The 315 Strategy for EOD trading
The first step is to understand what is 315 .. its advatages and disadvantages. The second step is to understand some rules I have derived to use it effectively. Rules are related to effective entries, effective SL management, effective profit bookings, effective re-entries and in the end effective money management or effective safeguarding the capital. In this post I would focus on step 1 i.e what is 315 etc. 315 Strategy for swing trading 315 is a simple swing technique which tries to identify a trend very early. In this strategy we use only EMAs name EMA 3 & EMA 15 (hence the name 315). People ask me why EMA 3 and EMA 15 .... for me last 3 days define the immediate average price ... to find the slightly longer term trend i use the factor of 5. This is becuase 5 has an interesting relevance to markets.... we have approx 5 hours of trading everyday, 5 trading days in a week, almost 5 trading weeks in a month .... So I simply multiple 3 by 5 to get my 15 EMA which defines my medium term average price. Now in simple terms, if our immediate average price is higher than the medium term average price that means we are entering in a bull swing ... and visa versa. Hence the strategy entries are: 1 Enter Long when 3 EMA goes above 15 EMA 2 Enter Short when 3 EMA goes below 15 EMA Advantages of following 315 strategy 1. A simple technique using just 2 EMAs, no other oscilattors or indicators required. NO advanced charting softwares required. 2. System is based on following the ULTIMATE indicator available i.e price action. 3. Keeps a trader in the trend, lets the full swing to complete. Never gets a trader against the trend. 4. Since we are just following price action, we dont need to worry about divergences etc. Disadvantages of 315 Strategy 1. Works brilliantly in a trending market but can whipsaw in extremely ranging markets. However this can be overcome by certain rules and money management to be explained later in this thread. Coming back to my rules... I will talk about Entries, position sizing, pyramiding and Exits (yes, its not always in a trade method) !! BUT FIRST OF ALL, PLS APPLY 315 TO EOD ... believe me i have thought (and tried) applying 315
to intraday but success ratio is too low. 315 is for traders to trade less and make more money. Coming to rules.... Entries Entries are simple, you wait for a candle to close above 15 EMA, next candle to open and see if 3 EMA is above 15 EMA or not. If the answer is 'Yes' you go long. For shorts you need an exact opposite setup. An Improvization possible is: I would go long as soon as crossover is clearly visible. Losses can be substantial only if the candle which created the crossover is a hige wide range bar. In that scenario you can skip the trade. Position Sizing Since in this system SL cannot be defined as a 'level' your initial position sizing has to be small. Depending on the trading capital, you dont want to put more than 25% capital which you want to put in this trade in as the first trade i.e assume if you can trade a total of 4 lots max, you will start with 1 lot. Rest 3 lots we will add later as our position moves into profit. Pyramiding Pyramiding or 'adds' are obviosly done once our position has 'swung' into profits. The rule is we add when the markets correct after a swing, price comes and touched 15 EMA again (but 3 EMA hasnt crossed over). This means that we add very close to our SAR hence keeps the risk small and also ensures that even if SAR is triggered we still end up in net profits (since our initial position is in profits hopefully now). [1 more condition added later and the high/low of previous day is breached for longs/ shorts respectively. ] Exits Yes, we do exit at certain points even when our SAR is not hit. These exit points are obviously when our position is suddenly in deep profits becuase of an extreme rally or crash in our favour. The exit points are where you find our 'current' EOD candle is not touching 3 EMA at all. On this candle, we book profits and wait for markets to correct back and touch 3 EMA again. As soon as 3 EMA is touched we jump back into our initiaal position. So in a way we stay with our position, we just exit it once and get back in after a small correction. Improvisation for Re-entry as suggested by raj_usb Before jumping back to our initial position I suggest to look for trend of 3 EMA. If it is in the direction of the original trend (Up for Long and Down for Short) then we should jump back into our initial position. BUT if 3EMA direction is against our original position then I suggest to wait and watch. Once 3 EMA turns in the direction of our original position then we can jump.
In the end, I would try and touch the most important piece which is 'how to protect capital from whipsaws' .. but thats later.....
Sar=stop and reverse
OK - so seems we have digested the 'basics' of 315 and its time to move to advanced '315' which takes care of how to avoid whipsaws and protect capital. I will first give you an example of the most painful trade that you can come across in 315. please have a look at below example. The EOD candles are from 4th Feb to 17th Feb with 3 EMA (red line) and 15 EMA plotted.
Now as you can see, 315 generated a buy on 6th Feb since EMA crossover was almost confirmed so we entered longs at around 3.25PM on 6th Feb at 2830. Now, Nifty swung up until 13th Feb and made a high of 2974 on that day.(If you notice that day was actually our Exit day since again candle body didnt touch 3 EMA). However, for sake of this example, please assume for a moment 3 EMA did touch the candle and we stayed with our longs. However next trading day (16th Feb) it crashed and touched 15 EMA at around 2850. This is technically where we 'ADD' as per the strategy. So if we add at 2850 we then have 2 lots long at average price 2840. The day ended at 2831 but since 3 EMA was still above 15 EMA we will hold as per the strategy. Now next day it gaps down against our position, opens at 2800 and finally closes at 2753. Thats when
Effective add is after 15 EMA is touched and previous days highs are breached
. I actually dont add on 16th Feb becasue I am waiting for 17th candle to go above 16th candle which never happened. please absorb and post any questions.well I can be slightly less greedy and delay my 'ADD' to a point where I have some confidence that the correction is over and the markets are swinging back in the main trend's direction. So coming back to the example below. In coming days i will talk about 'effective SLs' and 'effective' profit booking. So I amended the ADD rules slightly.
