How To Find High Probable Trades

More often we find asking questions to ourselves that if the current rise in the stock is going to be sustainable or not? For Positional traders or short term traders this question is more valid than intraday traders; however intraday traders can also use it for finding high probable trades for their next day trading. Now, the question would be how to find high probable trades or point of exit, the answer lies in the data generated by NSE/BSE at the end of the day. There are two parameters which can be used to identify such trades and those two parameters are DELIVERY % and VOLUME.

Suppose, any scrip is making higher highs every day with increase in volume every day,  but if delivery % of such scrip is less, then it’s going to fall very soon. Intraday traders can find such opportunity for shorting scrips near its resistance or going long near its support point. Looking at charts for finding Support & Resistance is necessary apart from looking into these data.

Delivery Percentage

Delivery Position is nothing but number of shares marked for delivery from the total traded quantity. It shows if investors are willing to accept the shares into their demat account. A higher delivery quantity means serious investing by investors. For example, total traded quantity is 1000 and delivery quantity is 700 then delivery percentage would be 70% and 30% remaining is Intraday trades.

Volume

These traded quantities are nothing but volume. If scrip is generating higher volume every day, it shows traders and investors are more interested in the scrip. If its daily volume is higher than averages of previous few days range then scrip is bound to make highs or lows very fast.

Delivery Percentage and Volume

Suppose, any scrip is making higher highs alongwith increasing volume every day and its delivery percentage is also increasing every day then it can be considered that scrip is going to sustain the new high as investors or short term traders are more willing to accept delivery into demat accounts. Similarly, if scrip is making lower lows alongwith high volume and delivery percentage is also increasing, it means that investors or short term traders are offloading their delivery based positions which is sign of worry for positional buyers.

By combining these two parameters we can find good trades for Intraday as well as for positional purpose as well.

How to Identify

Let’s take an example of RBLBANK, as per Volume and Price Analysis Scanner, its volume and price making newer highs since last 3 days indicating increased interest in the scrip by traders, speculators and investors;

Now, the question to be asked is if this new high is going to be sustainable or not, that answer we can find from delivery percentage analysis as per below image;

As we can see in above image, RBLBANK’s delivery percentage is increasing everyday alongwith Volume and Price Rise, indicating increased interests by Investors/Positional/Short Term Traders. By Analysis of this data we can assume that RBLBANK is going to be bullish in coming days and Intraday Traders can use Support & Resistance Levels on chart to trade such stocks.

In another example, ARVIND is also making higher highs with increasing volume and price as can be seen in below image;

However, if we look into its delivery based buying, it seems that Delivery is decreasing alongwith increased volume and price, indicating its new high is not going to be sustainable, a warning sign for positional and short term buyers to make an exit and an opportunity for Intraday traders to short scrip on finding any confirmation near its resistance point.

Similarly, we can analyse scrips based on Delivery and Volume for finding high probable trades, we can also include Open Interest Analysis for more confirmation. However, there is more to Delivery, Volume and Open Interest alongwith Price and following table can be used for further analysis;

Price Delivery Volume Open Interest Trend Price Prediction
Inceasing Increasing Increasing Increasing Bullish Investors/Short Term Traders accepting delivery of scrip and its bullish trend may continue. Intraday Traders can go long on such scrips on every pullback.
Decreasing Increasing Increasing Increasing Bearish Investors/Short Term Traders offloading positions and its bearish trend may continue. Intraday Traders can short such scrips on every pullback.
Increasing Decreasing Average/
Decreasing
Decreasing Bearish Scrip is rising based on intraday trades and may fall any time in coming days. Intraday/Positional traders can short such scrip on every high/near its important resistance point
Decreasing Decreasing Average/
Decreasing
Decreasing Bullish Scrip is falling based on intraday trades and may start uptrend any time in coming days. Intraday/Positional traders can buy such scrip on every fall/near its important support points

 

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