Experiment - Law of Averaging

prasham

Active Member
#1
Couple of days back I had read a thread by TT where he had projected a Mini Nifty trading strategy. Buying 5 lots at Redline and selling them gradually. While it holds good for most days, on days with large volatilities and whipsaws it failed drastically. Since reading that thread I was thinking about some modification to it so that this amazing and simple system could be used effectively on all occasions.

What I've thought is...

a) Buy/Short 3 lots of NF or Mini NF at Redline +/- 0.1% respectively.

b) Book profits on 2 lots at 20 points profit on either side.

c) For last lot keep trailing SL of say 10 or 20 Points as per your risk apetite.

This would hold good for most days. Now on days with whipsaws follow the below...

1) Just like (a)

2) Just like (b) or if SL is triggered before you reach (b) then enter the trade again only when the NF or MNF reaches Redline +/- 0.2% or 0.25%.

For Example:

Say NF opens at 5000, we buy at 5005 keeping SL 5000. Instead of reaching the 1st target of 5025 it returns from somewhere in between and triggers SL.

Now if it goes into Negative side initiate trade at 4995 keeping SL at 5000. Instead of reaching 1st target of 4975 it returns somewhere in between and triggers SL.

Now its gets really tricky. Now initiate another trade only if NF or MNF crosses 5010 or 5012 or 5015 (depending on your Risk Apetite). Keep SL of Buying Price less 5/10 Points. Similar strategy can be adopted on the negative side too.

If again SL gets triggered move up by another 0.1% or 0.15%. This way unless the market is Broadening with very high volatility, you shall keep the losses to the minimum.

Well guys this is just a theory that I've thought in last 48 hours. There are all probabilities that there are some loopholes or maybe the entire strategy may be wrong. BTW like TT I too don't have strategy for Gap Up or Gap Down opening.

Can someone please help me with backtesting a few day's results and please do post your valuable comments.
 
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