SH's 315 Strategy - how to make it more comfortable and profitable!!

SH,

Nevermind. I have so much clarity in my trading now between your 315 method and MA envelopes methods. I see the only problem with your strategies are people (like myself) complicating it.


Thanks again.

The below post was already posted in original 315 thread... Just noticed this thread talks about how to make it more comfortable...so just reposting here as its relevant here... Also please give any possible impovements on this...

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Hi friends,

After spending sometime in trying to find a way of avoiding whipsaws in 315 method, i found full-stochastics indicator works really well with 315 ema...

Please look at the following picture and note in it... Hope this helps in avoiding whipsaws and stay out of market to preserve profits and also to make big profits sometimes....

Uploaded with ImageShack.us

Assuming that you have read the note in the picture, the gap between the stochs not necessarily mean that there will be a whipsaw... only if the market moves in other direction of stoch(or ema) and make opposite crossover and at the same time there is a GAP between stochs, better stay out of trades till both stoch meet again....

This is just my observation and might not work in future charts..(but hope it works )


Thanks,
...summasumma

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Hi,

Thats an interesting observation.
But my friend, as everyone says, things are different (and hazy) at the rightmost corner of the screen.
The question is How will you take a decision for tomorrow?
We can only see the gaps by looking at the past data, how will you predict whether or not to take the trade tomorrow.
E.g At the very right, both Oscillators are in Sync with each other, so do we hold on carry longs?

Thanks,
AC

Nice observation from the pic, AC.

Interestingly, I have found a VERY similar situation exactly 1 year before in the last december 2010 timeframe.... Please check the following image for dec2010, where 2 stochs are together and still market going down(very much like current situation after some 500 points down and then little recovery and then again starts going down etc...)....

So based on the above image, it looks like a similar current situation happened before also and point is, even last year before making any big movement(the jan2010 crash) both the stochs diverted & joined again to do so....

If you want to know about the small intermediate movements also (like the current down move), use (15,3,1) along with 2 others in the image. That gives some more idea .....

For question regarding, how to take trade, i ll update in my next post...

Thanks,
...summasumma

As RK already mentioned in previous posts, take position next day of crossover. We might save few points.

I normally check 30 mins NF RSI (including NIFTY stocks) to check what can happened next day.

Summasumma... Just my view for what its worth... The Stochastic Idea is a good observation.. but will become more valuable if we can define the "Gap"!! What difference is considered a gap.. its simple to observe but difficult to trade. I plotted it and eye balled some old charts.. yes we are kept out of whips but we are also getting delayed entries eating into our profits.

In the present scenario it worked..., I mean the suggestion of rkkarnani to enter the next day. He had also suggested something more about continuing the trade if the trigger bar High or Low is breached... I did copy it from here but now could not locate it in the thread. Either I missed it or it is deleted. Though I do not use exact 315 strategy but almost similar. But what I write now may be of some micro help to those who use 315 in pure form. Long was signalled on 4th Dec at 5094. Price did not go above 5094 on 5th and on 7th did breach 5094 but closed at ~5065... below 5094. I had gone long on 7th but exited , did not have the courage to reverse to short again, at close and took some Puts of 5000 instead of going short. On 8th when price broke the low of the trigger bar (the high of this trigger was never breached hence this action) I exited Puts in profit and switched to Nifty Shorts below 5055 less filter. I exited my shorts taken ~5055 today at close at 4884.60 as Short crossover happened and was confirmed at close. NOW I will go Short below todays Low and exit if the close is above the Low!! As I am trading multiple lots I book profits at certain intervals. An Excel sheet posted earlier in the thread has shown something similar about the Targets of different profit levels in each trade. I had promised to NTrader not to post here as it is being perceived as "Marketing" but when the matter of entering Next day came up I couldnt resist commenting. Even if this is objectionable I will refrain in future. All the best. I would like to add that I am also of the view that a vanilla crossover trading would be loss making idea. SH's other rules also must be followed to make it better, much better. His recent addition about exit on contra move by 3EMA on 2 consecutive days is a gem!! Add with it what rkkarnai said about using the high or low of the 2nd bar in contra move, and it really becomes excellent.

Can i know on what basis you are trying to enter trades? Based on your reply, it looks like you are talking about entry based on the stochs. But I am trying to use stochs as just a help to 315 and your actual entry/exits should be completly based on 315 rules. (3 and 15 ema crossovers)...
Having said that, after big moves, when you are long on bullish crossover, you will invest only 50% of lot and later on if you found it to be fake crossover, as per 315 you will book loss and enter 100% lot ....

Using this stochs, once you book loss in fake crossover, before making the next entry just check whether the GAP is far (based on previous data lookup, GAP>4 can be considered far).... If it is FAR, don't enter the trade and wait for both stochs to touch together.. Once the touch happens, enter more lots now where the entry is still based on 315....

Thanks,
...summasumma

For entering the trade i use excel sheet which i fill around 3:20 everyday with OHLC value... It will tell the 3ema, 15ema and also (32,9,1) , (21,9,1) stochs... based on this values, i ll see GAP,315 crossover, recent nifty moves, i enter trade..

And when i see the GAP between stoch is more and 3,15 ema's making fake crossover at the same time, I expect whipsaws for next few days still stochs touch again.... so during this time, we are very well do 'short strangle' options and get benefit from it instead of not doing anything to avoid whipsaws... my 2 cents ...

I just wanted to give a real life trade example from today.

Yesterday I was watching my stock as it was getting ready for a bearish 315 crossover. During the day it kept getting closer and closer to happening and as I watching it during the last 15 minutes of trading it happened. I was very excited!

Once I decided I was gonna buy puts, I began to watch the 1 minute charts, specifically the Stochastics (set at 5,3,3) for an overbought condition (this gave me the lowest price for my puts).

So I got ready to buy (stock options, specifically PUTS in this case). Got everything lined up and hit the 'buy' button. I was very, very confident with about 5 minutes to close. Then, with 3 minutes left, a buying frenzy took place and the crossover disappeared at the close!!!

Yeah, I was freaking out.

At that point, I was holding puts OVERNIGHT for a bearish 315 crossover that reversed. Many of my other indicators gave bullish reversal signals so I set up my gameplan for early in the morning which was to sell my puts and by calls immediately OR just sit tight if nothing had really changed and (hopefully) allow the bearish 315 crossover to resume its course.

This morning I was up, decided to stay the original course and stay a bear.

I was up 65% but sold out for less. Had I waited for the crossover which happened today, I would've made close to 200% profit with a much lower entry point this morning...wait for crossover and don't chase the crossover.

Real money and paper trading are as different as thinking about loving a woman while you don't have one and dealing with one and her craziness when you actually have one. Night and day difference.