Algo Trading System Trading FREE course | Abhishek Kar ft. Prateek Singh
So, guys... before even starting this video, let me tell you that you will be learning a lot today. You will learn about system trading. Not just this, our today's guest will show you how to do system trading on screen. He'll also show you how to backtest and stock-pick.
And to top it all off, we have three whole surprises in this video. One of those surprises is for the learners. So for that, make sure to sit with a pen and a notebook. And please don't pick that notebook where you do all your rough work along and play tic-tac-toe.
Take a clean notebook dedicated to trading. And that person who will take notes from today's session, post a thread about it on Twitter, and tag me, Mr. Prateek, and Learn app in the same, will get 6 months of free subscription to LearnApp. Isn't it exciting? Two more surprises left.
Watch the video to know more. "Yes bro, trendline has been set on 18,200. Seems like we'll be allowed to enter within 5 minutes.
Are you ready?" - "Dude I had entered at 10 am today. Now I'll just wait till the evening and see what happens." - "Wait, what? I've been trained to wait for the signal the whole day. Are you sure this is trading and not gambling?" - "This is called systematic trading.
- "You know what? I'll send you a link to a Zoom meeting, hurry up, we'll talk here only." "Hello, Abhishek! How are you?" - "I'm fantastic! What about you Prateek?" - "I'm great! Also, tell me something. How much did you earn last quarter or in the past 6 months?" - "Bro, what is this? First the social media followers and now you. What is happening?" - "Okay but still. Tell me a little only. Must've earned7-8% at least?" - "Yes I've earned way more than that but okay I admit that it was good."
- "And what all did you have to do to get these returns?" - "Not much actually. The usual. Working my usual Monday to Friday, getting scolded by my family, not being able to spend some time by myself peacefully. So yeah basically, researching and monitoring the market all day. Basically, that shift from 9:30 am to 3:30 pm and then I was able to do that." - "Okay so you see they all think that market needs a lot of time but let's talk about a system where we don't have to take out much time and the returns are also enough, shall we?" - "Wow! That would be great! Fantastic!" Let's now get straight to the point and understand.
So Prateek, my audience realizes that there is a system trading and a discretionary trading. But they don't really know the difference between the two. Can you please shed some light on that? And it would be great if you could give some examples. It's very simple. So let's define each of them in a single line.
Talking about discretionary trading. You use your own discretion in this. Whether it is practical or impractical, the logic is given by you. You select the stocks due to various reasons without much research or strategic methods.
Now it looks like a stroke of total luck when a beginner does it. You may also think the same. I have friends who are discretionary traders who sit up at 9 in the morning and start working. Actually, because of their experience, they are using some sort of strategic method that they are unable to explain and due to this, they are discretionary traders.
And they succeed as well. But generally what I think is that if you're buying a stock just by looking at some facts then it's discretionary. If you're a beginner then we can call it a guess.
But you can be successful if you're experienced in this. So, this is what discretionary means. If I buy a stock just by following someone's Tweet or due to any other impractical reason like the color of the company's promoter tie. Then it'll be called discretionary, right? Yes, that's correct. If you're trading without a systematic method then it's discretionary. Like if you're entering and exiting a stock with just random data then it's discretionary. And I think beginners should avoid it at all costs.
So, you're saying that we should choose systematic trading over discretionary trading. So can you please explain what is systematic trading? You have explained how discretionary trading works. But what about the systematic one? Okay, I'll explain discretionary with an example.
When you roll a dice at the casino table hoping for your number to appear and it does. Then it's pure luck, right? Because there is no method to this madness. If your number doesn't appear then you blame it on your luck. So I think this example fits perfectly with discretionary. Like how some people would buy some real estate stocks in the heat of the market. And it may work as well.
But I would consider it the roll of the dice. So all these are discretionary. I have a very good example for systematic that I think they will understand as well. When I used to live in Panchkula, Chandigarh, my friends and I daily used to go and sit into this outlet of Cafe Coffee Day because the coffee there was quite cheap. One would buy a coffee so that all the five could sit. So, the interesting part is that first, they introduced different prices of coffee, then they introduced new flavors, added some snacks and new furniture, then they added waiters and asked them to recommend something new from the menu. In this way, they built a whole new system.
So, this is what I think CCD did at that time... At that time I had heard that they were opening a new store every day. I was pondering upon its possibility. This means, Abhishek, that they had made a standard procedure for everything.
