Comfortable profits from trading Nifty.

[jamit_05]

Jamit,

Are there any other indicators (RSI,ADX,MACD,Stoch's etc) which can be applied together with 315 to get much better results or reduce whipsaws?

I don't think whipsaws can be flat reduced. There is always a give and take. No indicator can help you there.

 

[VJAY]

Dear Jamit,
you came back to TJ taking a long break....with Nice thread.......

 

[jamit_05]

Dear Jamit,
you came back to TJ taking a long break....with Nice thread.......

Hi VJAY,

Some weeks ago I read a few nice threads here. I felt that the spirit is alive again. Plus, I had an important concept to share. So, it felt right to start a new thread.

Hows trading coming along with you? Alls well I know.

Regards.

 

[jamit_05]

Gloomy picture and Exits.

Exits are usually the heart of a trading method. They can be designed to fulfill your needs. They are a function of you, whereas entries are a function of market action.

So how do we best exercise this control?

In the last post we understood the profitability of 315. 315, in the worst times, gives 40 to 50 NF points monthly after covering the worst DD and expenses. In some months, it gives a lot more, but let us just discuss the bare minimum.

With that said, If I wanted twice the returns of FD, then how would I go about it?

Now lets calculate how many lots and how much DD I will have to be prepared for.

Getting 50 NF points per lot, will fetch 50*50 = Rs.2500; That is 0.83% for a capital of Rs.3L; A little more than FD rates.

Ergo, trade two lots and you get 1.66% per month, more than twice the FD.

That is the icing of the cake. Now the crust.

One will also have to be prepared for Drawdowns (losses). They could amount to 300 NF points per lot. That is Rs.30K of maximum loss for 2 lots. This could happen once or twice a year. This is the absolute worst DD, as per backtests. If one feels that he could remain sane in this phase... then he should go ahead with 315.

One should understand the gloomy side of every trading method before getting knee-deep into it. Prepare for the worst. Keep your head clear and prepared for the fact that, this entry will start a string of losses that will give Rs.30K of loss. But, at the end of this quarter I will still be in green.

With that said, one should also have an exit strategy for the case where there is little or no DD and market gleefully takes off in your direction. With no DD to cover, and you fired with ambition, how will you make the best out of the situation? More on it in the next post.

 

[PartTime_Trader]

Hello JAMIT

The thread is shaping up nicely.

In the system proposed on this thread there are 2 major issues that need to addressed.

Point 01
The system is proposed to be used with positions using Nifty Options. The analysis has to consider the loss due to time value. This system is going to be always in the trade (using SAR) it has to be assumed that the annual cost on account of time value will be minimum 1200 points (100 points per expiry)

Point 02
Any trend following system makes minimum profit on its initial position (less than 20%), most of the profits come from scaling-in (or Adds), for now there is no provision of adding size to the trade that turns out to be successful.

There is no need to make the system complicated to incorporate the above 2 points.

1. Instead of using options the delta (size/risk) should be adjusted to reflect the capital available and stick to trading futures.

2. Scale-in (Add) after fixed duration (1 week, 3 days) when we get a strong trend candle that closes in direction of the trade.
(as most of the stops get hit in the initial phase of the trade, so avoid adding too much till the trade moves in our favor)


Thanks

 

[jamit_05]

Hello JAMIT

The thread is shaping up nicely.

In the system proposed on this thread there are 2 major issues that need to addressed.

Point 01
The system is proposed to be used with positions using Nifty Options. The analysis has to consider the loss due to time value. This system is going to be always in the trade (using SAR) it has to be assumed that the annual cost on account of time value will be minimum 1200 points (100 points per expiry)

Point 02
Any trend following system makes minimum profit on its initial position (less than 20%), most of the profits come from scaling-in (or Adds), for now there is no provision of adding size to the trade that turns out to be successful.

There is no need to make the system complicated to incorporate the above 2 points.

1. Instead of using options the delta (size/risk) should be adjusted to reflect the capital available and stick to trading futures.

2. Scale-in (Add) after fixed duration (1 week, 3 days) when we get a strong trend candle that closes in direction of the trade.
(as most of the stops get hit in the initial phase of the trade, so avoid adding too much till the trade moves in our favor)


Thanks

These are excellent points. Thanks for taking time for the write-up.

