious Locations
Using volatility-adjusted stops. For example, 1.5 ATR or 2 ATR
Indicators such as Supertrend / MAST / D-Smart can help. Combining it with the ‘two-stage entry structure’ mentioned above can be very useful.

3. Time-Based Validation
For example, “If price fails to progress within X time, exit.”

4. Re-Entry Rule
I think this is critical. Some of the biggest trends stop traders out a few times before exploding. Developing an objective method, and an open mind, for re-entry can be very helpful.

5. Entry Location
Skipping entries when one is late and/or the trend is extended. Entering only when price is near/around volatility contraction, or after pullbacks and trend continuation pivots.

6. Partial Stop Logic
For example:

• Exit 50% on tight invalidation
• Hold 50% using wider structural stop
  This is a good alternative to the first point "Two-Stage Entry Structure".

7. Market Regime Filters
Trading less during choppy phases is a very good advice but many times you only realise the choppy phase after the fact. A good market regime filter can be helpful to deal with this.

8. Pyramiding into Confirmed Trends
The real benefit of this approach (very tight SL, trail generously) can be realised only when one makes the most of profitable trades. Pyramiding after the trade is in favour can be the key to making this approach very successful.

Would love to hear more ideas, and personal experiences, from fellow traders. Thanks.

Performance update. Fixed the DD formula once and for all - was calculating current DD from base capital earlier. Fixed it to calculate from the peak. Also adjusted all figures per the new lot size.

The scenario on 10-Oct (posted above) did give a valuable hint. Trump news in the evening confirmed. Now another interesting scenario developing right now at about 2pm. Nifty spot going up since a couple of hours but 25-Nov 26000 straddle not interested at all.

Interesting phenomenon today. November 25500 straddle going up along with Nifty spot (currently 25280) since morning. Generally, this would be the case if Nifty is extremely bullish and trending but doesn't look like it. This uptrend is not convincing, so far.

@AP - yes, I had seen that video (P&F 0.25% 1-min). Thank you very much for bringing it up. Should be very interesting. I will backtest and see how that goes.

Status update: I have started trading this system again now that I have come to terms with my psychological barriers with regards to the risks associated with this system. I have been able to develop multiple trading systems that are catering to different timeframes and complementing each other. I can also see that the system has nicely weathered the storms of war and tariffs in 2025. All this has helped immensely in boosting my confidence to carry overnight positions. Going with this system for the long-term now.

Statistics

System update: After almost a year of trading this system, I'm removing the "P&F X% breadth MA crossover" rule that was filtering the trades to align with the trend. All other rules remain exactly the same.
Multiple reasons for this:

1. The monthly return has still remained the same (in fact, slightly better) without this rule. I've been tracking its performance separately since day 1.
2. There was a slight lack of objectivity in situations when the breadth crossover was happening within the day, and I had to decide whether or not to take the trade. At times the crossover would happen and then reverse in a few minutes. At times I would wait till EOD but that created scope for FOMO. Removing the rule makes the system 100% objective now.
3. Removes the need to trade lots in 'even' numbers (see 'Capital & Position Sizing' in the original post).
4. The realised DD without this rule has almost doubled (~17%) but I've neutralised that effect by adding an intraday long options system that is providing a good balance to my portfolio. Also, capital allocation to this system reduced by design, as mentioned above in point 2.

Overall, this update simplifies the system, and makes it fully objective while generating the same return.

Statistics

Nifty futures - 0.05 X 3, 1-min, P&F chart.
Please let me correct myself - the only chart to be opened is Nifty futures irrespective of which instrument is traded. Entry and exit 'signals' to be taken based on futures, trade to be taken on the instrument of choice. For spreads, monthly ATM and OTM (300 pts away).

@Narayanji J Thakkar HUF,

1. In the 5-in-1 method, 5 refers to the 5 different instruments (Nifty futures, long options, debit spread, credit spread, Nifty Bees) on which a trade can be taken. 1 refers to the method of taking the trade as follows:

• Run breadth on Nifty 50 X% breadth and check whether it’s a bullish crossover or bearish crossover (1%)
• Open price chart of any of the 5 instruments
• Plot D Smart line with default parameters
• Check whether it’s a bullish crossover or bearish crossover
• If breadth shows a bullish crossover and price is above D Smart line then go Long
• If breadth shows a bearish crossover and price is below D Smart line then go short
• If both are not in same direction then avoid fresh entry
• Reversal trades must be entered at 3:20 – 3:25 pm after checking status of breadth

Basically, X% breadth is the deciding factor. I used that concept and replaced D Smart with my choice of entry exit indicators.