At first, they would've chosen their catchment area keeping in mind its population, then the qualification criterion for the new employees, then choosing of food supplier, etc. Like this, they created a set of rules for everything. Correct? - Got it.
- And based on those set of rules, they proceeded with the scaling. They hired and trained new people in accordance with the rules and created a new store. And then they repeated it with another store.
And they just followed the rules. Now obviously, the founder wasn't really controlling each and every store opening right? He's just following a set of processes. And this is nothing new, right? This is how businesses scale. They have an SOP and a target. So, why not see trading with the same eyes? This can be done by assuming the stock selection, the entry price, and the exit price as an SOP.
And by using this, you can decide on a proper entry and exit to a portfolio. This is called systematic trading because it has a system to it. Does it make sense? - Yes it does. So, Prateek, talking about systematic trading... do these institutions or hedge funds also follow systematic trading or something else entirely? Yes definitely.
So, all companies/institutions have a strategy since they can't run a business without money and employees. For both of these things, you need a plan because you need to tell it to the investors to get the funding and a hedge fund has LPs or Limited Partners. They would need to make sure whether your plan is practical or not. So, all hedge funds have a strategy and it is backtested. Since it's all maths, they do it by running the entry-exit rules on the last available data of the company and seeing the profit and loss margins. You would obviously know, Abhishek.
I mean you can backtest for 10-15 future years to see if your strategy works or not. So, you're talking about backtesting and rules and all. That much I understood. Can you please explain how strategies are formed? And it would be great if you could present something on your screen for the same. Okay so let me first lay the ground rules as to what to expect from these strategies. Firstly, strategy is not equivalent to magic. And some facts that people don't usually tell: the backtesting you've done is not guaranteed success.
But the benefit is that it provides you with guard rails and you get a rough idea about your loss and profit range. Hence, giving you the headspace to make a strategy. For example, in a strategy, you predicted to make double your money but the worst case was that you may lose 90% of your money. And another thing. We have also talked about this offline, Abhishek. We should always assume that the worst-case in real life can worsen while the best-case might not be as good. So, where does strategy start? Every media company is telling a different story along with all the influencers.
Where shall I even start? First of all, shut down all the noise. Too much information will only freeze you. Only take the information you need. This is how Abhishek does it too, I guess? - Yes, exactly. I agree these are all noises that we need to cut. - Yes so. I know we both will agree on this one, that at this stage the most useful information is neither the news nor the fundamentals, it is the price. Because price knows everything.
For example, if a hedge fund manager knows the true value of a stock and if it's of Rs.1K Crore, of course, he wouldn't buy it immediately, and neither would the other institutions. Instead, they will buy it in parts. And there's no other way of knowing it other than monitoring the prices. Price knows everything. Because if anyone's an insider and he got bad news, he'll sell the stock so just pay attention to the price whether it goes low or not. - So did you mean to say that those SMS about operators are fake? - Yes, I am sorry, but it's all fake.
- So Prateek, talking about all those deviating noises... is there a way to avoid those distractions? Okay so, all this systematic starts with a guess. It's a gut feeling where you figure out why stocks change.
It starts with an idea. After observing the market, we start with an idea and build this whole system. Got it? - Great, great. So, first, we need to make up our mind whether we want to buy an already broken stock and hope for it to bounce back, or do we want to buy a stock that will grow in the future? So, theoretically speaking, what would you choose? What about you, Abhishek? - Honestly, broken stocks are easier to buy since they are cheap and all. So yes we can buy that.
- Great. This is something a lot of people do actually. But you see all these strong businesses currently have only grown over time. Now the reason behind it is a mystery, although Warren Buffett has talked about it, we won't go deep into the topic. The focus is that I'd want to buy a stock that is always going high up and people are always buying it. So, if we can switch then we'll be able to see... A company like Netflix or Titan or HDFC bank and most of the good companies always keep going up.
- Yeah, you're right. Add Nestle in this list too. - Right. And at the worst we have this down slope here. Bajaj Finance is a good example right? 2007 had arrived, right? And then we have this stock we were talking about. I'll mark it in red. That stock was doing very well, it's Kingfisher. It was going up but then the market collapsed and people bought it till it wen all the way down to zero.
So, you wouldn't want to bet on a falling knife. In fact we even have a saying that goes like: "don't catch a falling knife". This is the reason. When you ask someone to buy a healthy stalk, they'll deny because they want it to become cheaper. But let's change this thinking and try to buy a healthy stock. Now, switching again.