For me 15 EMA is my indicator.NOTHING.our SAR is hit since 3 EMA crossover is confirmed and we jump into shorts. the first thing I ask from myself here. an upward sloping 15 EMA means uptrend and downward sloping 15 EMA means downtrend. The second thing I ask from myself is . 3 EMA is still below 15 EMA for shorts and visa versa AND 2. I said I will add only if below 2 conditions are fulfilled: 1. We will see in live soon how we will do an 'effective' ADD if markets start to fall again. As a trader. So I just had 100 point loss instead of 200.what can i do different to reduce the overall loss in such situations? The reply comes back . We have lost a hefty 100 point per lot or total 200 points overall. For the time being. The current candle breaches previous day's lows for shorts (previous days highs for longs) This means that I add longs when i see fresh buying has started after the correction.. This is slightly high probability add though it means I dont add exactly at 15 EMA but slightly away from it. A flat 15 EMA means no trend. This is how I protect capital by 'ADDING' effectively. what could i have done to avoid this whipsaw completely? The answer comes back .
but not everyday I find trading at 3.. If 3 EMA is not touching the candle....25 PM to be safe since in the last 5 mins once a EOD crossover is still visible 99% of the times markets wont move so violently to suddenly negate that crossover.29 the crossover is negated you can always exit.. I ususally hold and exit only once 3 EMA is touched. Therefore. you can also play for openiing range breakout of first 5 mins i.The discount/Premium over spot is severe especially at the time of Exipiry of futures. Quote: Which prices do we need to use to check to determine if a 3/15 cross over has occurred or not ? Do we use the SPOT prices or the FUTURES prices ? For e. this is becuase by the day end the price can reverse and there might not be any crossover visisble then by day end. As a trend trader I am happy to take these small losses to get that big profit trade.. lets say at 3.How do you handle the gaps? when open is below our SL.. One should consider FUTURE data only for 3/15 Crossover.. and in any case if at 3.. 100/144. yes we would exit at the open unless the 3 EMA is not touching the candle. At close to day end. if you see 3 EMA crossing 15 EMA the trades should be opened immediately.. if it opens below our SL. Note: Be carefull around 50/55. the moving averages for the NIFTY FUTURES may be entirely different from the SPOT. alternatively.
.. most of these stocks are now testing 100 EMA zone hence booking all shorts . then exit at any cost at open? Hi Bandlab.g.e hold if after a gap down markets go above the first 5 minute range keeping an SL slightly below the range's low. Good morning.. no strategy would give you profitable trades 100% of the times.25 PM just before the market close.. once 15 EMA crossed 100 EMA bearishly that would mean offical bear market for me until a reverse crossover happens again. I am patient and happy to wait. 315 is like a hen which lays a golden egg every once in a while . 200/233 DMA Quote: Originally Posted by Tradewithhunter What I meant by candle close was that we should not jump into trade at 12 noon just becuase at that point a crossover is visible. NIFTY FUTURES can sometimes trade at +/-1% premium/discount to NIFTY INDEX.
e i do not have to wait until 7 PM to see how todays EOD candle or EMAs are looking. the 3 EMA and 15 EMA also keeps changing.. My EOD candle is real time and so are the 3 EMA and 15 EMA .25 PM to see how the 3 EMA and 15 EMA are finally closing for the day.I use a software that updates real time i. I wait until 3.
. since the EOD candle keeps changing shape as market goes up and down during the day .. If i see any crossover... i immediately open the trade assuming no wild movements in the last 5 minutes.
you might get a 100 point loss each in first 2 trades but the third trade will give you a 600 point profit. and 17th October was also a 'book profits' day as per 315 rules.. Look at SBI itself .... But even if i had entered as per signal on 27th @2204 still i would have had got whipsawed since on both days SBI's intraday high was much higher than 2204 (2339 on 27th & 2232 on 28th).... do you have the nerves... our SL is when an opposite crossover happens.. thats a massive 750 points move.. a loser won't have traded the third signal which gave a 750 points profit after those failed trades.. see my point? you need to ask yourself. (sorry but i call them penny wise pound foolish traders). Hi.. your SL is only when 315 gives a bullish crossover even if that happens when SBI is closing at 2400 suddenly the next day. As i explained in my previous post. welcome to the world of successful traders.
. Please understand this is not an intraday game but a SWING game where both SLs as well as profits will have to be BIG ! so if you have shorted SBI at 2204 you need to wait for markets to swing.. faith and enough capital to take 100 point SLs and still trade based on 315 after 2 failed trades? If your answer is yes. pls!!!!! 315 is a strategy for patient traders who have nerves to hold positions even when they move in loss (or profits) waiting to exit only at a 315 signal . but before that SBI gave a couple of false trades since it was rangebound and caused losses of 200-300 points. thereafter market kept on going up.. Plz guide on stop loss to be kept at entry that is crucial thing i feel. its not for traders who have small risk appetite and get scared by intraday wild moves . Avoid entering or exiting based on intraday moves. the last buy it gave was at 1752 and after that it went to make a high of 2500 on 17th October.Quote: Originally Posted by ppmatkari yes i did enter late in SBI & as i said i picked it near the nifty's days low .
can u please confirm as i am still learning your strategy. If the mkts dont correct.. some securities will start correcting and give opposite signal. and from the rest 15 i see some stocks giving sell signals.. if the range is 300 points on Nifty . it means these stocks are weak as compared to other stocks and I short them instantly... my shorts will whipsaw but my longs will move in huge profits Current examples were I was long in RIL. Net result is both suzlon and unitech broke down and gave nice profits while other stocks gave sells much later. Net net earned in longs and shorts both. you can still make money in 315. Yes mangafreakz. my long positions would whipsaw but my shorts will give me huge profits. However as trend changes. However depends on how tight the range is . nothing can help you except patience and acceptance of these small losses. Thanks. SesaGoa. Nifty and BankNifty. DLF. However a tight range often signals an upcoming big move so no reason to give up following the signals even after some consective losses.. I track top 20 active securities and trade in them in future. So if overall market corrects.Quote: Originally Posted by Mangafreakz @SH You track the Top 20 active securities for your futures trades? Also BNF had triggered sail on 27th i think . The trick is to be the first to buy a strong stock and sell the weakest stock and there 315 is your best guide. Out of these 20 I trade in upto 5 stocks at one point and keep some capital aside to catch a trend change .
. Usually in a strong trend I end up with longs or shorts in all 5 stocks. However Suzlon and RCOM gave sells before anything else and I jumped in shorts in those. this is becuase in stron trends almost all 20 securties would have same 315 signal. For eg if I am long in 5 stocks. This hedges my long positions beautifully. but if the range is 150 points.
