100 trading strategies

#13
Many traders misinterpret the rules of probability.

Some believe that, if you have an unprofitable trade, then somehow this increases the chance that their next trade will be profitable. If they incur a string of losses, then their chance of a profitable trade also increases as each unprofitable trade passes.

That is clearly not the case, as each trade is completely independent of any other. Disregarding this, many people increase their position size after a loss or string of losses in an attempt to regain their losses quickly. Rather, this is a time when you should be even more diligent to ensure that you scale back your positions and not increase them.

If you think of the laws of probability, increasing your position size after a series of losses in order to breakeven faster is a recipe for disaster.
U r right :)
 

trader.trends

Well-Known Member
#14
Many traders misinterpret the rules of probability.

Some believe that, if you have an unprofitable trade, then somehow this increases the chance that their next trade will be profitable. If they incur a string of losses, then their chance of a profitable trade also increases as each unprofitable trade passes.

That is clearly not the case, as each trade is completely independent of any other. Disregarding this, many people increase their position size after a loss or string of losses in an attempt to regain their losses quickly. Rather, this is a time when you should be even more diligent to ensure that you scale back your positions and not increase them.

If you think of the laws of probability, increasing your position size after a series of losses in order to breakeven faster is a recipe for disaster.
Velluri

This comes close to the concept of Martingale in gambling. If the risk reward ratio is 1:2 then over a period of outcomes, you will end up a winner. Let me give an example to amplify the point

I will buy Reliance at 1000. My Target is 1020 and my SL is 990. My reward is double the risk at all times. I initiate the first trade

1. Buy 1 unit @ 1000. SL hit. Loss 10/-. If profitable profit 20. If profitable stop trade. If loss made go to next trade.
2. Sell 2 units @ 990. SL at 1000 and T @ 970. SL hit. Loss 20 Cumulative loss 30. If profitable, profit 40 from trade and cumulative profit 30.
3. buy 4 units @ 1000 SL 990 T 1020. If Sl hit loss 40, cumulative loss 70. if profitable Profit 80, Overall profit 50.
4. Sell 8 units @ 990. SL 1000 T 970. If SL hit, loss 80, cumulative loss 150. IF profitable profit 160, Overall profit 90
5. Buy 16 units @ 1000. SL 990 T 1020. If Sl hit, loss 160 overall loss 210. If profitable profit 320 overall profit 170.

If goes on like this. Doubling the trade at every turn. The belief that we will eventually get out of a tight range. One it assumes unlimited time and unlimited money at your disposal. And the ability to pull of trades without slippages and extremely low trade charges.

Disclaimer: I have never tried anything like this and don't intend to. Not recommended to any small trader.
 

saivenkat

Well-Known Member
#15
Veluri ji,

Any other different trading strategies, involving less indicators and calculations, that which is easy to use, but for definite and sure profits,be it one percent or two percent.

Regards
Saivenkat.:)
 

veluri1967

Well-Known Member
#16
A simple ATR based day trading strategy.

1. Select any highly liquid stocks. Atleast 3 stocks.
2. Let the first half an hour candle close so that initial hiccups are over.
3. Take the close of first half an hour candle.
4. Visually scan ATR(14) for the last 4 months. Take the average of highest ATR and lowest ATR. Not a big work if you have amibroker. Just drag ATR indicator and visually scan it by scrolling. No need to have very specific numbers. Just a rouch idea.
5. Calculate 25% of this average ATR.
6. Place buy order at CLOSE + 25% OF AVERAGE ATR and sell order at CLOSE - 25% of average ATR.
7. place stop loss at close after the buy/sell order is filled.
8. Profit Target is ENTRY + 25% OF AVERAGE ATR in case of BUY and ENTRY - 25% OF AVERAGE ATR IN CASE OF SHORT. No greed.
9. If stop loss hit and book losses.
10. Cancel all orders.
11. Start afresh from step 3 by doubling the order size.
12. If second time stop loss hit, close the terminal for the day and :stop::eat::cheers:

NOTE : WHEN I BACKTESTED LAST ONE MONTH, USING THIS STRATEGY THERE ARE ONLY 2 LOOSING DAYS. STRICT DISCIPLINE AND NO OVERTRADING.

