1️⃣ What Is a Call Option and a Put Option?

Options are derivative contracts that give the holder a right, not an obligation, to buy or sell an underlying asset at a fixed price before or on expiry.

2️⃣ Call Option Explained (In Detail)

A Call Option gives the buyer the right to buy the underlying asset at a fixed price (called the strike price) before expiry.

📌 When Do Traders Buy Call Options?

• When they expect the market to move upward
• When momentum is strong
• When they want limited risk with high upside potential

📊 Call Option Outcomes

3️⃣ Put Option Explained (In Detail)

A Put Option gives the buyer the right to sell the underlying asset at a fixed price before expiry. It benefits when the market moves downward.

📌 When Do Traders Buy Put Options?

• When they expect market weakness
• When protecting an existing portfolio
• During high uncertainty or bearish sentiment

📊 Put Option Outcomes

4️⃣ Option Buyer vs Option Seller

5️⃣ Common Beginner Mistakes (Avoid These)

• Buying options only because they are cheap
• Ignoring expiry date
• Assuming direction alone guarantees profit
• Overtrading without understanding risk

1️⃣ What Is a Strike Price?

The strike price is the fixed price at which an option contract allows the buyer to buy (Call) or sell (Put) the underlying asset.

2️⃣ What Is Moneyness?

Moneyness describes the relationship between the current market price and the option’s strike price.

3️⃣ ITM, ATM & OTM – Call Options

Assume: NIFTY = 24,000

4️⃣ ITM, ATM & OTM – Put Options

Assume: NIFTY = 24,000

5️⃣ Why Beginners Lose Money with OTM Options

• OTM options have no intrinsic value
• Time decay reduces premium rapidly
• Small index movement does not help
• Requires perfect timing and momentum

6️⃣ Why Beginners Prefer ATM Options

7️⃣ Weekly vs Monthly Expiry

8️⃣ Simple Strike Selection Rules (Beginner)

• Trade only ATM options initially
• Avoid deep OTM strikes
• Prefer monthly expiry for learning
• Focus on one index only (NIFTY)

1️⃣ What Is a Payoff?

Payoff refers to the profit or loss an option position generates at expiry for different prices of the underlying asset.

Every option trade has:

• Defined maximum loss (for buyers)
• Defined or limited maximum profit (for sellers)
• A break-even point

2️⃣ Call Option Payoff (Buyer)

A Call option buyer profits when the market moves above the strike price by more than the premium paid.

3️⃣ Put Option Payoff (Buyer)

A Put option buyer profits when the market falls below the strike price by more than the premium paid.

4️⃣ Break-even Point Explained

The break-even point is the price at which the option trade results in neither profit nor loss.

5️⃣ Risk vs Reward Analysis

Before entering any trade, you must compare the potential reward against the maximum possible loss.

6️⃣ Common Beginner Mistakes

• Entering trades without calculating max loss
• Ignoring break-even level
• Risking large capital for small potential gain
• Assuming market will “surely move”

1️⃣ What Is an Option Chain?

The Option Chain is a table that displays all available option contracts for a particular underlying (like NIFTY) across different strike prices and expiries.

It shows where traders are placing money, not opinions.

• Left side → Call Options (CE)
• Right side → Put Options (PE)
• Center → Strike Prices

2️⃣ Open Interest (OI) Explained

Open Interest (OI) is the total number of outstanding option contracts that are currently open (not squared off).

📌 What OI Tells You

• High OI = Strong interest at that strike
• Low OI = Weak participation
• OI builds where traders expect market to react

3️⃣ Change in Open Interest (Change in OI)

Change in OI shows whether new positions are being created or old positions are being closed during the day.

4️⃣ Support Levels from Put OI

Put option writers benefit when the market stays above their strike. Therefore, high Put OI often indicates a support zone.

• High PE OI = Traders defending downside
• Put writers lose money if market falls below this level

5️⃣ Resistance Levels from Call OI

Call option writers benefit when the market stays below their strike. High Call OI usually represents a resistance zone.

• High CE OI = Traders betting market won’t cross this level
• Call writers face loss above resistance

6️⃣ OI Shift – Early Trend Signal

When OI shifts from one strike to another, it signals changing expectations.

• Rising CE OI above price = resistance moving up
• Rising PE OI below price = support strengthening

7️⃣ Common Beginner Mistakes

• Looking only at premium, not OI
• Ignoring Change in OI
• Assuming support/resistance will never break
• Trading without context of price action

1️⃣ What Are Option Greeks?

Option Greeks are measures that explain how an option’s premium reacts to different factors such as price movement, time, and volatility.

• Delta → Price movement effect
• Theta → Time decay effect
• Vega → Volatility effect
• Gamma → Speed of delta change

2️⃣ Delta – Price Movement Impact

Delta shows how much an option’s premium changes when the underlying price moves by 1 point.

📌 Delta Range

• Call Option Delta: 0 to +1
• Put Option Delta: 0 to -1

3️⃣ Theta – Time Decay (Silent Killer)

Theta represents how much option premium reduces with the passage of time, assuming all else remains constant.