Now, see, if we're trying to pick a profitable company then we can't wait around for times like 2007 or 2008. This generation is not that patient. So, that means a stock like this will keep creating new highs. It can stagnate a little but then it'll continue soon. - You sound like you're trying to speak Japanese, but yes I agree. But my point is that a good stock will always keep making new highs.
Alright, so, we have to chase these stocks which is counter-intuitive since it's growing continuously but our buy entry rule is to make sure it's making new highs regularly so let's quantify a little. It's not that practical to expect a new high, daily, weekly or even monthly. So let's settle our interest at a stock which is creating new high every year.
This will help shortlist the stocks. Makes sense? - Okay, so basically you want us to go with the trend, right?. - Correct. Absolutely right. This is a trend falling strategy. - So, Prateek I can understand it verbally when you explained to go with the stock creating new yearly highs.
But can you explain how to build a system across this strategy? Right, so let me explain. Here we write SHORTLIST. When stock is greater than 52 weeks high. Alright? So, for example, if a stock was on 500 and as soon as it hit 500.1 it'll appear on our shortlist. - Got it. Also, just to clarify, would we shortlist a stock at any time of the day it hits 501 or do we have to note at the end of the day? That is a very good question but we shall answer this later on because the purpose of this call is to avoid sitting for the whole day, right?.
So, instead, we'll sit for trading once a week. - We can trade like this too? - We can decide whatever we want. When do you want to indulge in trading? Whenever you're free throughout the week? I think Friday would be optimal since Saturday and Sunday is off. - So, what you mean to say is that system trading is optimal for office goers as well, right? People who can't give their whole day to trading. - Yes, so what we have to do is to not spend too much time overthinking.
The system ensures that if you follow it, you'll be good to go. Hence it's perfect for office goers. - Okay, good. - Superb. Now when a stock is 52 weeks (1 year) high, it's on our shortlist. The real question is how to prevent from investing in a potentially falling stock. Since we don't want to add fundamental analysis to it, we'll run these queries on the stock on NIFTY 100.
Now, what exactly is NIFTY 100? Abhishek knows already, but for the viewers: it refers to the top 100 stocks in the market or in the country. Generally, these companies are safe since they've been around for a while. The risk is related to fraud and stuff but it's less risky. The business itself works, that's guaranteed. So, we'll do the universe as NIFTY 100 so that we don't have to do much fundamental analysis. Makes sense? - Yes it does. So we're picking quality stocks to make it easy for us.
- That's right. Now, we'll grab the stock that has the most momentum. Let's backtest it to see how it works.
- Before we proceed, Prateek. I have a question... what is backtesting? To test the back? - Yes, so, like the first rule that we had about shortlisting then checking with NIFTY 100, let's consider it as our buy criterion. Let's assume that we have an exit criterion too that we'll discuss later on. Assume that we exited on 10%. So we can code these rules. We can put it back in time since we have the required data for pricing.
We'll apply these rules on NIFTY 100 from the last 10/20 years whenever we bought the stock as it crossed 52 weeks high and then we sold it at x% and we exited when it came down to a certain percentage. Following this, will I be profitable in 2022 or not? - Oh, okay. So, we're cross-checking using the previous historical data. Am I right? - Yes. And you see the benefits here. Firstly, there is no bias because you didn't favor a particular stock, it's all algorithm. You didn't exit because of any news, it's a quantitative decision. For both profit and exit.
- So over 20 years if it has corrected around 100 trades then the chances are that it may work in the future too. Because now it's math, not a guess or analysis. It's magical, isn't it? - Absolutely.
Also, Prateek, I had a doubt. Like you gave an example of backtesting the data of 20 years. This is great. But can we backtest for as short as 1 year as well? So, is there an ideal time frame to backtest? - This is a great question.
Firstly, your sample size should be large, including around 200 trades. - Okay. - That was first. Now secondly, whatever time frame you are picking, it should be having a bull market, down market, and a sideways period so that all the market situations can be covered in the backtest.
So including these two things, the statistical data will have some sort of validity. It would be a decent backtest. - Okay, great. Thank you. Prateek you have explained about the entry here. Can you also explain about exit? - Okay, so, the entry we planned was based on 52 weeks high, we have to plan the exit the same way. Not high of course, we'll plan it according to the low if we want to manage the risks.
