SH's 315 Strategy - how to use if effectively

MurAtt

Well-Known Member
#43
3EMA on NSpot close (y'day 13/7) was at 4013 then why did u close your long and move into shorts before NSpot reached 4103?
 

bandlab2

Well-Known Member
#44
3EMA on NSpot close (y'day 13/7) was at 4013 then why did u close your long and move into shorts before NSpot reached 4103?
not sure i understood yr post clearly. what SH has done is he closed the short position at 3930 which is created at around 4200+ and re-enterd the short again at 4040.

he took advantage of 3 ema moving away from current bar and coming back to touch current bar. his position is still in tact. shorts. but he gained some 110 points on the way.

if tomorrow current bar touches 15 EMA , then we expect a ADD to shorts. provided ema c/o doesnt occur.

on paper, i entered shorts at 4125 today. lets see
 

MurAtt

Well-Known Member
#45
No what I meant was -- (Since on a pullback or even generally we find that the price always tries to touch the 3EMA) 3EMA was placed at 4013, so expected was 4013

Ohhhh - sorry my mistake --- :confused: over 4103 and 4013 -- sorry bro - gotcha all
 

bandlab2

Well-Known Member
#46
The magic of 3 EMa worked as a charm since market gapped up today to touch 3 EMA... so jumped back in shorts now at 4040 which were covered yesterday at 3930.

Cheers
SH
hi SH,

I am eagerly waiting for your 'how to protect the capital' chapter. hopefully we can see it tomorrow

investbulls doesnt show current day in EOD charts !!! icharts shows. we need current day live also in the EOD as we take some decisions during the course of the day itself. TTAdvance also doesnt show current day in EOD charts
 
#49
hi SH,

I am eagerly waiting for your 'how to protect the capital' chapter. hopefully we can see it tomorrow

investbulls doesnt show current day in EOD charts !!! icharts shows. we need current day live also in the EOD as we take some decisions during the course of the day itself. TTAdvance also doesnt show current day in EOD charts
Hi,

Could any body help about RT EOD charts showing the current day.

Regards
 
#50
OK - so seems we have digested the 'basics' of 315 and its time to move to advanced '315' which takes care of how to avoid whipsaws and protect capital.

I will first give you an example of the most painful trade that you can come across in 315. please have a look at below example. The EOD candles are from 4th Feb to 17th Feb with 3 EMA (red line) and 15 EMA plotted.

Now as you can see, 315 generated a buy on 6th Feb since EMA crossover was almost confirmed so we entered longs at around 3.25PM on 6th Feb at 2830.

Now, Nifty swung up until 13th Feb and made a high of 2974 on that day.(If you notice that day was actually our Exit day since again candle body didnt touch 3 EMA). However, for sake of this example, please assume for a moment 3 EMA did touch the candle and we stayed with our longs.

However next trading day (16th Feb) it crashed and touched 15 EMA at around 2850. This is technically where we 'ADD' as per the strategy. So if we add at 2850 we then have 2 lots long at average price 2840. The day ended at 2831 but since 3 EMA was still above 15 EMA we will hold as per the strategy.

Now next day it gaps down against our position, opens at 2800 and finally closes at 2753. Thats when our SAR is hit since 3 EMA crossover is confirmed and we jump into shorts. We have lost a hefty 100 point per lot or total 200 points overall.

As a trader, the first thing I ask from myself here, what could i have done to avoid this whipsaw completely? The answer comes back - NOTHING.

The second thing I ask from myself is - what can i do different to reduce the overall loss in such situations? The reply comes back - well I can be slightly less greedy and delay my 'ADD' to a point where I have some confidence that the correction is over and the markets are swinging back in the main trend's direction.

So I amended the ADD rules slightly. I said I will add only if below 2 conditions are fulfilled:

1. 3 EMA is still below 15 EMA for shorts and visa versa AND
2. The current candle breaches previous day's lows for shorts (previous days highs for longs)

This means that I add longs when i see fresh buying has started after the correction. This is slightly high probability add though it means I dont add exactly at 15 EMA but slightly away from it.

So coming back to the example below, I actually dont add on 16th Feb becasue I am waiting for 17th candle to go above 16th candle which never happened. So I just had 100 point loss instead of 200.

This is how I protect capital by 'ADDING' effectively. In coming days i will talk about 'effective SLs' and 'effective' profit booking.

For the time being, please absorb and post any questions. We will see in live soon how we will do an 'effective' ADD if markets start to fall again.

Cheers
SH
 

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