SH's 315 Strategy - how to use if effectively

[HHPPREMM]

Hi Friends,

I would like to use this thread to explain my 315 strategy along with some rules on how to trade it effectively for swings as well as positionals.

Cheers
Stockhunter (SH)
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Edited by Stockhunter on 11/08/2009

Hi Friends - since thread has become very long and my rules are thrown in between on different pages, I am giving the index of my important posts for anyone who sees this thread for the first time and wants to know the strategy.

For Basics and some Background on 315 - Please click here http://www.traderji.com/technical-a...rategy-how-use-if-effectively.html#post331535

For Entry, Pryramiding & Exits (profit booking) and re-entry rules - Please click here http://www.traderji.com/technical-a...tegy-how-use-if-effectively-3.html#post332954

Also click here to see explanation using a chart http://www.traderji.com/technical-a...tegy-how-use-if-effectively-4.html#post333264

For Stop Losses and protecting your capital - Please click here http://www.traderji.com/technical-a...tegy-how-use-if-effectively-7.html#post338314

Also, for more explanations and different SLs for a conservative trader and an aggressive trader click http://www.traderji.com/technical-a...egy-how-use-if-effectively-11.html#post347026

Cheers
Stockhunter (SH)

Dear Mr .Stockhunter a million thanks 4 yr post i m just gng thro it and i m finding it useful i also want 2 in detail study and understand Mr.Saints mini flow.thanks 2 u all

 

[jeetu888]

:thumb:dear SH once u said are planning to use 315 with diff parameters for intraday, are u still trying ,bcoz ,after ur 315 great strategy,my optimism n faith in u has increased. GOD BLESS U

 

[mama]

Hi Bandlab/Ankit - Sorry for the delay in responding to all your posts and putting my rules here. I just wanted to leave the strategy here for people to digest the 'concept' first before i put forward my money management and other system details.

Its great to see you guys have done some chart reading. Bandlab, great that you have tested it on some intraday time frames as well.

Coming back to my rules... I will talk about Entries, position sizing, pyramiding and Exits (yes, its not always in a trade method) !!

BUT FIRST OF ALL, PLS APPLY 315 TO EOD ... believe me i have thought (and tried) applying 315 to intraday but success ratio is too low. 315 is for traders to trade less and make more money.

Coming to rules....

Entries

Entries are simple, you wait for a candle to close above 15 EMA, next candle to open and see if 3 EMA is above 15 EMA or not. If the answer is 'Yes' you go long. For shorts you need an exact opposite setup.

Position Sizing

Since in this system SL cannot be defined as a 'level' your initial position sizing has to be small. Depending on the trading capital, you dont want to put more than 25% capital which you want to put in this trade in as the first trade i.e assume if you can trade a total of 4 lots max, you will start with 1 lot. Rest 3 lots we will add later as our position moves into profit.

Pyramiding

Pyramiding or 'adds' are obviosly done once our position has 'swung' into profits. The rule is we add when the markets correct after a swing, price comes and touched 15 EMA again (but 3 EMA hasnt crossed over). This means that we add very close to our SAR hence keeps the risk small and also ensures that even if SAR is triggered we still end up in net profits (since our initial position is in profits hopefully now).

Exits

Yes, we do exit at certain points even when our SAR is not hit. These exit points are obviously when our position is suddenly in deep profits becuase of an extreme rally or crash in our favour. The exit points are where you find our 'current' EOD candle is not touching 3 EMA at all. On this candle, we book profits and wait for markets to correct back and touch 3 EMA again. As soon as 3 EMA is touched we jump back into our initiaal position. So in a way we stay with our position, we just exit it once and get back in after a small correction.

I would let you guys analyse, examine and apply these rules to some of the trades which you have identified. I am also posting an NF chart below showing entries, Pyramids or 'adds', Exit and jump back in and finally SAR.

Please do post any questions you have here.

In the end, I would try and touch the most important piece which is 'how to protect capital from whipsaws' .. but thats later.....

NF Chart in next post below.

Cheers
SH:thumb:

Hi,

I am Really excited to trade on this Strategy from tommorrow onwards but one question started to haunt me i.e i will use intraday if any stoc k opens gap up and on opening trade if the prices is above 3 EMA i can immediately exit the trade or wait for bar to complete(which time frame 5 min,hourly,or daily) ... some one please explain this
thanx....

 

[atuldoc]

Dear friend,
please do not use this strategy for intraday trades.SH has mentioned this. Kindly go thro the first few posts.

 

[mama]

Dear,

Well what to say :thumb: i traded today successfully with this strategy on dlf,rcom,aptech,educomp, nifty with success and earned a good money out of them(of course shorts) i used 15 min chart for it ...... i am always the lover on ma's but was missing only few tings now right got this strategies to use with obviously with other laging indicators .....

