What it does
Most day-trading strategies try to trade every five-minute wiggle and lose steadily to brokerage and slippage. This one waits for an hour where a large company has been pushed to a rare intraday extreme — either dumped in a morning panic or chased into a vertical spike — and bets that the rubber band has stretched too far for one session.
It can both buy a crash and sell short a spike, and it closes every trade by 15:15 so nothing is held overnight.
How it makes money
On hourly bars between 09:30 and 13:30, it checks two things at once: whether price has closed outside a wide 2.5-standard-deviation Bollinger Band (wider than the standard 2.0 band), and whether the 14-bar RSI has reached an extreme below 20 (for a buy) or above 80 (for a short sale).
Why hourly bars for a day-trade scalp? A five-minute bar on a NIFTY 50 stock averages only a 0.25% range against ~0.20% round-trip slippage and charges, so five-minute scalpers hand their gross edge to the broker. Requiring an hourly 2.5-sigma stretch filters out ordinary noise and only enters when the snapback room is several times larger than the cost of the trade.
A worked example, in rupees
Illustrative. ₹1,00,000 account, balanced version, a stock at ₹1,000 that drops sharply in the morning.
- 11:15 entry
- buy at ₹965 after an hourly close below the 2.5σ band with RSI at 18
- Position
- 12% of the account, 12 shares
- Stop
- ₹941, 2.5% below
- Target
- ₹1,004, 4% above
- 15:15 square-off
- sell at ₹984 as the afternoon steadies
- Result
- ₹228 before charges, about 0.23% of the account
Across two years of NSE history (257 trades across 6 names), this was the only intraday stock family whose gross edge cleared round-trip brokerage and slippage.
When it does well, and when it hurts
Does well when
- Sharp morning or midday overreactions in liquid large caps that stall and partially retrace before the close.
- Two-way markets where individual stocks overshoot on news or sector rotation and mean-revert within the session.
Hurts when
- One-way news days where a stock gaps on results or a regulatory shock and trends relentlessly into the close without bouncing.
- Quiet, low-volatility weeks where no stock reaches a 2.5-sigma hourly stretch and the strategy sits idle.
What the robot does when a trade goes wrong
These are the real rules, in the order the strategy checks them. Nothing here needs you to be watching.
- 1
Enters only on a 2.5-sigma + RSI 20/80 extreme
Both the wide Bollinger band and the RSI threshold must agree between 09:30 and 13:30.
- 2
Stops if the move is a true repricing
Two to three percent from entry, depending on the preset.
- 3
Books the snapback if it reaches target early
Three-and-a-half to five percent, or holds until the afternoon square-off.
- 4
Squares off at 15:15
Intraday MIS product; every open long or short is closed before the bell.
Adjustments, and why it does not make them
No averaging down into a falling knife or adding to a short that keeps rising. One entry per setup, bounded by its stop.
The three versions
Each strategy comes as conservative, balanced and aggressive. They share the idea and differ in how much they risk once in.
| Setting | Conservative | Balanced | Aggressive |
|---|---|---|---|
| Companies | 6 large caps | 6 large caps | 6 large caps |
| Buys when | RSI < 20 and close < 2.5σ lower band | same | same |
| Sells short when | RSI > 80 and close > 2.5σ upper band | same | same |
| Stop | 2% | 2.5% | 3% |
| Target | 3.5% | 4% | 5% |
| Position size | 8% of the account | 12% | 15% |
Entry: Between 09:30 and 13:30 when 14-bar RSI is below 20 (or above 80) and close is outside the 2.5σ Bollinger band
Action: Buy oversold dips or sell short (MIS) overbought spikes with 12% equity
Exits: Stop at 2.5%, target at 4%, or square off at 15:15
Want a stricter filter, a different stop, or your own stock list? Open a working copy in the builder and run a backtest.
Customize this ruleRisks you should know
- Fading a sharp move means stepping in front of momentum; on a genuine breakout day the stop will be hit.
- Short positions carry theoretically unlimited risk until the stop or 15:15 square-off closes them.
The jargon, explained
- RSI
- A 0 to 100 score of recent momentum. Below 30 or 35 means a stock has fallen hard and fast; above 60 or 70, it has risen hard.
- Bollinger bands
- A band two standard deviations either side of the 20-day average. Price outside the band is unusually stretched.
- Intraday (MIS)
- A position the broker requires you to close the same day. It allows larger sizes and, for stocks, is the only way to sell short.
- Square-off
- Closing a position. These strategies square everything off by 15:15 so nothing is held into the next day.