Day Trading : Nifty Futures : 50 point game

Cubt

Algo Trader
#12
Hi,
I have a question. When Nifty moves 100 to 150 points, you book ur profits of 50 points and exit the trade and no more trades for whole month.

What in case you are not able to meet ur 50 points target next month, what if your stop loss is hit consistently? ? How can u cover ur loss when the profits are capped at 50 points?

So u will be end up with more out flow from your capital. Correct me if am wrong! !
 

TraderRavi

low risk profile
#13
Hi,
I have a question. When Nifty moves 100 to 150 points, you book ur profits of 50 points and exit the trade and no more trades for whole month.

What in case you are not able to meet ur 50 points target next month, what if your stop loss is hit consistently? ? How can u cover ur loss when the profits are capped at 50 points?

So u will be end up with more out flow from your capital. Correct me if am wrong! !
this fixed points per month phenomenon simply does not work , some trending months will give more profit some choppy months will take away points from your purse , so you cant put cap on maximum cause if you getting good points take them all ,its kinda insurance for bad months :D
 

Cubt

Algo Trader
#15
What you can consider is, instead of cap on 50 points profit, put a cap of 50 or 75 points loss. If u r down 75 points anytime in a month, stop n close ur trade for that month.

So ur downside is limited n profits unlimited. Find out the maximum loss that u can afford in a month n trade accordingly.

Thats how I operate this business. I find the maximum consistent drawdown that could happen, based on 6 years backtest results, its 1000 points. then I keep aside 50000 as my risk money and trade 1 lot. So I keep 75000 to trade 1 lot.

What if my consistent drawdown happened and am down 50000? I left with only 25000. In order to face this situation that may arise, I need to keep 1 lac, that is 1000*2*50. As my risk capital, so that even if I fail once I shall bounce back again and trade with the same quantity.

My calculated risk is 1.25 lacs for 1 lot of nifty, considering the fact I need to be in this business for next 6 years and even if I fail once in 6 years, I can still operate my business without any interruption as I have enough risk capital.
 

TraderRavi

low risk profile
#16
What you can consider is, instead of cap on 50 points profit, put a cap of 50 or 75 points loss. If u r down 75 points anytime in a month, stop n close ur trade for that month.

So ur downside is limited n profits unlimited. Find out the maximum loss that u can afford in a month n trade accordingly.

Thats how I operate this business. I find the maximum consistent drawdown that could happen, based on 6 years backtest results, its 1000 points. then I keep aside 50000 as my risk money and trade 1 lot. So I keep 75000 to trade 1 lot.

What if my consistent drawdown happened and am down 50000? I left with only 25000. In order to face this situation that may arise, I need to keep 1 lac, that is 1000*2*50. As my risk capital, so that even if I fail once I shall bounce back again and trade with the same quantity.

My calculated risk is 1.25 lacs for 1 lot of nifty, considering the fact I need to be in this business for next 6 years and even if I fail once in 6 years, I can still operate my business without any interruption as I have enough risk capital.
:thumb::thumb::thumb:
 

trader15

Well-Known Member
#19
What you can consider is, instead of cap on 50 points profit, put a cap of 50 or 75 points loss. If u r down 75 points anytime in a month, stop n close ur trade for that month.

So ur downside is limited n profits unlimited. Find out the maximum loss that u can afford in a month n trade accordingly.

Thats how I operate this business. I find the maximum consistent drawdown that could happen, based on 6 years backtest results, its 1000 points. then I keep aside 50000 as my risk money and trade 1 lot. So I keep 75000 to trade 1 lot.

What if my consistent drawdown happened and am down 50000? I left with only 25000. In order to face this situation that may arise, I need to keep 1 lac, that is 1000*2*50. As my risk capital, so that even if I fail once I shall bounce back again and trade with the same quantity.

My calculated risk is 1.25 lacs for 1 lot of nifty, considering the fact I need to be in this business for next 6 years and even if I fail once in 6 years, I can still operate my business without any interruption as I have enough risk capital.

Good thoughts. But what I'm planning for is to trade very limited number of days, when I'm sure of ability to enter near resistance and support levels ..

Why the cap for fixed points.... This will prevent me from over trading... I have tried this in past and not keeping cap made me over trade resulting in wiping out profits... But what worked was having a fixed target and chasing those number of points, and becoming consistent in doing that..

Obviously not saying that I will not have any losses, but my focus will be on increasing the odds if winning versus losing, becoming consistent in that for target of 50 points and then once after couple of months let the profits run.

50 points may look too small per month... But it is actually 30% profits per month if you are leveraged using cover orders...

I think if one can consistently make 30% monthly that's a decent business operating margin.

Regarding drawdowns : since I'll be limiting the number of days I'm trading and strict stop losses, I'm not expecting major drawdowns. Obviously markets are masters and our wishes are not their commands. But drawdowns compound if we don't exit early and keep reentering and get into revenge mode knowingly or unknowingly

Let's see how it goes.. I have tried this in past once and was able to move forward but then moved back to favorite options trading and what happens post that's is no one guesss:clapping:
 

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