SH's MArket Correction Prediction Strategy

[Tradewithhunter]

Vjay - This strategy is always BUY straddle never short it.....

Rmhatre - If today markets close below 100 EMA on daily .. you can safely assume the volatily is down and hence just hold puts for profit and exit calls.

If markets continue falling ...your puts will give handsome returns... if market reverses and closed above 100 EMA ... exit puts and buy some calls...

This was you will be able to maximise profits.

Cheers
SH

 

[DiwaliCrackers]

Sir,

i am having DLF FS XX 24/02/2011 -0.01 @ 273.80...please tell me what i should do...having big loss...-10K...please give me some call....

 

[mayur553]

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

SH.... 100 EMA tested today....you predicted it way before... lols... awesome...

 

[rrmhatre72]

Vjay - This strategy is always BUY straddle never short it.....

Rmhatre - If today markets close below 100 EMA on daily .. you can safely assume the volatily is down and hence just hold puts for profit and exit calls.

If markets continue falling ...your puts will give handsome returns... if market reverses and closed above 100 EMA ... exit puts and buy some calls...

This was you will be able to maximise profits.

Cheers
SH

Hi SH,

It correction strategy worked great..... nifty decided to run away from 100EMA very fast....
frankly I never expected it to be so fast.. In single day it feched ~20% returns without any risk as positions were hedged.
I exited with 8% profit as I was expecting some bounce back & thinking of reentering... That did not happen.

Anyway currently I am playing with stradle or strangle & exiting intraday to kill time dekay issue.
I will be looking into entering 5700pe + 5800ce or 5800ce+pe.
I will have to note your point that volatility will decrease tomorrow hence my buying price should discount that factor.

 

[Tradewithhunter]

SH.... 100 EMA tested today....you predicted it way before... lols... awesome...

Thanks - but after i wrote above post .. the 100 EMA got tested in November end itself if I am not mistaken .....

Cheers
SH

 

[Tradewithhunter]

Hi SH,

It correction strategy worked great..... nifty decided to run away from 100EMA very fast....
frankly I never expected it to be so fast.. In single day it feched ~20% returns without any risk as positions were hedged.
I exited with 8% profit as I was expecting some bounce back & thinking of reentering... That did not happen.

Anyway currently I am playing with stradle or strangle & exiting intraday to kill time dekay issue.
I will be looking into entering 5700pe + 5800ce or 5800ce+pe.
I will have to note your point that volatility will decrease tomorrow hence my buying price should discount that factor.

You will end up paying more brokerage than the actual time decay if you keep exiting intraday itself ... plus you will miss big moves that might come in the shape of gap downs or ups as the case may be ....

Also, time decay will not kill you if you square off one of the leg after breaking 100 EMA ... for example ... today when we opened below 100 EMA i closed all my calls and held only puts.

Cheers
SH

 

[Visualize]

Dear SH,

Did you notice it has been ~1.5 years since nifty reverted to 15ema on monthly charts.

 

[vinst]

Dear SH,

Did you notice it has been ~1.5 years since nifty reverted to 15ema on monthly charts.

Visualize,
Any backtest data on monthly?

regards
vin

 

[Visualize]

Here you go:

Uploaded with ImageShack.us

 

[vinst]

Visualize,
Thanks.
from the data you have given, it seems to be about 20 months within which monthly ema15 should be touched.
I'll try this with sensex data from 1996 and see if any further change is seen.

regards
vin