Nov '24 • Option Strategy
Renko & Stochastic RSI Trading Strategy for Nifty 50
Hello Everyone,
I’d like to share a Renko-based trading strategy I’ve been working on for Nifty 50 stocks. The strategy is designed for intraday trading and incorporates stock-specific tracking of profit and loss (P&L). This ensures precise risk management for each stock while enabling better decision-making. Here's the detailed explanation:
1. Strategy Overview
- Renko Box Size:
a. Calculated using the ATR (14) of the previous day’s 5-minute candles.
b. Box sizes are rounded to the nearest 10 paisa for each stock.
- Indicators Used:
- a.Renko Charts for price filtering.
- b. Stochastic RSI, applied to Renko closing prices instead of candlestick data.
- Trading Hours:
- The algorithm begins scanning for trades at 9:20 AM to allow for initial market stabilization.
- Uses the first 5-minute candle (from 9:15-9:20 AM) for calculations.
- Profit/Loss Tracking: The algorithm maintains a separate P&L tracker for each stock to monitor individual stock performance. Trades for a specific stock are stopped once the profit or loss for that stock reaches ₹1,000 for the day.
2. Entry Rules
- Buy: When %K crosses %D from below in the oversold zone (< 20).
- Sell: When %K crosses %D from above in the overbought zone (> 80).
- This Stochastic RSI needs to take the closing price of Renko box and not candles
3. Exit Rules
- Stop Loss (SL): 2 Renko bricks (e.g., if the box size is ₹1.5, SL = ₹3).
- Take Profit (TP): Square off 50% of the position at 2 Renko bricks profit. Trail the remaining position until a Renko box reversal (opposite direction brick forms).
- Trade Limits: Maximum 2 trades per stock per day. Stop trading a stock if the profit or loss reaches ₹1,000 for the day. (This is to be tracked only after closing the position)
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Renko & Stochastic RSI Trading Strategy for Nifty 50
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