• Theta increases as expiry approaches
• ATM options lose value fastest
• Buyers suffer, sellers benefit

4️⃣ Vega – Volatility Effect

Vega measures how much option premium changes when market volatility changes.

• High volatility = expensive options
• Low volatility = cheap options
• Volatility crush reduces premium fast

5️⃣ Gamma – Acceleration of Delta

Gamma measures how fast delta changes when the underlying price moves.

• Gamma is highest for ATM options
• Near expiry → Gamma becomes dangerous
• Fast moves cause sharp premium changes

6️⃣ Why Options Lose Value (Even If You’re Right)

1️⃣ Why Weekly Revision Is Mandatory

Most beginners fail not because they lack information, but because they move forward without fully understanding the foundation.

2️⃣ What You Have Learned in Week 1 (Day 1–6)

3️⃣ Connecting All Concepts (Big Picture)

• Strike price decides probability
• Delta decides how fast premium moves
• Theta decides daily loss
• OI decides support and resistance
• Volatility decides option pricing

4️⃣ Write Your Own Notes (Most Important Task)

Writing forces clarity. If you can explain a concept in your own words, you truly understand it.

1. Why do option buyers lose money over time?
2. Why are ATM options safer than OTM?
3. Why does premium fall even when market is flat?
4. What does high OI at a strike mean?
5. What is the maximum loss in any option buy trade?

What Changes in Week 2?

🎯 Goal of Week 2

• Understand how premiums react intraday
• See theta decay in real time
• Observe OI shifts with price movement
• Practice discipline through paper trading

1️⃣ What Is Time Decay?

Time Decay (Theta) is the gradual reduction in an option’s premium as time passes, assuming all other factors remain constant.

2️⃣ Why Options Lose Value Every Day

• Options have a fixed expiry date
• As expiry approaches, probability reduces
• Less time = less chance of profitable movement

3️⃣ Theta Is Not Linear (It Accelerates)

Time decay does not reduce option value evenly. It accelerates as expiry comes closer.

4️⃣ Why Holding Weekly Options Is Dangerous

Weekly options have very little time value. Any delay or sideways market action results in rapid premium decay.

• Weekly options punish waiting
• Sideways markets destroy premiums
• Small pullbacks wipe out gains

5️⃣ Monthly vs Weekly – Time Decay Comparison

6️⃣ Why Beginners Fall into the Theta Trap

• Weekly options look cheap
• Quick profit stories attract greed
• Ignoring time decay
• Holding and hoping

7️⃣ How to Respect Time Decay (Beginner Rules)

• Prefer monthly options while learning
• Avoid holding weekly options overnight
• Exit quickly if move does not come
• Do not wait for “recovery”

1️⃣ What Is Implied Volatility (IV)?

Implied Volatility (IV) represents the market’s expectation of how much the underlying price may move in the future. It is not historical movement — it is expected uncertainty.

2️⃣ High IV vs Low IV

3️⃣ Why Buying Options in Low IV Is Better

When IV is low, options are cheaper because the market does not expect large movement. If movement suddenly increases, premium expands.

• Low IV = lower premium risk
• IV expansion helps buyers
• Best phase to plan option buying

4️⃣ Why Selling Options in High IV Is Logical

High IV means options are overpriced due to fear or events. Once the event passes, IV falls sharply — this is called IV Crush.

• High IV favors option sellers
• IV crush reduces premium fast
• Sellers earn from fear decay

5️⃣ What Is IV Crush?

IV Crush occurs when uncertainty disappears suddenly, causing option premiums to fall sharply.

• Common after results, budget, policy events
• Option buyers suffer the most
• Direction may be right, profit still negative

6️⃣ Common Beginner Mistakes with IV

• Buying options just before big events
• Ignoring IV while selecting strikes
• Thinking high premium means high profit
• Confusing volatility with direction

7️⃣ Simple IV Rules (Beginner-Friendly)

• Prefer buying options in low IV zones
• Avoid fresh buying during IV spikes
• Be cautious near major events
• Always check IV before entering a trade

1️⃣ Why Instrument Selection Is Critical

Not all options behave the same. Liquidity, volatility, manipulation risk, and spreads differ widely between index options and stock options.

2️⃣ Trade ONLY Index Options

As a beginner, you should trade only the following index options:

• NIFTY – Broad market index
• BANKNIFTY – Banking sector index
• FINNIFTY – Financial services index

3️⃣ Why NIFTY Is Best for Beginners

4️⃣ BANKNIFTY & FINNIFTY – Higher Volatility

BANKNIFTY and FINNIFTY move faster than NIFTY. This increases both opportunity and risk.

5️⃣ ❌ Why Beginners Must Avoid Stock Options

• Low liquidity in many strikes
• Wide bid–ask spreads
• Sudden operator-driven moves
• Corporate news risk (results, deals, bans)
• Unpredictable volatility spikes

6️⃣ Cash Settlement Advantage (Index Options)

Index options are cash-settled. There is no risk of physical delivery.

