A simple Trend Following Trading strategy

  • Sep-10-2019

How about a trading system that gives you just two or three trades in a year, but ends up giving phenomenal returns. This is one such trading strategy with plain simple rules, even a 10th Grade student can follow it.

Bank Nifty

As we know that Market gets into trending phase 30% of the time and stay in range bound rest of the time. If we are able to design a trading strategy which could capture most of the trending moves and keep as away during side way movements, then we can be assured that most of the year we could stay profitable.

Here’s the rules of the game:

Buy when the stock closes above last 20 days high price

buy=c>Ref(HHV(H,20),-1)

Sell when the stock goes below last 20 days low price.

sell=c<L1=Ref(LLV(L,20),-1)

Its almost similar to the famous Turtle Trading Strategy. Traders can add more condition to it to reduce the over all drawdown, however even with such plain rules, the strategy has given best returns.

As markets always go higher in the longer run, most of the positional trading system would do well if we stick to trade only the Long and ignore the short. If you are following a positional strategy, you can check your strategy results, am sure, the profits from Long trades will be always higher than the Short trades. And some times, even the trades from Short would have resulted in loss.

The strategy has given more than 25000 Bank nifty points when tested with historical data. The bull year like 2017 was phenomenon, where it returned 5000 points.

Bank Nifty

Here’s the link to download historical backtest report of Nifty and Bank Nifty, along with the AFL.

https://drive.google.com/file/d/1TXaxz-2CuATp0ZLTYhmFXGs717tSu_lh/view?usp=sharing

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  • profile
    WinThe Markets
      2 weeks ago

    After u entered on 16/02/1/18 at 25974.9 ,I am unable to understand why u waited till 06/03/18 to exit when the 20 day low was broken on 09/02/18 at 25463.65 on closing basis. 20 days earlier date was 01/11/18 and low was 25532.25

    Reply 0 comments
  • profile
    Tushar Kadam
      2 weeks ago

    20 calendar days or working days?

    Reply 1 comments
    • profile
      Square Off
        2 weeks ago

      20 trading days

  • profile
    K V Rao
      2 weeks ago

    Can you calculate including Short Future below 20Day Low? Also, can you do ideal combination. i.e instead of 20 days, say will 15 days or 10 days better

    Reply 0 comments
  • profile
    sagar talreja
      2 months ago

    Hi. You have shared the link for buy... but if we want to short how to filter stocks for that

    Reply 0 comments

  • Tags | trend following,swing trading strategy,The turtle Trading,Trading Strategy,Trading System