2. In Decma 2023, Raju Ranjan sir had presented an options-buying strategy that used DC 28 and he said that 28 worked well based on his observations. The number kind of stuck with me as I was looking for something faster than 40 to use on 3% option charts for swing trading. It worked for me. I can say now that any other number would also work just fine. Observation is required.

3. If you look at the chart closely, the bricks did overlap.

@Ajay Chaudhary, changed to 20 now. Since BI is tracking last 10 bricks, I found it good enough to track the lows of last 20 bricks from intraday POV.

@Somu R, thanks. Unfortunately, not. The main hindrance would be checking for Nifty breadth in the decision-making. Also, things such as switching to the next near-ATM strike once trade is in profit by 100 pts., strike selection. These are minor things but need manual intervention.

Final update on this system - all rules, nuances, and my observations after trading for a month.

Instrument and Charting Method: Nifty weekly options; Renko 4% High-Low, 1-min
Indicators: Brick Indicator (10) or Brick Zone (10), Donchian Channel (20)
Capital deployed: 2 lacs per lot

Rules:
• Entry: Look for a positive divergence on the Brick Indicator when it goes to -4 or below. Enter on a bounce of 2 bricks from/near the DC LB.
• SL: 3 brick-back
• Trail/Exit: Two ways to handle this,

1. Book half at 1:1. For the rest, move SL to entry and trail until a negative divergence appears between price and Brick Indicator OR exit at 3:20 pm, if none of that happens.
2. No partial booking. Exit fully once a negative divergence appears between price and Brick Indicator. If that doesn’t happen, exit at 3:20 pm.

Important notes on Trail/Exit:

1. The first method is only a ‘feel good / play safe’ approach. The aim of this system is to follow the intraday trend. Exiting half when the trend has just started is not good for pure trend-following traders. Moreover, the second method generates much better returns with exactly the same amount of DD (based on results so far).
2. The most important part of this system, as for any system, is the exit. I have been following the second method listed above. I will confess that it hasn’t been easy to execute it properly each and every time. There are times when I face difficulty in identifying negative divergence due to the highly dynamic nature of brick count formation. While the trade is on, one has to be alert about how the next brick (red/green) that will affect the brick count and it’s hard to be accurate all the time. Hence, I’m working to find a more objective/simpler method for exits.

Statistics: These stats are for 2 lots. Chart for each of the 62 trades is posted under this topic. I'm aware that the results are outrageous and should be treated very cautiously since it's only a month of data. I can assure that I have taken almost all the trades and will admit that my execution accuracy was quite poor in the beginning, probably 40-50%. It is still not great but has improved to around 75% after a month and should get better from hereon. Bringing more objectivity to rules will also help.

Observations:

