An update on the technical strategy: the ITC trade mentioned in the last post hit a stop loss (mentioned this on twitter) at 348 after which, the stock went on its way and boom:
Remember the idea is:
- Stock traverses up (or down) one band.
- It then reverses direction and then tries to go back in the original direction, but this time reverses again before it touches the original bollinger band.
- A confirmation is required, I use a MACD crossover.
My exit was early and not really systematic, but the stop loss was experimented as a function of a recent low after the trade. (It had fallen as low as 334, and a 14 point rebound to 348 was enough to get me out of the trade).
RCOM too, has exited at 145 after triggering a short at 149. However, I didn’t take this trade as the size of the loss was too large for a strategy I am only testing with (can’t have disproportionate wins and losses)
Finally, the Sesa Goa Trade too has had stop losses, like ITC. I didn’t trade that set up too, don’t really know why. The trade lost 6% as the stock bounced from the 180 levels (
In the meantime during my Gurgaon trip, one excellent move came in without my having to do much: Hindalco . Hindalco fell 7% in a very quick short trade:
Btw, I realized I left the BHEL entry open, but it was closed at 147 a while back. Apologies for not mentioning it.
I have no positions on this strategy at the moment. I have also been testing this on the hourly timeframes with success, but all of them have exited. Looking at Cipla (long) and L&T (short) if the signals come.
So the overall system has done, in three months:
- 10 trades, 8 positive, 2 negative.
- Average holding period: less than 10 trading days
- Average win (9.8% – includes an outlier of +32% in BHEL, +6.4% if outlier ignored)
- Average loss (-5.2%)
Scorecard:
- Oct 26: ITC hits Stop Loss (-3%), Sesa Goa Stop Loss (-6%) and RCOM Books +3% (This Post) Also, Hindalco shows +7% as well.
- Oct 4: ITC and RCOM Short Entries, Sesa Goa stays open.
- Oct 1: Tata Steel exits at +6%, TCS call write expires worthless (+3%), Sesa Goa Entry
- Sep 18: Tata Steel and TCS short entries spotted, short fut and a call write, respectively.
- Sep 06: ACC entry spotted at 976, which has exited on Sep 11 around 1048. (+7%)
- Aug 23: BHEL entry spotted at 108, which shows promise to 140, but doesn’t close the gap.Partial exit at 142, looking for 147. (+32% if done right. I didn’t).
- Aug 06: Airtel Short Setup at 326, and exits at 304 (+7%)
- Jul 29: Nifty Short Setup at 5886, and exits around 5542. (+6%)
