Mechanical Trading StrategyThe "Mechanical Trading Strategy" is a simple and systematic approach to trading that aims to capture short-term price movements in the financial markets. This strategy focuses on executing trades based on specific conditions and predetermined profit targets and stop loss levels.
Key Features:
Profit Target: The strategy allows you to set a profit target as a percentage of the entry price. This target represents the desired level of profit for each trade.
Stop Loss: The strategy incorporates a stop loss level as a percentage of the entry price. This level represents the maximum acceptable loss for each trade, helping to manage risk.
Entry Condition: The strategy triggers trades at a specific time. In this case, the condition for entering a trade is based on the hour of the candle being 16 (4:00 PM). This time-based entry condition provides a systematic approach to executing trades.
Position Sizing: The strategy determines the position size based on a fixed percentage of the available equity. This approach ensures consistent risk management and allows for potential portfolio diversification.
Execution:
When the entry condition is met, signified by the hour being 16, the strategy initiates a long position using the strategy.entry function. It sets the exit conditions using the strategy.exit function, with a limit order for the take profit level and a stop order for the stop loss level.
Take Profit and Stop Loss:
The take profit level is calculated by adding a percentage of the entry price to the entry price itself. This represents the profit target for the trade. Conversely, the stop loss level is calculated by subtracting a percentage of the entry price from the entry price. This level represents the maximum acceptable loss for the trade.
By using this mechanical trading strategy, traders can establish a disciplined and systematic approach to their trading decisions. The predefined profit target and stop loss levels provide clear exit rules, helping to manage risk and potentially maximize returns. However, it is important to note that no trading strategy is guaranteed to be profitable, and careful analysis and monitoring of market conditions are always recommended.
Mechanicaltradingsystem
TrendShikari NTS - StrategyTrendShikari NTS is a Nifty Index, Swing trading system with great profitability. This is the STRATEGY file for you to see backtest performance along with the feature to see the next day trading levels in advance. For getting Email / SMA alerts (based on your TV subscription plan) and to see better graphic level marking use the STUDY file from the indicator library. Access to this system will be limited. See my profile status field to see how you can gain access.
Salient Features
1. Daily Bar System. System analyzes a Daily chart of NIFTY to give signals with average holding period of 5 days.
2. Automatic Long and Short signal generation. No need to draw waves / lines and other fancy stuff on your charts to analyze NIFTY any more.
3. Backtester Results Available - Thanks to TradingView, backtest results for previous years (from 1990) are available right in the charting platform for NIFTY.
Having a good trading system is one thing and trading it to make money is a whole different ball game. One thing you must always do if you want to mimic the backtest results in live trading is to follow the rules mentioned below as if your life depends on it.
Trading Rules
1. Each day the system gives you a Long and Short trading level. You go Long on NIFTY when the Daily Long level is breached and you go Short on NIFTY when the Daily Short Level is breached.
2. Trade using Nifty Options, In the Money calls, one strike below the nearest strike price for going Long using Call Option or one strike above the nearest strike price for going Short using Put Option.
3. Preset exit and entry orders of appropriate option contracts every day at market open. To set the levels see the difference in Nifty spot price and the trading levels given by system and then multiply it with 0.8 to give an approximate order trigger price in both directions for the corresponding option contracts.
4. Book profit when Nifty moves significantly along signal direction. Every time NIFTY moves 100 points in your direction you exit the current option contract and enter a trade in the next strike price in the same direction.
5. Rollover before expiry. Its important that you rollover (ideally one day before the expiry day) your Option contact positions by exiting the current month contract and take a new position in the next month contract of the same type and strike price of the current month contract.
6. Trade only Nifty using this system. Also Daily chart has to be used for trading. System parameters have been tested and optimized for Nifty Index Daily patterns only and hence is likely to give stated results with Nifty Daily chart only.
7. Trade all signals. Don't pick and choose or add your own or someone else's analysis to filter the signals. Take confidence from the objective backtest results and not any subjective interpretations.
8. Trade with only that amount of money you can afford to loose. Initial capital that you need to have to trade one lot of NIFTY Option using this system should be at least INR 150000. You need only INR 7500 - 15000 to open a position and the rest is the margin of safety you need to have in your trading account to account for drawdowns in trading. You can add the capital in a staggered need to basis to your trading account. But make sure you have the initial capital mentioned above at your disposal, if need be.
As always your thoughts and inputs are welcome. Happy Trading !!!
