Learn about System Based Trading with an example
Hello, Hello, Hello, my friends, i am your friend Vivek Bajaj Co-founder of StockEdge and Elearnmakets Since the previous face to face, i have been telling everyone the same thing to all of you, that convert your trading style in a process, convert it in a rule, So why i am saying this, you need to know the reason behind this, I have seen every kind of ups and downs in the market, i am in market from a very early period. Since the time derivatives market started, from that time i am involved in the markets,and i have seen an evolution in the markets Earlier when there was pick trading in the markets, where there was lot of shouting done on the floor, after that came online market, And after 2008, algo trading started, friends algo trading is also called robotic trading, approximately 60% and if would be even more, i will not be surprised, But approximately 60% in India opt for algo trading, which means that the robots have come, So you are not just fighting with people, you are also fighting with the robots, In this scenario friends, if our discipline will not be proper, if there will not be randomness in the way we work, then definitely we are going to face problem, I am communicating this theory again and again with you, and i am seeing that very few people are following this, Who have created a system in there process, but majority is still doing the discretionary work, If someone says anything in TV or twitter, people go and participate in those shares quickly, Friends, this has been going on for a long time now, so when the momentum was good, there were no issues and people made money But from here, keeping that money and making more money out of this, it is not going to be that easy, And if you want to make money by trading in market, then there is just one solution which the Rule Based Trading, Friends, i always put the endeavour to bring those guest here who are doing the cutting edge work, Algo trading, rule based trading, i have already recorded many videos on the same, you will surly like it and you will also see that In the upcoming days i am going to get more guest who will teach you how to do rule based trading, in a simple and an effective language Todays video, also my friends is based on the same topic, i will be presenting a guest infront of you, who has seen a transition in his life, From a discretionary trader who had a very tough time in his life, to a rule based trader, who is in a peace, making money, and now he is in a comfort zone Friends, i want you to listen about him, do learn his strategy and his way, you need to understand the process, I am not saying that you need to do what he is saying, every individual has there unique process, But you learn from his way and make the process according to your style, Friends, in todays’ face to face i would like to invite sankalp, Hi, good morning sir, it is a pleasure to meet you, its my pleasure sankalp, good morning, i have been following sankalp from a couple of days, You know my way, i just keep following, and see who is doing what, how much genuine work is he doing, So sankalp is really really doing good work, if you see his twitter post, and from what i have heard, he has really made a place for himself in the markets, And i thought that if you also here his story, you will be able to go in the path in a better way, Sankalp very good to know the way you have evolved yourself in the markets, thank you sir, great fantastic, So sankalp you know our format, we would like to know about your family, history, about you and why are you doing this, we would also like to know, And after that we will do technical discussions,in the topic of rule based trading, Sir as of now you can call me a circumstantial trader, my life has been faced a bit of ups and downs, I come from a scholarly background, both my parents are teachers, i was working in a government bank for 11 years, But one fine day i felt sick, and woke up in an ICU finally, and they had to operate me because there were some medical issues And internal organ failure, i was there in the hospital for 2 months, my survival rate was very low, So they kept on preparing my family, as i was young so anything can happen, but fortunately i came on my own two feet, But after surgery i could not continue my normal job, because they had to cut me open , i had surgery of my intestines, i was on complete bed rest, And that time i had to quit my job and look for the opportunity, to provide for my family, and fortunately banking is a field where you meet such people, Who are in shares or investments, and do trading and you learn a lot from them as well, so i did learn from them, i use to trade, There was no system as such, at times i did basis on news, some rumour, or someone had said so on that basis i did, basically i was going on word of mouth, there was no system, So when i came out of the hospital, so i was on bed and i had to create some system, so i thought what can i do while being on bed rest, So trading was an option for me, and i started exploring it, saw the charts, day after days i saw charts and made a system, How to gauge the prices, price gives a lot of peculiar signs, as to how the price is going up and down, building that i created a system, and then i started full day intraday trading Since then, 2017, i am a full time trader now, Fantastic, so, i think that, in your story lot of things seem common, that a lot of emails come to me, lot of interactions come, That there are circumstances that leads to very down and out situation for a person, and emerging out of that negativity, Bringing positivity and getting stable, actually reminds me of that movie, Jo Jeeta Wahi Sikander, so well done sankalp, really proud of you, And i am sure everyone around you is very proud of you, you have come up very strong in life, you are an inspiration for many people who are going through tough times right now, yes sir, So sankalp let us talk about your rule, your system, transition of being discretionary trader to a rule driven trader, tell us more about this transition, Sir, i had to come rule driven, because the initial system that i had created, i got a lot of success initially, You have explained already in the starting that market was trending, so you could any stock and make money, Fortunately, when