SH's MArket Correction Prediction Strategy

[Tradewithhunter]

OK guys .. after the 15 EMA touch, the 34 EMA also got tested today within the maximum timeframe mentioned in this strategy.

Now keep an eye on 100 EMA, the last time Nifty touched 100 EMA was on 10th June. So the retest of 100 EMA should happen before 10th January 2011.

If Nifty doesnt touch 100 EMA by mid december .. it will be a great place to start buying January puts !!!!

Keep watching 100 EMA :thumb:

Cheers
SH

NF made a low of 5822 today and that low has touched 100 EMA on daily charts.

The strategy continues to work ! :thumb:

Cheers
SH

 

[Prashant Patel]

Can you help in reviewing this?

Image Link:
http://img442.imageshack.us/img442/7195/2010novspcnxnifty800x60.png

 

[biggles]

so based on this strategy,what trades have u all taken ?

thanks

 

[Tradewithhunter]

so based on this strategy,what trades have u all taken ?

thanks

Dear biggles - I was short based on my 315 strategy since 6095 levels. Since the 100 EMA pullback was in action, my targets for shorts was 100 EMA.

Once the 100 EMA was reached, I booked my shorts at 5840 odd levels and then longed Nifty with 100 EMA break as SL.

I am long now.

Please see my other thread posts below:

http://www.traderji.com/technical-a...gy-how-use-if-effectively-180.html#post490474

Cheers
SH:thumb:

 

[mrnakar]

Dear SH,

as per this Strtegies now we can go FOR LONG?????
as 100 EMA is touched now what we do ??
or waiting for ???????

 

[Tradewithhunter]

Dear SH,

as per this Strtegies now we can go FOR LONG?????
as 100 EMA is touched now what we do ??
or waiting for ???????

As per this strategy - we are now waiting for a 15 EMA retest.

Cheers
SH

 

[biggles]

Dear biggles - I was short based on my 315 strategy since 6095 levels. Since the 100 EMA pullback was in action, my targets for shorts was 100 EMA.

Once the 100 EMA was reached, I booked my shorts at 5840 odd levels and then longed Nifty with 100 EMA break as SL.

I am long now.

Please see my other thread posts below:

http://www.traderji.com/technical-a...gy-how-use-if-effectively-180.html#post490474

Cheers
SH:thumb:

thanks twh, for a prompt and clear response.

i have taken 5700 call and 6300 put with a bias towards puts(negative trend). is it in consonance with ur strategy? (there wasnt enuff time between my reading ur post and the mkt closing bell so acted in haste)

If the trend is expected to be up, would u advise to close the puts 2moro?

thanks

 

[Tradewithhunter]

thanks twh, for a prompt and clear response.

i have taken 5700 call and 6300 put with a bias towards puts(negative trend). is it in consonance with ur strategy? (there wasnt enuff time between my reading ur post and the mkt closing bell so acted in haste)

If the trend is expected to be up, would u advise to close the puts 2moro?

thanks

Yes... puts are worthless until we are above 100 EMA on daily.

Cheers
SH

 

[Tradewithhunter]

OK dude - here you go.

How to earn 25% to 50% ROI per trade twice every year


First of all, the trades are done in options. If you invest 50K in buying options, you can expect the options to become 60K to 70K within a month (sometimes more!) and hence 25% - 50% returns on investment. Anyone ready to invest larger amounts, My suggestion would be to start booking gradual profits starting from 10% onwards.

Success Ratio is again above 90% (based on my backtest which is usually pretty RAW since I dont know how to build AFLs etc). I am more than happy to be standing corrected if success ratio is lower than that.

This is also a market neautral strategy i.e it doesnt matter whether market goes up or down .. a trader will still earn.


Trade Setup


Ok - I have already explained how NIfty Futures likes to return to some key EMAs within a definite period of time.

One of the key EMA is 100 EMA which Nifty has to retest within 6-7 months. HOwever please note .. Nifty HATES 100 EMA ... i.e it doesnt like to stick around 100 EMA for long. It will either shoot back towards the main trend after getting resisted/supported by 100 EMA or if its a reversal it will shoot off in the opposite direction.

The key word is it 'shoots off' in one direction or the other but in no way it will stick around 100 EMA for long.

Now once we know this, how do we exploit this knowledge to our advantage?? Simple... As soon as Nifty touches 100 EMA ... we buy OTM (out of money) calls and puts both and hold until one of them becomes ITM (In the money). As soon as one of the option becomes ITM .. it will give you 25% to 50% returns over investment (even if the other option leg is expiring worthless).

For eg look at 3rd Nov candle which retested 100 EMA at 4650 odd levels. At that point one can buy 4800 Calls and 4500 Puts and hold. Since it was start of the month these options would not have costed more that 50-60 odd points each or Total investment of Rs 5000-6000 per pair of call and put taken together.

Now since Nifty hated 100 EMA.. it jumped back in the direction of the main trend making a high of 5024 on 11th November. At this point our 4800 call was selling for 200+ points and our puts were almost worthless. If we square off both calls and puts at that stage we get Rs 10000 per pair which is a WHOPPING 100% returns on investment.

I actually did not wait until 11th Nov but I squared off my option pairs on 9th Nov when Nifty touched 4850 levels and was satisfied with 50%+ profits.

Similarly you can check out what happened after 24th March when 100 EMA was touched at around 2990. After 9 trading days Nifty was sitting pretty at 3350 levels again generating awesome ROI.

you see the game plan?? :lol: The thumb rule is as soon as NIfty has moved 5% -6% in any direction after kissing 100 EMA .. your market neautral option strategy should be in 25% profits or above.

Thats how you can get 25% to 50% ROI atleast twice an year (since we know every 6th-7th month 100 EMA will have to be retested).

Happy Backtesting again :thumb:

Cheers
SH

Yesterday when Nifty touched 5822 and restested 100 EMA .... not sure how many bought calls and puts together .... We are up 140 points from the lows of the days from yesterday... I am sure the combo would have given 30% profits by now.

I couldnt trade it since I was busy with my future positions... anyone traded it?

Cheers
SH

 

[biggles]

Thanks twh.