iCharts Discussions

[Stockhunter]

Hi Guys,

Thought to share a strategy which with my fellow traders here on icharts. I have named it the '315' theory.

This is not exactly a swing strategy but more of positional in nature hence sometimes trades might run for a couple of months. The objective of positionals are to catch big moves by staying with the trend , adding positions to a winning trade (pyramiding) and let the trades run until the markets are trending.

If you are a patient trader who can sleep with winning (or losing) positions overnight.. read on.... nervous/intraday traders.. stop reading now

Ok .. coming to how to trade 315 theory....

We need to plot period 3 EMA and period 15 EMA on EOD charts (hence the name 315).

Entry - Enter longs whenever 3 EMA crosses above 15 EMA and enter short when the opposite happen.

Pyramids (adds) - Positions should be added only if the initial position is in profit. NEVER add positions to a losing trade and average in this strategy. Add positions whenever the EOD candle touches the 15 EMA after trending away in your favour for a while. MAx pyramidying allowed is 1 initial position + 1 add + a add. Dont pyramid the 4th time 15 EMA is touched.

Stop Loss - There is no level specific stop losses here. The stop loss for a long trade is when the EMAs signal a short trade. So you end up closing shorts and opening longs. In case you have pyramided positions... keep your SL at the entry point of the last pyramid.

Profit booking zones - A good spot to book profit is when you see the current EOD candle is placed away from 3 EMA line. If that doesnt happen, let the markets run until an opposite crossover happens.

Whipsaws - whipsaws would happen in this strategy however they will be much less than any other strategy (even RSEX). However, just one good trade will be enough to cover any losses due to 2-3 whipsaws (even if the whipsaws are consecutive.

Do a visual backtest of this if you want on EOD charts to gain confidence. Start with small mini nifties to test this system. As per this system, the last buy signal was given on 16/03/09 at 2774 with no adds done as yet. And we are at 3220 right now

Cheers
SH

[prashantdc]

Hi SH

Thanx for sharing another great strategy which is useful for positional traders like me.

Can we combine RSEX with this one???


Regards

Prashant

[ConMan]

Dear SH

Thank you for sharing another strategy and it does work...
I feel this is more of a continuation strategy...as RSEX gives us signals to buy/sell much before this indicator. We can look at addining more to our winning trade based on this... I think the same can be applied for swing trades too....request other opinions too....

[ConMan]

This is an extension to what I wrote in my last msg...I am attaching NF chart with entry levels based on RSEX & continuation confirmation by 315 theory...I have used line bar to make things clearer....

Unfortunately not able to load chart...pls help

[NORBE_1958]

Thanks for sharing your knowledge

[Stockhunter]

Hi Guys,

Thanks for your comments. I am glad that you have liked this strategy.... my endevour is to share the knowlede here under 'strategies through these posts... till now I had shared some intraday and swing strategies (under RSEX) and this one is positional.

Bullishanand - very good analysis, yes this can be used with RSEX since RSEX gives an earlier signal. However remember RSEX is a swing strategy whereas this one is positional.

Hence you might have a trade where you enter based on RSEX, as it moved in profit the 315 strategy also gives a signal.. at this point your swing trade becomes positional .. you can add when both RSEX and 315 are giving similar signals.

Please check the allowed ext and sizes before you post a chart.. maybe thats causing you trouble.

Prashant - hope above answers your query too.

All the best guys...

Cheers
SH

[Stockhunter]

Attached is a chart showing a good example of where to book profits in 315 strategy. As per my original post, an EOD candle where the body does not touch the 3 EMA is always a good place to exits your positions and open an opposite position. Usually the correction happens immediately next day.

For eg today was the day when positional longs should have been closed initiated in 2700 range as per 315 strategy. Todays candle did not touch 3 EMA at all which is extreme and in 99% probability it will get touched tomorrow.

Also see RSEX, though its bullish however watch out for the divergence.. NIfty made a new high but RSEX didnt !