So let's do 10 weeks low. - This means we are entering at 52 weeks high and exiting 10 weeks low. Okay, got it. - Now some of you may be wondering why not 9.5 weeks or something. That's simply because 10 is a nice round number and we'll change the number if it doesn't go with our planned baktesting. So, let me just write here. 10 week low is your exit. - We are talking about loss though, what if we face profit? What then? - Yes that's a correct argument.
So, I'll just creat some space here to write the exit. You're correct, it was just the loss part of the exit. So, on number four let me write TARGET which would be 60% profit. 60% profit sounds nice, doesn't it? One more thing, Abhishek.
Let's assume that when we entered, our 80% is 10 weeks away for whatever reasons. Maybe the market reached too high; 10 weeks would be very far, right? So, in this case, we can put a fixed stop loss or initial stop loss at 30%. So, if we had entered at Rs.100, what would be our initial stop loss? - At Rs.70. - Correct. - Were you testing my calculations? - So, it's very simple. Can you revise all of the five points for me?
- Alright. So the first thing that we're doing is to shortlist. And to do that, we must select the stocks which are more than 52 weeks high. The second thing that you explained is to not get into falling stocks. So, we made a stock universe only of those stocks which are included in the NIFTY 100.
And thirdly, we decided that our exit point would be at 10 weeks. Then, we put our target at 60% profit but in case it doesn't reach the 10 weeks, we added our stop loss at 30% - I hope I have covered everything so far, Prateek? - Absolutely correct. We have our entry, stock selection, entry, profit, and stop loss. And it's all quantitative without mentioning Reliance even once. - It'll be selected by itself. Sounds good, right? - Amazing, yeah. - Now comes the magical part. We'll go to our screen onto a software called Amibroker.
What it does is convert all of this into coding. It codes in a very simple language. When you write >50= Shortlist. It'll show you a shortlist of all the stocks greater than 50. It's very simple. Now, you can code all these rules on Amibroker and click on the backtest button.
You can also do automation where the stocks will align themselves automatically. But we won't talk about it today. We'll only talk about the backtesting. - FYI, it's not a paid promotion so please don't attack us later. - As I was saying, you can do the same thing in Excel too.
Download the data, select the range, put in the formula, and add the filters. It's the same thing. You can do it in excel too. Although Amibroker is a bit less complicated, the function is the same. If you know python programming, ladies and gentlemen, you may use that as well. The point is to run a query on the given data. The rest is on you. Cool.
- As you can see, on the left side of the screen we have all the NIFTY 100 stocks. Remember when we were talking about successful stocks that keep going up? Look at this, so beautiful. This is Asian Paints. Look, isn't it great? - It keeps going up. - Anyways, do you think this stock would have been on our shortlist? - I think so. Yes.
- Right? It's going high up. Sometimes it would've reached 52 weeks too. It's beautiful. - Then let's look at another one. And... - And guys if you want the views on this video to reach the skies the same way, don't forget to like it. And if you want Prateek to come back, comment "Prateek Bhai OP". Yes, Prateek, you may continue. - Now next up is Bank of Baroda. It was on 210 and the lowest was on 40.
Do you think it could be on our shortlist? - I don't think so. - It can't because it never could've reached 52 weeks high. - Yes. That too and also it came down a few times. - Berger Paint would clearly be on the list. Okay, enough with the guessing. - This was discretionary up until now, right? - Yes it was since we were just analyzing the stock growth and predicting.
- Right. - What I'll do now is... We have an analysis window here. It's very simple. We have written our 52-week high strategy
and have an AFL file here. We don't need to get into the details but the file contains the exact details we have discussed. Got it? - Understood. - Now, we'll click on the backtest button.
This would take you hours to do. And it's done already. - Just like that? - Yes, and I'd like you to note the dates here. - It just did 20 years of backtesting? - Yeah, it's pretty cool, right?. - Wow! - What's cool is that you can see here ICICI Bank, you can see the entry and exit dates, the price change, and the profit. So, in this case, ICICI had 71% profit.
- Okay... so, Prateek, sorry to interrupt, but I wanted to ask that this software just showed us by backtesting, the possibility of how much profit we would've gained if we had invested in that trade, right? - Correct! And also with the commission. Plus, STT and stamp duty, everything is included. - Okay... so, Prateek, I saw a video of yours with Sohail on LearnApp, is it the same thing? - Yes, it's actually very similar. It's also systematic and easier to execute.
