Nifty 2 Points - How to Trade?

Hello ,

I am interested in going ahead with scalping.

Am interested in only 2 points in NIFTY (one trade per day).

(ie 1 point in the nifty option) using Zerodha for big number of lots (200 - 300).

Would like to get some guidance from the experienced members.

1. Is it worthwhile to look at Oscillators (RSI / MACD / ROC etc)

(Cause only for a target of 2 points and a short time frame of a couple of minutes).

If yes , which would be the best indicators for this and approach to use them.

2. What would be a better way to get to capture those 2 points with more surety? (Other observations to consider and how - volume / time of day / buy-sell difference etc)

3.What would be a good system to place the orders?

(My thought For eg. when Nifty is at 5000 -
Place a SL-L order to buy at 5010 and immediately place an order to sell the entire at 5011). During the day if NIFTY does cross 5010 both orders will get execute and fetch the 1 point. Likewise do for a PUT option in case downward.
Either way my buy and sell must be executed.
Only flaw is that if it just touches 5010 and does not go to 5011 - that's a risk which must be taken and some experience or comments here may advise how to get the better of such situations.

Please suggest money management and safety techniques.

4. Is 300 - 500 lots a big number - to affect the pricing.

(Any limit to number of lots that can be traded by an individual?)

Looking forward to some good advise.


My thought process is such -

1. Options provide the highest multiplication factor than Cash / Future / Margin by broker etc.

2. Interested in scalping - as I find it difficult to "predict" direction of markets during the day or week or month.

Really impressed with credit spreads (understand options well also) but do not really think that will be able to get a good assessment of the movement in the month. Better to grasp what we can.

3. With just 1 point per day (getting .5% of return on capital translates to 12% per month which is phenomenal).
It sounds good in theory. But there are professional organizations doing similar stuff using completely automated systems with sophisticated algorithms running on state of the art hardware and zero latency connections to the exchanges and up-to-date order data feeds. Trying to compete against them using a web based platform will be like racing against Michael Schumacher in an F1 car at the peak of his powers while driving a Nano.

Another problem is the potential gain is very low and the potential losses would be huge. At 500 lots, even an 10 point down move would result in a 2.5 lk loss.

If you want to try it out, my suggestion would be to initally try with single lots to see how it works even though you might end losing some money due to brokerage and transaction costs.

What do you think Alchemist?