STAIRS SYSTEM & PROCEDURES

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STAIRS is a signaling system where a non-discretionary algorithm determines if the

current state of the market (Nifty and Bank Nifty Spot Index) is suitable for long or
shorts based on its parameters.

The base underlying idea is to catch dominant trends and stay with the
trend till they change​. The focus is on reducing our attention on market noise
and follow a structured approach even if comes at the cost of reduced returns. This
way STAIRS ensures that you spend no more than 5 minutes per day looking in and
managing your position. On average there are about 60 turns per year and an
average month will have only 5 trades.

The signals on the SPOT indices are disseminated on a telegram channel a hourly
basis at the following times (within seconds of this time)
10.15AM
11.15AM
12.15PM
01.15PM
02.15PM
03.15PM
03.25PM

A sample signal will look like this

A few seconds later, the absolute value of the spot index long will also be flashed

Near the end of each trading day, the days position that is being carried forward is
again flashed at 3.25 PM

The position change signals are flashed ONLY if there is a change… so there may be
days or weeks when the same signal may continue. If there is no change in any day
the only Telegram message you will see is near the end of the day at 3.25PM about
the current position.

Within seconds of the telegram update, the shared Google sheet (link is in
on-boarding mail) is also updated with the new trade for both Model 1 and Model 2.
This sheet is accessible only from your registered g-mail ID

Sample

For telegram you can use a different notification tone or set a hourly alarm in your
phone to peek in.

There are various ways of using the signal. Using these signals you can either follow
the two suggested models below, or build your own directional model using futures
and /or options.

On receiving the on-boarding mail please ensure you are able to login to the google
sheet and access the Telegram Paid Group which will be added by the admin. Scroll
up on the telegram group and read past messages to familiarize yourself. You can
also keep your access to the ​FREE Telegram End of Day​ group as many general
references are made there to avoid cluttering the paid group.
We propose two basic models of operations for plain vanilla use of the directional
signal.

Model 1 : Futures position based on capital allocation basis

Model 2 : Futures position based on a per lot basis (risk managed by user)

Model 1:

The basic premise of the STAIRS system is that it is an Always-in-trade model. So

the position of Nifty and Bank Nifty can be long or short (independent of each
other) but always in trade. A long ends and a short starts and vice versa.

This model is a leveraged model and the model assumes and recommends a
leverage of 3X (unless we high very high volatility when we announce reduction to
1.5X leverage). This means that the notional position taken (Qty X price) will be 3X
of the capital at hand. So if you allocate INR 5 lac to Nifty, you can take 15 lac of
notional nifty position etc. You may also vary the leverage as per your liking as
well.

The model 1 typically results in 40 to 60 trades per year. There can be periods of
frequent trades if the markets are choppy or may not have trades for weeks if
markets are trending.

Since the positions are leveraged 3X and margins required (by the brokers) are
only 10-15% or so on notional value, about 70% of your capital will sit idle in your
trading account. We can use the LIQUIDBEES vehicle to park the idle capital and
earn some interest annually on that part. That is totally up to you. This excess
returns is able to nullify the transaction costs for our 40-60 trades of the year as
well as any gaps between spot and futures prices. You can also choose to keep this
excess capital elsewhere if you have better use for it but be able to bring it back
when needed.

As is known nature of all systematic trading strategies, there may be long periods
of draw-downs and adherence to the system only can make you a winner in the
long term. The strategy per se is not so important but the discipline to follow it
diligently with proper risk management is.

As your capital goes up so can your position size if you like. A google sheet with
complete transaction history is also shared with you and updated alongside each
signal change. You can make a copy of it and use that template to track your own
trades ( use the format sheet link to make a copy and populate it) . A video of how
to maintain the sheet is provided separately

As a service assurance for the annual subscription users, if at the end of the year
the model performance is below 8% or below 8% annualized at the end of any
subsequent month, it will result in free extension of subscription services till such
time you are able to achieve the above conditions. The service guarantee is
calculated on Model 1 basis.

Model 2
On demand from a lot of our users who did not wish to lock up so much capital in
idle form, we have offered another model where ​the risk management was
decided by the user​ and the positions would be taken in multiples of 2 lots each.

The user takes positions in Nifty and Bank Nifty in multiples of 2 lots each as per
the signal and books half the position on a >1% move (profit/loss at the end of the
hour) . The other half of the position is exited as per the usual next signal turn and
once the new signal is achieved the position again goes into multiple of 2 lots in
that direction.

Example : So you could go LONG 2 lots (or multiples of 2 lots) each. At one pct
gain/loss on spot half positions are closed and rest half positions are continued till
we get a short. Once the SHORT signal is there, the half longs are closed and full 2
lots (or multiples) are shorted.

The performance of Model2 is not strictly comparable to the Model 1 as it depends

on the risk management deployed by the user, it could be a better proposition for
many. It is advisable to however try to stick to leverage of no more than 3X.

Model 1 performs better in trending markets while Model 2 can perform better in
choppy ones. I always encourage users to add their experience or layer of
intelligence on top of these basic models to build a more robust system that can
suit your risk profile more. There are no hard and fast rules on leverage etc. You
can start at a low leverage and build gradually up from there.

If there are any queries at any point of time, just shoot a mail to
niftytrader@gmail.com​ and I should get back to you within 1 to 6 business hours.