Yes 315 is a trend following strategy and in rangebound markets you might get whipsawed.
.m. the day when 3ema is touched do i reenter at 3:25 p. Visual retest works in our favour both ways since it delays our add when market is correcting against the trend. 2. on a real time basis your EOD EMAs will by dynamic i. if the markets dont rise but keep falling.e if NF is trading at 5000 and we see 15 EMA at 4850. 15 EMA would close around 4850. Also.. Rest is upto the users and their improvisation. Yeah I reverse and go short immediately. Conversely.. So my thumb rule stays as 'Add only when you see price retesting 15 EMA without waiting for candle to close'. Lets say we ADD at 4820 when visual retest happens and markets rise later in the day and mkts close at 5000.Quote:
Originally Posted by tradenifty Hi Stockhunter. Please understand. I have an another question. This is because by the time markets falls to 4850 during the day. By waiting for a visual restest to ADD we were just able to buy at a lower price (4820 instead of 4850).m. so if on 16th low of 15th is breached we go short again. This is where 'visual' retest of 15 EMA is important. Again we are not worse off since we added longs at 4820 and not 4850. I keep doing it no matter how many times i get whipsawed. you should exit as soon as you see current days candle not touching 3 EMA. Hence we add only when we see a visual retest which might happen at 4820 or 4810 or even lower. 14th low becomes irrelevant. I do not keep any filters becuase I cannot define any % to be used as filters since the underlying 15 EMA value keeps changing during the day.25 for Exit . 1. ? No you should not wait for 3. the day when 3ema is not touched do i exit at 3:25 p.. they can always better this system with their experience. 15 EMA would have dropped too to lets say 4820. its possible a bearish crossover happens at 4700 levels which forces us to exit longs and open shorts. we cannot blindly ADD at 4850. Thanks for your reply.m. I have understood that I make an entry on 315 ema crossover at 3:25 p. Immediate previos day is what matter . However.
Exiting longs at 4946. Dear Karthik. it cannot be 'book profit' candle since we did not have shorts . there were 2 ADDs and multiple profit booking candles which makes this 500 point rally to something like a 1000 point profit.In such situation what should be our course of action. I have written some posts in the past of effective money protection and you can read them. after 3 whipsaws in August came a strong one way rally from 4650 to 5150 and that proves my above point.. I might be wrong . one aspect is not clear i. rest 50% to be added when 3 EMA is touched.. From that point if Nifty falls . I am opening 50% of Nifty shorts today.Quote:
Dear SH.23 PM now . As you see in your example itself. This strong trend will be enough to cover all your losses made and will be able to giev some profits on top of it. then long entry & then another shorts all whipsawed). If you could see from the chart there were so may whipsaws in Aug'09 which i have marked in a box. There were 3 whipsaws in August (first short entry. But if Nifty
.how can we book profits? It is a plain 'open shorts' candle. I am watching this thread for quite some time. 3 EMA has given a bearish crossover but not touching today's candle hence tomorrow we can see an upmove.. same candle insisting us to go short because of 3/15 crossover and also insisting to book profit because candle body is away from 3 EMA. However since 3 EMA is not touched by the candle there is a possibility Monday we get a +ve opening which makes the Monday candle touch 3 EMA and then its 'business as usual'. This was due to a small range that market developed at that time. Even within that rally.. However to respect the bearish crossover. I have attached below Mini Nifty Futures chart (EOD)..20 PM to exit longs and enter shorts since. The good news is that after each rangebound period comes a strong trend and hence its important to keep trading each signal without losing hope and patience. ie. Answer is simple mmca. Unfortunately we can not control markets and we will have to stay open to such rangbound days and should always stay ready for some consecutive whipsaws.e we have opened short because of 3-15 bearish crossover but on same day candle body was not touching to 3 EMA and it is one of the criteria to book profit .NF opened at 4920 levels (below my SL) and kept sliding since open. 3 EMA was not touching todays candle body hence i held longs and waited for 3.very well for my shorts. Please guide us on how to place entry. Its 3. 7 minutes to go and NF is at 4946 (below my SL point). please correct me. as i have already said earlier. Quote: Originally Posted by mmca2006 TH .. exit & sl in this scenario as it will be very useful and will cover all the thing.. we wait until EOD close to get a confirmed signal. This is why i opened only 50% shorts on Friday. if we didnt have shorts .
25 PM on Monday.. Now mkts have closed at 5122 levels and 3 EMA is still not touching the candle. On small gap up days where the distance between todays candle and 3 EMA is not that great. I checked 3 EMA level and it was at 5108 at that point. We exit at that point and re-enter when we see a current EOD candle touching 3 EMA. you can book at opening price. Dont we wait till just before close to see whether or not a Bar has touched 3 ema or not and then exit!!! My understanding is that there will be very many days when price gaps up a bit stays up w/o touching 3 EMA and in latter half come down to touch it.... Hence I should have booked my NF longs as per 315 today at 5122 around 3. I also put in a stop loss buy order at 5160 in case NF went up later in the day which would have pulled the 3 EMA along with it making it touch the candle.25 PM Basically the net result of the 315 trade till now should be: Bought NF at 5025 sold at 5142. but i dont mind whipsaws. profits = 117 points
. similarly for every whipsaw there is a profitable trend waiting to be encashed in future.25 PM. you can hold your positions instead of exiting immediately until 3. It can be another whipsaw for what it takes. I placed a buy order immediately at 5108.. Quote: Originally Posted by rkkarnani TWH.25 PM.for 315 gives me enough profit in the long run to bear whipsaws with grace.keeps going up we will end up with a bullish crossover and I will exit shorts and enter longs again. Mkts fell and my 5108 buy order got filled.. However this is relevant when we get a BIG gap up (or down for shorts)... Was this action preempted by you or this we follow as a rule!! Now today if the Price bar does not come down and touch the EMA do we exit long ? Please reply per your convenience!!! Regards.. Depends how 315 looks at 3.. The thumb rule is that if the current candle is not touching 3 EMA we exit immediately irrespective of whether its 10 AM in morning or 3. This is becuase its possible that markets continue to go up throughout the day and hence pull the EMA up with it making it touch the candle at the candle's lower body. check where 3 EMA is at that point . Like for every bad thing there is a good thing in this world. Alternatively on small gap days. For eg today this is what I did today. and re-enter at that level without waiting for visual 3 EMA touch. -R K Karnani This is an excellent question RKKarnani and worth spending time to answer it at length to make it clear. NF booked at 5142 in the morinng itself since 3 EMA was not touching at that point.
