SH's 315 Strategy - how to use if effectively

[Tradewithhunter]

Why are you still long in SAIL?
I took position in SAIL but got whipsawed twice (last two days), overall SAIL was not looking weak, so closed my position at loss.

oops sorry observer .. I follow 534 for SAIL since its a less volatile stock. I was just putting my positions.

Cheers
SH

 

[observer]

If the stock IS too volatile, should we not use 534 to filter out noise? Or is it the other way round?

 

[Tradewithhunter]

If the stock IS too volatile, should we not use 534 to filter out noise? Or is it the other way round?

the way I see it.. in more volatile stocks you want to get into a trend as soon as possible so that you can encash a fast move either ways... hence 315.

A less volatile stock would not tend to move fast in either direction hence no need to get into a trend early.. hence 534.

Cheers
SH

 

[Trader4242]

NIfty closed at 5085 yesterday, 315 bearish signal was confirmed and I have reversed to shorts in Nifty at 5083 levels.

Longs were at 5262 levels hence this gave a loss of 199 points ! Got saved by ICICI shorts ... (have also been holding IFCI & Unitech & shorts in my portfolio and SAIL still long)

So 5 positions in my portfolio now are:

IFCI shorts
Unitech Shorts
NIfty Shorts
ICICIBank Shorts
SAIL Longs

Cheers
SH

NF now at 5083 .. 3 EMA not being touched... booked NF at 5083 here (100 point profit) . Will reenter at 3 EMA touch.

Other shorts in stocks being booked too as per 3 EMA rule. Fantastic day !! :rofl:

Cheers
SH

Hello SH

Interesting way of using EMAs.

When I started using TA for trading the MA lines criss crossing on the chart and generating these Buy/Sell arrows looked like the Holy Grail, but after experiencing a few whips made me swear that i would never look at these wiggly lines again

You seem to have evolved a nice way of using them; profit booking and re-entry should be making a big difference. Just goes to show that the simplest of all tools can be used productively.

Thanks for sharing your work here.

 

[feelbullish]

hi feelbullish!!! What an intelligent question!!! But just see what sh had written at the beginning of the thread :



I almost laughed aloud!!!!

5 trading weeks in a month!!!

Well he qualified his statement by saying "almost"!!!

sh was dishing out free stuff so one 'questioned' him how did he get 5 weeks in a months!! (daan kee bachhiya ke daant nahee gine jaate)

so you see its all approximate!!! 3 and 15 works irrespective of the reasons there may be!!!! The most significant reason would be that it worked 'historically!!!

Moreover we are not trading intraday or hourly charts so it does not matter if the trading time is enhanced!!!

lets not get into all this and be on the the constructive side of the matter....

 

[Tradewithhunter]

Took a bad risk on 3 EMA rule today ... was cursing myself at one point but it finally paid off !!

When NF gapped down, I exited my NF shorts at 4983 (as stated above).

When NF fell further to 4975, I saw that January series 5000 CE was selling for 55. Since my rule book say 3 EMA has to be touched within 3 days , i decided to take some risk by buying 5000 calls at 55 and keep buying them if Nifty falls more to average in a hope that if Nifty moves up even 60-70 points to touch 3 EMA by Monday (which was actually 130 points away) I would be able to make profits.

I started buying at 55 and by the time NF touched 4950 I had 16 lots of 5000 CE at an average price of 46.

5000 CE was trading at 40 and I was trying to gather courage to buy more if it fell further.

Thankfully 3 EMA showed some strength, some big players came in to buy Nifty and took it to 5050 ... by that time I had exited all my 5000 CEs for an average sell price of 70.

3 EMA rocks !! :thumb:

I have still not got back in NF shorts since 3 EMA has not been touched by EOD candle.

Cheers
SH

 

[feelbullish]

hey bro....

how do you decide that bf is no touchinf 3 ema durin mkt hours?

thru online softwware?

 

[observer]

T

Thankfully 3 EMA showed some strength, some big players came in to buy Nifty and took it to 5050 ... by that time I had exited all my 5000 CEs for an average sell price of 70.

3 EMA rocks !! :thumb:

I have still not got back in NF shorts since 3 EMA has not been touched by EOD candle.

Cheers
SH

Why did you exit options before price retracing to 3ema?

Also I have observed if prices move down/up too much after opening away from 3ema, the 3ema re-entry point becomes indecisive. And the next day if the market moves up/down further, the 3ema gets pulled up/down and touches the candle eventually. Such sessions the benefit of 3ema play diminishes and re-entry comes at a higher/lower point. How do you trade such days?

B. Do you have any protection strategy when a position whipsaws? I am not asking a way to avoid whipsaw, but after entering a position, is there a way to minimize the loss dues to whipsaw?

Thanks

 

[raj_usb]

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:

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Hi,

Could someone pls tell me what is the meaning of 'SAR' in above post?

Thanks in advance.

 

[VJAY]

Sar=stop and reverse