• No surprise delivery obligations
• No stock-specific risk
• Cleaner expiry behavior

7️⃣ Simple Index Selection Rules

• Start with NIFTY only
• Trade one index at a time
• Avoid switching instruments daily
• Ignore “hot stock” tips

1️⃣ Why Entry Rules Are Mandatory

Entering a trade without rules is equivalent to guessing. Professional traders do not predict — they wait for confirmation.

2️⃣ Trend Identification (First Filter)

Never trade without knowing the market trend. Trend tells you which side has higher probability.

📌 Simple Trend Rules (Beginner-Friendly)

3️⃣ Support & Resistance (Location Matters)

Entry should happen near important price levels, not in the middle of nowhere.

📌 How to Identify Support & Resistance

• Previous day high / low
• Option chain highest OI levels
• Round numbers (24,000 / 24,200 etc.)

4️⃣ Entry Confirmation (Final Trigger)

Confirmation means waiting for proof that buyers or sellers are actually entering the market.

📌 Simple Confirmation Signals

• Strong candle closing near high (for Calls)
• Rejection wick from support or resistance
• Premium holding above VWAP (optional)

5️⃣ Entry Checklist (Must Say YES to All)

• ☑ Trend is clear
• ☑ Entry near support or resistance
• ☑ Confirmation candle received
• ☑ Risk and max loss calculated
• ☑ Trade aligns with option chain levels

6️⃣ Common Beginner Entry Mistakes

• Entering because price is moving fast
• Buying at resistance in excitement
• Entering without knowing support
• Trading every candle
• Revenge entries after loss

1️⃣ Why Stop Loss Is Mandatory

A Stop Loss (SL) is a predefined exit point where you accept a small loss to avoid a big one.

2️⃣ Fixed Stop Loss vs Percentage Stop Loss

3️⃣ Max Loss per Trade: 1–2% Rule

Professional traders never risk large portions of capital on a single trade. The standard rule is 1–2% of total capital per trade.

4️⃣ Position Sizing (Most Ignored Skill)

Position sizing decides how many lots you should trade so that your loss stays within limits.

📌 Position Size Formula

Position Size = Max Loss Allowed ÷ Loss per Lot
    

5️⃣ What Happens If You Ignore Position Sizing

6️⃣ Where to Place Stop Loss (Practical Rules)

• Below recent support (for Calls)
• Above recent resistance (for Puts)
• Below confirmation candle low
• Never move SL away after entry

7️⃣ Common Beginner Mistakes

• No stop loss
• Increasing quantity after loss
• Shifting SL hoping for reversal
• Risking more than 5% per trade

1️⃣ Why Paper Trading Is Mandatory

Paper trading allows you to experience real market behavior without financial damage. Mistakes are learning tools here — not losses.

2️⃣ Non-Negotiable Paper Trading Rules

• ✔ Only 1 trade per day
• ✔ Trade only ATM CE or ATM PE
• ✔ Only one index (prefer NIFTY)
• ✔ Fixed stop loss and fixed target
• ✔ No revenge trades

3️⃣ Standard Trade Setup (Same Every Day)

4️⃣ Practical Example – ATM Call Trade

5️⃣ Practical Example – ATM Put Trade

6️⃣ Trade Management Rules

• Do not move stop loss
• Do not book partial profits
• Do not re-enter same day
• Exit fully at SL or target

7️⃣ Trading Journal (Most Important)

After every paper trade, write:

• Why you entered
• Trend & level used
• SL & target
• Result (Win / Loss)
• Rule followed or broken

1️⃣ Why a Trade Journal Is Mandatory

Every trader makes mistakes. The difference between losing traders and consistent traders is simple: one writes mistakes down, the other repeats them.

2️⃣ What Exactly to Write After Every Trade

Your journal must answer three core questions:

3️⃣ Real-Life Journal Example – Disciplined Trade

4️⃣ Real-Life Journal Example – Undisciplined Trade

5️⃣ Real-Life Journal Example – Rule Break

6️⃣ How Journaling Builds Discipline

• Forces accountability
• Reduces impulsive trades
• Improves patience
• Reveals emotional triggers

7️⃣ Simple Trade Journal Format (Use This)

Date:
Index:
Strike:
Entry Price:
Stop Loss:
Target:

Entry Reason:
Exit Reason:
Emotion Felt:
Rule Followed (Yes/No):
Lesson Learned:
    

1️⃣ What Is a Trading Strategy?

A trading strategy is simply a structured response to market conditions. It answers three questions:

• What is the market likely to do?
• How fast can it move?
• How much risk am I willing to take?

2️⃣ Directional vs Non-Directional Strategies

3️⃣ Directional Strategy Logic (When You Expect a Move)

Directional strategies are used when you expect a clear upward or downward move in the market.

📌 Typical Directional Actions

• Buy Call → Expect market to rise
• Buy Put → Expect market to fall

4️⃣ Non-Directional Strategy Logic (When Market Is Range-Bound)

Non-directional strategies are used when you expect the market to stay within a range and not move strongly.

📌 Typical Non-Directional Actions

• Sell Call & Put (range betting)
• Benefit from time decay (theta)

5️⃣ When to Buy Options

Buying options makes sense only when multiple conditions align.