- Also, to everyone who doesn't understand this: there's a website called LearnApp that has over 250 video lessons on various domains like trading, investing, and systematic trading. And like always, since I am street-smart, I have a solution planned. So, the solution is that we have an offer for you guys... if you click the link in the description and buy 12 months of subscription then you'll get an additional free subscription of 2 months. So just imagine how much information we'll get from Prateek there. So, anyone who's interested in learning, make sure to check out the link in the description.
Prateek, sorry to disturb you. Now we're back to the topic. - No problem. What I was thinking while backtesting is that when do we take an entry? After shortlisting, you don't need to buy it immediately.
You have to buy it on Friday at 3:20 just before the market is closing. Not when it happens. - Okay. - Yes. So no matter if it gets to 52 weeks high on Monday, you buy it on Friday only.
- So... we're buying it at the end of the weekly candle, am I right? - Yes, exactly! And it's also easier to backtest since the week is closing, that would be the entry. And it's easier for you too. No matter what happens, enter on Friday only. - Also, Prateek, I think that what the market makers decide to do, won't escape your eyes as you would be there at the end of the week. Am I right? - 100%. Whatever we were trying to do will be valid till Friday, and that's our game.
So, yeah, completely agreed. - So, one more question for the clarity of our audience. Will this signal work only on Fridays? I mean what would it be like? - Good question. But what we'll do is... no matter when we get a signal, we'll trade only on Fridays
because of our convenience. And we've tested per Friday 3:20. The advantage of it is that you wouldn't have to stress out for the whole week. Only for 10 minutes every Friday.
And it's easier to execute. My point is that you don't need to sit in front of the freaking screen to trade or invest. You don't need to do that. Just put in some effort and you'll actually do pretty well.
- Looks pretty easy to me but let's run on the screen and see our profits and losses. - So, I'm a pessimist. Whenever I backtest, I criticize a lot. So, let's go in that zone. Taking an example of Asian paints, the signal was in 2019 and the exit was 2020. This means a whole year of holding. - Prateek, it's showing 63.15% of the profit for 1+ years.
So, this means that I put in 10K and got 63.15% of that, right? - Yes that's correct. - Without doing anything? Just by entering in Asian paints and done? - We've done so much analysis, what are you even talking about? - And I sit for the whole day, so not fair. Yes, you are showing something on the screen okay.
- Yes, so... this candle has made 52 weeks high. One high was 1529.8, another was 1490, and this one was 1550.
This means that it crossed its 52 weeks high with some rupees. - So, repeating the rules... if we see a 52-week high stock, we make an entry, stop-loss is at 10 weeks low or 30%, and besides this, I'm targeting at least or around 60% profit, correct? - Correct. And also, you can see that it also dropped after its high. See the close had happened at 1545. Right? And now we're entering at that close because we're entering on Friday.
- Ah! So this is another advantage. Okay. - Yes but sometimes it's not when the market goes up but that's random. - It's better to be safe than sorry. - Yes. It's better to keep your hair than be sorry. Otherwise, you'll stay stressed.
- Now, after entering, let's follow the market. The market is working its way to the top and see this bar right here, this is our cue to leave because we have our 60%. The end. - Okay that's the reason to exit. I was confused because I couldn't see the 30% or 10 weeks low. - We planned on selling at profit too right? - So basically you have made a system where you have made entry-exit and it'll to do it automatically.
We enter on Friday and then it will signal us to exit. Wow. - Momentum trend following with the top 100 stocks. If there's momentum and it extends beyond 60%, I'll exit, if the momentum falls below 30%, I'll exit and take the loss.
It's simple, just pure logic. - This universe of 100 stocks. If we had invested in those small-cap stocks, what would've happened then? - It has execution risk. It actually has two risks, one of them is execution risk. This means that it doesn't have any liquidity. For example, it'll keep hitting the lower circle and you wouldn't be able to exit.
So, you may face this with such stocks. And secondly, fundamental risk. The company itself isn't well enough. Like you say how the operator messed with the stock.
So, why should you enter at unnecessary risks? Keep it to the top 100 where you enter with the momentum. - So, Prateek, can you give a few examples on this one? - Yeah, let's take one related to loss. It'll be fun. - Otherwise, they'll complain about the same. - Let's see one more example of PL. It's about loss. - This green arrow disappears a lot.
