Pride's Intra-Day Strategy [Profit Everyday]

.Pride. · #1 16th June 2009, 07:53 PM

Hi!

I have been following this system for quite some time now, and believe me, have never had a losing day.
The system is very simple and though I cannot guarantee massive profits, you will get consistent returns.
It utilizes Dual time-frame Momentum and EMA Crossovers on a 5 Minute Chart and is best suited to trade Nifty Futures, though any stock can be traded with this system over any time frame.

Coming to the actual system now, the following is required for a long position to be initiated:

Entry Strategy

1. In the 30 Minute Chart, the Stochastic should be bullish.
(That is, the fast stochastic line should have crossed over the slow line. It does not matter how long ago the crossover took place, it should just be above the slow line and should be going upwards).

2. In the 5 Minute Chart, the Stochastic should be bullish as well.
(Fast stochastic line should have crossed over the slow line and should be moving upwards. It should not be in overbought condition yet, that is, it should not have crossed 80 yet).

3. The 5 Period EMA crossed over the 13 Period EMA from below and moves upwards.

When all three conditions are met, we buy, placing stoploss at the low of the last bar or the bar to the left of the last bar, whichever is lower.

Stochastic Setting is 8,3,4 for this system.

Exit Strategy

1. When fast Stochastic reverses from it's upward move, curves downwards and crosses the slow line from above, sell half of the units.

2. If the next bar goes below the low of the previous bar, exit completely, otherwise keep a tight trailing stoploss and enjoy the continuing bull market

-----------------------------------------------------------------------------

The second point of the exit strategy might seem confusing, but it is there as in a trending market, the stochastic might reverse while the market is still going up, so we do not exit completely on stochastic reversal as we do not want to miss out on the rally. But if the next bar goes below the previous bar (where we have exited half), it is confirmed that there might be a reversal, though short term, but we exit with the profits we have.

I tend to avoid taking positions if the crossover is near an important support or resistance level.

For going short, the exact opposite of the above rules is used.

Thats it! I have been following this and making around 50 points everyday.
-------------------------------------------------------------------------
These are the trades that I did today with this strategy.

Overall profit of around 50-55 points after removing brokerage and slippage.
--------------------------------------------------------------------------

As I am not here to sell anything to you, I will not flood this post with hundreds of examples and charts where this system proved profitable, you can backtest yourself and see how it works out for you.

The main purpose of my sharing this system with you is that we can have a discussion regarding it and see if any tweaks/modifications can make this more profitable.
EMA Crossover Non-believers, please stay away from this thread.

I look forward to hear from all of you and your comments and suggestions are most welcome.

.Pride. · #2 17th June 2009, 03:25 PM

Firstly, I would like to thank all the members for the positive response that I have received.
I am quoting some important posts which I have compiled from this thread that will help you better understand this system and trade profitably with it.
---------------------------------------------

Quote:

Originally Posted by .Pride.

The main stochastic line is known as %K, and is calculated over a specified number of days/bars, in this case, it is 8.

A short term moving average is applied to %K and this timing line is known as %D, which is 3 for this system.

A third variable is used to “slow” or smooth the %K line by displaying it as a moving average, which for us is 4.

Quote:

Originally Posted by .Pride.

Here are the possible positions of higher time frame momentum:

1. Bullish and not Overbought: Consider only long positions following the smaller time frame momentum bullish reversal.
(Bullish and oversold comes under this as well).

2. Bullish but Overbought: The upside should be limited in this case, and no new long positions should be taken.
If the higher time frame is overbought, the upside is usually limited before a momentum high is made, and there is not enough profit potential to execute a new long trade.

3. Bearish but not Oversold: A short position setup follows a smaller time frame bearish reversal.
(Bearish and overbought comes under this).

4. Bearish but Oversold: The downside should be limited and no new short positions should be taken.

You can use this strategy with any trading plan and is good with any two time frames of data.

You can use MACD or any other momentum indicator as well if you are not comfortable with Stochastic.

The dual time frame momentum strategy is a powerful filter to identify a trade setup.
The higher time frame identifies trade direction while the lower time frame momentum reversals in the direction of the higher time frame momentum are important filters to identify a trade setup.

If you want to, you can read a book by Rober Miner which extensively discusses Dual time frame momentum.
He too uses it as a filter, but his triggers are different from mine as he uses pattern recognition, fibonacci etc. while I use EMA crossovers.

Quote:

Originally Posted by .Pride.

the series of actions for initiating a long trade should be in this order:

1. Confirm whether 30min stoch is bullish.

2. Confirm that 5min stoch is bullish.

3. Wait for bullish crossover in EMA and enter when candle closes to confirm EMA crossover.

4. Exit when 5min stoch shows bearish crossover.

Do the opposite for going short.

Quote:

Originally Posted by ankitgarg20

I guess we should take all trades that a system generates and shouldnt try to be subjective about it. IMHO, we never know which trade will turn into a winner and which not. We just need to play with probability.
And when, the probability of winning trades is so high, I didnt wanna miss on any trade.