• Clear trend (up or down)
• Low or reasonable IV
• Sufficient time to expiry
• Strong entry confirmation

6️⃣ When to Sell Options

Selling options makes sense when you expect no strong movement and time decay to work in your favor.

• Market is sideways
• IV is high
• Event risk is reducing
• You have defined risk (hedged)

7️⃣ Buy vs Sell – Simple Decision Table

8️⃣ Common Beginner Mistakes

• Buying options in sideways market
• Selling options without understanding risk
• Using one strategy in all conditions
• Ignoring IV and time decay

1️⃣ The Truth About Buying Options

Buying options works only on trend days. In sideways markets, option buyers slowly bleed due to time decay (Theta) and volatility crush.

2️⃣ How to Identify a Trend Day (MOST IMPORTANT)

A trend day means the market is likely to move in one direction for a sustained period.

📌 Trend Day Checklist

• Market opens above previous day high → Bullish bias
• Market opens below previous day low → Bearish bias
• Strong candles with little retracement
• Higher highs & higher lows (uptrend)
• Lower highs & lower lows (downtrend)

3️⃣ How to Identify a Sideways Market (AVOID BUYING)

Sideways markets destroy option buyers silently. Learning to identify them will save most of your capital.

📌 Sideways Market Signs

• Price stuck between two levels
• Frequent up-down movement with no follow-through
• Long wicks on both sides of candles
• Option premiums falling despite movement
• Put & Call OI heavy on both sides (range-bound)

4️⃣ Buy Call (CE) – Proper Rules

Buy Call options only when the market shows clear bullish strength.

📌 CE Buying Conditions

• Overall trend = Up
• Price above support / VWAP
• Strong bullish candle confirmation
• ATM CE only
• Low or moderate IV

5️⃣ Buy Put (PE) – Proper Rules

Buy Put options only when the market shows clear bearish strength.

📌 PE Buying Conditions

• Overall trend = Down
• Price below resistance
• Strong bearish candle confirmation
• ATM PE only
• No sudden bounce signs

6️⃣ Why Tight Stop Loss Is Mandatory

Option buying fails because traders give too much room to losses.

• Use 20–25% SL on premium
• Exit immediately if SL hits
• Never widen stop loss

7️⃣ Pre-Entry Checklist (ALL MUST BE YES)

• ☑ Market is trending
• ☑ Not a sideways range
• ☑ ATM strike selected
• ☑ IV not extremely high
• ☑ SL & target fixed before entry
• ☑ Risk ≤ 1–2% capital

8️⃣ Common Beginner Mistakes

• Buying options in sideways market
• Buying far OTM options
• Holding weekly options too long
• Ignoring IV & time decay
• Entering out of excitement

1️⃣ What Is a Bull Call Spread?

A Bull Call Spread is a directional strategy used when you expect the market to move up, but not explosively.

It involves:

• ✔ Buying one ATM Call option
• ✔ Selling one OTM Call option (same expiry)

2️⃣ Why Use Bull Call Spread Instead of Buying CE?

3️⃣ Bull Call Spread Structure (Practical)

• Market below 24,000 → Max loss = ₹60
• Market above 24,200 → Max profit = ₹140

4️⃣ Payoff Logic (Understand This Clearly)

📌 Maximum Loss

Net premium paid = ₹60 → This is the maximum loss.

📌 Maximum Profit

Difference between strikes − net premium
= (24,200 − 24,000) − 60 = ₹140

5️⃣ When to Use Bull Call Spread

• You are bullish, but not expecting a big breakout
• IV is moderate or slightly high
• You want reduced theta damage
• You prefer controlled risk

6️⃣ When NOT to Use Bull Call Spread

• Strong breakout expected (use naked call)
• Market is sideways (use non-directional)
• Very low volatility
• Expiry day gambling

7️⃣ Why Bull Call Spread Has Higher Probability

• Lower break-even point
• Partial profit even with small move
• Time decay impact is reduced
• OTM Call sold acts as hedge

8️⃣ Common Beginner Mistakes

• Using spread in sideways market
• Choosing very far strikes
• Entering without trend confirmation
• Ignoring max profit cap

1️⃣ What Is a Bear Put Spread?

A Bear Put Spread is a directional bearish strategy. It profits when the market moves downward, but limits loss if the market reverses.

The strategy involves:

• ✔ Buying one ATM Put option
• ✔ Selling one OTM Put option (same expiry)

2️⃣ Why Use Bear Put Spread Instead of Buying PE?

3️⃣ Bear Put Spread Structure (Practical)

• Market above 24,000 → Max loss = ₹60
• Market below 23,800 → Max profit = ₹140

4️⃣ Payoff Logic (Understand Clearly)

📌 Maximum Loss

Net premium paid = ₹60 → this is the maximum loss.

