IST: Low risk - High Reward strategy

Discussion in 'Derivatives' started by pos_trader, Dec 18, 2016.

  1. pos_trader

    pos_trader Member

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    Hello all

    IST stands for "Infrequent Small Trades" (in Nifty futures).

    Para 1: How it works: Between 10:30 am and 12:30 pm complete ONE trade of 10 points. SL 15 points.

    Do not trade on days when some news is expected (like Brexit, budget, RBI policy, Fed decision). Generally every week trade only on three days so as to minimize risk.

    Basis of trade: Visible price movement of Nifty futures and its recent highs and lows. No graphs / indicators required. In the two hours mentioned, the movement is anyway narrow.

    Two things are very important: Intra-day multiple allowed by broker and brokerage charged.

    Para 2: Choice of broker

    From whatever I know, three brokers were shortlisted (bracket shows multiple allowed and brokerage charged)

    (A) Zerodha (2.5x, Rs 40 per pair trade)
    (B) Astha (10x, Rs 1000 per Rs 1 Crore of trade)
    (C) SAS online (5x, Rs 999 pm unlimited trade)

    Considering both criteria together, the best is SAS online for IST technique.
    (In case of Astha the multiple of 10x is attractive but brokerage would be Rs 12000 per month ... cannot afford that).

    Para 3: Profit calculation (per month)

    Capital : Rs 1 lac (can be increased later)

    (A) With 5x multiple, it is possible to trade 8 lots of Nifty futures (qty 600).
    (B) Total points per month: No. of trades is 3 per week OR 12 per month. Assume SL hit 2 times in month.
    ( C) Net points per month : 70 (this is how --- Profit 10 x 10 = 100 points. Minus Loss 2 x 15 points = 30 points).
    (D) Gross profit per month: 600 qty x 70 points = Rs 42 k
    (E) Expenses per pair trade assuming Nifty fut as 8200: Trade volume is 8200 x 600 qty x 2 (buy txn and sell txn) ~ Rs. 1 Cr. So the expenses are as follows:
    STT 500, NSE turnover tax 210, SEBI charges 20, Stamp duty (Maha state) 200. Total exepnses per pair trade: 930.
    (F) Expenses per month: 930 x 12 ~ 11.2 k
    (G) Add brokerage 999 + 14% tax ~ Rs 1140
    (G) Net profit per month ~ 30 k (a cool 30%).
    (H) What if the Stop loss is hit 3 times in a month? Net profit is still 15 k.


    This is quite opp. of scalping/jobbing where no. of trades are very high (like 20 per day or 400 per month).

    Is anybody been doing this? Request the experienced traders on this board to comment whether this is feasible or not. Also point out if there is any mistake in profit calculation above or suggest a broker who allows 10x multiple AND fixed brokerage per month.

    My own experience of loss making reveals that the only reason for loss was "trading every day, that too every now and then". Restricting to 3 trades per week, that too during 10.30 am and 12:30 pm can minimize losses.

    In my next post I will give details of my dry run last week (12-16 Dec).

    Thanks for your time. Take care.
    pos_trader
     
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  2. pos_trader

    pos_trader Member

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    IST: Details of dry run (12-16 Dec)

    Hello all

    Here are the details of my dry run (12-16 Dec)

    1. Mon 12 Dec: Buy at 8210 (11:26 am), Sell at 8220 (12 noon)
    2. Tue 13 Dec: Buy at 8185 (10:50 am). Sell at 8195 (12:07 PM)
    3. Wed 14 Dec: Buy at 8210 (10:47 am), Sell at 8220 (11:32 AM)
    4. Thu 15 Dec: No trade since Fed decision was expected to cause volatality
    5. Fri 15 Dec: Buy at 8140 (10:58 am), Sell at 8150 (11:08 am)

    Planning to do dry run for one more week.

    Thanks and take care
    pos_trader
     
  3. pos_trader

    pos_trader Member

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    IST: Add BONUS profit

    Folks

    Would like to add one more thing.

    There will be surely at least one occasion in a month when you will feel comfortable holding position even after 10 points in profit. Say, you hold for 25 points. Then this additional 15 points is simply added to monthly profit.

    Thanks
    pos_trader
     
  4. copypasteaee

    copypasteaee Well-Known Member

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    what is basis of trades?
     
  5. tradedatrend

    tradedatrend Well-Known Member

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    arrey bhai lekin kab short karna hai ya kab long karna hai, ye kaise decide hoga?

    When to short or long, it will be decided how?
     
  6. pos_trader

    pos_trader Member

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    As mentioned in Para 1 of the original post, trade is to be taken based in the "visible price movement" of Nifty futures.... from 9.15 am to 10.30 am that same day and last 3 days history. Trade could be long or short depending on the situation at 10.30 am.

    This is not difficult at all. Recommend you to do this and you will realize that you develop a "judgement" for 10 point price movement of Nifty future (Initially you can target 5 points and then go on to 10 points).

    On this point (basis of trade) I have nothing more to add.

    Take care
    pos_trader
     

  7. anuragmunjal

    anuragmunjal Well-Known Member

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    Re: IST: Add BONUS profit



    bro, pls teach me this . when and how to get comfortable?? each time 10 pts profit ..

    regards
     
  8. tradedatrend

    tradedatrend Well-Known Member

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    hmmm, why so much vagueness?


     
  9. vagar11

    vagar11 Well-Known Member

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    Re: IST: Details of dry run (12-16 Dec)

    The price levels represent nifty fut or spot?
    The price levels are diff for me at the time u posted.
     
  10. pos_trader

    pos_trader Member

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    @anuragmunjal and tradedatrend

    Those who keenly watch Nifty future price movement will know that it is not diffucult to develop a judgement to get 10 points trade correct (upward or downward) THREE times in a week, with with 2-3 times a month hitting SL.

    Those who do not understand the above, can ignore this thread and save their time.

    @vagar11
    The prices mentioned are NIFTY fut. Timings may not be that accurate, apologize for the same.

    pos_trader
     
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