Here is the AFL for Amibroker Users if you have not it already.
_SECTION_BEGIN("ATR");
periods = Param( "Periods", 15, 1, 200, 1 );
Plot( ATR(periods), _DEFAULT_NAME(), ParamColor( "Color", colorCycle ), ParamStyle("Style") );
_SECTION_END();


Money Management.

1. This strategy is based on volatility. Since the price can move in any direction, expect stop loss hits. So, we should have a proper money management in order to succeed in this strategy.

2. If one has an account of Rs.50,000/-. Consider 1/4th of it. That is Rs.12,500/-. Spread it into three shares ie Rs.4,100/- roughly for each scrip.
Use 4 times leverage. ie 16,400 for each scrip.

3. Divide Rs.16,400/- by scrip value. Ex Unitech Rs.71. Just rough calculations. Rs.16,400 divided by 71 comes to 230 shares. So, your buy order will be for 230 shares and sell order for 230 shares.
Another example. Axis Bank Price 1240. Rs.16,400 divided by 1240 comes to 13 shares. So, buy order will be 13 shares and sell order for 13 shares.
 
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SwingKing

Well-Known Member
#17
Many traders misinterpret the rules of probability.

Some believe that, if you have an unprofitable trade, then somehow this increases the chance that their next trade will be profitable. If they incur a string of losses, then their chance of a profitable trade also increases as each unprofitable trade passes.

That is clearly not the case, as each trade is completely independent of any other. Disregarding this, many people increase their position size after a loss or string of losses in an attempt to regain their losses quickly. Rather, this is a time when you should be even more diligent to ensure that you scale back your positions and not increase them.

If you think of the laws of probability, increasing your position size after a series of losses in order to breakeven faster is a recipe for disaster.

In a way you are right and in a way you are wrong.

Scenario 1: No time tested formula which gives the edge

When it comes to trading without rules, then your point is very valid. Where there are no rules, then the next trade is totally independent of the previous one. Hence, if we increase sizes with losses, then there is no way out but to file for bankruptcy.

Scenario 2: What if you have an edge?

Now what happens if you have a set of rules which deliver 7 wins out of 10 trades. In that case, with proper risk management and by not using pure martingale system, this could well be done. But yes, one must have deep pockets for that. Sadly though, for most traders, this is not the way to go. Prudent traders know when to scale in and when to scale out. This is an art and it cannot be taught in books/seminars/webinars.

Nice that you brought this thing up.

Tc
 
#18
In a way you are right and in a way you are wrong.

Scenario 2: What if you have an edge?

Now what happens if you have a set of rules which deliver 7 wins out of 10 trades. In that case, with proper risk management and by not using pure martingale system, this could well be done....................

Nice that you brought this thing up.

Tc
Dear Raunak, In my opinion, you are too , "In a way you are right and in a way you are wrong. ".

Your assumption (since winning ratio is 7/10), that after few losses, the Wins are over due is more like fallacy of "Appeal to Probabilty". Commonly known as gambler's fallacy.

But then i cannot agree more to the fact that, however big pocket size you have, applying martingale to trading is the fastest way to bankrupty.

P.S : It's always pleasure to read your posts........
 
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veluri1967

Well-Known Member
#19
Simple Moving Average and RSI strategy.

Suitable for Intraday and 1 or 2 days swing trades.

Amibroker AFL:
Buy = Cross( Close, MA( Close, 5 ) )AND RSIa( Close, 5 ) > 50 AND RSIa (Close, 5) <60;
Sell =Cross( MA( Close, 5 ), Close )AND RSIa( Close, 5 ) < 50 AND RSIa (Close, 5) >30;
Short=Cover=0;
Buy conditions

1.AFL signals buy today.
2.Buy the scrip next day if the High is taken off. (A must condition)
3.Profit Tgt and SL to be set as per your comfort level.


Sell conditions

1. AFL signals sell today.
2. Sell the scrip next day if the Low is taken off. (A must condition)
3. Profit Tgt and SL to be set as per your comfort level.