20% ROI per month on captial above 1 Cr possible?

[marimuthu13]

Okay ....lets start

Stocks Universe (or baskets) is NSE F&O stocks only...

Out of 136 stocks, we will select 5 stocks only...

The selection of stocks should be purely system-driven, via scanner ..We will discuss a selection of stocks later stage.

Now we have 5 stocks to day trade. We trade those 5 stocks using the simple ORB method in the first 15 Minutes...

the first step is calculating Qty for each scrip,., everything can be inbuild into an excel sheet.. we don't need any kind of charts at all...

there are 2 ways to trade.....one is with a Risk-Reward of 1:2, another is trading with a risk-reward of 1:1..

let's go with option 2.

Risk per trade, assume 1 Lakhs per trade... so for Qty calculation, we use 100000/(High-Low).....irrespective of the candle size our risk is controlled at 1 lakhs..

if you calculate transaction value it will be around 30 lakhs per order....100% our entry price gets filled while entering using the SL-LImit order...

No slippages at all for entry..

TGT order at Entry+ ( High-low) ...SL order at LOW of OR...

for a year, we may get around 230 * 5 trades...1150 trades...remove 150 as no entry....so for a year we have 1000 trades.

with a success rate of 70% and R:R 1:1, 700 winning trade should give is 7 cr but consider only 600 trades as clean winning trades..rest 100 trades are with a minimal profit or no profit/loss.... so 600 winning trades should give is 6 cr...

300 losing trades should give us -3 cr..so net is 3 cr........give 60 lakhs for charges and slippages ...so final NET will be 2.4 crores which is 240% percentage of 1 crore capital..

DONT JUMP for stock selection and 70% success rate Now.......

just see whether execution is possible without slippages as we trade in higher capital.....also results are measured against YEARLY performance..
cannot expect a monthly basis 20% return...

 

[marimuthu13]

I've got a primitive scanner on 5m for 100 stocks doing for over 3yrs and I'm very sure 0.5% SL will not work.
But would love to see a system that does it. Such tight SL will result in a mental burnout.

Index 0.5% is ok though.

Fully automated system can maybe do it, but human year on year, I'd say 1 in 1000 traders can.

my god......i said .5% of capital...

 

[marimuthu13]

Also i dont believe there is magic in small stops. Edges dont work like that, Your win rate will adjust accordingly. There is a sweet spot and some systems will work better with smaller stops and others with wider ones and that depends on market and timeframe too. But small stops is not a magical way to get large risk adjusted returns. Markets are pretty efficient, R:R and win rate adjust automatically.

we cannot have Stoploss based on the price of stock...1% 2% of stock value never going to work....identify potential entry and exit (SL exit), then measure distance then decide the risk amount, then calculate qty for the trade

 

[travi]

my god......i said .5% of capital...

sorry.
SL in terms of trade or position size is better way of expressing it

Capital may or may not be free and affected by real-time MTM as well.

but if trade size is 1Cr / 5 = 20L and SL is 0.5% of 1Cr, ie. 50k per trade
works out to 2.5% which is OK
my best range is still 1.5%-1.7%. more than that it turns out to be bad.

 

[checkmate7]

my best range is still 1.5%-1.7%. more than that it turns out to be bad.

Yes mine is 1.5%-2%

 

[TracerBullet]

we cannot have Stoploss based on the price of stock...1% 2% of stock value never going to work....identify potential entry and exit (SL exit), then measure distance then decide the risk amount, then calculate qty for the trade

Yes, atr works well to adjust as per volatility and so will chart based ones.

 

[travi]

Yes mine is 1.5%-2%

also trades executed after 10am and upto 3pm have favourable net outcome.
False gaps / entries and reversals mostly occur within first 20-30min of open and a lot of SL hits.

 

[TracerBullet]

I have not tested ORB yet. Part of my long list of todos.
In Nifty, there is a decent chance that it will be profitable with some filters as Nifty works smoothly.

Would be nice to see what the basic stock selection logic is, i am guessing that that is where most of the edge will lie. I also see a lot of noise in stocks in open hour, but have not tested ORB and using targets might help reduce noise impact.

 

[rjshem]

Okay ....lets start

Stocks Universe (or baskets) is NSE F&O stocks only...

Out of 136 stocks, we will select 5 stocks only...

The selection of stocks should be purely system-driven, via scanner ..We will discuss a selection of stocks later stage.

Now we have 5 stocks to day trade. We trade those 5 stocks using the simple ORB method in the first 15 Minutes...

the first step is calculating Qty for each scrip,., everything can be inbuild into an excel sheet.. we don't need any kind of charts at all...

there are 2 ways to trade.....one is with a Risk-Reward of 1:2, another is trading with a risk-reward of 1:1..

let's go with option 2.

Risk per trade, assume 1 Lakhs per trade... so for Qty calculation, we use 100000/(High-Low).....irrespective of the candle size our risk is controlled at 1 lakhs..

if you calculate transaction value it will be around 30 lakhs per order....100% our entry price gets filled while entering using the SL-LImit order...

No slippages at all for entry..

TGT order at Entry+ ( High-low) ...SL order at LOW of OR...

for a year, we may get around 230 * 5 trades...1150 trades...remove 150 as no entry....so for a year we have 1000 trades.

with a success rate of 70% and R:R 1:1, 700 winning trade should give is 7 cr but consider only 600 trades as clean winning trades..rest 100 trades are with a minimal profit or no profit/loss.... so 600 winning trades should give is 6 cr...

300 losing trades should give us -3 cr..so net is 3 cr........give 60 lakhs for charges and slippages ...so final NET will be 2.4 crores which is 240% percentage of 1 crore capital..

DONT JUMP for stock selection and 70% success rate Now.......

just see whether execution is possible without slippages as we trade in higher capital.....also results are measured against YEARLY performance..
cannot expect a monthly basis 20% return...

Excellent thread marimuthu . one thing i have learnt from experience is thers no one exact way of trading (to each his own based on their mindset and experience). Trading is an wholesome individual game.how well one understands the basics and executes and improves with experience based on their personality is what decides success or failure of trader.yes it is possible to generate 20% return per month but but but only on average.again a lot of things depends on individual trader how well hes able to follow his trade plan which not many can do.Nice gesture to share with others here.hope it will help someone and all the best.

 

[checkmate7]

I have not tested ORB yet. Part of my long list of todos.
In Nifty, there is a decent chance that it will be profitable with some filters as Nifty works smoothly.

Would be nice to see what the basic stock selection logic is, i am guessing that that is where most of the edge will lie. I also see a lot of noise in stocks in open hour, but have not tested ORB and using targets might help reduce noise impact.

Its not only important as when to take trade but when not to take trade...How to filter the days automatically in the system when its non-trending...It would save most and will increase the profitability....

@marimuthu13 is here trying to remove this by scanning the trending stock.......but since you are the system man tell me how have you overcome this in a TA way in Nifty?