SH's 315 Strategy - how to use if effectively

Quick update on the open positions.

Nifty - Exited at 4598 (no profit no loss) and now waiting for an entry signal.

ICICI Bank - still holding with SL 760 (my entry point).

DLF - still holding longs since 315 has not yet confirmed sell.

RIL - Holding longs with SL 2032


Cheers
SH

Dear Stock Hunter,
Thank you so much for providing this excellent 315 trading method. Though i cant do day trade (Intraday), i was checking for a good method for positional trading and found your method a good one. I have been reading your post from the beginning and just have some doubts. I have taken the EOD chart of CAIRN (NSE) below. The long cross over happened on 4th May'09 and below are the EOD price of 4th May'09.

OPEN 192.00
HIGH 203.45
LOW 190.50
CLOSE 202.05

My query is

1). What would be the entry point for placing buy order
2). SL as mentioned by you will it be the entry price?
3). Exit price as you said will be the price when 3 EMA is not touched. But this will be known on the next day in case of positional trading? what to do on this case.

Rgds, Karthik

Hi Karthik - I am glad that you like the strategy, hope it helps you too for your positional trading.

Coming to your questions, though i do not trade CAIRN but I will try and answer your questions based on 315. However first of all you will need a charting software that would provide you real time EOD charts (including current day's candle) along with EMAs.

1. Entry would be at around closing time around 202 since at that point your charts will tell you bullish crossover is complete and confirmed.

2. Initially SL is a bearish crossover of EMAs. However I believe that once I have enough M2M profits i would not want to take a loss later on that position. For myself, I have defined enough as 3% for Nifty, for stocks its slightly higher i.e 5%. Once i get this favourable move, I would put SL at my entry point so that if markets reverse atleast I would not have to bear any loss. In this case if we long at 202 and Cairn touches 212 (which it did on 07/05/2009) I would have put my trailing SL to 202 immediately. Apparently this SL would have got hit on 12/05/09.

For re-entry, I would re-enter on when previous days highs are breached and again wait for my position to move 5% above my entry point before i put a trailing SL. Here in this case, on 13/05/09 Cairn breached previous days high (212.45) hence I would have longed at 212.50 again. NOw we would put a trailing SL only once our position moves to 223 (5% up) otherwise we will hold until bearish crossover is completed. apprently 223 gets hit on 18/05/2009 and immediately next day SL (212.50 our entry point) is taken out on 19/05/09 leaving us empty handed again. We again wait for re-entry (previous day high breach) which happens on 21/05/2009 and we long at 232.50 .. and then rest is history when you exit at 270 odd levels as shown on your charts.

Please note : Putting trailing SLs is for conservative traders like me, high risk takers can forget about trailing SLs for higher returns like in this case had we not put trailing SLs we would have held onto longs from 202 to 270 (instead of 232.50 to 270)

3. This has to be known same day at open price and thats why you need the real time EOD candle.

Hope tihs helps, please do not hesitate in asking if you still have any doubts.

Cheers
SH

Hello SH,
Thanks for your immediate response...
I will check for the realtime charts asap....
But one question will realtime chart update the data of EOD & Realtime simultaneously...might be my question will be stupidity as i have not used to Real Time Chart. If possible request you to suggest a real time chart vendor and please post a chart.

Thanks,
Karthik

One of the cheapest options is ichart.in and investbulls.com

I use icharts.in though

TWH,

I would like you to give your opinion on Axis Bank for the month of June 2009.

Pretty bad whips....how to handle them ??

hi stockhunter,

can u explain how to use this method in nifty options.

Dear tradewith hunter,

Congrats for such a simple and low risk strategy.:thumb:

Can we trade this setup on intraday 30 min or 1Hr?Have u tested this for

intraday?

Hello atul, he already said that it is not very successful with intraday, as it shows wrong signals and more whipsaws in intraday, it works better for swing trading and in trend markets.

Dear padhugvn,

The logic remains the same i.e on a bullish crossover you buy calls instead of buying Nifty futures and on bearish crossover you buy puts instead of selling nifty futures.

However a word of caution with options, I would not suggest using this strategy for options since you will find over a period of time your profits will be smaller and your losses will be bigger as compared to futures. This is becuase the time value of options would reduce your profits in a favourable move and enhance your losses in a whipsaw.

For Nifty, if you do not have the capital or the risk appetite to trade in Nifty future, i would suggest you trade in mini nifty ... 1 mini nifty lot will give you better performance as compared to one Nifty option lot with similar risk.

Cheers
Stockhunter (SH)