Quote:

Originally Posted by Smart_trade

This method has its success due to the fact that it filters its entries by sideways method ( 30 min stoc set up and 5 min stoc crossover ) and also by a trend following MA crossover...so when all agree we take a trade which gives a high success rate....with stocastics we are trying to avoid a long entry in short term overbought market ( and subsequent false trades/reversals)

A small tweak suggested by Rajadhiraj:

Quote:

Originally Posted by Rajadhiraj

Here's one suggestion

You can test the following condition

Take Long trades even when K30 < D30, but both K30 and D30 are less than 20/25 which means the stoch although is bearish but its also showing an oversold condition, so reversal on 5 min stoch can be profitable, also the EMA should keep you on the right side,

The bet is that on the next 30 mins bar the stoch values K30 and D30 should flip.

Opposite for Short trade can use K30 & D30 > 75/80

Hope it helps

Backtesting by humble:

Quote:

Originally Posted by humble

Hi Pride,

I have backtested your method for the June 2009 Series of "Minifty Futures" and the result is mind blowing

There have been loss trades [very rarely] and the most important thing is that there was not even a single loss day!!!!

. The total points accumulated were ~1000

, that too with only 1 lot!!!.

On an average I see there can be 3 trades in a day and very rarely once in two weeks more than 3 trades in a day. Thanks for sharing such a wonderful method. Hopefully I can make the most of it.

Regards,
-Sri

lalpar · #3 17th June 2009, 04:32 PM

what is the intial Stop loss you PUT?...Without SL all methods are USELESS as it takes only a second for mrket to go 100 points on either side

Suraj · #4 17th June 2009, 05:42 PM

hi Pride,
Thanks for sharing your system!!
It would be really nice if we could see few more charts. Helps in better understanding. Should we always wait for the system to give us exit signal or should we have some kind of fixed SL to start with?
will try to follow for next few days
Suraj

.Pride. · #5 17th June 2009, 06:45 PM

Quote:

Originally Posted by sarlamonu1980

dont think so pls. encl. chart of any stock
so that we can underst'nd it very well

i've included the chart for yesterday's trades...you can click on it to enlarge it...

Quote:

Originally Posted by lalpar

what is the intial Stop loss you PUT?...Without SL all methods are USELESS as it takes only a second for mrket to go 100 points on either side

if you read carefully, you can see that I have given how to put initial stoploss after point 3 of entry stategy.

Quote:

Originally Posted by Suraj

hi Pride,
Thanks for sharing your system!!
It would be really nice if we could see few more charts. Helps in better understanding. Should we always wait for the system to give us exit signal or should we have some kind of fixed SL to start with?
will try to follow for next few days
Suraj

by SL, if you mean stoploss, then yes, we always place stoploss and I have mentioned what level to keep the stoploss at. For target, we just wait for the signal as we cannot pre-determine target. Once the fast stochastic starts curving downwards, we can get ready to exit and once it crosses the slow stochastic, we can exit.
Though, I have experienced that around 20-30 points is achieved on each trade.

I will see if I can get some free time to upload more charts.

Thanks everyone for showing interest in this system.

Regards
Pride

Rajadhiraj · #6 17th June 2009, 08:39 PM

Hi

If you are using amibroker then you can plot the higher TF stock on the same chart (different panel), using the following code

Code:

_SECTION_BEGIN("Stochastic_30_MINS");
periods = Param( "Periods", 8, 1, 200, 1 );
Ksmooth = Param( "%K avg", 3, 1, 200, 1 );
Dsmooth = Param( "%D avg", 4, 1, 200, 1 );

TimeFrameSet(in1Minute * 30);
k30 = StochK( periods , Ksmooth);
d30 = StochD( periods , Ksmooth, DSmooth );
TimeFrameRestore();

K	=	TimeFrameExpand(k30, in1Minute * 30);
D	=	TimeFrameExpand(d30, in1Minute * 30);

Plot(D, "D", colorRed, styleThick );
Plot(K, "K", colorBlue, styleThick );

Hi = IIf(k > d, k, d);
Lo = IIf(k < d, k, d);

COLOR = IIf(Ref(d,1) > Ref(k,1), colorRed, colorBlue);
//COLOR = IIf(K > D AND (K > 80 OR D > 80) OR D > K AND (K < 20 OR D <20), colorLightGrey, COLOR);

PlotOHLC(Lo,Hi,Lo,Hi,"",COLOR, styleNoLabel | styleCloud);

_SECTION_END();

radha55 · #7 17th June 2009, 08:48 PM

Quote:

Originally Posted by .Pride.

Hi!

I have been following this system for quite some time now, and believe me, have never had a losing day.
The system is very simple and though I cannot guarantee massive profits, you will get consistent returns.
It utilizes Dual time-frame Momentum and EMA Crossovers on a 5 Minute Chart and is best suited to trade Nifty Futures, though any stock can be traded with this system over any time frame.

Coming to the actual system now, the following is required for a long position to be initiated:

Entry Strategy

1. In the 30 Minute Chart, the Stochastic should be bullish.
(That is, the fast stochastic line should have crossed over the slow line. It does not matter how long ago the crossover took place, it should just be above the slow line and should be going upwards).