i started, i got good rewards that time, and i earned income then, but the moment volatility use to come, or there was some unforeseen event, or price behaved in an erratic way, then my system use to fail and i was hitting losses, And there was one indiscipline that i use to follow, if i had a profit of 20-30K, or 40-50K, and i am there the entire day, hoping to get more and more, Because i come from a very different background, i has a salary, and accordingly i had my lifestyle, my expenses and EMI’s, and that cushion was not there, So i thought to make as much as i can, so this was my objective, when i started, but then i started realising, That days when i was making 40-50K i was exiting at cost or at losses, so i am not taking anything at home, So when this happened continuously for 1-2 months and started hitting my capital, then i realised i have to draw a line, That if i am looking to trading as a sustainable source of system, i have to be disciplined, it is not like a gambler’s market, That you keep on doing as much as you can, there is no end to trading, you can trade in equity markets from 9:15 to 3:30, then in commodity, But how many decisions you can take, we have two types of capital, one is financial capital and one is mental capital, absolutely Financial capita limited and people don’t give much attention to mental capital, the kind of trade that i can do between 9-10, that i cannot take at 2 pm, Because i will be exhausted, i might not be taking the right decision, so fortunately, twitter also helped me, I came across people, i learned from the mistakes of the people, started noting that down, greed and fear are two common mistakes, And there is a thin line between greed and fear, if we put discipline in that, then it is a life changing event, So what i did was, i made a basic target, if my bank’s salary was Rs 3500-4000 per day salary, so according to that i use to see trading also, i will make the same amount and i will close the day, I call they ok days, when i meet my daily target, then i close the terminal, and then i learn, so i have a strategy for myself, I come from a commerce background, so it was a new field for me, so i keep learning new things, So i had to develop a system, because it was the only source of income i have right now and that time also it was very crucial, So when i started applying these rules, and it will evolve it is a continuous process, no system is perfect, So that is how i am treating trading right now, your story sankalp, is pretty much a boy next door, That i see that people have a maximum capital of Rs 2-5-10 lacs and they want to replace the monthly salary of 40-50K through a consistent earning in market, So if i see to target Rs 3-4K a day, so we can go in that zone of 50-60K, but there is a lot discipline required in that and it is really difficult to bring that discipline, Sir i have learnt it the hard way, when i had started, that time i could not even stand properly, so i had to do something radical, And if i did not do the military discipline, if would end up selling the family silver to support the family, or do something else, Which my body might not support and i again may fall sick, so i had to get that discipline, i had no option, true, Glad that you did that and i also hope that people who are listening this, they also understand this, and you really said a good thing here about Money capital and mental capital, that in the morning, the mental capital is so good, typically do people make money in the morning, Because by afternoon exhaustion comes, market also start manipulating you, so during that time you make the broker rich and you become poor, And third point i would also like to add here which many people dont understand, with maturity you understand this that, There is one more capital which is time capital, that if from morning 9:30-3:30 pm you are engaged in one work, and if you are not getting that return, That time does not come back, once gone, and you are the person who understands time, because you have fought time and came back literally, Good good sankalp, now let us come to the technical discussions, so i would like you to share a presentation, so that whatever you are following, So if you can explain us the process it will be really useful, absolutely sir, while sankalp is sharing the screen, Meanwhile let me tell you that sankalp is a B.Com graduate, and he has coded a system in trading view, This thing really impressed me a lot, no engineer or technology background, he used trading view, coded the system and using that system, So understand this process well, and that confidence in you, that if sankalp can do then all of us can do, Is my screen visible sir, yes, i can see your screen, so as you just introduced, whatever strategy i used, the technical analysis, i have coded that in trading view, And that indicator is called StableFork, its basic purpose is to read price action and then give buy or sell signals, The basic purpose of this indicator is to read the price action and generate buy and sell signals, It is the job of the indicator to give new trades, it will never sit idle either it will give buy or sell signals, now we have to grade those trades, which trade we should take, which trade has that strength or not. The first thing that happens to traders be it intraday or swing traders circum failures, if we see a new scenario we enter in a long position or short and in sometime trend gets reverse and there is loss, with the help of this indicator fortunately I am able to stay away from the traps because according to me a bad trade not taken is the best trade. Anything which is not reducing my capital is profitable
to me because if my capital is intact, the market will open tomorrow also so I will take tomorrow atleast the capital with which I had started is intact. Secondly those trade given my system which is perfect , I have more confidence in those trades, I can scale up and increase my position sizing, you get more confidence in good setups and as it is I am away from traps right. These traps may give us reward later but there is no benefit of hand sign analysis. At one time which we think right or wrong if it is keeping you away from some bad trades some eventually are good also but that is going to change the whole scenario so I will just explain the setup to you.