Cheers
SH

[manojkchaudhari]

Thanks a lot SH for sharing a very beautiful strategy. There are very few selfless people like you. Please ignore any rough statements against you by some foolish people and do continue your excellent work.

Thanks and regards
Best wishes!
Manoj

[saikat]

Hello SH,

You are doing very good job by posting all these in Forum.
This is indeed a good strategy - though I use with 5/13 (as a fibo lover -I don't see any number other than fibo ).
I even use 5/34 EMA - which keeps me longer in the trend but takes away much profit too... It is a personal choice and different combi should be applied to different stocks after studying their volatility and trending pattern.
For some I have found 5/13 works nicely and for some 5/34.

One more thing I wish to mention. I find whenever SH puts down some strategy - immediately some users ask whether RSEX can be used with that?

As per me it should NOT be done. If you like, You do one stock as per this 315 and another one as per RSEX, but don't mix up. The more numbers of constraints you will have - the more difficult it would be to take decisions.

Best of luck,

Regards,

Saikat

[Stockhunter]

Hi Saikat - thanks.

I know your obsession with fibo .. i usually keep factors of 2 and 5 ...

factor of 2 is for my channel strategy ... EMA 5, 11, 22

factor of 5 for 315 etc.. factor of 5 makes sense to me since there are 5 trading hours in a day... 5 trading days in a week, almost 5 weeks in a month..

anyways i am sure 315 and your combo of 5/13 would not trigger trades miles apart..

and you are right about combining 315 and RSEX, they are standalone strategies .. should be combined only in exceptional cases.

Cheers
SH

[RKM]

Hi, I loved your strategy - I'm a new member and saw it only yesterday. It looks great on the charts although the signals may be a little later than if you using the 10EMA. I need some clarifications -

1. You say that yesterday was a good day to book profits as the EOD candle did not touch the 3EMA. But this became clear only after the market closed. Do you mean that one should take action just before closing of the market, or wait till next day after studying the charts?

2. The chart in your post is correctly showing a bearish candle whereas every other chart including Icharts's shows a bullish candle based on the official Nifty opening price of 3211. Can you tell me which chart you are using and where to get it?

3. I am a novice and anari trader who has been carrying Nifty shorts instead of longs in anticipation of a decline. Last two days' closes suggested a further rise for the Nifty and I finally reversed my trade. What do you suggest I should do now?

4. I would like to know what is RSEX and which softwares have it.

Cheers,
Makhijani

[vinst]

SH,

very nice of you to post this strategy.

regards,
vin

[Stockhunter]

Hi Makhijani

1. I would say take action before market closes... in Jcharts RT Premium (RT) one can see the current day's candle .. its dynamic.

2. I have used the above chart only, i.e Jcharts (RT-Premium) provided by icharts. I dont dare to put someone else's chart on icharts

3. I really can't advise what to do in your case. However with reference to this strategy you shouldnt be in shorts till 3 is above 15.

4. To know what is RSEX please read my other post under strategies.. and this indicator is available to icharts RT charts users.

Cheers
SH

[RKM]

Hi!

Thanks for your reply. You covered all my points. javascript:emoticon('')

With reference to your chart, I realised later that you have posted the Nifty 1M chart and not the Nifty chart. Since the Futures normally has values very close to the Index , can one also use the Index chart instead?

Only one thing more. You said that yesterday was a good day to book profits. But at the same time since the downward crossover hasn't taken place, I suppose one can safely (?!) think of staying in the trade - am I right ? From what I can make out, there seems to be a strong possibility that the market may go up even further upto 3520 or so.

Would like to know your views.

Thanks again.

Makhijani

[Stockhunter]

Hi Makhijani,

yes either of them would work, spot or futures.

Yeah it was a good day to book profits since it has to correct after such days .... after the correction is over.. you can again re-enter longs at lower levels... but yes the trend is bullish till 3 is above 15.

I dont want to share my personal views on what levels to expect, but suggest we just follow charts and ride the trend.. doesnt matter whether it takes us to 3550 or 4550 or 2250

Cheers
SH