NIFTY Futures Mechanical Trading

shanki99 · #**1231** 10th September 2008, 08:28 AM

Today again SL hit?? Let us wait and watch !

xtalk · #**1232** 10th September 2008, 09:21 AM

Real culprit is our currency. When oil cooling off why RBI allowing rupee to depreciate? Unless rupee stops falling holding long will be difficult.

S S · #**1233** 10th September 2008, 09:45 AM

Quote:

Originally Posted by skr

Hello friends

Nobody is replying to the question about maximum drawdown given by the system.

To understand this better, read the topic "Inverted Investor" under the thread "Food for Thought" under derivatives.

Do comment on it, thereafter.
Cheers!

msmouli · #**1234** 10th September 2008, 09:56 AM

Hai

Let me know how you calculate Support and Resistance level...what formula you use for that?

jitu123 · #**1235** 10th September 2008, 10:15 AM

Quote:

Originally Posted by msmouli

Hai

Let me know how you calculate Support and Resistance level...what formula you use for that?

Refer the thread from the beginning

MaxBombay · #**1236** 10th September 2008, 12:18 PM

Quote:

Originally Posted by skr

Dear MaxBombay

Trading is psychological game but heavy draw down screws trader's psychology, if trader is not aware about maximum draw down a system can give.

Can you tell me how much maximum draw down this system has given up to now, or how much maximum draw down one can expect? So as one can plan his money management rules accordingly.

In my experience, You can expect up to 400 points cut in nifty futures. So if you are trading 2 lots (100 qty) then you can expect going down up to Rs.40,000.

Let me share with you, what I have learned after many mistakes.

Mechanical system is about levels, you have to follow up and down levels, so stop losses are already defined. Money management!, definitely you need money management.

Lets talk about money management, I suggest, whenever anyone start trades he should trade only up to what kind of losses he can take without loosing his sleep. I know I can go up and down 50,000 without any tension. So I trade accordingly.

I recommend anyone starting trading to trade up to 10% of what he has and then slowly start his percentage to maximum 50% of total account at any time. In this way you can still bear hits like this and can still remain in trade.

IMO, If you have Rs.200,000, I will recommend trading only 1 nifty futures lot (about rs.34000 margin) for beginners and 2 lots for experienced traders and 3-4 lots for professional traders who know what they are doing.

Never, NEVER, become greedy and try over trading. Trade only up to the kind of losses you can bear. If your normal trading is 2 lots and buy guessing something you traded 4 lots, you will loose double the money, if it goes wrong. You may earn 1 or 2 times but you will loose allot if trade goes against you and will hit your account hard and push you back many many months. I have done many many such mistakes so now I know.

nadodav · #**1237** 10th September 2008, 12:30 PM

Quote:

Originally Posted by skr

Hello friends

Nobody is replying to the question about maximum drawdown given by the system.

On page no 94 i.e. on 29th July 2008. Profit of the system was 2248.
Today’s profit is 1684
2248 – 1684 = 564

Since 29th July system has lost 564 + brokerage & other expenses.

A trader who started trading as per the system, since 29th July has lost around 600 points i.e. a trader who started trading this system, since 29th July has lost his 100% trading capital.

One should be prepared for similar loss in future

Dear skr,

Max drawdown for the period specified by you is 453 points including MTM loss of 50.95 points of yesterday. I request you to please refer "Nifty Fut.xls". Till last friday, we had drawdown of 217 points & we have to add 185points loss + yesterday's MTM 50.95, & hence total of 453 points till yesterday. to calculate drawdown, we do not include MTM profit but profit for the closed trades, while in case of losses, we have to include daily MTM losses to arrive drawdown.

I believe, that any trend following system for positional trading should have incurred losses during these period. So either better to avoid trading those periods or in case of this method, we stop trading for some time when we reaches 500 points drawdown.

Vinod

MaxBombay · #**1238** 10th September 2008, 12:32 PM

Quote:

Originally Posted by skr

Hello friends

Nobody is replying to the question about maximum drawdown given by the system.

On page no 94 i.e. on 29th July 2008. Profit of the system was 2248.
Today’s profit is 1684
2248 – 1684 = 564

Since 29th July system has lost 564 + brokerage & other expenses.

One should be prepared for similar loss in future

July August series was the bad series, specially for the nifty futures. And it is very bad in September too (till today).

Quote:

A trader who started trading as per the system, since 29th July has lost around 600 points i.e. a trader who started trading this system, since 29th July has lost his 100% trading capital.

Here we go, you need money management. If your account size is Rs.200,000 you must not have traded more then 2 lots of nifty (hell, 1 lot for beginners).

If you lost 600 points then also your total loss was Rs.60,000 (Rs.30,000 for beginners) and you still have Rs.140,000 and are still in trade. You will definitely earn rs.60,000 back in next 60 days but since you had no money management your account is tossed and you are out of trade.

If you back test mechanical trading, (approx levels, you can have your own levels).....

2004 nifty gave 700 points returns (nifty 1800 level)
2005 nifty gave 800 points returns (nifty 2800 level)
2006 nifty gave -100 points return (nifty 3900 level)
2007 nifty gave 2000 points return (nifty 6000 level)
2008 nifty has given 1200 point return (approx) (nifty 4400 level)

As, you can see in 2006 nifty gave NO return due to choppy market (swing trades all around), so you should be patience and prepared to down by 40% of your total capital.

nadodav · #**1239** 10th September 2008, 01:28 PM

Dear All,

If SL hits today, I will not take new short position as Max drawdown will exceeds 500 points. I will prefer to avoid trading for sometime. I will keep posting levels as usual.

Vinod

nadodav · #**1240** 10th September 2008, 02:24 PM

Exited Long position. No new position

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