So the mode will be intraday sir and the instrument which I choose is option buying, and the signal generation whether I will be going long or short that will be taken care of by my indicator, it will be giving buy or sell signals and stock selection, I share 3-4 stocks on my telegram channel everyday, I will explain about stock selection in a bit. So 3-4 stocks which we select for our trade, we work in that only and now trade execution we have our stocks and system and now we need to grade and select the stocks for trading that will be taken care of this so this three point grading system which we call 3 GPS, and exit strategy is very simple, the indicator is going to plot exit signals where we will be exiting now stop loss which I will be explaining in live charts as well, whenever there is a long signal so stop loss will be placed at the low of the signal generation candle and in case of the short the stop loss will be placed at the high of the signal generation candle. The reason that we have put the stop loss at the candle so that the risk reward will not be fixed. Many times a very big candle is being made so our entry is late and candle size is big, in that case it is 1:1 but in the other cases we get 1:2 trades, but this is the variance from 1:1-1:2. Mr. Vivek- Sankalp such one minute, friends see this slide again and in the left slide of this slide in bold there are Sankalp’s thought process answers. Friends please write the pointers on the left side mode, instrument, signal generation, stock selection, exit strategy, stop loss, risk reward.
You should write these for every trades, generally people say that why we did this trade so Sankalp has given you a very good template and I got catch of it. Please capture this template quickly and write down if you want to trade then what should be your parameters based on the left side items, yours right side so for Sankalp it is StableFork, for stock selection Sankalp has his own stock selection, you may have your own stock selection criteria, I hope you have understood this and taken a note of this, you can continue Sankalp. Mr. Sankalp- So before I start Sir, I just share my thoughts about price action. Everyone see the charts but you will be surprised to know that most of the people I interacted with, if they see a green candle it means bullish move is happening if they see a red candle it means bearish move is happening. 20:04-20:45-But they dont psychology or economics behind what is happening behind the candle so whenever we see a green candle I just explain it to you briefly the price opens lower and it closes higher so the price is actually appreciating and what happens in a bearish candle the price opens higher and closes lower I know it is a very basic thing but many people dont focus on this , if we see this only then our trend analysis becomes very easy, this candle is itself telling you whether the trend is an uptrend or downtrend. Now a simple strategy which is my that is based on demand and supply. If this is price, whatever data points is below the price be moving average,
vwap, pivot, fibonacci retracement whatever is below price will act as a support and whatever is above price be it pivot, fibonacci retracement or ema of a larger timeframe it will act as resistance. Why I am discussing this if I am going short then this is a zone which may create a problem as the price may get reverse from here so I am going to be extra cautious on these zones as it can spoil my trade. You get a signal and there is a confluence then only we can execute a trade but you never know when excessive demand can be created in this zone. But in the run time if you have these variables and thought process that sell signal is being made, there is confluence but it is difficult for the price to cross this zone so I will be a bit cautious, this is the basic thing of price action that I wanted to say. So now the mode remains intraday, we wont take any trade at the opening, trades are taken post 9:20, at the 9:25 opening candle if any signal is being made. From 9:25 we start and no trades will be take after 3 because the mode remains intraday and no trade is found in half an hour and strictly there will be no carry forward trades and I might be best example to tell you, you never know what will happen tomorrow.
