5/10/2021 GuruSpeak | Ankush Bajaj: An Algo Trader On How He Trades Multiple Strategies For Steady Returns

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Diversi cation of stocks in a portfolio is commonly seen in investors. But for traders, especially
those trading on a shorter time frame, diversi cation of trading strategies and positions are dif cult
to manage.

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5/10/2021 GuruSpeak | Ankush Bajaj: An Algo Trader On How He Trades Multiple Strategies For Steady Returns

Ankush Bajaj, a trader from Raipur, Chhattisgarh, manages to balance many plates at a time. He
takes the help of algo trading to trade multiple intraday and short-term trading opportunities.

Born in a humble family, Bajaj completed his graduation and an MBA while working with a broker.
His thirst for knowledge took him to a seminar on algorithmic trading from where he never looked
back.

In this interview with Moneycontrol, Ankush Bajaj talks of his journey and trading strategies.

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After my higher secondary schooling, I decided to
support my family by taking up a job in Delhi, where
my maternal uncle helped me to get a job with a
broker. That was my rst introduction to the market.

I worked for Elite Stock Management, a Delhi-based

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Yogeeswar Pal — a risk

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I later joined Sharekhan in Raipur, where I worked for 5

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yogeeswar-pal-a-risk-averse-options-trader- years and learned the tricks of the trade. I joined their
on-his-trading-secrets-and-how-he-diversi es- Online Training Academy, where I learned about the
positions-6711551.html) tools of trading, which I use to date.

From Sharekhan, I moved to IIFL and over time I

developed enough con dence to start my own companyAlgodesk -Alfa FineduconPvt Ltd where
along with trading with the help of algorithms we also train traders.

Q. Tell us about your trading journey

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5/10/2021 GuruSpeak | Ankush Bajaj: An Algo Trader On How He Trades Multiple Strategies For Steady Returns

I was introduced to the market when I was in Delhi, but due to certain family compulsions, I
returned to Raipur. But the market exposure in Raipur was limited. I was lucky to get the support of
ShashwatVerma, a fellow trader who stuck with me through thick or thin. It is with his support that
we built our rst Algo system in 2015.

We kept ourselves abreast with various trading styles and techniques by attending seminars and
webinars of traders like AsitPati, AshwaniGujral, Rajendran, and Santosh Pasi. With the grace of the
almighty and my parents' blessings, I started the ful lling journey of a trader.

In my initial days, I relied on the demand and supply or support resistance methodology and
traditional indicators.

In 2013, I attended an Algo Trading workshop, and I got hooked to it. I am more of a system trader
where I like to have pre-de ned entry and exit points based on ful lling certain conditions. Algo
trading meets my requirement for trading.

In later years I did extensive studies on technical, fundamentals, valuations, and derivatives which I
used to develop my screeners for algo trading.

I also tried to gain mastery in pair trading strategies and studied extensively the mechanics of
standard deviation and correlate it with many parameters.

Q: What was the most dif cult aspect of trading?

Like many traders, I used to jump from one system to another quickly. This went on until I read
about the 80 20 rule. I tweaked it a bit to suit my need. For me, trading is 80% psychology and 20%
system. As per my understanding, one normal system with good risk management and perfect
position sizing can do well in this market rather than a good system with poor money and
psychology management.

After going through numerous strategies, I concluded that trading is more of a psychological play
and less about other aspects. One has to be continuously motivated to weed out negative thoughts
and to discount news.

Q. How do you presently trade?

We are currently trading 6/7 strategies at a time. Around 70 percent of our strategies are trend
following ones, and the others are either mean reversals or non-directional option strategies.

We have done back-testing of numerous strategies both on an intra-day and end-of-the-day basis.
Trend-following strategies are normally correct 4 times out of 10, but they give a risk-reward of
anywhere between 1 3 and 1 4. Compared to that mean-reversal strategies have a 1 2 risk-reward
ratio. On an intra-day basis, the risk-reward can go lower for mean-reversal trades.

One of the strategies that we do is pair trading, mainly between Nifty and Bank Nifty. We have seen
that both the indices move in harmony most of the time, but there are those rare occasions when
they move in a different direction.

Our algo tracks the two indices in real-time, and based on the Z-Score (indicates how far from the
mean a data point is) we take a trade. Our entry will be when the probability of further divergence is
less. Depending on the divergence, we buy one index and sell the other. Our exit is when the
divergence narrows and comes back to historically normal levels.

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5/10/2021 GuruSpeak | Ankush Bajaj: An Algo Trader On How He Trades Multiple Strategies For Steady Returns

We also trade volatility breakout trades for which we run a query to select stocks that are on the
verge of an explosive break out after a series of narrow range bar.

Having said that, I am more of an index-based positional trader rather than going for stocks. I use a
combination of 3-4 indicators to take a trend-following trade. The success rate of these trades is
between 40%-45%.

I would like to share one of my trend-following strategy which is based on the Heiken Ashi chart
(HA) as it is easy to identify trends by using this chart. Along with HA, I add a Supertrend (10/3)
indicator and trade it on a 5 minutes timeframe.

To eliminate noise and whipsaws, I use a 200-period Simple Moving Average (SMA) which helps me
in identifying the trend. I take trades in the direction of the trend. If the price is above the moving
average and we get a green HA candle with a at bottom, I will go long above the high of the candle.

In case of a short trade, a red candle with a at top is needed, and the price has to be below the
moving average to initiate a trade below the low of the candle. The chart below shows the trades
taken through this system.

Traders can use this system with Pivots or Average True Range (ATR) based target for intraday.

Backtest of 10 years data shows 24%-25% CAGR (compounded annual growth rate) return with 8-
10% maximum drawdown (DD) and a success ratio of 40%.

For trend following strategies, I generally trade in a futures contract or by buying options. I try to
achieve a win to loss ratio of 1 3 and am constantly working on improving my drawdown.

Trading multiple systems help smoothens the pro t curve.

Q. Your plans for the future

I plan to set up a huge algo desk comprising new and experienced traders. To increase my
knowledge in the nancial market I am pursuing CFA (Chartered Financial Analyst) and am also
planning to do CMT (Chartered Market Technician) in the near future.

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5/10/2021 GuruSpeak | Ankush Bajaj: An Algo Trader On How He Trades Multiple Strategies For Steady Returns

SHISHIR ASTHANA

TAGS: #GuruSpeak (https://www.moneycontrol.com/news/tags/guruspeak.html)

FIRST PUBLISHED: MAY 10, 2021 09:49 AM

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