Please Note: This Strategy is referred from this blog on Squareoff. Just that we have changed the strategy exit rules a bit.
We observed that in a trending market, Mean reversion Strategy could really give a large drawdown especially in the historic trending months of Nov’20 and Dec’20. To decrease this drawdown, we can parallelly run Trend Following Strategy to reduce the overall system Drawdown. Without further ado, lets get down to the strategy.
What would you bet on?
A fast horse or a slower one?
Of course, we all would bet on the faster horse. This is because the probability of it winning the race is more. If we follow the same strategy in the stock market, would we make money?
This strategy is quite simple. It just takes in the Intraday data of all FNO stocks and scans them based on their speed(%change from open price).
Rules of the Strategy
Universe: All FNO Stocks
Entry Criteria: Filter out the stocks out of the universe which have increased more than 3% till 11:15 AM i.e., in the first 2 hours of trading.
(Price (at 11:15AM) – Open Price)*100/(Open Price) > 3%
For Example: Say a Stock ABC Ltd opened at a price of Rs. 100. At 11:15AM, the price increased to Rs. 104. This stock fulfilled our entry criteria since it rose more than 3%.
Entry Price: By 11:15 AM, we have the list of all stocks that fulfill our entry criteria. So, we will place a buy market order at 11:15 AM, which in most cases would be near the price at 11:15 AM.
Entry Price = Price (at 11:15 AM)
Stoploss: We have a strict stoploss of 3% from our Entry Price.
Stop-Loss = Entry Price – 3% of Entry Price
Target: There is no target or a trailing stop-loss in this system. We will simply square off the trades at 03:10 PM.
That’s it. Its as simple as it can get.
You give a profitable trading system to people and many of them would still not be profitable. The single reason behind this is the fact that many of them are not able to face the losses which are a part of the system. Instead, they will try to tweak with the system and make it worse.
It is crucial to remain disciplined while following any trading system. Those who understand that losses are an essential part of the system and money is made only by being consistently following the trading system over the long term, have more odds of getting better returns.
The Telegram Bot
We at MarketScanner, have built a Telegram bot for Intraday Trend Following Strategy. This bot will help you remain disciplined and follow the strategy with automatic risk management based on your daily risk appetite.
You can watch the demo of the bot here.
You can also check the Live Performance page of Intraday Trend Following Strategy. This webpage displays the strategy statistics, PNL curve, Drawdown curve and Monthly returns to help you gauge the strategy performance regularly.
You can fill this google form to get a free trial of our bot for 7 days.
We hope that our bot will help you stay disciplined and follow the strategy to benefit from compounding returns over several years.
When you subscribe to this bot, you will get access to all our trading bots. We have also made a bot on Intraday Mean Reversion Strategy. So, you will get access to that bot as well. You can subscribe to all these bots using one of the following options:
- Rs. 3000 for 6 months subscription
- Rs. 5000 for 12 months subscription
Please enter your Personal Email ID and Telegram number while filling up the subscription form using the links below:
We are not providing an option to subscribe for less than 6 months as we believe you won’t be able to see the real returns of the strategy in such a short period. Remember, you make most money when you are compounding returns. So, it is always better to stick with the system for the long term.
After Subscribing to this Trend Following Bot, you will be added to MarketScanner Trading Bot channel where you will get the trading links in our Telegram Group by 11:15 AM through which you can place your orders.
The Trend Following bot automates the following:
- The whole process of scanning the stocks according to the strategy
- Places stop loss according to the strategy
- Order links every trading day at 11:15AM
- Notifies users to squareoff the positions at 03:10 PM
- Updates the PNL of the day at 03:10 PM
- A dedicated webpage to track statistics of the strategy
As of now, Zerodha has been integrated with our bot. If you have any other broker, please write to us at firstname.lastname@example.org