This is a plain and vanilla reversal based strategy for intraday (15m) timeframe on Futures prices of the assets.
Now what all it comprises of?
- It finds out the dynamic support & resistance from Bollinger Band (20 period, 1.5 std dev).
- It finds out the potential divergence of price deviation from 5 period exponential moving average (EMA).
- If the previous candle (N-1) shows a divergence it confirms the reversal by checking the present candle (N) to be closed inside the Bollinger Band.
- It confirms the momentum by checking RSI shows a crossover/crossunder to oversold (30) / overbought (70) region.
- It also confirms whether the trend is up (then only reversal trade to short) or down (then only reversal trade to long). The trend is checked with EMA-21 and EMA-50.
- Re-affirmation Condition: It re-affirms the position of two successive candles called as `hhLLong` and `hhLLShort` in the script.
In Indian context, retail participants are pre-dominantly (yes- 80% of Indian daily volume) Options buyers mainly in weekly indices (Nifty, BankNifty, FinNifty, CNXMidcap, Sensex, Bankx .. well everyday is expiry now in India, except -- Thank God -- Saturday & Sunday).
And in Index Options the momentum plays a big role.
If one can catch a good reversal point the potential of high Risk-to-Reward trade (hence earn handsomely) is very likely (please note: there is no holy grail in trading. Nothing works 100%).
So this is the attempt to catch a reversal.
Re-affirmation of Reversal
- hhLLong: It's a reversal point after an uptrend. It checks the relative positioning of current candle compared to that of previous candle. [The details are in the script. Check for variable
- hhLLShort: It's a reversal point after a downtrend. It checks the relative positioning of current candle compared to that of previous candle. [The details are in the script. Check for variable
What's unique in it? Why we decided to publicly share this:
- Already given the context of The Great Indian Options Buyers community. It should be helpful to them, we believe.
- It takes Very Less Number of Trades with High Accuracy. Please check the result in
in 15m timeframe. 71% accuracy with roughly a trade in a month.
- There is no point giving brokers' the brokerages taking 10 trades a day and ending not-so-good EoD. Better lets take less trades with better result possibility. .
- There are many people uses this variation of Bolling Band, 5EMA
- Many people use RSI, trends and relative positioning of candles.
--> We are grateful to all of them. It's really difficult to mention everyone's name. But all people somehow influence the thought process. Thanks for all of them.
- There is no silver bullet / holy grail in trading. Nothing works 100% time. One has to be careful about the loss (s)he can bear in case of the trade goes against.
- We, as the author of this script, is not responsible for any trading or position decision one is taken based on the outcome of this.
- It is our sole discretion to change, add, delete the portion or withdraw the whole script without any prior notice or intimation.
- In Indian Context: We are not SEBI registered, will never be SEBI registered.
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