1. DC: The lower band’s main purpose is to highlight support. If the same level is found acting as support in any of the previous few sessions, even better; although not necessary.
2. BI Values: A divergence happening when the Brick Indicator value is at least -4 or less (-6, -8, -10) is good. Any higher values (-2, 0 etc.) generally indicate lower probability of the price catching a trend. The logic is that BI value turning 0 from negative means price is close to equilibrium and an entry from here would have a less than desirable R:R.
3. Types of Divergence: Regular and hidden. Regular divergence is where price has made a LL whereas BI has made a HL. These are common. Hidden divergence is where price has made a HL and BI has made a LL. These are fewer, and generally occur in the direction of the main trend. In such cases, price will not be always at/near DC LB; especially when the trend is strong. One has to be alert to pick these and take an entry.
4. Scanning for Divergence: Scanning for divergence can appear subjective but regular practice makes it easier to identify. Two observations here:
    Since BI value is set to 10, it won’t go beyond -10 on the scale. It will often happen that price will keep making a lower low and BI will keep going to -10 (can’t go any lower). Treat this as divergence. In other words, the probability of reversal keeps increasing every time BI goes to -10. Then, all one needs to do is look out for a 2-brick bounce from a support level/DC LB.
    For regular divergence, troughs can be compared across 3-4 sessions (especially when BI has reached -10). However, for hidden divergence one should not look back more than 1 session for troughs. Reason being, most hidden divergences appear in strong trends which are short-lived from the intraday POV.
5. Chart Type: High-Low charts are recommended for Intraday as prices move fast and entry/SL orders can be entered accurately, in advance.
6. Expiry Selection: Avoid trading current expiry on the expiry day as options become volatile and chances of hitting SL increases, especially when trading HL. Switch to next week expiry on the current expiry day.
7. IV Regimes: In very low IV environments, switch to the next week expiry a day before the current expiry. Theta decay will affect the trades more during low IVs as volatility dies and market lacks strong trends. In such environments, number of trades as well as chances of hitting SLs increases. Switching to the next week expiry can help slightly due to lesser theta impact.
8. Strike Selection: The soul of this system is divergence between BI and price. Each option strike has its own price action going on and divergence may not always appear on all strikes. Hence, keep charts of 3 strikes (ATM/ITM/OTM) open for CE and PE each and follow the entry signals. Strikes in the price range of 140 to 180 have worked well in July 2025 when the IVs have been one of the lowest. Need to observe the price range in higher IV environments.
9. Multiple Entries: When the market is taking a breather, both CE and PE trades running in parallel is fairly common. In other words, a CE entry can trigger while the PE trade is on and vice versa. This simply signifies that the market is hinting at changing direction but is not fully ready yet. All trade signals should be taken.

Final note: This system is very much work in progress and has a few subjective elements. My goal is to make it more and more objective while making improvements based on everyday observations. I won’t be posting any further under this topic unless there is any significant new development.

@Ajay Chaudhary - Yes, 12 trades since my last post but not planning to share all of that here. It's a very simple system so nothing new to share.

@Ajay Chaudhary, valid questions and glad someone is asking. I will answer all 3 Q together, as they are connected.

I will admit that spotting divergence in this system is not 100% objective. If you see my first post under this topic, I have mentioned under observations that it can be subjective at times but can be made easy with regular practice. Now, BI is an oscillator like RSI, MACD, Stoch etc. Oscillators are range-bound, and their value is calculated based on a ratio of gains to losses. BI cannot go beyond -10 as that's the limit we have set. When it is -10, it means price is strongly bearish and we make a presumption that the probability of a short-term pullback or reversal is high. This probability keeps increasing as BI keeps repeatedly going to -10 in an ongoing downtrend. You can call it mean reversion, sellers' exhaustion etc.

In my observation, any troughs made during previous 3-4 sessions can be good to use for marking divergence. In case of 24750 CE today, I agree that it wasn't textbook/objective divergence but more in line with the inherent concept of trend reversal and/or oversold conditions. Also, I quickly saw at market open that although Calls made a lower low compared to 29/07, Puts did not make a higher high. It supported the sellers' exhaustion theory. But all that is not part of the system's everyday decision-making process so let's keep that out of the discussion. I hope this makes sense. I have noted a number of observations about this system based on my experience trading it so far. Will post all of that shortly.

3 more trades and that's the end of the day, and the month.

24750 CE

Switched to next week (07-Aug) options after having a large no. of trades yesterday. Current week options are more volatile than expected. 2 losses today.

2 more trades and done for the day. Lot of trades today, but totally worth it.

Bears trying to push further today but hard resistance from the bulls. 4 trades already for PE - 3 hits and 1 gain.

24600 CE

@Ashish Talekar, you got that right - discipline is the most important thing. Both, in execution as well as risk management. I won't tell you to paper trade because I know it's very hard to just sit aside and watch a system wherein trades run for days/weeks together. Discipline is tested only in real trades. The last two months (June/July) have been excellent for this system. July return is 6% as of today. The system will work but just make sure you are comfortable with your risk management. All the best.

2 more trades and that's it. Super day

24950 PE - mammoth trade! IVs have risen.

24700 CE

2 more hits on the CE. No rise in PEs so all credit to theta decay. Overall, another superb week. 3 more trading days to go for completing a full month of executing this system. Will post the full statistics on 30-Jul.