📌 Maximum Profit

Difference between strikes − net premium
= (24,000 − 23,800) − 60 = ₹140

5️⃣ When to Use Bear Put Spread

• Clear downtrend
• Lower highs & lower lows
• Breakdown below support
• Moderate or slightly high IV

6️⃣ When NOT to Use Bear Put Spread

• Market is sideways
• Strong bounce expected
• Very low volatility
• Expiry-day noise

7️⃣ Why Bear Put Spread Controls Risk Better

• Lower premium outflow
• Reduced theta damage
• Defined max loss
• No emotional SL shifting

8️⃣ Common Beginner Mistakes

• Using spread without downtrend confirmation
• Choosing far strikes
• Holding till expiry blindly
• Ignoring max profit cap

1️⃣ What Is a Range-bound Market?

A range-bound market is one where price oscillates between a clear support and resistance without making higher highs or lower lows.

2️⃣ How to Identify a Sideways Market (Practical Checklist)

📌 Price Action Signs

• Price moving between two levels for hours
• No higher high or lower low
• Frequent reversals from same zone
• Long upper and lower wicks

📌 Option-based Signs

• Both CE and PE premiums falling together
• High Call OI above price AND high Put OI below price
• IV slowly decreasing during the day

3️⃣ Why Buying CE/PE Fails in Range-bound Markets

• No follow-through after breakouts
• Time decay eats premium every minute
• IV slowly drops (IV crush)
• False moves trap emotional entries

4️⃣ What Works Best in Range-bound Markets

When the market is sideways, the advantage shifts from buyers to option sellers. The goal is to earn from time decay.

• Sell volatility
• Define risk using spreads
• Let time work in your favor

5️⃣ Introduction to Iron Condor (Conceptual)

An Iron Condor is a non-directional strategy designed to profit when the market stays within a range.

📌 Basic Structure

• Sell one OTM Call
• Buy one farther OTM Call (protection)
• Sell one OTM Put
• Buy one farther OTM Put (protection)

6️⃣ How Iron Condor Makes Money

• Market stays between sold strikes
• Time decay reduces option value
• IV falls, helping sellers

7️⃣ When NOT to Use Iron Condor

• Strong trend day
• Major news or event day
• Sudden volatility expansion
• Near breakout conditions

8️⃣ Simple Decision Flow (Use Daily)

Is market trending?
→ YES → Directional strategies (Buy / Spreads)
→ NO  → Range strategies (Iron Condor)
    

1️⃣ The Truth About Strategy Selection

Strategy selection is NOT about:

• ❌ Which strategy looks profitable
• ❌ Which strategy worked yesterday
• ❌ Which strategy someone recommended

Strategy selection IS about:

• ✔ Current market behavior
• ✔ Volatility environment
• ✔ Time available before expiry

2️⃣ Correct Order to Read the Market (Step-by-Step)

Always read the market in this exact order:

1. Trend (Direction or No Direction)
2. Implied Volatility (IV)
3. Time to Expiry

3️⃣ Strategy Selection Based on Trend

4️⃣ Strategy Selection Based on Implied Volatility (IV)

5️⃣ Strategy Selection Based on Time to Expiry

6️⃣ Wrong Approaches Traders Use in Real Market

❌ Mistake 1: Strategy First, Market Later

“I like Iron Condor, so I will use it today” → Market trends → Heavy loss

❌ Mistake 2: Ignoring IV

Buying options just because market is moving, ignoring the fact that IV is extremely high.

❌ Mistake 3: Expiry-Day Gambling

Choosing strategies only because premium looks cheap.

7️⃣ What Kind of Traders Make These Mistakes?

8️⃣ Daily Strategy Selection Checklist

• ☑ Is market trending or sideways?
• ☑ Is IV high or low?
• ☑ How many days to expiry?
• ☑ Does strategy benefit from this condition?
• ☑ Is risk predefined?

1️⃣ Why Weekly Review Is Mandatory

Trading results are a mirror of behavior. If you don’t review, the market will keep teaching the same lesson — repeatedly and painfully.

2️⃣ What Exactly to Analyze in Paper Trades

Do NOT analyze profit or loss only. Analyze the process.

3️⃣ Step-by-Step Weekly Review Process

1. List all paper trades taken during the week
2. Mark each trade as Rule-Followed or Rule-Broken
3. Ignore P/L initially
4. Group similar mistakes together
5. Write 1 corrective rule for next week

4️⃣ Weekly Review Example – Disciplined Week

5️⃣ Weekly Review Example – Undisciplined Week

6️⃣ Common Mistakes Found During Weekly Reviews

• Trading every day regardless of setup
• Ignoring sideways market signals
• Shifting stop loss
• Changing strategy mid-trade
• Letting emotions decide exits

7️⃣ Convert Mistakes into Rules

8️⃣ Must-Answer Weekly Review Questions

• Which trade should I NOT have taken?
• Which rule saved me money?
• What emotion caused the biggest mistake?
• What one thing will I improve next week?

1️⃣ What Is Advanced Risk Management?

Basic risk management protects a single trade. Advanced risk management protects your account over time.

2️⃣ Drawdown Control (Most Important Rule)

Drawdown is the decline from your peak capital to the lowest point during losses.

📌 Safe Drawdown Limits

• Beginner: Max 5–7%
• Intermediate: Max 8–10%
• Above this → STOP trading

3️⃣ Daily Loss Limit (Circuit Breaker)

A daily loss limit is a predefined amount after which you stop trading for the day — no matter what.