I will see some stocks correcting and giving a sell signal while other will stay bullish. Now as the bull mkts matures.. Q) Do I do a mass scan of stocks or manually check a list of stocks to identify entries. So basically in a raging bull mkts you will assume all 20 stocks to be bullish as per 315 and hence I will have 5 long positions in 5 of the stocks.. 2.Bought NF at 5108 sold at 5122. But please note a couple of very important things: 1.. So trust 315 and dont wait for the trend to be visible to general public. Now I will have
. Even a flat start today morning can mean 3 EMA touching todays EOD candle since 3 EMA will inch up gradually today. Cheers SH Quote: Originally Posted by spiritunit as per 315. Most importantly dont forget the foundation rule.. I will take the first 2 stocks that give me sell signal and short it (I will close 2 underperforming long positions to keep my portfolio to 5 stocks overall). I have my set of 20 odd stocks which i track daily and trade based on 315. NO SHORTING till the time 3 EMA is above 15 EMA .. Cheers SH The beauty of 315 is that it gets you in the trend even before its visible to a naked eye. so shorting tomorrow for sometime is good. Remember last two closing prices have been around 5125 and today any open around 5125 will mean 3 EMA at 5125 (hence candle touch). I believe tomorrow NF may test around 5070 level as 3 EMA did'nt touch today's candle. think of only longs.. I trade in futures. (Pls note though that I am still long in NF and short in ICICI Bank at closing price based on some other strategies I use along with 315) Hope this helps rather than confuse further. profits = 14 points Now as per 315 people should be empty handed waiting to enter longs again at 3 EMA touch. I like the way you are trying to derive a short here spiritunit. Now I continue holding these 5 stocks and book profits/re-enter as per rules in them while i continue to track the rest 15 stocks. At no point I open more than 5 positions.
probably the weakest one's from my 20 stocks and hence good chance of outperforming. its enough for you to make you good money. But i like to outperform Nifty by shorting the weakest and buying the strongest and hence have 20 stock watchlist.. we dont want to buy value but we want to buy a bullish wave or sell a bearish wave. I do not have amibroker or any other software to mass scan the universe for signals and i dont want to do it anyways.. Even if you just stick to Nifty.... If the downtrend continues.....2 short positions and 3 longs so I am kind of hedged. And the process continues until the downtrend starts getting exhausted and i start getting buy signals. forget about buying value and all. However my ADD at 15 EMA touch is inspired by AE ( I am an avid fan of Alexander Elder and whatever I have learnt in TA is inspired by him) Cheers SH
. I will short that stock and book an underperforming long to keep my portfolio to 5 again.. Q) Timing of identification Short and simple answer is you enter at the crossover. I will monitor the rest 3 long positions. its enough to make you stinkingly rich. If the downtrend continues. if i get another sell on some other stock.. If you just focus on some handful of stocks that are volatile and liquid.... I will end up with 5 shorts . I have shorted the weakest stocks already of the 20 stocks ( weakest since they gave sell first than others) and hence my chances of making good money in shorts are huge.
To Exit: Exit when the candle moves above 3EMA. and that too in futures market and on large cap/mid cap stocks which are normally above Rs 300 per stock and considering M2M cost and others. To Add more lots: Add second lot when the candle touches back 15 EMA after moving above it and also the candle high is above the previous candle high. when you realize you have made huge profit and huge is subjective. If the profit does not move up 100 points but reverses after going up a few points ? I presume this is the case where we can do nothing but still wanted to raise this question just for clarity. Use SL and money management for profit management. To Re Enter: Renter when the candle which moved above the 3 EMA returns back and touches 3EMA. exit.20 stocks and taking position in 4 . In addition to these. Regarding protecting profit. the frequency/number of trades one make per month based on this strategy ? Do we see so many cross overs first to begin with ? 4. Also another chance to exit is when reverse cross over happens. What kind of capital is required to do this kind of trading ? Watching 10 . one idea mooted here was to place SL when the profit moves up 100 points.
To Enter: Apply 315 strategy to the selected high volume stocks and wait for cross over. (5% for stocks ??) Now that I have some clarity on this.
.Summing up my understanding: Dos: Donts: Do not apply this to intraday.5 at a time. Do not apply to low volume stocks as it can whipsaw. What is the typical frequency of trade ? The typical duration of holding the trade. Apply this strategy to only selected 10 . Enter long or short depending strictly on the cross over.20 high volume large cap/mid cap stocks. does one require some substantial amount to start this trade ? 2. I am also keen to know the qualitative aspects of trading such as: 1. Do not apply to options Do not apply if the entry criteria is not fully met. In futures trading. should we target only current month and square off at the end of month whether exit conditions are met or not ? How does one predict the duration of the rally/crash ? 3. Apply this strategy to EOD charts only. Preferably choose futures so that both long and short can be tried.