24850 CE - another failed attempt at reversal

24900 CE - first attempt at reversal; exit with minor loss

25000 PE - classic hidden divergence in the direction of the strong trend

Blockbuster - 25300 PE

31-Jul expiry - 2 trades for the day

Learning of the week: In extreme low IV environments, switch to next week expiry as soon as you notice that you are getting battered by theta more than the price action. Saves a lot of pain.

The choppiest day for the system even though the underlying price action doesn't tell as much. 6 trades in total. Most of the time, both CE and PE trades were running together. Interestingly, only a small negative day. PEs took care of the CEs.

Some observations after the suggestion received from @Ravi Shinde to follow the spot chart for divergences and taking trade on options.

• At times, underlying generates a signal but no signal on options chart. In a way that saves from a probable false move but on the other hand creates psyche issues such as FOMO and disbelief in the system for those few minutes.

• It happens that after a trade is initiated, underlying does not give an exit but options do. Especially, during low IV environments. Psyche issues again.

• At times, reading divergence on the underlying becomes difficult/confusing. The small box size on the underlying creates a lot of troughs and peaks on the indicator and it keeps you guessing.

• Overall, the level of difficulty increases when taking signal from one instrument and trading another. I find it much easier to look at one chart and take whatever signals it gives. Also easier to take care of any chinks in the armor during post-market analysis such as backtesting, exercises to improve R:R, evaluating patterns etc.

It was a good exercise. Thanks, Ravi.

@Akash, none of the above. All I need to do is keep the option charts open for anything that has premium between 125 and 160.

24950 CE. Excellent day.

25150 PE

Good start to the week.

25000 CE - 1 hit and 1 BE. Difficult times for long options - very low IVs, grinding moves. But system has to be followed cause tides can change without advance notice.

25250 PE

25350 PE - 2 trades to end the day.

24950 CE - SL hit

25050 CE - first attempt failed. Second attempt did great.

25300 PE - another one for the records but not tradeable. Morning gap leaves you helpless. SL is off-limits and all you can do is leave it and wait for the next trade.

@Ravi Shinde, in my observations from the past, I have consistently seen that options exhibit signals earlier than spot/fut. However, I hadn't looked at the underlying charts on a very small brick size. This is surely interesting, and I'll observe this for the next few days. Maybe I'll change it to 0.02% H-L to avoid re-painting on close. Intraday will need fast action. But again, thanks for your comment. This is why I've started posting on this forum - hoping to get suggestions/feedback and improve further.

Everyone knows the saying 'simple strategies work'. Definedge's SAR strategy using MAST indicator on Nifty/BN futures has been well-known and is one of the simplest ones I have ever seen. To trade it with utmost discipline is a different thing altogether

Concept:
It is widely agreed that BRN (big round numbers) work as major levels of support/resistance. I have always been amazed at how straddles of BRN strikes far from the ATM give hints about what's really happening under the radar. Long back I had posted a chart and a conversation with AP sir provided motivation to dig deeper into this area. However, only a few months ago did I start developing a simple strategy with the idea that markets move in ranges and BRN strikes can act as good pillars to hang our hammock and lie in it peacefully while eating premium.

So here are the rules and performance of this strategy since January 2025. I traded this live from Feb. to May but gave up thereafter due to a reason I'll explain in the end. I am still keeping track of each trade and intend to do so in the near future.

Instrument & Charting Method: Nifty monthly options; Renko 1% box size, 1-min

Capital & Position Sizing: 3,25,000 per straddle. Minimum 2 straddles (1 each above and below ATM)

Indicator: D-Smart

Rules:

• Sell next month straddles - 45 DTE.
  e.g. if Aug 28th is the expiry, start trading that from July 14th. Trade this expiry until Aug. 11th and then switch over to Sep. expiry which will be 45 DTE.
• Entry - choose two BRN (big round number) strikes, one each above and below the spot price. For e.g., today Nifty spot is 25200, so choose 25000 and 25500. Sell those straddles if the price is below D-Smart.
• SL/Exit - D-Smart line is the stop. Switch to the next nearest BRN straddle as per entry rules.