📌 Recommended Daily Loss Limits

4️⃣ Weekly Capital Protection Rules

Weekly rules prevent small daily mistakes from turning into account-killing weeks.

📌 Weekly Protection Rules

• Max weekly loss: 3–5% of capital
• 3 consecutive losing days → Stop trading
• Review before next week starts

5️⃣ How to Handle Losing Streaks

Losing streaks are normal. How you respond decides survival.

6️⃣ Capital Reduction Rule (Professional Secret)

When drawdown increases, professionals reduce risk automatically.

📌 Rule

• After 5% drawdown → Reduce position size by 50%
• After recovery → Gradually restore size

7️⃣ Common Advanced Risk Management Mistakes

• No daily loss limit
• Trying to recover losses same day
• Ignoring drawdown percentage
• Trading emotionally after losses
• Confusing confidence with aggression

8️⃣ Master Risk Control System (Use This)

Per Trade Risk: 1–2%
Daily Loss Limit: 2–3%
Weekly Loss Limit: 3–5%
Max Drawdown: 7–10%
After Drawdown: Reduce size
    

1️⃣ Expiry Day Reality (Truth First)

On expiry day:

• Options lose value very fast
• Price moves become sharp and unpredictable
• Small index moves cause large option price changes
• Overtrading temptation is highest

2️⃣ Gamma Effect (Why Expiry Is Explosive)

Gamma measures how fast delta changes. On expiry day, gamma is at its highest.

3️⃣ Who Should AVOID Expiry Day Trading

• Beginners
• Emotionally reactive traders
• Traders without strict SL discipline
• Traders trying to recover losses

4️⃣ Only Allowed Style on Expiry: Scalping

Holding trades for long duration on expiry day is extremely dangerous.

📌 What Scalping Means

• Small targets
• Quick exits
• No hope-based holding
• In and out fast

5️⃣ Expiry Day Scalping Rules

• ☑ Trade only ATM options
• ☑ Use very small quantity
• ☑ Target: 5–15 points only
• ☑ Stop loss: same as target
• ☑ Exit immediately on SL hit
• ☑ Max 2–3 trades only

6️⃣ Overtrading – Biggest Expiry Killer

Expiry day creates the illusion that:

• “Next move will be big”
• “Premium is cheap”
• “Just one more trade”

7️⃣ Wrong Approaches on Expiry Day

• Buying far OTM options
• Holding positions till last hour
• No stop loss
• Revenge trading
• Watching premium instead of index

8️⃣ Safe Expiry Day Plan (Beginner Version)

Option 1: Do not trade
Option 2: 1–2 small scalps only
Option 3: Observe market behavior
    

1️⃣ Why Trade Management Is Critical

Two traders enter the same trade at the same price. One exits emotionally, the other follows rules. Their results are completely different.

2️⃣ Partial Profit Booking (Lock Profits Early)

Partial profit booking means exiting a portion of your position once the trade moves in your favor. This reduces emotional pressure and protects capital.

📌 Why Partial Booking Works

• Reduces fear of losing open profits
• Covers initial risk
• Allows remaining position to run freely

3️⃣ Common Mistakes in Partial Profit Booking

• Booking everything too early
• Never booking partials due to greed
• Random booking without predefined levels

4️⃣ Trailing Stop Loss (Protect Gains)

A trailing stop loss moves in the direction of your profit, locking gains while keeping downside limited.

📌 Trailing SL Methods

• Fixed point trailing (e.g., trail by 20 points)
• Previous candle low/high
• Break-even trailing after partial booking

5️⃣ Wrong Trailing SL Approaches

• Trailing SL too tightly → early exit
• Not trailing at all → profit turns into loss
• Moving SL backward

6️⃣ Let Winners Run (Professional Mindset)

Most traders cut profits early due to fear. Professionals let winners run with protection.

📌 How to Let Winners Run Safely

• Book partial profits
• Trail SL logically
• Ignore small pullbacks
• Exit only when structure breaks

7️⃣ Complete Trade Management Flow

Entry → Initial SL
↓
Price moves in favor
↓
Partial booking
↓
SL to break-even
↓
Trail SL
↓
Exit on SL or target
    

8️⃣ Common Trade Management Mistakes

• Exiting due to fear, not logic
• Watching P&L instead of price
• Re-entering immediately after exit
• Not having exit rules

1️⃣ Why Psychology Decides Results

The market constantly creates uncertainty. Your brain is wired to avoid pain and chase pleasure — which is the exact opposite of profitable trading behavior.

2️⃣ Fear (Cuts Winners, Freezes Decisions)

Fear appears after losses or during open profits. It makes traders exit good trades too early or avoid valid setups completely.

📌 Signs of Fear

• Booking profit too early
• Skipping valid trades
• Watching P&L instead of price

✅ How to Control Fear

• Use partial profit booking
• Trail stop loss logically
• Risk only 1–2% per trade

3️⃣ Greed (Turns Wins into Losses)

Greed appears after winning trades. It convinces traders to ignore exits, add quantity, or hold without logic.