What kind of capital is required to do this kind of trading ? Watching 10 . For now. If the profit does not move up 100 points but reverses after going up a few points ? I presume this is the case where we can do nothing but still wanted to raise this question just for clarity. even when we observe a pattern where in we do not get a chance to exit but the candle moves above 15 EMA and comes back and touches 15 EMA. Thank you one and all. I will try to answer these myself. Are there any best practices to protect the initial capital itself ? One option seems to be restricting our 'add' lots to not more than 2. ie. and that too in futures market and on large cap/mid cap stocks which are normally above Rs 300 per stock and considering M2M cost and others. If I get more clarity on these questions. What is the typical frequency of trade ? The typical duration of holding the trade.5 at a time. This way we may be able to protect some capital but I am not sure about best practices to protect already invested capital.5. Ideas are welcome. How can we protect the capital ? Profits can be to some extent protected by SL. Thank you one and all. How can we protect the capital ? Profits can be to some extent protected by SL.20 stocks and taking position in 4 . should we target only current month and square off at the end of month whether exit conditions are met or not ? How does one predict the duration of the rally/crash ? 3. Quote: Originally Posted by sureshciyer Summing up my understanding: Now that I have some clarity on this. we do not keep adding lots but just stop after adding the second lot. Are there any best practices to protect the initial capital itself ? One option seems to be restricting our 'add' lots to not more than 2. I am also keen to know the qualitative aspects of trading such as: 1. Regarding protecting profit. 5. This way we may be able to protect some capital but I am not sure about best practices to protect already invested capital. one idea mooted here was to place SL when the profit moves up 100 points. In futures trading. Any further elaboration by others is quite welcome. Well. the frequency/number of trades one make per month based on this strategy ? Do we see so many cross overs first to begin with ? 4. does one require some substantial amount to start this trade ? 2.
. the simple answer appears to be "It depends" and depends on quite a few factors I suppose. Ideas are welcome. these are just a few thoughts which I phrased as questions. we do not keep adding lots but just stop after adding the second lot. ie. even when we observe a pattern where in we do not get a chance to exit but the candle moves above 15 EMA and comes back and touches 15 EMA.
.Ok lemme try to answer them for you. A high risk appetite trader can go 'slam bam' in the markets and a conservative trader might buy options to hedge the future positions. As soon as you start predicting. your ego comes in your way of desciplined trading. once you have made 100% of your capital invested you remove your capital and just trade with the markets profit.deadly combo! . 4. A few pointers to bring back smiles to strong bulls/investors: . My suggestion is that a new trader should start with just Nifty (capital of 30K margin + another 30K for M2M). . Depends on the state of market. 1.315 is bearish on EOD currently . Can be many trades in a rangebound mkts (3-4 trades per month per stock) and can be no trades at all in the month if the trend continues and cuts across many months (March 09 to June 09).Long term chart setup is still bullish meaning a new highs can still come in coming months.315 on weekly is still bullish so long term investors . So at expiry you simply rollover your position i. be ready to reverse your position as well.no need to panic
. the beauty of not predicting and just sticking to teh charts is that you dont attach any ego to your trade. . This is a swing trade which can last for months.MACD gave a sell signal on daily charts a few days back. Earn for 6-12 months in just Nifty.e if holding longs . you basically close this months futures and immediately buy next months futures. Can't answer this question since money management for different people is different.Above coupled with the fact that MACD on weekly charts are in sell mode for a long time now .Negative diveregences on Weekly timeframes and on daily too clearly visible. looking at margin requirements of trading in futures. make money. raise confidence and build the descipline while trading in live markets and then gradually start increasing the number of stocks. you would need atleast 4 lakhs + another 2 lakhs for M2M to start with. 5. 2. If it reverses it reverses. No need to predict anything. 3. The way I reversed to shorts yesterday. Lock your initial capital in a bank's fixed deposit to protect it Cheers SH A few pointers to scare the weak bulls: . One way is that you start with the capital.
. avoid it. Cheers SH
.Quote: Originally Posted by observer SESAGOA has whipsawed too much Sesa must be going through a tight range ..
seeker . I am aggressive with my Longs but conservative with my Shorts and visa versa. The ADD which you did was the 'aggressive' style where you ADD at 15 EMA touch without waiting. Observer . I will again appeal to all users to be pateint and persistent with 315 for atleast 6 months. I have posted two styles in the past for ADDS. if my original shorts are in huge profits when 15 EMA retest happens. the ADD rule which Ankit Garg and KKR5 are highlighting are the 'Conservative' style of ADDs where you wait for the trend to resume again by waiting for previous candle lows breach. How do I define bull markets and bear markets? My logic is again based on 315..Yesterday's whipsaw was one of the worst whipsaws you would come across while trading 315..As per the rules you enter longs at 3..Hope above clarifies your confusions as well.25 PM on the day the crossover happens.Sorry no backtest data.25 PM around 5145.Ok folks. So yesterday I went long at 3. It hurt me and my profits. But I can remain confident with 315 since 315 has helped me capture huge 1000-2000 points moves in the past and without doubt no such move in future will be missed if I stick to 315. Now as far as ADDs are concerned. I can understand people losing faith when they see such whipsaws. In the end. but yesterday I did not ADD shorts at 15 EMA touch but waited for previous days lows to be breached.. Similar to the whipsaw we had on the dubai debt crisis news.
. It also depends on how my original position is faring. Arti . we are in a bull market and visa versa. In a Bull market.. And I dont believe in Holy Grails.. I can go short at that point being aggressive. if your original positions are in profits.Yes you are right. This is because we are still in bull markets. KKR55 . you can ADD at just 15 EMA touch since you are risking markets money in your ADD here. one for agressive traders and the second one for conservative traders who want to protect their capital. I am sure FM was trying to save his losses on his longs. I am not even sure if anyone would know for if they knew they would be holding the secret to the Holy Grail. Yesterday whipsaw was because of our blessed FM suddenly came out with his fancy predictions on GDP for next 3 years and I dont think any technical analysis can predict these things. Even Gann used to lose money big time. and I am being honest here.. And the trouble is. It will hurt for sure. I dont know how to avoid such whipsaws. Dear rh6996/Kanchan . If on weekly charts 315 is bullish. Take these whipsaws as business expenses . So you saw I ADDED longs on 15 EMA touch a few days back. Being aggressive or conservative for me depends in what markets we are going through vis-a-vis my positions. tips. let me try to put the doubts at rest once again. You really dont want 3-4% index moves against 315 that too near 15 EMA.
I have answered these questions several times in the past. If the trend is strong.. had booked 32 points already in those shorts hence net loss 73 points.. I know the answers are lost in so many pages now..This way your entire risk in mkts is the profit you have already made in the trade. If cant enter today..I liked your strategy.My positions: reversed to longs at 3...have some doubts please reply... Wishing you a happy & prosperous new year-2010.. if its weak and has to whipsaw. Out of that profit ..... but even the risk goes down significantly. close your Nifty Futures and book profits....looking to papertrade it. buy at the money option ('Call' if the 315 is bullish & 'Put' if 315 is bearish).
