Gaps while swing trading Nifty Futures

General
1

Hi,

I am a swing trader trading primarily Nifty futures. I’m wondering is there a way or strategy to minimize the risk of next day’s gaps when you carry over the position to next day in nifty futures? Somedays due to news or something else unexpected big gap ups or gap downs happen more than 100 points & in those cases SL become useless. In such cases is there anything that can be done the prior day to minimize or limit the risk using any option strategies or anything similar?

Thanks!

2

Anyone ?

3

Keep the position if it’s 50 to 60 points above your average price. That way you can keep the swing trade safely. If you know the trend then the gaps will be in your favour :slight_smile:

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4

hedging

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5

  1. To be safe, take a positional trade only if you have entered intraday and you have a cushion for e.g. you are 50 plus points up on Nifty

  2. Take positional trade near EOD only if the index has been opposite to the overall trend for few days. For e.g. in last 1 month, whenever Bank Nifty was 200-300 points down, it was a BLIND BUY with negligible risk knowing the overall trend was UP.

  3. Do hedging with options etc. But frankly speaking, if you know the trend and understand the market, hedging is not required mostly.

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6

hedge it with ATM options … buy it just before the close and sell it immediately when mkt opens…
premium depreciation will be minimal when mkt opens flat

7

Thank you to each & every one of you for replying!

Most of the days gaps occur in the direction of the trend & that is what we want as swing traders. But what to do when someday market opens gap up / gap down by some huge points say 80-100 points & sometimes maybe even more? Is it advisable to book loss on these days & wait for the next entry or shall I keep the trade open & wait for at least a part of the gap to be filled? I trade on 3L capital only Nifty fut in swing strictly one lot.