Yes on (1) and a super Yes on (2)

I do not propose that the method be traded with options at all. It was just for gtm900. I feared that his capital should not be demolished in case he happened to fail to SAR. It was just temporary.

Scaling in will multiply the profitability, not just increase.

Regards.

 

[PartTime_Trader]

_SECTION_BEGIN("Price");
SetChartOptions(0,chartShowArrows|chartShowDates);
_N(Title = StrFormat("{{NAME}} - {{INTERVAL}} {{DATE}} Open %g, Hi %g, Lo %g, Close %g (%.1f%%) {{VALUES}}", O, H, L, C, SelectedValue( ROC( C, 1 ) ) ));
Plot( C, "Close", ParamColor("Color", colorBlack ), styleNoTitle | ParamStyle("Style") | GetPriceStyle() ); 
_SECTION_END();

_SECTION_BEGIN("315 System"); 

e3	=	EMA(C,3); 
e15	=	EMA(C,15);  

Plot(e3,   "e3", colorRed,   styleThick); 
Plot(e15, "e15", colorBlue, styleThick); 
 
Buy 	=	Cross(e3,  e15); 
Sell	=	Cross(e15, e3); 
 
Buy 	=	ExRem(Buy,Sell); 
Sell	=	ExRem(Sell,Buy); 
   
PlotShapes(Buy * shapeUpArrow, colorBlue, 0, L,-30); 
PlotShapes(Sell * shapeDownArrow, colorRed, 0, H,-30); 

_SECTION_END();

_SECTION_BEGIN("Trend Ribbon"); 
color = IIf(BarsSince(Buy) < BarsSince(Sell),colorBlue,colorRed);
Plot(10, "", color, styleArea | styleNoLabel | styleOwnScale,0,300);

SL = IIf(BarsSince(Buy) < BarsSince(Sell),LLV(L,3),HHV(H,3)); //Disaster Stop
Plot(SL, "SL", colorBlueGrey, styleStaircase,0,0,1); 

_SECTION_END();

_SECTION_BEGIN("Strength of Bar");
ShowBarStrength	=	ParamToggle("Show Bar Strength", "No|Yes");
if (ShowBarStrength == 1)
{
  ShapeUP	=	IIf(C > Ref(HHV(H,10),-1),shapeDigit9,IIf(C > Ref(HHV(H,5),-1),shapeDigit5,
				IIf(C > Ref(HHV(H,3),-1), shapeDigit3,IIf(C > Ref(HHV(H,1),-1),shapeDigit1,shapeNone)) ));

  ShapeDN	=	IIf(C < Ref(LLV(L,10),-1),shapeDigit9,IIf(C < Ref(LLV(L,5),-1),shapeDigit5,
				IIf(C < Ref(LLV(L,3),-1), shapeDigit3,IIf(C < Ref(LLV(L,1),-1),shapeDigit1,shapeNone)) ));


  PlotShapes(shapeUP, colorBlueGrey, 0, L, -20);//         2 Weeks = 9,  1 Week = 5
  PlotShapes(shapeDN, colorLime, 0, H, 20); //   High/Low: 3 Days  = 3, Previous Day = 1	
}
_SECTION_END();

 

[jamit_05]

Afl

The disaster stop which is set to Lowest Low of last three days would probably need some testing.

Thanks for the AFL.

Currently, I am working on having an exit strategy for the time when there is little or no Draw down to cover. When MM allows me to be aggressive. Will make a post by tomorrow morning.

 

[Rajeevji]

Re: Afl

The disaster stop which is set to Lowest Low of last three days would probably need some testing.

Thanks for the AFL.

Currently, I am working on having an exit strategy for the time when there is little or no Draw down to cover. When MM allows me to be aggressive. Will make a post by tomorrow morning.

Dear Amit,

Missing your posts. Please continue.

regards

Rajeev

 

[jamit_05]

http://www.traderji.com/general-tra...gh-but-theres-prob-post752609.html#post752609


In the above link you will find a trader who is on the brink of success. He is trading right, but is unable to retain. Interesting.

There is much to trading than just entries and exits