SH's 315 Strategy - how to use if effectively

[TraderRavi]

can you please attach the excel file if you dont mind.Because i am having a really hard time figuring it out.

check page no . 322...

 

[tanewbie]

can you please attach the excel file if you dont mind.Because i am having a really hard time figuring it out.

d/l fr

http://www.mediafire.com/?tuvligq7jzs1qz7

 

[gambler]

Dear Ashish,

Bullish Cross over point for today is 5017. Please confirm once again your value. Yesterday 3EMA Oct'11 series was 4988.15 and 15EMA was 5000.51

Please find below excel sheet link.

http://www.4shared.com/document/vm1vEXTl/SH_online.html

Thanks!

I think tomorrow is one of those rare days when even if the nifty goes down there is a +ve crossver. if nifty closes over 5009.55 - we still have a bullish crossover.

 

[abhi_neth]

I'm getting reversal levels as 5026.

 

[gambler]

How do you check reversal levels.

I checked reversal level by 3EMA & 15EMA of october series.

Reversal levels should be matched. Kindly let us know how you check.

Thanks!

I'm getting reversal levels as 5026.

 

[galrani]

How do you check reversal levels.

I checked reversal level by 3EMA & 15EMA of october series.

Reversal levels should be matched. Kindly let us know how you check.

Thanks!

I for one, use the september series and after expiry i.e. today I will start using Oct series with the carry forward ema calculations of yesterday...


As per my excel sheet, the cross over was at 5013.2

I think instead of concentrating more on the finer point where cross over happens, its more important to concentrate on being ready for the trend.

Anyways as per the 315 strategy, you have to wait till 3.15 in the afternoon to initiate trade, so it really does not matter 5013 or 5009 or 5020. Its more important to know that the cross over has happened and to be nimble enough to book profits and re enter at 3ema touch.

Cheers

 

[abhi_neth]

How do you check reversal levels.

I checked reversal level by 3EMA & 15EMA of october series.

Reversal levels should be matched. Kindly let us know how you check.

Thanks!

I did the same, & used the Excel sheet provided.
Here are the prices I'm getting on my screen.
Yest Close: 5019.25, 3EMA: 4982.98; 15EMA: 5003.81

 

[ashwani chadha]

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:

thanks for introducing this system of trading

 

[ashwani chadha]

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:

thanks for explaining ,how to use this strategy

 

[ashwani chadha]

Hi - Related to the charts posted earlier by Bandlab2... its good you used EOD.. i personally trade on EOD using 315.

Also note that the recent bearish crossover was ON the budget day not before. so basically the current swing is bearish on Nifty.

I am also putting up RIL's EOD charts .. see how it has crashed from 2150 levels to 1800 levels after giving a sell signal in the current swing (please see red arrow).

Please do not buy RIL for delivery unless 315 gives a buy

As i said earlier, I will be back with some rules which will make 315 strategy a more PROFITABLE proposition.

Cheers
SH:thumb:

system looks to be quite successfull,i have opened this thread to day and reading the link provided for summary of the thread,being a commodity trader,i will use it at commodity,i feel it is going to work very well and shortly will share the result of commodity at the thread