When trading individual stocks in cash, futures, or options, comparing LTP with indicator-based prices and support/resistance levels makes sense because the price action reflects a single stock and common trader psychology. However, in index scalping (for example, Nifty 50), a level like 26,000 may act as support multiple times for completely different reasons each time , such as buying in a few heavy-weight constituents on one occasion and buying in different constituents on another. Similarly, indicators on indices may reflect shifting constituent behavior rather than a consistent market intent. Given this internal rotation within the index, what is the logic behind trusting support/resistance levels while trading or scalping Nifty, and can community members share their personal experience with this?
I don’t know the answer but - the best answer to such questions anyway is to test this yourself on market data without bias.
I could say yes it works, i could say no it doesnt. How will you know whether i am right or wrong ?
Test it, if you cant or don’t want to, i would say stay away from trading.
It makes sense if it works. I can come up with whatever theory to justify it or to reject it.
Market doesnt care for theories. We have to test how target market/timeframe actually works. This is my point.
I wasted a lot of my early period reading different theories from different people in a forum ( traderji) and making trading plans without verifying them properly over large data sample ( multiple years).
And things are not still. Something that worked yesterday might shift in future and we do have cycles.
Also, there is a problem of subjective and objective definitions too. What is SR ? Should round numbers be SR ? Why ? Just because news people say so ? Market Highs and lows ? Fibo levels ? Discretionary levels ? Should index levels be adjusted to dividends (of constituent stocks) ? Or futures to rollover, stocks to dividends ? etc etc
Anyway - I guy i was familiar with in that forum who was likely profitable, traded in those days using Demand and Supply Zones i think using market or volume profile. Dunno beyond that. I don’t use them.
Can I say your answer essentially boil down to this: since we do not know the" future", the most practical approach is to rely on historical data or any other suitable framework, accepting that the outcome will either be a profit or a stop-loss?
You’re seeing it backwards. Theoretically, derivatives “derive” their price from cash market. Practically though, derivative volume is 400x that of cash volume3 and in a highly rigged environment, derivatives move before cash 1 2. So, stocks aren’t bought at 26000 because the stocks are cheap, but because whales decided to move the index from 26k - that’s what you call price action.
Only one reason. if it acts as a support, it’s because the whales are purchasing stocks to move the index.
Yes, but to know what happened in the past we need to test the past data itself.
That’s all.
Not to just listen to someone else’s opinion ( which can be good to get ideas), but to test it yourself.
If you mean for adjustments, then its past data that gets adjusted on events.
As an extreme example, Say a stock spilts by half. Do we divide the SR by half too?
Whatever you decide, things are anyway fuzzy. As long as your version of SR makes profits its all good.
So once you have a premise and plan, then you test it. And yeah trades will be a mix of wins and losses and hopefully if it works net will be good profit. Live results tend to degrade too, so we want pretty decent backtest results without overfitting stuff.
In this case, my understanding was that you already know what you want to test for. Then answer from forum, atleast from my pov, isnt very useful. Most people lose, its hard to find people who actually know what they are doing.
Anyway good luck.