RANK IT is a indicator that measures the strength in stock within a given list or selected folder.
Higher the Rank, stronger the stock will be. The stock which Rank 1 within a given list indicates, that stock is strongest among all. Similarly lower the Rank weaker the stock will be.
RANK IT is basically used for stock selection but we can also use it by making Stock Spread.
Here is the Example:
Today we took a theoretical trade according to RANK IT, a product available in our software TREND ANALYZER.
The Trade Was Like This:
In morning at 10:25
Bank Nifty was showing RANK -1,
Whereas the Nifty showing RANK-5
which indiactes Bank Nifty was having more strength as compared to the Nifty.
So we took the trade by Buying one contract of Bank Nifty at 8795 and selling two contracts of Nifty at 4800.
we have kept the ratio of 1:2 due to their value although it was not a perfect ratio but as Bank Nifty is more volatile as compared to Nifty, so ratio was exceptable.
In late Afternoon Nifty was trading at 4870 and Bank Nifty was trading around 8975 fetching us 40 points. ( Bank Nifty gain 180points whereas Nifty losses 70*2 i.e 140 points)
The trade become more profitable at 3:20 at the time of squaring off position Nifty was trading at 4907 whereas Bank Nifty was trading at 9138 which give us 129 points.
Total loss incurred by Nifty 214 points (107*2).
Total gain delivered by Bank Nifty 343 points (9138-8795)
The trade was carrying less risk as our position was hedged.
