NIfty Futures Averaging strategy

jassinko

Well-Known Member
#11
Lets analyze backways:

Say in July, we longed 75 nifty at 8600 (assume 75 in june though it was 25).... taking worst case

Now...at 8400, we added 75 more.......but jully expired near 8400.....we lost 200 points in july expiry and rolled over both lots in aug

not to forget 40 point premium lose as well

so, -200+0-40-40=-280 lose

Now, added 8440 2 lots aug and high came at 8600......now, u sold 1.....rt....160 point profit

it came 8400 again......u bought 1 more.......then 8300 came and gap down near 8000.......u bought 2 more......then 7800 come.....u bought 2 more..... expiry near 7900.......

u lost -700-500-100-100+100+100=-1200 points in aug....now u rolled over 6 lots with almost 40 points premium......-240 points lost more

it came to 8000....u sold 2 lots and pocketed 320 points......again 7800 come......2 lots added and 7600 come...4 lots added

it gone to 8000 in sep

in nutshell, u earned=-280+160-1200-240+320+640+320=-280 points lose till Sep....and then u started earning in oct........but is draw down of 1440 points digestable in 2 months........

u might earn in long term but will u keep loosing month after month if market goes opposite and down trend dont change for 7-8 months.......hypothetically
 

tradedatrend

Well-Known Member
#14
averaging is useful (yes ONLY useful,not very profitable) ONLY for seller

buyer shall DIE in paying roll-over premium difference every month.

if a buyer get trapped in a bear run, after 12 months of averaging - market might be at his average price, but still he shall in the loss of approx 500-600 nifty points (for other stocks one will have to calculate separately/accordingly)

Whereas a seller get advantage of this rollover premium difference part - but it involves HUGE capital, and after 3 / 4 years employing this huge capital - you will slap yourself and say what the hell I was doing with my money.

Remember Nobody leaves the table as long he is winning, and continuous play eventually leads to loss.
 
Last edited:
#15
@sniff
averaging in any futures wont work because you have to square-off positions on expiry whether they are profitable or not.this is not equity averaging kind of thing where you can get delivery and wait for profitable prices on the board.you are on a very HUGE risk of losing capital.
 

jassinko

Well-Known Member
#16
i know one or two traders who are averaging in commodity market at each support or resistance (acc to trend) and are earning good but that is their system.......

they know risk, reward, when to average, when not to average and not simply add on 200 point fall or double at 400 point fall.........

My point is do whatever u want but have some system and backtesting of that......there is no holygrail but only trader mindset which can make ordinary or simple system a success.......ALL THE BEST

jassi

PS: u may win sometime using martingale but one day will come which will wipe out ur profits and capital too........so be cautious (Almost Similar thing happened to me and one Mr. M here in TJ)
 

Similar threads