📌 Signs of Greed

• Not booking profits
• Adding quantity mid-trade
• Ignoring trailing SL

✅ How to Control Greed

• Define targets before entry
• Use partial exits
• Respect trailing stop loss

4️⃣ Overconfidence (Silent Account Killer)

Overconfidence usually comes after a winning streak. It leads traders to believe they can’t be wrong.

📌 Signs of Overconfidence

• Increasing quantity without reason
• Breaking risk rules
• Trading without confirmation

✅ How to Control Overconfidence

• Keep position size constant
• Follow same rules after wins
• Review trades weekly

5️⃣ Revenge Trading (Emotion in Disguise)

Revenge trading happens after a loss. The goal becomes recovering money, not following logic.

📌 Signs of Revenge Trading

• Immediate re-entry after loss
• Increasing quantity to recover
• Ignoring strategy selection

✅ How to Control Revenge Trading

• Daily loss limit
• Mandatory break after loss
• Shut platform when limit hits

6️⃣ Emotion → Behavior → Outcome Map

7️⃣ Psychology Control System (Use This)

• Fixed risk per trade
• Daily & weekly loss limits
• Predefined entry & exit rules
• Mandatory breaks after losses
• Weekly review & journaling

8️⃣ Self-Diagnosis (Be Honest)

• Which emotion caused my biggest loss?
• Do I break rules after wins or losses?
• Do I trade to follow process or recover money?
• What emotion appears most often?

1️⃣ Trading Without Stop Loss (Account Killer)

Not using a stop loss is equivalent to trading blind. A stop loss is not optional — it is a survival tool.

📌 Why Traders Avoid SL

• Hope that price will come back
• Fear of booking loss
• Overconfidence in analysis

✅ Correct Practice

• SL decided before entry
• Max 20–25% premium SL for buying
• SL never widened

2️⃣ Trading with High Quantity (Greed Disguised as Confidence)

High quantity magnifies emotions. Even a good setup fails when size is too big.

📌 Why Traders Increase Quantity

• Recover previous loss
• After a winning streak
• Influenced by others’ P&L screenshots

✅ Correct Practice

• Risk fixed at 1–2% of capital
• Same quantity for all trades
• Increase size only after long consistency

3️⃣ Tip-Based Trading (Borrowed Confidence)

Tip-based trading is trading without ownership. You enter with confidence but exit with confusion.

📌 Why Tips Are Dangerous

• No clarity on entry logic
• No idea of stop loss
• No understanding of time horizon
• Emotional exit decisions

✅ Correct Practice

• Trade only setups you understand
• If logic isn’t clear → no trade
• Build your own decision framework

4️⃣ Other Common Real-Market Mistakes

• Overtrading out of boredom
• Trading without a plan
• Changing strategy mid-trade
• Ignoring market condition
• Watching P&L instead of price

5️⃣ Mistake → Consequence Map

6️⃣ Who Usually Makes These Mistakes?

• Beginners chasing fast money
• Intermediate traders after losses
• Overconfident traders after wins
• Emotionally stressed traders

7️⃣ Mistake Prevention System (Use Daily)

• ☑ SL fixed before entry
• ☑ Quantity pre-calculated
• ☑ Trade based on own logic
• ☑ Market condition identified
• ☑ Daily loss limit defined

1️⃣ What Is a Trading System?

A trading system is a fixed set of rules that answers:

• When to enter
• When to exit
• How much to risk

2️⃣ Entry Rules (WHEN You Are Allowed to Trade)

Entry rules define the exact market conditions required before you place a trade.

📌 Core Entry Conditions

• Market type identified (Trend / Range)
• Strategy matches market condition
• Clear price action confirmation
• ATM strike only
• IV condition acceptable

3️⃣ Exit Rules (HOW You Exit, Not Emotionally)

Exit rules protect profits and control losses. They must be defined before entry.

📌 Loss Exit Rules

• Fixed SL: 20–25% of option premium
• SL never moved backward
• Immediate exit on SL hit

📌 Profit Exit Rules

• Partial profit at 30–40%
• SL moved to break-even after partial
• Trailing SL using candle structure

4️⃣ Risk Rules (ACCOUNT PROTECTION LAYER)

Risk rules protect you from bad days, bad weeks, and emotional decisions.

📌 Per-Trade Risk

• Risk only 1–2% of total capital per trade
• Quantity calculated using SL

📌 Daily & Weekly Risk

• Daily loss limit: 2–3%
• Weekly loss limit: 4–5%
• Stop trading when limit is hit

5️⃣ Complete Trading System Flow

Market Open
↓
Identify Market Type
↓
Check Strategy Fit
↓
Entry Conditions Met?
→ NO → No Trade
→ YES → Calculate Risk
↓
Enter Trade
↓
Manage Trade (Partial + Trailing SL)
↓
Exit → Journal
    

6️⃣ Common Mistakes While Building a System

• Too many indicators
• Too many strategies
• No written rules
• Changing system every week
• Optimizing for profits instead of discipline

7️⃣ Who This System Works For

• Traders who want consistency
• People with limited screen time
• Those tired of emotional losses
• Traders aiming long-term survival

1️⃣ What Is Manual Backtesting?