2One day I was happy, enjoying with my family in a secured job and the next day my whole life changed so maybe because of my life events buy you can relate to these things, day before yesterday’s and yesterday market opened gap down 200 points, it is now in our control any news or tweet came because of which global market got affected, this is not in our hand, we have a position and next day what will it open we dont have any control so it is better to safeguard your capital and we will trader tomorrow according to the chart. I still am an option buyer carrying trades with theta decay so that is also the reason why I dont carry forward my trades, now the instrument which I choose is option buying, a brief introduction on options buying whenever we are bullish or expect the price to go up we buy a call option and whenever we expect downtrend or correction we buy a put option, for trade execution we will be taking only limit orders, we will not take market orders as in my stocks there is not enough liquidity in options and if we put market order then we will get worst possible rate and many times there can be correction in the stock but are buying price become so heavy that it does not match with the underlying price. So the trade execution will be limit orders, if it does not execute then not a problem we still have 3-4 stocks, if we get trade in other stock or get re-entry in this stock then its fine, if we miss the bus then we miss it we have to have military discipline in this other FOMO traders give us troubles, now strike price selection, in this we will choose ATM strike price, the strike price which is extremely near to the underlying price. It is very simple which ever price is near the underlying price we will select that price, can I go forward? Mr Vivek- yes Mr, Sankalp- so what about stablefork, I really worked on this, i will tell you the logic also that why I made this, I would have used normal charts also, when we sit on the trade it is not necessarily that all the four stocks at that time when there is trend reversal at the time of execution we are seeing, one indicator or setup give you timely alert that a trade is being made in your shortlisted stock so trading view is a brilliant platform you can set custom alerts so what will I do I made custom alerts for my 4 stocks , I get alert both on my screen and mobile as well, scandal it take cares of human emotions as it has its own set of rule, if it gives buy signals then buy, and if sell then sell. Many time we bring our discretions in between but in actual sense whatever we think might happen in the market be irrelevant, we just follow whatever is happening, we are not move makers, we just follow the moves. So a human part where bias comes that also is being taken care of and those people who do not understand chart reading or there is difficulty in ready for them it shows buy and sell in a simplified manner. Mr. Vivek- Just a small for my viewers, this indicator is his proprietary indicator
which he gives to people if people subscribe, I dont have any role, dont get any commission, this is of his, if someone understands the process and think that they want to adopt this process you have seen his website address plus I will give you the twitter handle, if you want to connect with him then you can, I am telling you again I dont have anything to do with this, if I like someone I host them, what they do I dont go into it, lets continue I had to say this because of disclaimer Mr. Sankalp- As I have said it is an honour to sharing this platform with you and speak about the system that I follow, this is enough for me. So for stock selection when I was in the bank people who follow the system, i will give you a brief introduction, it is a long process that I follow at night, It takes 1-2 hours I read reports and I read charts so basically the criteria for my stock selection are the stock should be of volume gainer, secondly the indicator in the backend is also a screener the stocks which come in my setup, it gives me list of 20-25 stocks then I analyse those stocks, see the volume, their day’s variance i.e the change in ATR , and if there is no news, i generally avoid news based and event based stocks in which volatile move comes, i dont watch news while I am trading as whatever can influence my decision taking I dont do that and secondly I thank you on my telegram channel i keep giving positional ideas. So I give positional ideas long on Tata Motors last month, I see the volume and it shows graphical representation is just brilliant so there was confluence and according to my setup it volume was going good, So I bought that stock. The exit strategy is very simple the indicator plot a line like this and this is a exit target, There are many people who have to work for big targets who do not want get free by 11-12 they want to trade whole day this indicator is also for those people which ATR keeps plotting but as the system this is a exit line for manual exit we can plot fibonacci retracement, if time exist I will explain this too.
This is the system for trade execution there are 3 points that have to be in confluence, I call this 3 point grading because we are giving grades to all 3 paramters, ther should be a buy or sell signal whatever the case is from the indicator in a 5 minutes chart, normal candle will be better and secondly you may have seen ADX, there is a crossover +DI and -DI, there should be a crossover which I will explain on charts there should be recent crossover between positive and negative DI. and if a buy signal is made then positive DI should be above 25, and if short signal, then negative DI should be above 25. It basically means that trend reversal has happened secondly there is strength behind this trend.
