"1-hour range breakout" strategy backtesting in Nifty ( 2022 ): Option Buyer's Complete Guide

Markets at 9:15, as we all know, during the first few minutes are very volatile and unpredictable and to play safe in the markets we should ignore the first few minutes.

The Strategy that I will share with you peeps works after the initial turmoil has settled down and the market has started taking its shape in the intra-day time frame. So, for those who believe more in investing, kindly read this article with a curious heart.

How to play safe?

• Wait for an hour, i.e. start looking at the markets after 10:00 am and after 10:15 ( one hour after market opening ), be ready to leap into the market. Keep all the instruments that you want to trade ready. In simple words, suppose Nifty is at 17000, keep 17100 CE / PE ( calls and puts ) and 16900 CE / PE in your watchlist so that you don't lose time executing the right trades.
• After 10:15, on the 5-minutes time frame, look for whether the price is breaking the 1-hour range. The "one-hour range" is just the high and low made by the markets during the period between 9:15 to 10:15 i.e. 1-hour. Whichever side the price is breaking out of the range, take the long/short trade on that side or be ready for whenever that happens. Simplifying that, long trade means buying CE ( call ), and short means buying PE ( put ). That's it trust me. Keep your Stop Loss limited to 10 points of the option price or according to your will, how much loss you can bear.
• Apart from this, keep an eye on whether there is some higher lows / lower highs formation anytime in the market after some gap-up / gap-down opening. You can learn about it from "Ayush Thakur" on youtube ( or anyone you like ) or I can explain you all over some youtube videos, just write in the comments.
• EXIT: Exit can be when you don't feel comfortable about holding the trade. Look for lost strength in whatever direction you are in. If markets are to reach some level it will show repeated efforts of reaching there, if you see any uncomfortable movement just exit. Secondly, if you have got like 1:2 and more just keep your exit orders ready, any sign or reversal / uncomfortable movement exit out.

That's it for the entire strategy, everyone. You can have multiple entries in a single day too but remember the time frame will be from 9:15 to 10:30 am or 1:00 to 3:00 pm because this is the time of good volume and liquidity i.e more people will be active in that period and you will get desired returns on your trades.

Now, Let's show you the backtesting results for 2022...

? green: Profit

?? yellow: breakeven ( minor loss or minor profit )

? red: Loss

• No trades will be there when the market didn't break the One hour range.

Trust me ;) saves you a lot of money as an option buyer.

December 2022

Profitability: 63%

Profitable days: 12

Loss days: 4

Breakeven days: 3

No trades: 3

Trading sessions: 22

November 2022

Profitability: 45%

Profitable days: 9

Loss days: 5

Breakeven days: 6

No trades: 1

Trading sessions: 21

October 2022

Profitability: 45%

Profitable days: 9

Loss days: 5

Breakeven days: 6

No trades: 1

Trading sessions: 21

September 2022

Profitability: 28%

Profitable days: 6

Loss days: 5

Breakeven days: 10

No trades: 1

Trading sessions: 22

August 2022

Profitability: 44%

Profitable days: 8

Loss days: 1

Breakeven days: 9

No trades: 2

Trading sessions: 20

July 2022

Profitability: 53%

Profitable days: 10

Loss days: 1

Breakeven days: 8

No trades: 2

Trading sessions: 21

June 2022

Profitability: 55%

Profitable days: 11

Loss days: 1

Breakeven days: 8

No trades: 2

Trading sessions: 22

May 2022

Profitability: 65%

Profitable days: 13

Loss days: 0

Breakeven days: 7

No trades: 1

Trading sessions: 21

April 2022

Profitability: 50%

Profitable days: 9

Loss days: 1

Breakeven days: 8

No trades: 1

Trading sessions: 19

March 2022

Profitability: 80%

Profitable days: 16

Loss days: 0

Breakeven days: 4

No trades: 1

Trading sessions: 21

February 2022

Profitability: 70%

Profitable days: 14

Loss days: 2

Breakeven days: 4

No trades: 0

Trading sessions: 20

January 2022

Profitability: 55%

Profitable days: 11

Loss days: 1

Breakeven days: 8

No trades: 0

Trading sessions: 20

Summary:

Something to add...

• You can increase profitability by learning more about the price action and observing the price movement of the option.
• Breakout entries can be made more accurate with the help of an option price chart.

I know you will have a lot of doubts,

and I am more than happy to answer them all.

Ask me over my Instagram: https://www.instagram.com/ikarmanya/

Thanks for reading ! Should I post it over medium too ?