ATR based High Probability Experimental AMO Trading Strategy

[GuluGulu]

To understand "Amount of Money", it is better to understand this with some example.

Take our case of SBIN; which I bought @ 1915. At ATR/2, its SL or TP level is 1883 or 1947. Or Rs. 32/- lost or gained in each trade.

Simply assume, this ATR/2 level or Rs. 32/- is our "Amount of Money" per trade.

Assume, if it is a profit, define it as 'P'. If it is a loss, define it as 'L'

We have to normalize this or fix this for the entire method according to our capital.

Take example of 1 lac starting capital and SBIN, HEROMOTORCO, UNITECH, RANBAXY, LT, MARUTI as our first 6 securities.

So we perhaps need to buy each securities of 10,000/- value @ CENTER price. Again, I am reminding, I shall discuss later in details what is this CENTER price...how to determine it. So please don't ask now. Just assume the following.

Securities Center Price ATR/2
======= ========== =====
SBIN 1915 32
HEROMOTO 2050 55
UNITECH 29.5 0.75
RANBAXY 505 7.5
LT 1375 24
MARUTI 1119 18

 

[vinst]

To understand "Amount of Money", it is better to understand this with some example.

Take our case of SBIN; which I bought @ 1915. At ATR/2, its SL or TP level is 1883 or 1947. Or Rs. 32/- lost or gained in each trade.

Simply assume, this ATR/2 level or Rs. 32/- is our "Amount of Money" per trade.

Assume, if it is a profit, define it as 'P'. If it is a loss, define it as 'L'

We have to normalize this or fix this for the entire method according to our capital.

Take example of 1 lac starting capital and SBIN, HEROMOTORCO, UNITECH, RANBAXY, LT, MARUTI as our first 6 securities.

So we perhaps need to buy each securities of 10,000/- value @ CENTER price. Again, I am reminding, I shall discuss later in details what is this CENTER price...how to determine it. So please don't ask now. Just assume the following.

Securities Center Price ATR/2
======= ========== =====
SBIN 1915 32
HEROMOTO 2050 55
UNITECH 29.5 0.75
RANBAXY 505 7.5
LT 1375 24
MARUTI 1119 18

Securities Center Price ATR/2
======= ========== =====
SBIN 1915 32 ~ 1.5%
HEROMOTO 2050 55 ~ 2.25%
UNITECH 29.5 0.75 ~ 2.5%
RANBAXY 505 7.5 ~ 1.5%
LT 1375 24 ~ 2%
MARUTI 1119 18 ~ 1.75%

the above was for my mental mapping.

 

[Taurus1]

Hi Gulu, nice variation on Lim's methodology. Using ATR instead of levels could make it tricky to adjust later if there is a sustained downtrend.
What is the lower boundary?

 

[vinst]

Hi Gulu, nice variation on Lim's methodology. Using ATR instead of levels could make it tricky to adjust later if there is a sustained downtrend.
What is the lower boundary?

Who's Lim?

As per my current understanding, Lower boundary is 2*ATR below CENTRAL Price since step size is ATR/2 and there are 4 steps.

 

[vinst]

Hi Gulugulu,

I am already trying with real trade on ABAN as I already indicated. the absolute SL has come very close to the weekly SL which I had when I initiated buy. it makes me more comfortable.
today's orders given to buy at 402 and sell at 446.
thanks,
vin

ABAN 10 sold at 435 which was 22/2=11 higher than CENTRAL PRICE of 424.
Now holding 30 aban.
Next trade levels buy 10 at 424, sell 10 at 446

 

[GuluGulu]

Taurus1, Vinst is right in defining the lower boundary. BTW, can you tell me who is Lim and what is his methodology? I may try to learn and will look if I could improve this method reading it.

Vinst, You can try the trade alone with ABAN...but much risk of SL getting hit is involved if ABAN goes down straightway from here.

The complete part of the system will perhaps take care of the thing with minimal SL in case market and all securities goes straight down one directional. But probability of this without any intermediate up-down is very less.

So please try this with very minimal quantity for test purpose until I finish the whole method. It is OK that you are testing with 40 ABAN; like I tested with 4 nos each of SBIN, N100, NIFTYBEES and GOLDBEES. I assume if you hit SL, the losses will be acceptable in terms of total money lost.

For brokerage issue, although the Govt. taxes are same for all; still you can cut some cost by switching to low brokerage firm like Zerodha.

In case of straight downfall to 1000 or 2000 point Nifty, I am experimenting with a second method like Hedging NF with buying first month and selling 2nd month or with Options. Anyway, that is very much in nascent stage. Don't consider that for the time being.

 

[SaravananKS]

hi Gulu Gulu,
did You calculated How Much amount U Can earn from this method after deducting brokerage???.

here is my opinions
===================
This method works well in sideways.
1)in Uptrend You May end up with small Profit.
2)in downtrend You May Loose compartievly bigger Loss

Your capital is one lakh Rupees
to Over come Bank Interest You need to earn atleast Rs 2000/ Per month/

say 20 Trading day in Month

to earn 2000/ U should Make Rs 100/ Every Day
Considering brokerage and Taxes Your daily Target would be higher


Frankly I don't Know You considered all this auspects

 

[GuluGulu]

Employing this strategy, already earned 8300/- in real trade out of around 200,000/- capital from 11th October to 1st November. All in cash market. No FnO. (I traded FnO but not considering that profit here).

The system works best in sideways market where people mostly hit stop-loss in both way. Also there is an assumption; 80% of the time market is ranging whereas 20% of the time is trending.

Out of this 20% trending market, you are still making a profit for 10% time. So, 90% time you are in profit...10% time it hits stop-loss.

Still, I outlined in the earlier post, in this experimental strategy, I am testing a hedging strategy to protect capital in case of drastic fall in securities.

 

[GuluGulu]

Traded the following cash securities in real:

SBIN, LT, MARUTI, RANBAXY, ITC, RCOM, UNITECH, SAIL, HEROMOTOCO, N100, NIFTYBEES, GOLDBEES, STER AND RELIANCE.

 

[mehtaka]

I am still waiting for your futher explanation in this stratergy.

thanks