.25 PM yesterday at 5145..here we wait for complete the bar which touches 15 ema or at touching price? 3..... and at crossover start afresh with NIfty futures. I can give you another suggestion here to protect the capital and some profits here ... I usually get into options immediately). By this.. Happy Trading SH
By the way..here also wait for last minute of that day or enter it when price touch 3 ema? Dear Vjay . When your positions are 150-200 points in profit. Enter it immediately. Quote: Originally Posted by VJAY Dear Tradewithhunter.. They usually trade at 140-150 points at the start of the month and you can get it cheaper if your are doing it in the middle of the month .looking the crossover.if it ema crossover is just happen @EOD then can we wait for next day or enter it immediately? 2.same doubt when we exit the trade if price not touch 3 ema and then reenter when price touches 3 ema again. you will be able to exit that option for 50% of its value (remember that 50% is still your profit)... I will again answer these for you. 1. enter tomorrow morning.. probably the annual returns would become 150% from 300% ... you can accept that or ignore it based on your trading style.Add comes when price go towards our trade then reverse to touch 15ema.. I would not leave all that on the table..We enter trade at closing.... even your options will earn profits.Am new to this thread. This is again one innovation/common sense one can take to preserve capital and preserve profits (IF my positions are 500 points in profit. Loss in shorts 105 points per lot.. 1.
so you can sometimes not wait until a 3 EMA kiss but enter 1015 points higher than 3 EMA (this is becuase if NIfty reverses from that point and goes up you will find 3 EMA is pulled up and it kisses the candle at your entry point). 3 EMA rule is simple. Instead of exiting longs and entering on dips at 3 EMA. Thanks Dear Forestflower... Cheers SH
. Cheers SH Quote: Originally Posted by observer Why are you still long in SAIL? I took position in SAIL but got whipsawed twice (last two days). oops sorry observer . But even as of yesterday when the nifty was at 5190 the 5300 call was at 95 [the call was sold at 85 on 31-12-09] . re-enter when you see 3 EMA touch. If original position not in good profit. ADD at touching the 15 EMA if your original positions is already in good profits OR if you are a high risk high returns aggressive trader. However you will see that as Nifty falls 3 EMA will also fall. overall SAIL was not looking weak.. I follow 534 for SAIL since its a less volatile stock. Cheers SH Quote: Originally Posted by forestflower Dear SH. 3. Yes this is also a good way of exploiting the 3 EMA situatuions. I was just putting my positions. If nifty breaks the 5300 barrier we could exit the 5300 call at about 100. so closed my position at loss. Cann't thls be generally adopted when price is not touching the 3 EMA instead of exiting our positions. The written call is completed covered by the futures. we can continue to hold longs but write an ATM call. I made that move on 31-12-09. dont ADD (what is good? I would say 100-150 Nifty points).2. The switch cost me 12 points.
. In simple words it's EMA 5 crossover of EMA 34 on EOD chart. Also it is observed that when our position is suddenly in deep profits because of an extreme rally or crash in our favour.. in more volatile stocks you want to get into a trend as soon as possible so that you can encash a fast move either ways.
.. Cheers SH Quote: Originally Posted by raj_usb
Could someone pls explain what is 534 strategy??
Hi Raj. Rest crossovers are to be used between 5 EMA and 34 EMA. hence 534. hence 315. Once the 3EMA changes its direction and close of current candle is above previous candle then one can think of re-enrty. Raj ..Originally Posted by observer If the stock IS too volatile. A less volatile stock would not tend to move fast in either direction hence no need to get into a trend early.in 315 we exit if 3 EMA is not touching the candle and re-enter when it touches. We do not use 5 EMA just becuase we are using 534. Whenever we exit at candle not touching 3EMA one shud wait n watch for next candle touching 3EMA. the stock tends to correct either way. In 534. we still exit at 3 EMA not touching and re-enter. Rest rules are same as of 315
Pls find attached below CAIRN chart from 1-Dec-09... If the close of candle is below previous non-touching candle or 3EMA is in opposite direction (here downward) then avoid re-entry. should we not use 534 to filter out noise? Or is it the other way round? the way I see it.
All your Comments are always welcome specially from SH and people trading this strategy.
... we do not wait for the price to retrace to 3 EMA.-Raj
Quote: Originally Posted by rkkarnani Observer.. booked 50% at 341 . book rest when you get 10% move . 5% and 10% are just aribtrary profit booking points for me. Usually after moving 10% from the entry point. holding rest which i will exit if bearish crossover happens or at 356. Retracement to 3 EMA is applicable after we exit our position and to re-enter in the same direction we wait for a retracement. Why 5% and 10% move? Is there any reason behind this? Shud we trade commodities Intra-day instead EOD? Thks.. I Have been buying copper at 326 for last 3 days (34 EMA support) and it closed at 333 yesterday.. commodities correct to test 34 EMA where you can re-enter again. Book 50% when you get 5% move in your favour. bought copper recently at 326. By doing this your equity will never go in negative and you will still be able to catch 80% of the trend... Request SH to confirm my view please!!! Spot on answer !! Cheers SH Try 5 & 34 EMA crossovers for commodities EOD..
. Dont we enter long on crossover!!! We were short and are waiting for the 3EMA to cross 15EMA from below to go long!! My understanding is that we enter long at close when we are sure that the 3EMA would remain above 15EMA.Raj Hi Raj. wait for next crossover. holding for targets 346. I am trading copper on EOD . I am an EOD trader. Cheers SH Quote: Originally Posted by raj_usb Hi SH.
One can book longs and initiate shorts if gap between 3 EMA and current day's candle body is significant . 3 EMA usually gets touched in 2-3 days maximum so this type of trade doesnt last for more that 2-3 days... or chose to ride the entire trend and exit when opposite crossover happens.. let me put the debate to an end.as per 534 I would have held until opposite crossover happens. I think I had mentioned it somewhere on this thread earlier as well. The above is a high probability trade. Cheers SH --Dear Sukhi Aatma . Have a look at Nickel chart.
