Smart Don Stock Options Bearish

Strategy Type: Positional
Direction: Bearish
Instruments: Options (Buying)

You can define your own group of instruments, apply filters, decide the investment amount or quantity, and customise it as per your preference.

I have always found the Donchian Channel, developed by Richard Donchian, to be a highly effective indicator.

Donchian Channel

• Upper Band: Represents the highest high over a specified period
• Lower Band: Represents the lowest low over the same period
• Middle Band: The average of the highest high and lowest low

This indicator can also be applied to Renko charts, where it becomes even more effective.

The combination of Renko’s diagonal structure, its ability to filter noise, and the clarity provided by the Donchian Channel helps make price patterns more objective and easier to interpret.

Together, this creates a highly effective and robust trading setup.

Smart Don Strategy for buying stock options

Smart Don strategy uses Donchian channel on the Renko chart for entering the trade.

• We will use only upper band and Lower band in Donchian channel for this strategy.
• Parameter of Donchian channel will be 40.

Entry Criteria :

• Brick Above Donchian Channel upper band — Bullish Entry
• Brick Below Donchian channel lower band — Bearish Entry
• Parameter for Donchian channel — 40 (Default)
• Max Open position at a time – 3
• Max No. of Trades for the day — 10 or 20 (Swadanusar)
• Box Size for Renko : 0.05% one min time frame (Stocks Spot Chart)
• Group : Option Liquid Inst

Entry Filter Criteria (Which Stocks?)

• Price Above ORB 15 Min —- Bullish
• Price Below ORB 15 Min — Bearish

Exit

We will use D Smart indicator for exiting the trades.

D Smart Line

The D Smart Line, developed by Definedge team, is a dynamic trend-following indicator designed to simplify market direction by filtering out noise and focusing only on meaningful price movements using Point & Figure and Renko-based logic.

It helps traders clearly identify whether the market is in a bullish or bearish phase, while also acting as a guide for entries, exits, and risk management.

One of its most powerful features is the cloud concept, formed by the Running Line (fast-moving) and Walking Line (slow-moving), which together create a zone that defines market structure—when price is above the cloud it indicates strong bullish momentum, below the cloud signals bearishness, and within the cloud reflects consolidation or indecision.

This adaptive nature allows the indicator to respond quickly during trends and slow down in sideways markets, making it a complete framework for disciplined, rule-based trading.

Exit Criteria:

D Smart Line

Parameter : 20 bricks

Price below D Smart WL (Long Exit)

Price Above D Smart WL (Short Exit)

Exit Before 3:05 PM

Please Note: This is an intraday system

Example:

Feel free to experiment with it and refine it to suit your trading style, thereby enhancing both execution and conviction.

Study it, experiment with it, and refine it to suit your trading style.
Run virtual strategies, observe their behaviour, and build conviction through experience.

You may consider reducing the indicator settings during strong trends, though this is optional.

You can also apply this strategy in top 10, 20 or some other number of instruments having liquidity in their options. There are ready made groups available in Definedge platforms and they are updated on daily basis. You can also create your own group.

Filters

You can further enhance the strategy by adding filters: additional rules, indicators, or pattern-based conditions.

One effective approach is to incorporate a higher timeframe trend filter, such as the daily trend of the stock.

You can also apply intraday-specific filters to improve trade quality.

With the right filters, you can further refine and personalise it to suit your trading style.

You can modify it, test it, and deploy it on the Algostra.