- By signal has been generated. - That's correct. Now technical analysts would be advising you to purchase because they're panicking on the breakout.
And you'll buy. Anyway, you're buying at the close and the breakout has happened. I don't know why am I even remembering technical analysts.
We would draw the numbers here and exit once the test is done. So, in this case, the exit would be discretionary which we don't want to do. - We would have to face heavy losses if we waited around for all this. - Correct. That's why we'll get out as soon as the low hits 30%.
Which, in this case, happened in four weeks or around one month. - So, Prateek, correct me if I'm wrong... referring to that Yes Bank scandal of Mr. Rana, if we had followed this system at that time then it would've saved all of us from a huge loss, correct? - Correct. That's right.
- I think we could've saved ourselves from very bad news too. - Yes. I think the edge you have as a trader is of exit. I don't think you need to hold a stock for 100 years.
Exit is what defines you as a trader so that you don't face those huge losses. - Warren Buffett fans line up in the comments. - Now, let's look at an analysis report, Abhishek. - Prateek, all of this looks so high-tech. I feel like Tony Stark/Iron Man - Let me show you another fancy thing. This is nothing. - As you can see here is some initial capital which increases by a lot in 20 years.
I won't be telling the numbers because people tend to get fixated on them. The risk-reward is more important than returns. So, let's look at that first. - No but we value returns as well.
Is this much return real? - Yes, this test showed these returns. Correct. And it has also shown 20% of annual return. But in reality, you can't earn 20% annually. This is an average divided in the context of 20 years.
So, if you'll actually do this for two years, you won't get 20% per year. We'll also discuss this in detail further ahead. - Oh, okay. - Alright? I'll explain it later. Now take a look at these 574 trades. Remember how we discussed the importance of a good sample size? This completes it.
And it covers all of the bull market, low market, sideways, everything. So, statistically, it's valid. We can also see our maximum possible loss because at one time we'll see a bear market when all the stocks will hit the stop loss. So, the worst-case scenario here was -25%. - So, this -25% is our one-time drop-down, right? - Correct. Adding up all the losses before you made a profit with a new high. Including all this, your worst-case scenario was -25%.
And you should assume that the loss can go all the way to 35% and you should be okay with it. - Yes, you explained it at the beginning itself. - So, assume a bit more to avoid surprises. - Got it.
- Now, let's see something cool. Look at these charts. They represent your account value. It shows how the value of the invested account is moving. Notice how you made a high but then for two years, no returns. Then the capital doubled up, again silent for two years. After that, it didn't stop. It kept making new highs.
- So, Prateek, just to be clear... is this chart based on a specific stock or on the entire NIFTY 100 Space. - Yeah, that's a damn good question. Totally right. - I didn't realize that I didn't clear it. It's the entire portfolio. All 20 stocks that you should trade with. So, it's the value of the portfolio of 20 stocks.
Now, look at this one, it's inverted. It's called an underwater stock. It shows your worst-case scenario. Mostly 10-15% of loss is imminent here. - You can see this loss every 3 years, right? - This is very interesting; I'll tell you how to read this. On the left side, we have all the years up to 2020 and on the right side, we have the returns and profits for the same year. So, now you read it and tell me how the profile is. Is it consistent or erratic on a yearly basis?
- A little erratic but what I can observe is that if we stick to the system, the net profit is very good. - Correct. So, some years it may reach up to 100% while -20% during the other. - So, what I can see is that it gave us -21.8% during the bear cycle of 2003 and it also has shown the rise during the 2001-2003 era since it was a glorious period.
And same we can see with 2020 when the market dropped and bounced back. - Now the problem arises when people look at the rising market but invest in 2008 and think that it's all about gambling. Then when the market rises again, they'll invest in 2011 and lose their money yet again.
So, the problem is not related to the market. It's about consistency. So, if you decided to enter, stay for 7-8 years otherwise there is no point in it. - Prateek, the best thing about this system is that I don't have to sit around all day. On Friday I have to run it for 10 minutes and punch an order; that's number one. The second is that all I have to do is put in a stop loss at 30%, a target at 60%, and lounge all week.
This is the second thing. And the third thing I noticed is that if we stay consistent and play by the system, we'll definitely make a good amount of money in the long run. Correct? - Correct. Now, Abhishek, let's do a rapid-fire round.