Thanks Again to SH to inhance my capability wit MA's

 

[Tradewithhunter]

Hello TH,
TH : Just saw this thread today! After reading about the strategy I was viewing August 2009 EOD chart of Nifty.
The nifty was long from July contract and we must have rolled over the same to August contract when on 29th July the price almost touched 15 EMA (was within 10 points of the EMA 15 value of 28th i.e. 4415).This where you suggest to add to existing position.

We hold our long. Now on 7th August the price closes at 4468, making a low of 4465 and the close is below 15 EMA, however 3 EMA is still above the 15 EMA so we hold our Longs.

On 8th August the price closes at 4390 and now we see that the 3 EMA has also closed below so at ~3.25 we close our longs and go short.

On 11th and 12th no action is required as 3 EMA continues to stay below 15 EMA.
On 13th August the price closes ~4615, the 3EMA has moved above 15 EMA, we go long at around closing time.
On 14th no action is required as 3 EMA is above 15 EMA and we hold our longs.

On 17th the market closes at ~4377 and 3 EMA has also closed below 15 EMA, we revert to Short at close.

No action required till 20th as the 3 EMA is still langusihing below 15 EMA.

On 21st the market close is ~4531 but the 3 EMA is just very very slightly below 15 EMA, my chart (it does not have the averaged close values but actualclose values) shows the 15 EMA value as 4590.02 and EMA3 value as 4585.96.

We go long on close on 24th, at around 4636 and the same is continuing still now.

This period seems to have given us a lot of 'pain'!! How to avoid this ? Any strategy to overcome this problem.

Ofcourse its individuals choice,but trying to get into trade at 3.25 with crossovers seems a bit uncomfy to me. But at times your strategy seems to give just really BIG money!!! As the EMAs we are using are based on closing price, I would prefer a bar to close before deciding on any action.
OR maybe we can make it as a rule to enter at 3.25 level of EMA's!!! Though uncommon but there are instances where the market made vicious moves in last 5 minutes.
This not to discourage any one using this strategy as I may be very wrong in my interpretation of the system.
So just accept it as my 'thinking aloud'.
Regards
-Shravan

Hi Shravan and other friends,

Have been busy with some project work hence was away from Traderji for some time.

Shravan - Yes the period you had described has given some pains ... its unfortunately unavoidable .... no strategy would give you profitable trades 100% of the times. As a trend trader I am happy to take these small losses to get that big profit trade. I am patient and happy to wait... 315 is like a hen which lays a golden egg every once in a while ... but not everyday

I find trading at 3.25 PM to be safe since in the last 5 mins once a EOD crossover is still visible 99% of the times markets wont move so violently to suddenly negate that crossover... and in any case if at 3.29 the crossover is negated you can always exit.

Cheers
Stockhunter (SH)

 

[Tradewithhunter]

:thumb:dear SH once u said are planning to use 315 with diff parameters for intraday, are u still trying ,bcoz ,after ur 315 great strategy,my optimism n faith in u has increased. GOD BLESS U

Dear Jeetu - 315 can be used on 5 mins or 10 mins timeframes for intraday however I do not trade intradays based on 315 ..... this is because due to overnight gap ups/gap downs the EMAs get skewed.

So unfortunately, I do not recommend 315 for intraday though people can try and they might get some winning trades between some losing trades...

Cheers
SH

 

[Tradewithhunter]

Dear,

Well what to say :thumb: i traded today successfully with this strategy on dlf,rcom,aptech,educomp, nifty with success and earned a good money out of them(of course shorts) i used 15 min chart for it ...... i am always the lover on ma's but was missing only few tings now right got this strategies to use with obviously with other laging indicators .....

Thanks Again to SH to inhance my capability wit MA's

Hello Mama,

Good to hear that you made money using 315 on intraday, however please note my recommendation is to use 315 only on EOD .... rest people can innvovate and use it on whatever time frames they like.

Cheers
Stockhunter (SH)

 

[eevra]

@ SH ( STockHunter )

Am a new entrant to this posting & a newbie to trading.
Great strategy by SH.

Simply put:

As long as EMA 3 is above EMA 15 , I should not Short ( even though the price may be below previous day's Low & below EMA15 ! )

&

To (re) enter in Long , EMA 3 should always be above EMA 15 !! ( even if the price has breached the previous day's high !!!).

Please guide me for a possible such a scenario !!!!

thanks a million SH & others.

Cheers........

Hello Mama,

Good to hear that you made money using 315 on intraday, however please note my recommendation is to use 315 only on EOD .... rest people can innvovate and use it on whatever time frames they like.

Cheers
Stockhunter (SH)

 

[mama]

Hello Mama,

Good to hear that you made money using 315 on intraday, however please note my recommendation is to use 315 only on EOD .... rest people can innvovate and use it on whatever time frames they like.

Cheers
Stockhunter (SH)

Dear,

Thanks for your gesture You are absolutely right on your part but a fast observation on mix of eod and intra gives a beautiful picture what to do off course in congestion with other indicators too a person having sound observation of line study and indicators can follow your system easily for few fast buks in intraday too thanx buddy :thumb::

Regards,
Mama