Simple Day Trading Strategy - Seems well working

#1
This strategy I found in blog and tested reltime for a few days and also back tested in chart. Seems very Good. Today traded TCS with this setup. The setup is too simple to believe it works with around 80% win rate and risk reward 2.

See the chart below



First bar of today is Long white candle closing above the Previous day High. The green line is the previous day high. Second candle is a small candle closing within the range of first candle. This setup completion. After setup completion entry is within the range of second candle.

TCS today rocked after entry. Back tests also shows same results.
 

fabrics

Active Member
#2
This strategy I found in blog and tested reltime for a few days and also back tested in chart. Seems very Good. Today traded TCS with this setup. The setup is too simple to believe it works with around 80% win rate and risk reward 2.

See the chart below



First bar of today is Long white candle closing above the Previous day High. The green line is the previous day high. Second candle is a small candle closing within the range of first candle. This setup completion. After setup completion entry is within the range of second candle.

TCS today rocked after entry. Back tests also shows same results.
explain a bit more for a lay man to read what u are reading
 
#5
This is not my setup, I learned it from a blog post I came across.

Here is the rules.

Setup

First candle do not have a significant upper wick and it must be a long white candle. Second candle closes within or little above the top of the first candle. Second candle do not trade down significantly with respect to the first candle. Second candle range should be significantly smaller compared to first candle. The daily chart must be one time framing up or bracketing. If the daily chart is one time framing down, there must be strong evidence that an excess low is about to form (This we will cover in another post, for now understand that prices trades in the opposite direction of daily trend with momentum and the bar closes near the high of the candle). There should be no unfilled gap or significant swing high (both formed recently) immediately above the price level. And finally the present price should not be far away from previous day high (ATR on daily charts is useful to evaluation).

Entry

Enter long position within the range of the second candle after the second candle is completed. Apply a stop loss based on recent volatility (This also will be covered in another post as this is common to all setups. Usually stop loss is 15-20 points for nifty).

Exit

Take profit when trade moves in favor by 2 times the risk taken.

It is well explained in the blog post with examples
 

chandra1

Active Member
#6
Thanks for the post and link

I have been to this blog post on day before yesterday and read the 3 posts casually, didn't pay much attention and saved the posts for reading some other time.

But now it seems I have to read this series carefully when you say you have tested this strategy realtime for few days and also back tested in chart.
 

Shantala

Well-Known Member
#7
DH1=TimeFrameGetPrice( "H", inDaily, -1);
DL1=TimeFrameGetPrice( "L", inDaily, -1);
Buy = Ref(C, -1) > DH1 AND Ref(O, -1) < DH1 AND Ref(C, -1) > Ref(O, -1) AND L > Ref(((O+C)/2), -1);
Short = Ref(C, -1) < DL1 AND Ref(O, -1) > DL1 AND Ref(C, -1) < Ref(O, -1) AND H < Ref(((O+C)/2), -1);

Testing with this AFL scan. Will post results after backtesting.

Please suggest changes if any to find out setup.

Following points included in AFL.
1) Yesterday's daily high.
2) First candle close is higher than yesterday's daily high.
3) No gapup.
4) First candle is bullish candle.
5) Signal low is greater than half of 1st candle.

Lesser wick of first candle and signal candle size needs to be included in the above scan, but we can visually judge.
Plotting not included in AFL as we are going to run it only once in a day.
For lesser wick of 1st candle, you can add (Ref(C, -1) + Ref(O, -1))/4 > Ref(H, -1) - Ref(C, -1)
 
Last edited:

anilnegi

Well-Known Member
#8
Interesting strategy, but today is a trending day, the real test of this strategy will be on trading days, when there will be more up / down
 
#10
Daily Chart trend was sideways, and I think the buy setup is ok, though it went up a bit from the first candle high and second candle was an inverted hammer. May be best place to buy was yesterday high 1943.
 

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