iCharts Discussions

[vinay28]

As the subject of the thread suggests, this is a strategy for investment and hence for BUY only. However, it can also be used for short term trading for as low as few days if one wishes and if one is lucky to be successful. Targets and SLs are to be decided by individuals based on whatever method(s) they follow e.g. TLs, moving averages, wolfe waves, flags, HnS, CnH, phalana dhimka.

Buy when the following conditions are met. They can be used alone or together to add strength to a “buy”.

Necessary condition

1. When price crosses over 200sma on daily chart

Other additives
2. When price is above close price on 31st March of previous year.
3. When price is above one complete FY high (presently it is from 01/04/11)
4. When price is at life time high
5. When price is above the issue price of scrip

Any one or more of conditions 2. to 5. can be used (as applicable) along with 1. to add strength to a “buy”.

Alternate condition

When price is above two complete FY low (presently since 01/04/10)

However, you should be aware of fundamentals of the firm as well. As an example, Kingfisher Airlines is a buy now and one needs to exercise caution by way of a good SL considering its present status. I have bought and my short term target is 30 but long term targets are 70/90. SL can be 12.25/13.30 (200sma)/14.40. Another example is Marksan Pharma.

Since strategy is simple, I don’t expect any doubts. However, I will be pleased to clarify if you ask a query with an example of a scrip. It’s never too late as many scrips are about cross 200sma or have just crossed. Note that this applies to indices as well but doesn’t work so perfectly e.g. a Buy was triggered in nifty on 1st Feb ’12 only i.e. after it had gone up from 4600 to 5200. A Buy was also triggered on 8th June and 27th July.

In addition, clearly, one can think of initiating a “Sell” if prices crosses below 200 sma.

I thought of posting this as it has been used by many a giants. Hope it is useful to you.

[falcon]

In the alternate condition,

"When price is above two complete FY low (presently since 01/04/10) "

is it "low" or "high"?

[vishyvaranasi]

Hi Vinay,

Yes, Infact i too observed some of my close people use this 200 SMA to good extent.

vishy

[vinay28]

[sandew]

Is this valid only for eod or also for other time frames (with suitable changes in the yardsticks of yearly highs and two year lows) - say 30 minutes or weekly? any study done?

[vinay28]

sandew, since it's basically for investment, lower tf will give whipsaws and I don't use it unless I am doing short term trading. But even in that case, buy is always based on eod and SLs on say 60tf. Weekly will give stronger indications but one may miss the bus.

[vinay28]

As an example, Aftek crossed 200sma today. Study fundamentals also before taking a decision.

[vinay28]

Orissamine crossed 200sma @ 3854 yesterday. Now 4172.

[vinay28]

I am giving below a consolidated list of scrips that satisfy the criteria given in the first post, to some degree or other. There would be many more and I request you to post them.

KFA, Aftek, Orissamine, tril, venkeys, kirloskarbros, pageind, paperproducts, relcap, ril, relinfra, gail, tataelxi, tatasteel, tv18, tvtoday, bhushan steel, lupin, petronet, geometric, gillette, aban (risky but big reward), acc, abgshipyard, elgiequip, tulsyan nec, optocircuit, autoind and fkonco. Do your own study of companies and for targets and SLs. Note that a few of these may not have crossed 200sma but other indicators e.g. +ww may help it cross it and I am giving them to try to catch them early.

[allwayswin]

Vinay,
what is the suggested s/l for Long once we r in trade by this strategy

[vinay28]

[Vikas91]

[vinay28]

vikas, yesterday it's high was 4445

[Vikas91]

[vinay28]

NTPC crossed over 200sma on 18/1/13 and on the same day also went above 30/3/12 prices. Closing above 166.40 my take it up fast to 189-191 above which it will be at 52 week high. Then possibly 204/223/233. Tight SL - closing below 200sma. Tight SL is necessary since it has deceived in the past after crossing above 200sma. In fact, it has hardly remained above 200sma for long periods. Typical public sector firm.