2. In the 5 Minute Chart, the Stochastic should be bullish as well.
(Fast stochastic line should have crossed over the slow line and should be moving upwards. It should not be in overbought condition yet, that is, it should not have crossed 80 yet).

3. The 5 Period EMA crossed over the 13 Period EMA from below and moves upwards.

When all three conditions are met, we buy, placing stoploss at the low of the last bar or the bar to the left of the last bar, whichever is lower.

Stochastic Setting is 8,3,4 for this system.

Exit Strategy

1. When fast Stochastic reverses from it's upward move, curves downwards and crosses the slow line from above, sell half of the units.

2. If the next bar goes below the low of the previous bar, exit completely, otherwise keep a tight trailing stoploss and enjoy the continuing bull market

-----------------------------------------------------------------------------

The second point of the exit strategy might seem confusing, but it is there as in a trending market, the stochastic might reverse while the market is still going up, so we do not exit completely on stochastic reversal as we do not want to miss out on the rally. But if the next bar goes below the previous bar (where we have exited half), it is confirmed that there might be a reversal, though short term, but we exit with the profits we have.

I tend to avoid taking positions if the crossover is near an important support or resistance level.

For going short, the exact opposite of the above rules is used.

Thats it! I have been following this and making around 50 points everyday.
-------------------------------------------------------------------------
These are the trades that I did today with this strategy.

Overall profit of around 50-55 points after removing brokerage and slippage.
--------------------------------------------------------------------------

As I am not here to sell anything to you, I will not flood this post with hundreds of examples and charts where this system proved profitable, you can backtest yourself and see how it works out for you.

The main purpose of my sharing this system with you is that we can have a discussion regarding it and see if any tweaks/modifications can make this more profitable.
EMA Crossover Non-believers, please stay away from this thread.

I look forward to hear from all of you and your comments and suggestions are most welcome.

Hi Friend,

I am very much interested.

Please reply back.

Now based on your above statement, i have few questions.
please take time to answer.

Question 1 : Where can i see all this indicators for intraday. please mention the free site name, that provides us this.

Question 2 : I understood the entry methodology, but could not understnad the exit and going short strategy. please please reply with one example minimum.

Question 3: Do we put any stoploss.

Since you have taken initiative to share with us, i urge you one more thing, please take some more effort and try to post charts here and explain it in more detail.

Thanks in advance.

Do come back and post some charts, please please....

Rajadhiraj · #8 17th June 2009, 09:32 PM

Hello Pride

I have ploted the trend direction form higher TF indicators directly on the price chart, its not exactly same as your strategy, but similar concept.

Let me confess, I never liked crosses,

but this looks interesting

radha55 · #9 17th June 2009, 09:39 PM

Hi,

I tried to back test your system for entry level using one free site which i know.

investbulls.com

here is the snapshot of how the screen in investnbulls looks like.

I could not do the setting which you provided.

Can u please help me

Can u guide me , when i say 30 minute chart, does it mean the chart of last 30 mins only or chart from morning till now in a time frame of 30 minutes.

I have posted the image above, Please help me how can i set the indicators in above screen.

If you know any other free charting website, please let me know.

I trade from my office. So i cant install any software on my machine in office.

I have to use website only. please guide.

If anyone else can also help me it would be great.

.Pride. · #10 17th June 2009, 10:15 PM

Quote:

Originally Posted by radha55

Question 1 : Where can i see all this indicators for intraday. please mention the free site name, that provides us this.

Question 2 : I understood the entry methodology, but could not understnad the exit and going short strategy. please please reply with one example minimum.

Question 3: Do we put any stoploss.

Ans.1. I don't know about free sources, but you can either use metastock/Amibroker with live intraday feed, or you can use iCharts.in or investbulls.com

Ans.2. For exit, just read what I have written again, it is very simple. Exit when the fast Stoch crosses over the slow line in the opposite direction to your trade.

Here is an example of a short trade from 12th june which will clear your doubts.

Net profit of around 45-50 points after deducting brokerage and slippage.

Ans.3. I have already explained how to use stoploss in my first post. It is mentioned after point 3 of entry strategy.

Quote:

Originally Posted by Rajadhiraj

Hello Pride

I have plotted the trend direction form higher TF indicators directly on the price chart, its not exactly same as your strategy, but similar concept.

Let me confess, I never liked crosses,

but this looks interesting

Thanks for the afl dhiraj
Personally I don't use amibroker but it will come in handy for those that do.

Though EMA crosses are lagging indicators, combining them with momentum indicators ensures that we enter the market once the upward/downward move has initiated and we exit the market before or exactly when it is reversing.

Quote:

Originally Posted by radha55

Hi,

Can u guide me , when i say 30 minute chart, does it mean the chart of last 30 mins only or chart from morning till now in a time frame of 30 minutes.

If you know any other free charting website, please let me know.

I trade from my office. So i cant install any software on my machine in office.

30 min chart means intra-day chart of 30 minute time frame for bar formation

I don't know of any free website, but I have been using investbulls.com real time service as I too cannot install any software on my computer. Though the data is not entirely accurate, total loss of 3-4 points per day due to delayed data is not a big issue for me, i can live with it

Regards,
Pride

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