Trade after 1hr strategy - Comments welcome

[kesk]

Hello fellow traders who made it big,

I started trading a year back without much knowledge on daily trading. During the initial period, without any tech analysis, charts, i was able to scalp a 50ps-2rs profit on some stocks. Was profitable too for some time. To earn more, started reading lot of books/videos and now have a grasp of TA, but started loosing money big time. My trading capital just down from 1.5lakh to 50K now. How i lost money: choosing to trade on the tips providers/broker calls. etc.

Now i want to start afresh and NOT to loose so much money. After analysing the chart for the past 3 months, have come to some trading setup which i give below:

1. No trades for the first 1 hr.
2. Note the High and Low within this period.
3. If market moves higher than High, then go Long with a 15pt SL and initially 20pt profit. and trail the SL.
4. If the low is breached, then short with the same MM.
5. If the market hovers within the High and Low even after 1.30hrs, then go long/short only when the High/Low is breached. If not no trades.

Does this sound practical. I couldnt write a suitable AFL in Amibroker and couldnt backtest. But on seeing the chart for 2 months, looks valid.

I would request experienced traders/strategist to comment on this.

 

[Laksh]

Hello fellow traders who made it big,

I started trading a year back without much knowledge on daily trading. During the initial period, without any tech analysis, charts, i was able to scalp a 50ps-2rs profit on some stocks. Was profitable too for some time. To earn more, started reading lot of books/videos and now have a grasp of TA, but started loosing money big time. My trading capital just down from 1.5lakh to 50K now. How i lost money: choosing to trade on the tips providers/broker calls. etc.

Now i want to start afresh and NOT to loose so much money. After analysing the chart for the past 3 months, have come to some trading setup which i give below:

1. No trades for the first 1 hr.
2. Note the High and Low within this period.
3. If market moves higher than High, then go Long with a 15pt SL and initially 20pt profit. and trail the SL.
4. If the low is breached, then short with the same MM.
5. If the market hovers within the High and Low even after 1.30hrs, then go long/short only when the High/Low is breached. If not no trades.

Does this sound practical. I couldnt write a suitable AFL in Amibroker and couldnt backtest. But on seeing the chart for 2 months, looks valid.

I would request experienced traders/strategist to comment on this.

Search for the thread " 60 minute range breakout" trading in this forum. You will find quite useful discussion there. It will help you to fine tune your strategy.

Laksh

 

[a.r.sivakumar]

its a good statergy i think
by following this we protect the capital

 

[chintan786]

i think this strategy work well during the trending Day... but in range bound... we may lost...... I think u should not paint the whole day with same Brush.... u need some strategy(s) for 1st 30 mins and last 45 mins. to trade otherwise may remain out of market on range bound or choppy day.

 

[augubhai]

Simplest ORB system

Is there any reason why you have chosen 1 hour?

Here is something that I have noted of the NIFTY, but is probably true of all the liquid stocks as well.

The simplest way to trade the daily Opening Range breakouts is to get in early, and to close open positions at the end of the day. The earlier you get in, the more the profit potential of this method. I would recommend that you enter on the range breakouts from the 30 minutes, 20 minutes, 15, 10 or even 5 minutes range. 1 hour seems like a large wait, and reduces the profit potential. There is no need for any buffer, that is enter as soon as the stock touches the day's high or low.

Off course, majority of the days would be loss making days, but average profit would always be multiples of the average loss. I have not obseved if reversing the positions at stop loss (SAR) is good.

The TRICK:
The max profit in this method will be obtained if you have no stop-losses, but since there can be "black swan" days around this may be a really risky option. So the trick here is to decide the optimum stop-loss. An incorrect stop loss will make this system unprofitable. A very tight stop loss would result in missing out most of the big moves. A large stop loss would have have a big impact on your account whenever it gets hit.

 

[kesk]

Thanks for the all the comments. I read the 1hr range break and other break outs too. Why did I choose 1 hr as the time frame: If a stock sustains its upward momentum/move for 1 hr, then its strong indeed and we can make out a good profit.

More comments, tips welcome.

 

[kesk]

Here is a formula which can give range breakout buy/sell. This is of not my making, but modifying the existing one to suit NSE timing. The default time is 30 min. If you want a different time frame, edit the AFL from a predefined time frame.

Put the dll in the plugin folder and the AFL file in custom folder. Drag and drop the AFL in a window and you can get the buy/sell signals.

Since the original AFL is not mine, I cannot answer some difficult queries, just the basic ones.

 

[rajatheroyal]

book profit at 20 points or trail stop ???

 

[kesk]

Depends on the risk apetite. If you are trying momentum, then 20 is a good profit target. However, if you can wait and watch, then use a trail stop. I am trying to use the strategy. Some of the stocks indeed gave a profit, others were stopped out.

book profit at 20 points or trail stop ???

 

[rajatheroyal]

I tested it, it does not work coz of poor risk reward ratio.