Dealing with various scenarios when spot is at or near a BRN, for e.g. 25000:

1. In such a scenario, there will be confusion regarding strike selection between 24500/25000/25500. Normally, it will be easy to choose as only 2 out of the 3 strikes will be below D-Smart.
2. In few scenarios (when VIX is low and market is extremely sideways), all 3 strikes will be below D-Smart. Sell the two strikes which are lowest in premium among the three.
3. A rare scenario is when only 1 BRN strike among the 2/3 is below D-Smart. In this case, just sell that one and wait to sell whichever strike goes below D-Smart first.

Statistics:

Note: there is no P&L for January as the trades started from Jan 13th ran all the way until Feb end.

Currently active trades: August 25000 and 25500 straddles

End Note:
So the reason that I stopped trading this system was what happened in May. Selling naked straddles overnight is not for the faint hearted. I always hedged them and that took away some profits which I was giving up unhappily. However, the Indo-Pak war days gave me uncomfortable days in spite of the hedges. The psychology got to me and I started breaking rules. Eventually I realised that this system was not for me and gave up. As it happens with all, I was left with my mouth gaping when June resulted in a huge positive month Anyway, this is a good system on its own with hardly any work to do and decent returns. It's up to the trader to manage the risk and psychology. Would love to hear feedback/thoughts.

25000 CE - almost 100 pts! Missed this trade due to a couple of reasons:

1. This system depends on divergence as displayed by BI. Now the issue is that divergence is based on the price action of the instrument and each strike has its own action going on. Not every strike will exhibit divergence. I was looking at 25050 CE and it gave no signal.
2. Even if I was looking at 25000 CE, the initial SL was beyond my limit so wouldn't have taken the trade. In hindsight, I could have gone with half qty.

All good learnings and food for thought. Helps improve the system. The thought process behind this system is working very well and that is consolation enough.

Finally the end of shorts. An excellent trade that lasted for 7 days.

25250 PE - good effort but couldn't sustain.

Last trade of the day, 25000 CE

2 more trades. 25150 PE triggered first. Later 25050 CE triggered while PE was still on. Both done now.

@Ashish Talekar , DC is 28 and BI is 10.
I select a strike having premium in the range of 130-150.

25050 CE

Booked 25200 CE and moved to 25000 CE.

@Harpreet Singh, by bearish trades I assume you are referring to short options? If so, I am not very comfortable working with negative divergences. Probably just a frame of mind developed over the years. Also, I wanted to develop an intraday long options system that would complement my other short options swing trading system.

Intraday brick zone% is a slightly different indicator in that it only focuses on the day's action irrespective of what has happened in the previous session(s). It does not provide any insight on divergences.

Good run... going strong.

3 consecutive hits. The system aims to pick up reversals and it is tough when the trend is strong. This is a good time to test and gather insights for future improvements. Overall a good week. Looking forward to the next week.

SL hit for NIFTY 17-Jul-2025 CE 25200.

@SANTANU BEZ, Pinches a little to miss this. Made high of 240 and still not over. But there will be many more such trades in the future

Missed this entry in 25350 PE while the SL hit in the earlier trade. Perfect hidden divergence which generally occurs in the direction of the main trend. Price will not always be at/near DC LB when the trend is strong and one has to keep an eye for hidden divergences. This makes me re-think the necessity of having DC as part of the setup. Regular divergence can be spotted without DC too. Will continue to track this.

SL hit for NIFTY 17-Jul-2025 CE 25300.

Forgot to mention an important trailing/booking rule in the original post. Once the position is in profit by 100+ pts., it should be booked to move to the near ATM strike having premium between 260 to 280. Booked the current position at 125 and switched to NIFTY 24-Jul-2025 CE 25200 having premium 266 and also switched to 24-Jul expiry as per rules.

SL hit for NIFTY 17-Jul-2025 CE 25450. The only trade of the day.

An important point missed under 'observations' in the initial post - avoid trading current expiry on the expiry day as those options become volatile and chances of hitting SL increases greatly, especially when trading HL. Switch to next week expiry on the current expiry day. No trades so far today. Let's see, a couple of hours to go.

NIFTY 17-Jul-2025 CE 25300 shorted yesterday at 276.