In many times when there is no strength in the trend then the trend reverse so it saves from these traps and as I said in the beginning its going to save us from the traps it give confidence, now there are some exceptions if your system is perfect where the variable change everyday if you see days before yesterday the market only got closed there should be some exception so in these exceptions trades are avoided completely so in case of ongoing signal like before closing if buy or sell is going on we will not touch it today, if someone want to touch then they can make a manual setup, we will get an idea of trend, if sell is going on then the trend is down but the risk reward and target setting will be done manually through fibonacci retracement. -But I would suggest to avoid these and in case of extreme gap up and gap down no trade will be taken in the ongoing signals because the setup is being made and next day there 4-5% donward movement in that stock then there is a general way on which what people do if it is broken then they start selling but they forget in that time RSI gets adjusted, if sellers are there then people will also buy and square off their trades, despite of a good downtrend people land up making losses in these gap ups and gap downs situations so in these cases no trades will be taken in the ongoing signals. Many times it happes that a signal is being made but the rest 2 points the confluence is happening after that i.e near to the target, then there our risk reward will be affected as our trade got executed in a lower level now it has progressed and come near the target so ther risk reward will become haphazard so in this case trades will be avoided and on an average the stocks which we select, there is average ATR of a stock which is of .78-2.04%, in this price range the stock moves many times there are abnormalities sometimes stock moves 5-6%
which we do not know before the start of the market so yesterday’s market will go so down or will correct so much people did not know before the market opened so we have to stick with an average ATR which is between . 78-2.04%. There is a whole system where a stupid trader, a big move had come and you left at 0.78 , this is not my system is telling it cannot predict that 5% move is going to come. If I had a sytem like this then in one trade 5%
and quit from the market.So for analysis it looks good but in reality this is a range that stock moves in a day and many times since our analysis is revolved at the close of our candle, if the candle’s size is more than .78% for which I have also an example for this so I will take the high of that candle I will explain this to you better with an example so in this case if we take the high and a bid candle is made then again the risk reward goes down the line then it become bad scenario so in this case I had or substract 0.38%
If so many criterias for exception will come, then do we keep a track and trade will also be lesser. How many trades do you get in a week? Oh you trade daily, sorry! Sir, i have made a backtest also for february, i will share that also with you? Ok ok! Because how will you remember so many criterias. Sir you need a day in the Live market to see all this. And if you make all these rules while a candle is getting formed, a big candle is getting formed like an abnormal candle, then i know that i need to take a stop loss little lower and not very high because my risk - reward is getting disrupted. So when you practice, fortunately people working with me are making good money. They are very happy. They are peaceful and they have a system to follow. Yes, there are trades that do get destroyed and stop loss
also gets disrupted, face failures also,because you can't control price action movement. We are just following whatever price is telling us.But they are in a very good state of mind because after following a system, there will be loss day and profit day, but they are satisfied following a system and they look at it cumulatively and are in agreement. Correct!. Like how maggi is made in 2 mins so the process has gotten established. First time. Even that might have sounded complicated. So, I'll share these talks that I had on the 26th. From this trade has been executed for only PEL. I'll take that example.
So this is the chart of PEL in 5 mins. There's no indicator applied on it. So whenever people subscribe to the indicator, so when you go to the indicator since i am the owner here, in invite only scripts, you will get an option for stablefork indicator. I will be giving you backend access so you can use this. Select this, it's already added to my chart. So whatever indicator you choose, that will give you signal according to buy/sell Sell represents short and long represents long only. This blue represents the target line. These dotted lines represent ATR trailing stocks and a lot of people working for higher profits will rely on it.
I would suggest that this is almost 7.8% of Fibonacci replacement. It should be enough if your aim is to make decent money in intraday trading. You don't know that the cells that have been made, these dots are higher targets. So now if we talk about systems, indicators have been applied and I have made a console for ADX also like a small plug in. So whenever there is a crossover, the indicators will tell you that there has been a crossover. The orange line is negative DI and the blue line is the positive DI. Now if we talk about this case, there is a long signal. First of all, this cell we will not execute because we will take the trade after 9:20 only. So this is negative as it is. So at 9:20, a long signal is being created but there is no bullish crossover here. So my point no 2 is not in confluence and the positive Di is not above 25.
The black line is 25 and the positive DI is not above it, so of my 3 point grading system, 2 points are not being factored in so i will not initiate a trade. Though we can feel that the long has been made, it has been rewarded as well. It has the hit the target and the indicator is telling you to book the target as well but as per the system, it is not a good trade. It is a risky trade. Ok Sir! But the alert that you get on your phone, when do you get it?