Manual backtesting means replaying historical market data and applying your trading rules exactly as if the market were live.

2️⃣ Why Manual Backtesting Is Mandatory

• Builds trust in your rules
• Shows real drawdowns
• Reveals emotional pressure points
• Prevents strategy-hopping

3️⃣ Backtesting Setup (Before You Start)

📌 Tools Needed

• TradingView / chart platform
• 15-min or 5-min chart (same as live)
• Your written trading system
• Pen & notebook / Excel

📌 Rules

• No hindsight bias
• Follow rules exactly
• One strategy only
• No skipping losses

4️⃣ Step-by-Step Manual Backtesting Process

1. Open chart → Go back 10 trading days
2. Hide future candles (scroll slowly)
3. Identify market type (trend / range)
4. Apply your entry rules
5. Mark entry, SL, target
6. Simulate trade candle by candle
7. Note exit (SL / target / trail)
8. Record result

5️⃣ Sample Manual Backtest Trade

6️⃣ What Data You MUST Record

7️⃣ How to Measure Accuracy (Correct Way)

Accuracy alone does NOT define profitability, but it helps understand system behavior.

📌 Accuracy Formula

Accuracy (%) = (Winning Trades ÷ Total Trades) × 100
    

8️⃣ Metrics That Actually Matter

• Average loss size
• Average win size
• Maximum losing streak
• Drawdown
• Rule-follow rate

9️⃣ Common Manual Backtesting Mistakes

• Ignoring losing trades
• Changing rules mid-test
• Looking ahead
• Testing too few days
• Optimizing instead of validating

1️⃣ What Is Live Simulation?

Live simulation means trading in real market hours, on real charts, with real emotions — but without risking real money. Every rule, limit, and behavior must match real trading.

2️⃣ Non-Negotiable Rules for Live Simulation

• ☑ Fixed capital (example: ₹1,00,000)
• ☑ Same quantity every trade
• ☑ Same risk per trade (1–2%)
• ☑ Same daily loss limit
• ☑ Same strategies only
• ☑ No rule bending

3️⃣ Daily Live Simulation Routine

📌 Before Market (Mandatory)

• Read your trading system
• Decide allowed strategies for the day
• Fix max loss for the day
• Decide max trades (1–2 only)

📌 During Market

• Wait for setup patiently
• Execute only if all rules match
• No impulse trades
• No quantity change

📌 After Market

• Journal trade details
• Note emotions felt
• Mark rule-followed or rule-broken

4️⃣ Sample Live Simulation Trade

5️⃣ How to Handle Losses During Simulation

Losses during simulation must be treated exactly like real losses.

• Accept SL without argument
• No immediate re-entry
• If daily loss limit hits → stop trading
• Write emotional response

6️⃣ Common Ways Traders Cheat in Simulation

• Increasing quantity “because it’s paper”
• Ignoring SL because money isn’t real
• Taking extra trades
• Skipping journaling

7️⃣ How to Evaluate Live Simulation Performance

8️⃣ When Is Live Simulation Successful?

• Rules followed for 10–15 sessions
• No revenge trading
• Daily loss limits respected
• Stable emotions during wins & losses

1️⃣ The Only Question That Matters

Ask yourself honestly:

2️⃣ Condition #1 – You Follow Stop Loss (Non-Negotiable)

Stop loss discipline is the foundation of live trading. If you hesitate, widen, or cancel SL — you are not ready.

📌 Ready If:

• You place SL before or immediately after entry
• You exit instantly when SL hits
• You never move SL backward

❌ Not Ready If:

• You “wait a little more” after SL
• You remove SL hoping price returns
• You average losing positions

3️⃣ Condition #2 – You Don’t Overtrade

Overtrading is emotional leakage. Professionals trade less, not more.

📌 Ready If:

• You wait patiently for valid setups
• You stop trading after daily loss limit
• You take 1–2 trades maximum per day

❌ Not Ready If:

• You trade out of boredom
• You re-enter immediately after a loss
• You increase frequency to “recover” money

4️⃣ Condition #3 – You Accept Losses Calmly

Losses are not a sign of failure. Inability to accept losses is.

📌 Ready If:

• You accept SL without anger
• You don’t try to recover losses the same day
• You judge trades by rules, not P&L

❌ Not Ready If:

• Losses affect your mood heavily
• You feel the urge to “get it back”
• You break rules after a loss

5️⃣ Self-Assessment Scorecard (Be Honest)

6️⃣ Final Decision Rule

If ALL conditions = YES
→ You may start live trading with small capital

If ANY condition = NO
→ Continue simulation for 10 more sessions
    

7️⃣ Go-Live Rules (If You Qualify)

• Start with minimum possible capital
• Risk only 0.5–1% per trade initially
• No scaling for first 30 trades
• Weekly review is mandatory

Strategy selection depends on market trend, volatility, and time to expiry.

• Trending market → Directional strategies
• Sideways market → Neutral strategies
• High volatility → Option selling

You are ready only when rules matter more than profits.