Page 143 - IMDR JOURNAL 2023-24

IMDR’s Journal of Management Development & Research 2023-24

Strategy: 1
Step:1 An optimized trading technique designed specifically for stock and futures markets involves using

the Relative Strength Index (RSI) over different periods to discover optimal entry points for long positions.
This method calls for a thorough evaluation of RSI values on monthly, weekly, and daily charts. Specifically,

the technique requires opening a long position only when certain criteria are met. First, the RSI on the monthly
chart exceeds the 60 thresholds, indicating strong bullish momentum over the long term; second, the RSI on

the weekly chart also exceeds the 60 mark, reinforcing sustained bullish sentiment over the medium term; and

finally, on the daily chart, the RSI shows support around the 60 level while exhibiting a clear upward trajectory.
This convergence of conditions acts as a signal to open long positions in equities and futures markets, using

the RSI as a dependable momentum indicator to catch favourable price movements.

Step:2 As part of the trading strategy designed for stock and futures markets, a secondary step
incorporating the Relative Strength Index (RSI) is discovered to improve the precision of long-side holdings.

This supplementary criterion provides an additional degree of confirmation to the entrance decision.
Specifically, the approach states that, in addition to the previously indicated RSI conditions—where the RSI

on the monthly and weekly charts exceeds 60—on the daily chart, the RSI should establish support around the
40 level while exhibiting a definite upward trend. This additional criterion allows a more consistent validation

of bullish momentum on a daily basis. The dual-step approach aims to fine-tune entry locations for long

positions in both equities and futures markets, using the inherent power of select stocks with strong upward
potential.

Strategy: 2
A dynamic trading method designed expressly for option trading, applicable to both individual stocks and

indices such as the Nifty and Bank Nifty, uses the Relative Strength Index (RSI) over various timeframes to

determine optimal times to begin long positions. This technique is distinguished by its multi-timeframe
approach, which improves accuracy and responsiveness to market changes. The approach plays out as follows:

To begin, traders monitor the RSI on the prospective stock's 1-hour chart, looking for it to exceed the 60
threshold, indicating bullish momentum over a short period of time. Traders also look at the option chart with

the associated strike price to ensure that the underlying stock and the option being traded are aligned.

Upon confirmation of an RSI movement over 60 on the 1-hour chart, traders transfer their attention to the 15-
minute timeframe on the option chart. They are waiting for the RSI to rise over 60, indicating a stronger bullish

momentum at a more granular level. When both requirements are met—above 60 RSI on the 1-hour chart of
the future stock and RSI crossing above 60 on the 15-minute chart of the option—traders enter a long position

by purchasing a Call Option (CE).
To limit risk and maximize returns, a trailing stop-loss mechanism is used. As the trade progresses favourably,

traders raise the stop-loss level to lock in profits while leaving room for potential future gains. This approach