When it goes long or when?In both the signals, this is the beauty of trading view, You select any stocks, go to an alert and select stablefork. Select what kind of alert you want to suppose if you select long, and now you have different options. You will find a screen or email or if you search through a 3rd party web group, so you can take signals on your telegram also.
Now we have a short. At 10:30 a short is being generated. If we look at the size of the candle, we see it's an abnormal candle because in this one candle, there is movement of 0.83%. So any candle which is above 0.78 is an abnormal candle as per the system. Normally what we do is, (this signal is generated after the candle closes?) Yes sir!. I will replay and show it to you and I'll take a mock trade and options. I will show the replay also but first i will quickly explain how the 3 points are in confluence here. There is a signal on a 5 min candle. So condition no 1 is satisfied. At the start of the day, there is already a bearish crossover, so the 2nd point is also met.
There is a crossover in negative and positive DI. And the 3rd condition, the positive DI is above 25. So all my 3 points are in confluence here and I can go ahead with the trade. Now in this trade, I will show the replay also. Since it's an abnormal candle, SL will be 0.38 added to this system. I provide a calculator for easy calculation to stay in the system. I don't get what you meant by I give a calculator. Sir, this is s an abnormal candle because the size of this candle is very big,
the stop loss according to the system, should be the high of this candle. And the target is here,and I am entering here. So my stoploss is very big in this case. And I am working for a smaller target. In such cases, retracements are very dangerous. We take the entry at this price plus 0.38% which comes out somewhere around here. This has already been plotted by the indicator here by dots. So basically, these dotted lines are trailing stop loss? Yes sir! So what i'll do here is i will replay a bar so as to get an idea how to actually run trades on bar time. This is the price action which is Live.
So this cell signal is forming in front of us .Here the indicator is telling us to go short at 1908 and this is the target 1893. As i have already explained, this is an abnormal candle. So the SL here, the candle high is 1924. I will calculate it. 1924 is the candle high so my SL that I will have to keep is 1916.7 almost at this level. So in these cases , 1:1 risk reward is there because the candle is so big that stop loss is disrupted. If we had a decent sized candle, till 0.25-0.5 %, there it 1:2 would have worked fine.
But this is an abnormal case, and in the Live scenario, all kinds of situations we face, it's a good example in which we can see the performance. So I am working for this SL. 1916 is the SL and I am taking an entry in the next candle which is open, Because this signal will be made for candles close. So this candle is opening at 1909. So I am planning to enter at 1909 and my SL is 1916.7, Ok sir?And the target indicator has plotted 1893.25. So SL is 7.7 and I am working for a target of 15Rs. In this case, since it's a put, I will be taking a put as I am expecting the price to correct. 44:39-45:03--So now the price is 1910 and the 18 strike price that will come will be 1900 put. I have already added it in a chart. So the execution time for this trade is 10:30. So 10:30 onwards we will take this trade. At 10:30, this signal has been generated so I will take a trade between 10:30 and 10:35.
You can see it on the screen. The opening was 119, 65 and high was 122. So somewhere in the middle realistically will be my execution. So if i consider the high also for my entering the trade, i am entering the trade at 122 , ie i am buying this put at 122. Now simple rules to calculate targets in options: most people expect that in the underlying movement, if i expect 15rs here, i will also get 15rs in the options. This is not going to happen. If i have taken ATM strike price then we have to keep a delta of 0.5 which means if i expect 15.75 from my underlying, then from my options i will expect a target of 7.8 and if my stop loss is of 7.7 then my stop loss level from options will be 3.85 from my entry. So now my target becomes 122 plus 7.87 that I have already calculated. So 129.87 is my exit zone.
My SL will be 122 minus 3.85 . My SL will be 118.25 and 129.8 is my target. PEL lot size 550. If I have taken the option trade to play the downtrend, I am deploying a capital of 67100. I will go back to the chart of options. My target is 129.87 so I will draw lines here at 129.87 and also on my SL. This is my target booking line at 118.15 so roundabout at this place. So this is my trade execution. Unfortunately, in Zerodha charts, bar replay is not allowed otherwise I would have played it here to show what was happening at the price action at this time. So what we have done here is, Between 9:30 and 9:45 we have taken an entry here.
For this discussion I have taken the worst possible rate. 122rs is the highest for this candle. So we have entered at 122 and we are working for this target at 129 and this is our SL. Here we can see that at 11:10 or 11:15, our target is getting achieved. And in underlying also, i will just show you our replay, here our target is getting achieved. So both the points are in confluence and the underlying moves are being captured by buying an option.
