Let me first thank all the following people for their kind words of appreciation:
mark_sas30, raj_hpking, cnbondre, and chitanyagoa.
Hi Raj,
CNB has almost explained on my behalf. Still I will put my version here for the benefit of all.
I am using AmiBroker and written a program (AFL) to generate the signals. I have selected a set of around 200 stocks and run the AFL on this set every evening after updating the quotes for the day. This AFL outputs the stock names which have satisfied a condition to signal a BUY or SELL. The condition is built into the AFL. Along with the Buy triggers the AFL also gives that day's Closing price, the Stop Loss and Expected Target price calculated according to the formula given earlier in this thread. After getting this output I visually see the charts of these triggered stocks just to verify that everything is ok. For example, when BHARTIARTL was split, I had not adjusted the data and I got the Sell signal for it. But after seeing the chart I realised the mistake and corrected it. I am testing this system by live paper trading. That means I actually place an order and get the actual purchase price during the market hours. But the order is a dummy and no real BUY/SELL action is taken. I do this to simulate the exact conditions which we face when we really do the trading.
This AFL is not a proprietary program nor it is going to patented or copy protected. Once I have the sufficient evidence that it does give good profitable results I will post it in this forum for all to use it and suggest modifications, corrections etc.
This AFL is not very complicated. I am making it so simple that even with an excel sheet or a simple calculator you can get the signals. A charting program like AmiBroker helps in filtering a large number of stocks. If you have just a few stocks you can use a spreadsheet. A few months EOD data is sufficient.
I request you just wait a little and go through the signals and follow up posted in Chapter II and have a feel of how it is performing. You can post your comments and questions here. I will try to answer to the best of my ability.
@CNB,
It is possible to program the trailing stop loss. What we require is to define the previous trough (low value). In AmiBroker you can do it with the function Trough(Array, Change, n=1)
Regards
-Anant