. Cheers SH Quote: Originally Posted by raj_usb Hi SH.. Waiting for suggestions. Obviously the stock futures in question should be highly liquid and highly volatile like banking.now 1204. How to handle such situation? As per 534 we wud hv exited @941 and wud hv missed rally upto 1204. however is also high risk trade and requires good position management and capital to keep shorting at higher levels and averaging in case Nifty keeps climbing up from 5000 levels without touching 3 EMA.. If current candle opens at 5000 and 3 EMA is at 4920 . For example.. you can short at 5000 with target 4960.My 315 can be used with not just with Nifty but any stock futures.More later on commodities since I am still experimenting. As I said. You can chose to follow 10% profit booking rule.. 10% profit booking is completely arbitrary as I told you earlier. -Raj Raj . Both have pros and cons and the choice is yours.. real estate etc. Thks. and the profit should be booked as soon as you get 50% of that 1%-2%. buy generated at 855. for example the gap should be atleast 1%-2% of CMP .8 and still up and up and up. Regarding shorting at 3 EMA not touching day's candle.
I usually take this trade on Day 2 and not on Day 1. Cheers SH
but by the end of the day.3EMA pulled up to touch the candle. SAIL 17. IFCI 9.Sukhi_atma said that we should exit our position and enter in opposite direction and exit when candle touches 3EMA.but in case of DLF. SESAGOA 18.am confused . Cheers SH Quote: Originally Posted by arti Help needed. IDBI 10. SH also replies. JP Associate 11. Reliance 15. ABAN 5. I remember in some posts back.so we have to exit our shorts.candle was again above 3EMA(though price came down to 309).But i observed that candle was above 3EMA when price was around 313 and when it was lingering between 315 and 316.
We exit when candle not touching 3EMA and enter again when it touches 3EMA. Arti
.y'day: 1.but candle not touching 3EMA. Reliance Capital 16.I track below stock futures: 1. So how much we should wait when candle starts touching 3EMA? I will really appreciate if along with others. Nifty 2. Unitech 7. Bank Nifty 3. ACC 4. It gave bullish crossover. STERLITE 20. ICICI BANK 8. RCOM 13. L&T 12. Bharti Airtel 14.So how to deal with it? 2. SBI Bank I have explained how I trade in only 5 stocks out of 20 in one of the previous posts. SUZLON 19. DLF 6.
e. Cheers SH
Quote: Originally Posted by msri Dear Sir. Thats why my position size will be bigger on bearish signals than on bullish signals right now. Cheers SH Yes .. Please clarify my one doubt regarding 'entry' of trade.I am long now too. Cheers SH Quote: Originally Posted by Tradewithhunter Spot on Sujit .I have answered this question a couple of times in the past. Even if 3 EMA is not touching after the crossover. Can I enter the trade even after the lapse of 4 or 5 days ( i. otherwise normal crossovers need to be traded. 3 EMA rule is only for booking profits. Secondly . Usually Nifty and other volatile stocks give a good trending move after a couple of whipsaws.Hi Arti . If it whipsaws again . i will go short again with a bigger position size.the bearish crossover has already whipsawed and if this bullish signal also whipsaws. in the middle of uptrend) and continue to hold the position till 3EMA line is not touching the candle? I expect a detailed reply to enable me to step into the trade. HOwever if the markets are still close to where they were when the 315 buy/sell
. I intend to follow this very soon. Regards Msri No you should not enter in a trend after 4 days if the markets have already trended in the direction of 315.it will be two in a row.. 3EMA has alreadycrossed 15EMA 4 days back and the trend is up.a lot of technical reasons related to global markets .For eg a 5% to 10% correction is due on S&P right now before we get the final thrust to 1250-1350 on it. I am very much impressed with your EOD strategy and I have gone through your rules. we need to enter into the position.
We do not add short but wait for subsequent candle to take out low of this candle. great strategy for swings . You mentioned in your post that add should be done only when below 2 conditions are fulfilled: 1. I am a little confused with the ADD part. even if at eod the candle closes above the previous days low? Please help to clarify this aspect. Thanks Ash Ash . 1. 2. But taking out low means we wait for the close of the subsequent day to check whether it has closed below previous candle low? Or do we add short intraday once the low of the previous candle is taken out.you simply ADD at the 15 EMA touch provided your initial positions is in good profits. Cheers SH Loss depends on the day when the crossover has happened. Aggressive method . However if that day is a big candle/wide range bar. If that day is a small candle day you will get an entry very close to 15 EMA. The current candle breaches previous day's lows for shorts (previous days highs for longs) So suppose we are short and the candle now comes and touches the 15 EMA.was triggered.There are two approaches to ADD. you will end up entering away from 15 EMA which means larger potential loss if the signal whipsaws. 3 EMA is still below 15 EMA for shorts and visa versa AND 2. Conservative method . Cheers SH
Quote: Originally Posted by akshah Hi TWH. The criteria is not 'closing' below the lows of the 15 EMA retest candle but a mere breach of that candles lows Cheers SH
.is the one you have explained above. you can enter the markets.
i am not bother about loss. Happy trading! It's likely simple trader. Views can be wrong.Quote: Originally Posted by gsri Sell Signal in NF Originally Posted by masticalrun no i think u misunderstood me. 3 EMA got touched yesterday at lows of yesterday's candle so the 3 EMA rule has been fulfilled
. I trade my charts. market could have trouble. positions reversed to shorts again. but the chart is always right ! Cheers SH Quote: Originally Posted by simple_trader Looks like 5260-70 NF correction is finally coming! taken one day more.so how u deal with it. Given expiry. below this. but it is doing! 5250 NF is support. gave bullish signal and whipsawed today to give short signal again.. it seems to be unlikely. My outlook remains bullish and will wait for the charts to give the buy signal to enter longs again. As usual.i am asking it already given 3 signal in 5 days and might give another sell signal on monday. they should trade 534 signals. For people who want less whipsaws (at the cost of entering a trend late as well as exiting it late) .... after a good trending move from 5216 to 4800 in shorts . Interestingly. And as per charts.means what will be policy for near trading days or follow same pattern as chart is saying of 315 crossover Yes.. we will respect the charts and stay short. I don't trade my views. 534 stays in short zone since 5141. Cheers SH
However being a technician.. This usually happens after a good trending move i. I am currently long. Nifty retraced to 15 EMA. Until then. I will tell the reason why it might happen for other traders to understand the game better.e a few whipsaws as the market goes into 'consolidation' or a range after a good trend.
