Nifty Hedging strategy with Supertrend
Timeframe :1 Hour
Better to have 2 trading accounts to trade this strategy.
When supertrend gives a signal ie buy or sell, enter the trade as usual.
Suppose supertrend gives a buy signal, you bought Nifty futures. Immediately, you enter a sell order as follows.
Example :-
1st account buy entry : 7965
2nd account sell order : 7865 (ie 100 point stop loss)
If Nifty moves up without touching 7865 you keep holding 1st account long and hold it.
When Nifty moves up, when it reaches +400 points, again sell 2nd account Nifty to lock in profit.
There will be a total three scenarious after we enter trade.
1st. Nifty moves against our position, and hits SL, where we enter counter trend trade with 2nd account.
2nd. Nifty moves in favour and hits profit target +400, where we enter counter trend trade with 2nd account to lock in profit.
3rd. Nifty does not hit SL or profit target, but a reverse signal is generated. Then we close 1st a/c buy Nifty and enter a fresh short Nifty.
Hope the system is clear.
From 05.06.2015 to 05.2.2016 this sytem has generated 20 trades out of which 9 are profitable and 11 are loosers. The profitable trades generated 2193 points and the loosers lost 958 points. Hence total profit 1235 points. Profit factor of 2.28 which is excellent by all parameters. Each win trade fetches us 243 average points, each loss trades drains 87 average points. Even the risk to reward is 1 : 2.7 which is again good. Drawdown is 424 points.
Very leisure system. Piece of mind with a clear cut stop loss and profit targets.