Strategy based on Limit Orders

[rohan.joshi55]

Hello Everyone
I need ur opinion on the following strategy :

What happens if I place LIMIT orders as given below at fixed interval, say every 5 seconds -

Buy at C -1
Sell at C +1

Im placing both orders simultaneously on tick chart of a stock like SBI, and suppose my brokerage and taxes are negligible..

Kindly give ur opinion..

 

[manojborle]

Hello Everyone
I need ur opinion on the following strategy :

What happens if I place LIMIT orders as given below at fixed interval, say every 5 seconds -

Buy at C -1
Sell at C +1

Im placing both orders simultaneously on tick chart of a stock like SBI, and suppose my brokerage and taxes are negligible..

Kindly give ur opinion..

I think you are talking about scalping may be even more than that, so there is no strategy.
How you plan to place these orders ?
Obviously you have to use auto trading feature to be able to place these orders.
What about the situation where you Buy @ C - 1 and sell at C + 1 is not triggered at all.

 

[rohan.joshi55]

I think you are talking about scalping may be even more than that, so there is no strategy.
How you plan to place these orders ?
Obviously you have to use auto trading feature to be able to place these orders.
What about the situation where you Buy @ C - 1 and sell at C + 1 is not triggered at all.

Yes. There is no strategy.
Just place these orders automatically using auto trading depending upon the "C" at that instant. In tick chart the price goes up-down at high frequency and there are ample chances that such orders at C+1 and C-1 are filled. Actually i have tested it on paper trading account. Gives quite good results.

But as you mentioned, some orders are not filled. Like Buy at C-1 is filled and Sell at C+1 is not triggered.
In that case, there has to be some stoploss so that the trade is closed, and earlier sell order at C+1 is cancelled.

 

[manojborle]

Yes. There is no strategy.
Just place these orders automatically using auto trading depending upon the "C" at that instant. In tick chart the price goes up-down at high frequency and there are ample chances that such orders at C+1 and C-1 are filled. Actually i have tested it on paper trading account. Gives quite good results.

But as you mentioned, some orders are not filled. Like Buy at C-1 is filled and Sell at C+1 is not triggered.
In that case, there has to be some stoploss so that the trade is closed, and earlier sell order at C+1 is cancelled.

In that case how much will be your stop loss ?
Will be it more than the reward which is 1 Point here in your case, and if not then chances of hitting stop loss first is also more than hitting your Stop Loss order. (Is this also checked in your paper trading ?).

 

[rohan.joshi55]

In that case how much will be your stop loss ?
Will be it more than the reward which is 1 Point here in your case, and if not then chances of hitting stop loss first is also more than hitting your Stop Loss order. (Is this also checked in your paper trading ?).

Actually I have not tested stoploss in paper trading..
I just placed Buy/Sell orders and left it.
But to my surprise almost all BUY/SELL orders were filled.
Some instantly and some after some time, say few minutes.
Even even some trades are not closed, they can be closed at day end.
Net will be profit, i think.
This method works very well in ranging conditions.
You are welcome to suggest some ranging stocks, which have less trend possiblity.

 

[manojborle]

Did you check about ATR ?
I am not sure but give it a try.
Check the stocks with least ATR (Less ATR means less Volatility), this may shortlist candidates which will most probably have rangebound trading.
However least volatility means it can increase .

There is another way, find out stocks with highest ATR(means they will be highly volatile).
Keep these stocks in your watch list as the volatility will reduce and the stock may become rangebound.

 

[rohan.joshi55]

Did you check about ATR ?
I am not sure but give it a try.
Check the stocks with least ATR (Less ATR means less Volatility), this may shortlist candidates which will most probably have rangebound trading.
However least volatility means it can increase .

There is another way, find out stocks with highest ATR(means they will be highly volatile).
Keep these stocks in your watch list as the volatility will reduce and the stock may become rangebound.

Will try it...

Thanks.