stochastic. and i will share that application in this forum once i complete that. However 5 EMA has not been touched for the last 2 days (I know i haven't discussed about 534 at length in this thread since it is 315 thread). we should enter again in 5ema touch.As per 315. Cheers SH Quote: Originally Posted by tmnkin That mean instead of 3 ema touch. You can plot MACD along with it . Remember. but developing this into software with more tedious trend confirmation will be much added advantage to our users. different EMAs work as resistance and supports both . Cheers SH Dear Friends. Cheers SH Quote: Originally Posted by tmnkin hi sh i am trying to develop a comprehensive application to track 315 entry and exit with charts. Since their objective is to earn 'less' than the future traders do. am i right sh. i would like to know the additional tool like RSI. That 5 EMA can pull down Nifty or alternatively markets can stay sideways with 5 EMA moving up to touch the day's candle. in 315 . i know as u said u dont want to complicate it..10% of investment every month (which compounds to more than 100% returns on investment per annum). i developing my own charting software with that. macd etc which can accompany 315 in charts.... any 315 buy signals when MACD line is above its EMA and is above 0 will be a stronger buy signal. However 5 EMA provides a good short term support to corrections so people who missed entries earlier can enter at 5 EMA as well. pls explain in details Hi tmnkin . re-entry is at 3 EMA touch. 15 EMA provides the swing support (and hence becomes our ADD point) and 3 EMA provides intraday supports..(and we have got back into longs).. they try and look for trading
. Their objective is to make 5% . A lot of risk averse professional traders make money using options.
Word of caution . the puts will go down in value so sell puts.Never write In the money options . If 315 has given a bearish crossover. If you are ready to take only a small risk. Even if the market trends for a few days in the direction of the 315 crossover and later comes back to the original level. not recommended for any trader with small capital (less than 5 lakhs). never write naked puts since any financial bad news overnight can make an uptrending market suddenly gap down to a lower freeze. . . write out of money options.Given above. Which strike price to sell? Depends how much risk and reward you want. you can write ATM (at the money) options.Since the options are naked. the trend is down. the trend is up. If the market whipsaws. The reward will be less as well. the option will be up only slightly giving a trader very small loss (as against a future trader). A trader who has identified the trend of the market (lets say using 315 or 534) can write options which are likely to go down in value as the market trends i. Why is it less risk and higher probabilities as compared to future trades As a seller of an option.e: If 315 has given a bullish crossover. the seller stands to unlimited risk if the market gaps up/down in opposite direction based on any overnight news. the option will have already lost some points due to time erosion. One of the ways to do that is selling options (also called writing options).strategies that reduces their risk of losses due to any whipsaws. the calls will go down in value so sell calls. If you want to take some more risk for a higher reward.This is used only by traders who are professionals and have deep pockets. Cheers SH
. both the market trend and the time factor works in favour of the seller.
..but as per 315 trading we are now in long.. 534 is effective on stocks too. Cheers SH TMKIN's view: its 2. 3EMA will come down and touch the candle. your entries and exits would be slightly late .. As per 315..3% but remember in some cases scrips bounced back even after touching more than 3% low.yes? Dear Jayan. Raju You need to enter again at the touch of 3 EMA irrespective of whether it happens below your exit level or above..to clarify. SH Sir mentioned once that 534 is efective primarily in Commodities. Regards... All stocks+their futures do well with 315..3% low on close low stocks failed to bounce back.. Now. shall I once again enter either @ the value of 3EMA when I booked profit or @ the touch of 3EMA? If market goes down furher. but mostly after touching 2.trade may get whipsaws.. however you will get less whipsaws and will end up riding the trend longer.. If cross over happen then must be take long trade. Hi ..no waiting.. and should wait . but not the previous day candle's high. and so the value of 3EMA at which I exited will be higher than the present value.. Cheers SH Quote: Originally Posted by kinguncle I dont think so. I have booked profit today in the opening as candle was not touching the 3EMA. and opposite crossover happens sooner or later Quote: Originally Posted by jayan12 Niffty 3ema has crossed 15ema..
. So I should not go long today. If you use 534 instead of 315.Quote: Originally Posted by nick721156 Dear SH.
you mean still we can go for shorts. along with 315 on daily timeframe . so the next 15 EMA correction watch starts ticking afresh now ... How you have decided to go for more longs? Dont catch the running train if your platform is too far off (15 EMA) The market correction strategy says price needs to retest 15 EMA . Cheers SH Quote: Originally Posted by trade4joisar Hi SH.. Can we will go for shorts? Market already corrected for last 15 days.. I monitor both 100 EMA on hourly along with 315. this is 3rd week.. but there is no sign of meeting 3 & 15 EMA lines.. If markets break 100 EMA on hourly I short . its that simple. Cheers SH
.I also follow 100 EMA break on hourly .__________________ Regards VJAY Hey guys its no brainer... only shorts until 315 crossover happens. no longs .. if they go above 100 EMA I long ...... Can i catch running train? As per market correction strategy..... SHorts taken yesterday based on 315 at 5900 are already in 140 points profit. But for the purpose of swing trading based on 315. (please note the strategy says price will touch 15 EMA not 3 EMA touching 15 EMA) As per 315.. which has already happened on Friday ..... Sometimes both are in same direction and sometimes they are in opposite direction. lets just stick to 315 in this thread.
..i think many waiting for entry in 315. after a good trend comes a few whipsaws.. Today have chance of getting buy cross over..
Yes ... I will be keeping my buy positions small to start with and will increase them if the buy signal whipsaws...but remember ... NF will generate a buy if future closes above 5470 (just an estimate will have to check the charts at 3...Quote: Originally Posted by VJAY Dear SH....
.25PM) Cheers SH
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