- Wealth PMS (50L+)
I presented at the Traders Carnival on Friday. Lots of learning, from some great traders present and overall, the impact to me has been of a yearning to return to a discipline that I love. The last few years have been a realization that trading requires patience and money; and while I can do something about one, I can’t easily fix the other.
So I had decided to work the money angle out first; you have to have enough in the bank to support your family for a long time, and then have capital left over for trading. I know it’s conservative and not a story of great sacrifice and all that, but I’m not out here to make a great story. I couldn’t care less if people talk about me after I die. (I’ll be dead anyway) What I care about is how I live, and if my story isn’t all that exciting, so be it.
But I digress.
The takeaways from the conference.
The system is an EMA (Exponential Moving Average) crossover strategy. Buy when the 3 EMA crosses over the 5 EMA and sell on the other way around. It always maintains a position, and the 3 and 5 EMAs tend to cross over fairly fast so you get about two-three trades a month.
These are pretty interesting strategies and Vish has been trading it on the Nifty and BankNifty full time. I’ve not tested this but they say the drawdown is about 30% or so (300 points on a Nifty for which you might allocate 50K as capital). I need to test this some more.
The 34-ema strategy. "Speculator" Naveen demonstrated a 34 EMA strategy which involves a retracement to the 34 EMA, a check on RSI(5 or 8) and then using swing pivots as stop losses with short term trades. Very interesting, and definitely worthy of attention. I don’t think this will be easy to automate or back-test though.
Prashant spoke about Technical Analysis, the history and even included a great book that I’m reading: Extraordinary Popular Delusions and the Madness of Crowds.
Krishna Kumar, who writes at MappingMarkets, had a great session about using disciplined trading and working with probabilities.
Kora Reddy (stocksiq.in) spoke of back-testing and how to use statistics to test and validate strategies.
Here are the slides that I presented.
And of course, it was great to meet all of those that I speak with either on the comments on this blog or on twitter – indeed an honour.Thanks to @ra1nb0w (DJ) for organizing this event. Looking forward to more such meets!
The other thing I’ve realized is that I need to spend more time analyzing stocks and writing on the blog. I’ve become a little too macro, a little too detached, perhaps. So more on the way!