DYNAMIC Trend Following-NSE Stocks-Long Only

19 août 2021

Motivation

The momentum feature is well known and researched in the market. Momentum trades/signals often result in out sized positive returns when trades go well in their favor. At the same time, almost all momentum methods/signals suffer from frequent, small and multiple losses.

Dynamic indicator/system is a proprietary systematic method designed to capture momentum on Indian Indices of NIFTY and BANKNIFTY . It aims to identify bullish / bearish patterns in a systematic manner and uses volatility adjusted entry levels and trailing points. The method employs a proprietary method to filter out market noise from an underlying trend to ensure whipsaws arising from a trend-following method are removed. These patterns can be found in several well known books such as those of LA Little and Market Wizards series. We have combined well known existing patterns into a proprietary pattern that improves the performance. It is similar to combining Moving Average and RSI to get confirmations into a single system.

The current indicator is a Long-Only investment strategy for NSE(INDIA) Stocks.


Trade Usage
The indicator can be used either as a standalone indicator/method or can be used as an additional confirmation to your stock analysis. If you have a knack of picking stocks or if you deploy any other system to pick stocks, this can add systematic entry and exits to your Stock Analysis.

Time Frame
This indicator can work best if you use a bit of Multi-Time Frame analysis. Depending on your expected holding period, here are a few suggestions:

• Investing - Holding period of a few Weeks to Months - Use Daily Charts and 2-Hr Charts
  
• Swing Trading - Holding period of a few Days to Weeks - Use 90-Minute Charts and 30-Minute Charts
  

You can use any other time frame combinations that may suit your style.

Elements of the indicator

• BUY - They depict the BUY Signal at the open of that bar.
  
• Scale-In (Optional) - If your risk appetite permits, you can potentially scale-in at these times. These are signals which come only when a prior Buy signal is on.
  
• Stop Loss - Anytime the system generates a Buy Signal, it will also generate an initial SL level. This SL level is updated at close of each bar and adapts to volatility and trend in the market.
  

Customizable Parameters
Here are a few things that can be customized:

Input Parameters:

• Volatility Lookback - The lookback period that affects the trailing SL and entry exit signals. Default value is 20 Bars, but you may want to edit on the basis of your time frame.
  
• Risk Mode - This comes with three options - Conservative, Moderate, Aggressive. It is a good idea to Enter Positions on Conservative Mode and then trail it on Moderate. Aggressive should rarely be used.
  
• Colors - All labels and plots on the chart can be customized for colors. Look under 'Style' settings.
  

How to obtain access?
Please PM the publisher of script to request access or refer to details in signature below.

23 août 2021

Notes de version

Added Logic to show Swing Highs and Lows. This is an optional feature and can be turned on/off from settings. You can also input a lookback over which the Swings are identified. A Swing Lookback of 5 bars means it will look for swings over last 5 days on a daily chart or last 5 hours on an hourly chart.