Earlier, when I used to trade, I just used to track one index like Nifty, Bank-Nifty, or even when tracking international markets like US markets, I just used to see the NASDAQ index, S&P index.
So, planning some positional or intraday trades using this methodology did not seem to work for me. My strategies were failing.
But recently, when I started tracking index pairs as mentioned in the example below, it actually improved my accuracy, and I was able to predict the market to some extent correctly compared to what I was using earlier.
Forming a view after tracking multiple indices and looking at a broader picture is what has helped me in my trading journey.
I started checking charts with pairs like, for example, Nifty / SPX.
If Nifty is up 1% but SPX is up 2%, Nifty/SPX will fall.
So even though Nifty is green, it is actually under-performing the US market.
Another interesting pair I follow mostly is Nifty / Bank Nifty.
If Nifty is going up but this ratio is falling, it basically means Bank Nifty is stronger than Nifty. So these pair charts can tell you where the actual strength or weakness is hiding.
You can try the same thing with Nifty/Gold, Nifty/Nasdaq, Nifty/VIX etc.
Simple takeaway:
Before taking a trade, don’t just ask, “Is Nifty going up?”
Rather, we can track multiple index pairs so as to make a view depending on the scenarios in the broader market instead of just tracking one index and planning a trade.
Also, we can think, “Is it going up stronger than what I’m comparing it with?”
Sometimes that small comparison gives a much better picture of the market.
What do folks here think about this?
