SH's 315 Strategy - how to use if effectively

[VJAY]

Nifty at 5225 today .... 1390 points profit now on NF (notional) .... holding with 5300 CEs as insurance.....

Cheers
SH

Dear SH,
One Q about pos size.......when cross over happen how we decide pos size?means we no have exact s/l......please share your style of taking positions...

 

[munde_77]

Pleae post the trades here whever calls trigger , so others can also take benefit

 

[krishere]

OK - so here we go.

The first step is to understand what is 315 .. its advatages and disadvantages.

The second step is to understand some rules I have derived to use it effectively. Rules are related to effective entries, effective SL management, effective profit bookings, effective re-entries and in the end effective money management or effective safeguarding the capital.

In this post I would focus on step 1 i.e what is 315 etc.

315 Strategy for swing trading

315 is a simple swing technique which tries to identify a trend very early. In this strategy we use only EMAs name EMA 3 & EMA 15 (hence the name 315).

People ask me why EMA 3 and EMA 15 .... for me last 3 days define the immediate average price ... to find the slightly longer term trend i use the factor of 5. This is becuase 5 has an interesting relevance to markets.... we have approx 5 hours of trading everyday, 5 trading days in a week, almost 5 trading weeks in a month .... So I simply multiple 3 by 5 to get my 15 EMA which defines my medium term average price.

Now in simple terms, if our immediate average price is higher than the medium term average price that means we are entering in a bull swing ... and visa versa. Hence the strategy entries are:

1 Enter Long when 3 EMA goes above 15 EMA
2 Enter Short when 3 EMA goes below 15 EMA

Advantages of following 315 strategy

1. A simple technique using just 2 EMAs, no other oscilattors or indicators required. NO advanced charting softwares required.

2. System is based on following the ULTIMATE indicator available i.e price action.

3. Keeps a trader in the trend, lets the full swing to complete. Never gets a trader against the trend.

4. Since we are just following price action, we dont need to worry about divergences etc.

Disadvantages of 315 Strategy

1. Works brilliantly in a trending market but can whipsaw in extremely ranging markets. However this can be overcome by certain rules and money management to be explained later in this thread.



So this is what the strategy is folks, do some chart reading and see how it works on EOD charts. Do post any questions you have here.

I will come back to talk about Step 2 again.

Keep an eye on Nifty charts, 315 is going to generate a signal soon... dont miss.

Cheers
SH:thumb:

Hi SH/TH...

thanks for such a simple theory.... sometimes we tend to go so deep into the advanced stuff that we forget such a simple solution is there... i used your 5-wala funda on forex market and it works like a charm. I use 5EMA and 25EMA in forex and am really happy with results. THANKS the big one.

Krishna.

 

[VJAY]

Pleae post the trades here whever calls trigger , so others can also take benefit

don't see in near future if this bearish trend not change....any way between 5470-5500 as per current situation....
sure when crossover happen then you can see here trigger ...from SH himself or from others

 

[jayan12]

Nifty at 5225 today .... 1390 points profit now on NF (notional) .... holding with 5300 CEs as insurance.....

Cheers
SH

Yes, I too bought 5300 CE for 54

 

[jayan12]

Yes, I too bought 5300 CE for 54

Closed 5300 CE for 36 and bought 5200 CE for 69 also holdng niffty short.

 

[msri]

TH Sir, kindly clarify the following scenario:
We take a position at the end of the day. Next morning when the market opens up we observe most probably with gap up/gap down. In that scenario 3EMA may not touch the candle if the gap is large. Is it necessary to exit the position immediately and re-enter when 3EMA touches the candle again. If so immediately or at the end of the day.
Regards
msri

 

[jayan12]

TH Sir, kindly clarify the following scenario:
We take a position at the end of the day. Next morning when the market opens up we observe most probably with gap up/gap down. In that scenario 3EMA may not touch the candle if the gap is large. Is it necessary to exit the position immediately and re-enter when 3EMA touches the candle again. If so immediately or at the end of the day.
Regards
msri

3ema-not-touch trade is executed as soon we notice it... and it is meant for making small profit ...till we get reentry when 3 ema touches.

 

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Bank Nifty is touching 3 and 15 ema.Is it a add signal ? What should we look for before we make our entry on monday ?

 

[jayan12]

We go LONG when at the point 3 ema crosses 15 ema and 3 ema line goes up.
We go SHORT when at the point 3 ema crosses 15 ema and 3ema line goes down