So sankalp you had told me that the trades that you have done, you have an excel sheet for the right and wrong trades you have done. Yes. So this is February stock selection and wherever we had set up and confluence , this is a summary. I will make it LIVE if someone wants to see this for research and see what trades and targets were achieved. Total 96 trades have been generated by the system in February out of which 54 trades have been profitable and according to a lot and future we have taken the profits. We trade in options so we can half it. It will be easier for calculations. So this profit is according to one lot. 34 out of 96 trades have gone bad in which stop loss has been hit. And 8 trades have been manually executed.They are done manually when it's about 3 o clock. If trade is on, and if it's not going to SL or target, then at 3 o'clock,
whatever rate is going on we close the trade as you can see in this particular excel. Ok got it! So friends this is a process that sankalp has made for himself. Now obviously he has results from this and he is getting positive results so definitely its working Whoever wants to know more about this process can directly contact Sankalp. I haven't seen this result so i cannot comment on this. But I find this process logical. That you made a model, and defined a criteria for stop loss and take profit and only act when criterias are being met. This process is logical but i don't know about the parameters because I don't know your indicators and i don't know anything inside it but i find the process point of view it is logical as to how people can define their rules.
So after this, let's look at some other stock or trade. I have Eicher motor trades that I will explain point wise. In Eicher motors, a long is being made, and a short is being made as you can see. Short will not take because according to the system the time is not fitting. The long that is being made is a very long candle. BUt here the rest of the 2 points are not in confluence . At run time, I don't know what's going to happen but I know from my back test that this is a trap. The reason I came to this conclusion is that I want a crossover also, ADX value also. Because if this is not there then these traps are made. It looks really good and beautiful and it feels it's going to give a breakout but it actually is a trap.because there is no strength behind this trend.. This is just a candle which attracts buyers but in the 2nd or 3rd candle, it will fail and there will be a stop loss or people will make a hope trade and sit that such a big volume has come , its psychology. This Is how the candles attract. I have been saved from this trade. I will not take this trade no matter how much up its going.
In hindsight, we see that it is going to correct itself. Maybe it could have just flown away. No problem, our system has not shown this trade so we will not take this trade. It's very fortunate for us that we did not take this trade. Now we have a short signal. In a short signal, my 3 points are in confluence. I already have a crossover of negative DI and positive DI. It's a bearish crossover The negative DI is above 25 as represented by this black line. I can go ahead with the trade, I have a 5 min signal, I have a crossover and I have a DI in my favour. You can see, I ll just clear the drawing, this cell is getting generated at 2524 level, little price is going up and down, stop loss is not getting hit. And from 2525 to 2504, almost 20rs correction we can capture if we follow the system.
I chose this example specifically because we are getting both a sell and buy example. During the day, this trade is over. I had told you initially that Many people don't work for this small target, this can be considered as a small trade as this is just Rs.20 trade. If you want a higher target then indicators can keep plotting these higher target levels or exit levels and you can factor them in and get your trailing stop loss, cost or previously achieved demand zone and keep trailing them. Don't keep them at the original place, keep trailing and you can aim your targets. Ahead, we are getting a long signal at 155. Here also we have 3 points in confluence. I have a long signal on a 5 min chart,
I have a crossover and now the positive DI is above 25 and this is happening in a falling market. If you remember what happened yesterday, I have full confidence that according to my system these 3 points which had saved me from this trap, that now other 2 points have also joined according to the system it's a perfect tarde. System is giving a long of 2496 and we can see that the target achieved is 2515 as the indicator has given an alert. Long book profit. If you don't want to book here, it will keep plotting higher targets. That is a personal choice.
I would recommend that if you can capture 0.78% or 0.8% of the market moves, then it's enough for your needs. There is no end to your moves. In hindsight, you can make how much ever percent return but realistically for an intraday trader if you are able to capture 0.8 % also it's more than enough. Great sankalp. The message of creating a rule based system seems clear. Your system also feels robust. You earn and your confidence is visible. So it must work.
So you connect with Sankalp on twitter. My twitter handle is nifty_baba and I would like to share something about it. Though people think about it as a paraody account. but the fact is after coming from the hospital, my beard had grown long and my son said you look like a baba and only look at the Nifty. So you are like a nifty baba.