It's for everyone watching this. All you have to do is answer yes/no. - Okay. - Does it matter if you earn profit in the next stock or not? - No, not really. - Does it matter whether the next 5 trades are profitable or not? - No, not really. - Is it important for me to trade for one year or shall I invest for a few years? - Of course for a few years. It makes more sense. - Right.
So, actually what stock to buy next doesn't matter at all. These statistics matter. That's all it is. It's just math. - Wow. So, all I have to do is to make a system and enjoy my life. - So, different kinds of systems exist for everyone. This system is very slow. It may take you 1-2 years to have 20 stocks in your portfolio. There are other systems as well.
- This system is showing only 530 trades in 20 years. People like us will get this much in a month only. - That's correct. We could have an intra-day system where we have a trade daily at 10 am, there could be a system where you are buying in options, there could be one where you invest in a trade every month, we also did a workshop recently where we made a portfolio of 15 stocks by Monday so that you don't wait around for two years. So, based on what your objectives are, a strategy is already out there. - Wow. And the best part is that it's all math and all logical.
There's no guessing, the numbers speak for themselves. So, that's something very incredible. Also, Prateek, if I'm not wrong, you bring all these strategies on LearnApp weekly, right? - Yeah, so, there are these workshops where we introduce a strategy almost weekly.
And you will also get a lot of strategies courses taught by big fund managers. So I think no matter what your strategy style is, you'll definitely get something there. - Amazing. I guess Raamdeo Agrawal and S Naren sir have also taken your investment lessons? - Absolutely right.
- You have influence acquaintances. - You are left, sir. - Yeah joke around all you want.
- So, Prateek, before we move ahead, can you tell me a few demerits of systems? There must be something, right? - Yes we talked about it before. The demerits are that you won't get results in a short time or by investing in just a few trades. No matter what your strategy is, I think you need to take your time up to the fullest. Even in intra-day trading, a quarter of people should decide whether the system is working or not. And for a system like this, you should wait for 5 years. So, patience is the key.
And if you can't be patient enough then it's a demerit for you. Since it's not a magic pill. I think that's a downside. The second is that the market is continuously changing and the worst-case scenario that the system had predicted can easily be exceeded.
If you have what it take to not be patient then it's great. I think these are all the demerits. - So we're done with the demerits. And even though you have told us a lot of advantages about system trading, is there anything else you'd like to add before we leave the audience? - You make your money here first, and in the account later. - Woah, that was a brilliant quote.
- The battle is one before it's fought. It's true because all a mental game. You have the system, we did the backtesting. All you have to do is execute it all and clarify all the doubts you may have. - So Prateek, we made this system and did all the work, is this what we call ALGO TRADING? I know it's a weird question but I'm asking on the audience's behalf.
- Yes, I mean when it's done, you can automate and execute it, where the system will automatically exchange the buy/sell orders. Now, that process is a discussion for a different day. - For that discussion, comment "Prateek Bhai OP".
- Yes we can talk about that later. The point is that the system doesn't make money. First, you should trade manually, if you're comfortable then automation is the last step. A lot of people want to rush, but automation is the last step. - So, yeah, it can be automated since it's all quantitative.
- Prateek, I think we should live-stream every Friday to select the stocks. I don't think anyone has this much time to do all the system stuff. - Relax, man. I don't think we'll be able to manage a stream every Friday.
What we've done is... here's our page that is fully automated and it shortlists all the stocks for Friday. This is a scanner and it scans all the stocks which are doing 52 weeks high.
So, it's up to you to manipulate the information but if you're interested to know about the high stocks every Friday then you can check it out every week since these are live-updated. - Okay, so... is it for free, Prateek? - Yes, that's right my friend, it's for free! - Aha! So, please send me this link for me to add to the description. And disclaimer: this is not a buy/sell recommendation, it's just a free screener for you guys. - So, Prateek, it was so fun to know everything about system trading. You explained everything so nicely.
Plus, there was a setup resembling Tony Stark. - So, guys as you can see how much you have learned today. And all of this requires a lot of effort.
Plus, you saw how Prateek is such an influencer guy. So, it obviously takes a lot of his time too. This is why we're going to target 15K likes on this video. If we reach the target, we'll bring him back for another video. If we don't, then Prateek is the only one to blame. So please make sure to keep Prateek's dignity intact and share this video as much as possible. And as I had mentioned earlier, go and check out the link to LearnApp from the description below if you want to learn something new.
You'll get an additional two-month free subscription. So, till then, keep learning, keep growing, keep investing, and keep trading.