Intro:
I have always been fascinated with Guppy MMA (https://www.definedgesecurities.com/library/guppy-multiple-moving-average/), probably because of its visual representation on the chart but more so because it gives me strong conviction about the direction of the trend. An equally favorite indicator for me has been the Donchian Channel. So I combined both of them with an aim to create a swing trading system that would benefit from the change in delta (directional moves) as well as some theta decay while keeping the Gamma impact (avoiding volatility near expiry) to a minimum.

I've been trading this system for a little over 8 months now and it has worked well. Based on the experience so far, I recently made a couple of changes to the rules defined in the beginning and rectified a formula that I was using to calculate drawdown. This has resulted in a significant reduction in the DD while keeping the returns intact. Below are the system rules as I trade today, and the statistics.

Instrument & Charting Method: Nifty weekly options; Renko 3% box size, 1-min

Capital & Position Sizing: 4 lacs per lot. Minimum 2 lots (as quantity should be reduced to half when daily P&F X% breadth for Nifty 50 is not in favor).

Indicators:

• Guppy MMA (EMA)
• Donchian Channel (28)
• Nifty P&F X% breadth (DECMA 5-in-1 method)

Rules:

• Sell weekly options - minimum 7 DTE and maximum 14 DTE.
  e.g. if Jan 14th is the expiry, start trading that expiry from Jan 1st and stop on Jan 8th - switch to next weekly expiry.
• Choose a strike having premium in the range of 270 to 320.

Entry (all conditions necessary):

• Bearish brick is below Donchian Channel LB (28)
• All fast MAs of Guppy MMA group are below the slow MAs.
• Take only long trades (short PE) when the daily P&F X% breadth (box size 1%) is above MA, and vice versa.
• If a short entry signal (short CE) is generated when the daily P&F X% breadth (box size 1%) is above the MA, trade half the quantity. Vice versa for long.

Exit:

• Brick low at 1 is above any of the slow Guppy MMA & brick at 0 is bullish.
• In other words, at least 2 bullish bricks should fully overlap the group of slow MAs of the Guppy MMA indicator.

Statistics:

Confession:
I will admit that I haven't been able to execute this system 100% accurately due to various reasons - trading breaks, psychology issues in the beginning (resolved now), lack of objectivity in the rules in some scenarios (addressed now) etc. However, I believe all these were necessary for me to remove the imperfections, both in the system and myself. Today, I trade this system without any issues as if it is a part of my daily routine like everything else.

Example of Entry and Exit:

2 trades for the day.

Divergences are of 2 types - regular and hidden. Mostly you will find regular divergences, i.e. price has made a LL whereas BI has made a HL. A few times hidden will happen (like today morning, 25400 CE) wherein price has made a HL and BI has made a LL. I will take both.

Concept:
I believe that a good and reliable way to consistently make money (intraday) by going long is entering in undervalued zones and exiting when the price is overvalued/overbought. This can be true irrespective of strategy/setup/indicator. Fundamental analysis has methods to determine if the instrument is undervalued and a good buy. What are the methods to determine value using technical analysis? There are many ways as listed here: ([https://tinyurl.com/u6vyhp3a](link url)). Among them, I find 'support levels' and 'oversold indicators combined with divergence' to be of great help. In this strategy, I have used Donchian Channel to identify support and Brick Indicator to find oversold areas. Add to this the key ingredient of divergence.

Setup:
Entry: Look for a positive divergence on the Brick Indicator when it goes to -4 or below. Scan left (4-5 sessions) to ensure the price is near a support zone. Enter on a bounce of 2 bricks from the DC LB.
SL: 3 brick-back (i.e. 1 brick below DC LB).
Trail/Exit: I book half at 1:1. For the rest, I move SL to entry and trail until a negative divergence appears between price and Brick Indicator OR exit at 3:20 pm if none of that happens.

Observations:

1. A divergence happening when the Brick Indicator value is at least -4 or less (-6, -8, -10) is good. Any higher values (-2, 0 etc.) generally result in false signals.
2. The DC part is totally objective. Scanning divergence on BI is clear and objective in most instances. Rarely, it can appear subjective but regular practice makes it easier to interpret.
3. Using High-Low charts is recommended for Intraday as prices move fast and entry/SL orders can be entered in advance.

Conclusion:
This setup should work very well across instruments and timeframes. I would love to hear feedback/observations from anyone reading this thread and applying it to their trading instrument(s). I will keep posting my charts here regularly.