Rules.
1. when trend is up
2. Go long above latest Red candle high. (When trend is down go short below latest green candle)
3. stop loss 10 points
4. profit target 30 points.
5. no trailing stop. Slide the stop to breakeven when trade moves 20 points in favour. Donot close the trade even if the signal flips until either SL or profit target or breakeven hits. Enter next trade only when either SL or profit target is hit. In case of BE trade, the next trade is to be initiated only when the price hits SL or profit target. If the signal flips after hitting SL or profit target, next trade should be as per new trend.
6. maximum 3 trades per day ie 30 points maximum loss per day. We keep trading until following profit target is met.
7. if 150 points profit is made within 2 days we donot trade for next 3 days. Similarly, if profit target is met in 3 days we donot trade for next 2 days. if profit target is met in 4 days, we take a break for 1 day.
A specimen trade with trade marked on 29/07/2016 nifty futures chart is pasted below.
We start our journey of 30 trading days from Monday ie 01/08/2016.
Broader Plan
We will have a maximum of 90 trades in next 30 trading days.
Even if we consider 30% strike rate, we will have 27 winning trades fetching us 810 points, and loosing 63 trades results in 630 points loss, thus giving us 180 points profit.
There will be trades which do not fetch us full profits. Likewise there will be some trades which does not hit stop losses. This is the result of intraday restricted timings.
There will be trades which trigger but immediately reverses and hit stop loss. We have to live with such trades.
Let us suppose all the 90 trades hit stop loss, so the maximum we loose is 900 points ie Rs.67500. suppose if we include brokerage it comes to around 1080 points ie Rs.81000.
So, our capital outlay should be a minimum of Rs.1,21,000.
Profit target is anywhere between 150 to 900 points. ie from Rs.11250 to Rs.67500. So, our effort should result in between these extremes.
We will evaluate the system after 30 trading trades and if any changes required we will impose them as the need dictates.
So, let us be ready to loose Rs.81000 in the next 30 trading days.
1. when trend is up
2. Go long above latest Red candle high. (When trend is down go short below latest green candle)
3. stop loss 10 points
4. profit target 30 points.
5. no trailing stop. Slide the stop to breakeven when trade moves 20 points in favour. Donot close the trade even if the signal flips until either SL or profit target or breakeven hits. Enter next trade only when either SL or profit target is hit. In case of BE trade, the next trade is to be initiated only when the price hits SL or profit target. If the signal flips after hitting SL or profit target, next trade should be as per new trend.
6. maximum 3 trades per day ie 30 points maximum loss per day. We keep trading until following profit target is met.
7. if 150 points profit is made within 2 days we donot trade for next 3 days. Similarly, if profit target is met in 3 days we donot trade for next 2 days. if profit target is met in 4 days, we take a break for 1 day.
A specimen trade with trade marked on 29/07/2016 nifty futures chart is pasted below.
We start our journey of 30 trading days from Monday ie 01/08/2016.
Broader Plan
We will have a maximum of 90 trades in next 30 trading days.
Even if we consider 30% strike rate, we will have 27 winning trades fetching us 810 points, and loosing 63 trades results in 630 points loss, thus giving us 180 points profit.
There will be trades which do not fetch us full profits. Likewise there will be some trades which does not hit stop losses. This is the result of intraday restricted timings.
There will be trades which trigger but immediately reverses and hit stop loss. We have to live with such trades.
Let us suppose all the 90 trades hit stop loss, so the maximum we loose is 900 points ie Rs.67500. suppose if we include brokerage it comes to around 1080 points ie Rs.81000.
So, our capital outlay should be a minimum of Rs.1,21,000.
Profit target is anywhere between 150 to 900 points. ie from Rs.11250 to Rs.67500. So, our effort should result in between these extremes.
We will evaluate the system after 30 trading trades and if any changes required we will impose them as the need dictates.
So, let us be ready to loose Rs.81000 in the next 30 trading days.
In my view, profit target of 15 points is to be considered for this strategy rather than 10 points profit target. In in the hind sight 10 points PT looks attractive. But, if the strike rate falls down from 72% to 52% in any month, 10 points PT turns negative, because of brokerage. 15 points PT dropping from 56% to 46% also does not leave much impact on profitability.
Some of the loosing trades in 15 points PT should be reduced. This can be achieved by increasing lot size to 2 after 1 loss. If the 2nd trade also results in losses, then increase the lot size to 3 for the 3rd trade. If the 3rd trade also results in losses, then bring back the lot size back to 1 from 4th trade onwards as we cannot anticipate how long the loosing spree can go. This method has inbuilt danger of increasing losses if we keep on increasing lot sizes. But, as seen from past trades it helps to reduce the losses for most of the time. This method has elimited sizable loosing trades and expecting it to be more helpful than harmful. We are taking chances.
As the name of the thread suggests, it is conservative strategy. We are not looking for bumper profits and at the same time not intended to loose much. Trading this strategy helps the trader to be in the game for longer durations to understand the intricacies of practical aspects of trading.
We are going to paper trade this strategy for next 30 trading days. Clear cut rules are made out in earlier post and for profit targets and additional lot trades as discussed in this post above, to follow them with discipline.
I will post the charts and P&L for the next 30 days as the time permits as the volunteers have not come up as expected. If everything goes well for next 30 trading days, we will have a nice trading strategy atleast for intermediate level traders.
Some of the loosing trades in 15 points PT should be reduced. This can be achieved by increasing lot size to 2 after 1 loss. If the 2nd trade also results in losses, then increase the lot size to 3 for the 3rd trade. If the 3rd trade also results in losses, then bring back the lot size back to 1 from 4th trade onwards as we cannot anticipate how long the loosing spree can go. This method has inbuilt danger of increasing losses if we keep on increasing lot sizes. But, as seen from past trades it helps to reduce the losses for most of the time. This method has elimited sizable loosing trades and expecting it to be more helpful than harmful. We are taking chances.
As the name of the thread suggests, it is conservative strategy. We are not looking for bumper profits and at the same time not intended to loose much. Trading this strategy helps the trader to be in the game for longer durations to understand the intricacies of practical aspects of trading.
We are going to paper trade this strategy for next 30 trading days. Clear cut rules are made out in earlier post and for profit targets and additional lot trades as discussed in this post above, to follow them with discipline.
I will post the charts and P&L for the next 30 days as the time permits as the volunteers have not come up as expected. If everything goes well for next 30 trading days, we will have a nice trading strategy atleast for intermediate level traders.
In the second post, in three trades total loss will be 60 points if all the three trades are in loss ie 10+20+30.
Should we follow total loss of 30 points or 60 points as per modified one?
