SH's MArket Correction Prediction Strategy

[AlokTewari]

You Owe me a treat alok

Hmmmm. Yes Anup. But having a strategy is one thing & following it up with courage & conviction is another. You have one half & I have the other:thumb:

Cheers !!!

Alok Tewari

 

[anup]

Alok, if any other charts not touching 15EMA , Please post the chart...

 

[bapu4]

Dear Alok,
Congratulations !!
How do u locate the scrips ??

-Vivek

 

[anup]

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

According to this strategy we will take some options .. AS the nifty has touched 100 EMA 5863 , we can take this option pair
5800 Put at 69.5
5900 Call at 72.4

Total cost of the pair=141.9

Wild moves can be expected in nifty considering Infy result and inflation data due.. We will track this pair closely..

 

[SEVEN STAR]

Try 3 EMA CROSS 50 SMA UP OR DOWN....REMEMBER IT IS 50 SMA..
AND 3 EMA. BANK NIFTY DAILY ONE YEAR CHART

screen shot on windows

 

[SEVEN STAR]

3 EMA always attached to candle. For variation can try 15 EMA cross over 50 SMA...this also can give clear picture of the trend.
This study can be used along with other Technical Parameters to get optimum result.

 

[anup]

According to this strategy we will take some options .. AS the nifty has touched 100 EMA 5863 , we can take this option pair
5800 Put at 69.5
5900 Call at 72.4

Total cost of the pair=141.9

Wild moves can be expected in nifty considering Infy result and inflation data due.. We will track this pair closely..

Still the pair is trading at 141.. Lets see what happens

 

[anup]

Still the pair is trading at 141.. Lets see what happens

5900 call high 116
5800 puy at 39...

 

[trade4putuval]

5900 call high 116
5800 puy at 39...

hi anup/alok,

You both must have noticed that this thread only highlights which stocks are eligible for SMC. Nobody posts their trades here. If you wish, you can start your own thread and post your trades there.

You can question the views and hold healthy debates, but I request you not to pollute this great thread with your trades.

 

[gmt900]

According to this strategy we will take some options .. AS the nifty has touched 100 EMA 5863 , we can take this option pair
5800 Put at 69.5
5900 Call at 72.4

Total cost of the pair=141.9

Wild moves can be expected in nifty considering Infy result and inflation data due.. We will track this pair closely..

Today at EOD, 5800 P is 21 and 5900 C is 150.
The pair is @171. Almost 30 points up.