Make 15% every year with this Trading Strategy

  • May-29-2020

Stock Market has witnessed major corrections often, eroding investors wealth.

Nifty has crashed more than -55% in 2008, corrected again in 2015, and even in 2020 due to Corona Virus market went down around -30%.Investors can follow this rule to avoid getting trapped in such crashes.

Rules:

Find High and Low of January month every year.

Buy Nifty when monthly close is above Jan high.

Exit Nifty when monthly close is below Jan Low or else Exit by December.

Example:

JAN 2017.

High was 8672 , Low was 8133.

In the month of February 2017, Nifty closed at 8880 which is above the January High of 8672. Hence, we buy with a stop loss of Jan low. Exited by December end at 10531. More than 1000 points trade in one trade.

With this strategy, we completely avoided the biggest crash of year 2008 and 2020. No trades triggered with our rules,as market did not move above January high in these years.

Tested it with 25 years of Historical data. only 5 years were negative, rest all years were positive. This strategy generated 15% average returns every year with least risk.

Here’s the yearly returns of this strategy

whereas the normal buy and hold strategy with Nifty would have generated less than 12% yearly average returns only and that too year like 2008 has given negative returns of more than -50%.

You can apply the same rules with your Mutual funds investments, where when Nifty breaks Jan high, buy mutual funds and if Nifty breaks Jan low, you can exit from your mutual fun holdings and wait until it goes above Jan high levels.

You can test this strategy by yourself and checkout the results.

If you liked this article, please do share share it (Whatsapp, Twitter) with other Traders/Investors. 


  • profile
    murugan Thirumalainambi
      4 weeks ago

    No . This strategy is not better than just buy and hold nifty.if you buy nifty bees for 1000 rs in 1996, it is now 10000. with the return of 900%.

    Reply 1 comments
    • profile
      Square Off
        4 weeks ago

      Yes, you can do that only if you can withstand, more than -60% of your capital getting wiped out. Not many investors can handle such downside, this is for those who do not want to risk more but happy with conservative returns.

  • profile
    murugan Thirumalainambi
      4 weeks ago

    If we deposited a 1000rs in 1996 in FD with that times rate of int ,5 years renewal, it would be 13500 in 2021.the same return was given by nifty .over a period of 25 years. I think FD is same as nifty just by and hold.

    Reply 0 comments
  • profile
    LATHA SELVARAJ
      1 month ago

    Total gains in points as shown above is 9818. Compare this with sit tight: Entry at 992.51 and exit at 12168.5 which gives 11175 points which is 13% more

    Reply 1 comments
    • profile
      Square Off
        1 month ago

      True but to get that 13% more, you end up facing -55% drawdown. Which is really very huge for any investor to see their capital getting wiped out.

  • profile
    LATHA SELVARAJ
      1 month ago

    Sir, Kindly add all the gains in terms of points and compare with entry at 992.51 and exit at 12168.5( or just sit tight)

    Reply 0 comments
  • profile
    Chandrasekaran Venkatramanan
      1 month ago

    Nice Idea.Shall follow hereafter

    Reply 0 comments
  • profile
    Chandrasekaran Venkatramanan
      1 month ago

    NICE IDEA .SHALL FOLLOW HEREAFTER

    Reply 0 comments
  • profile
    imran khan
      1 month ago

    But What to buy nifty futures r Nifty stocks? Anyhow mf can be continued with these rules and even 200 ma is not broken for stocks also.plz clarify

    Reply 1 comments
    • profile
        1 month ago

      YOU CAN BUY NIFTY BEES

  • profile
    Neeraj Thareja
      1 month ago

    Good read.. will try to apply on mf

    Reply 0 comments
  • profile
    Parin Shah
      1 month ago

    Where can we trade? Pls clarify..Pls provide script code to trade

    Reply 0 comments
  • profile
    Rajesh S
      1 month ago

    By referring to buy NIFTY , DO you mean NIFTY BEES ?? Since we cannot buy NIFTY

    Reply 0 comments
  • profile
    Venkateswara Prasad
      1 month ago

    Does it mean every beginning of month say march 1, check previous(Feb) month close is above Jan high. Keep repeating this every 1st of month like SIP with SL of JAN low or Dec end.

    Reply 1 comments
    • profile
        1 month ago

      What I think from 1st feb you can start tracking daily nifty closing. And if daily closing is above Jan high then we can make entry in NiftyBees or Nifty Mutual Fund and exit the day when Nifty day closing is below Jan low Or last trading day on Dec.

  • profile
    Venkatraman Narayanaswamy
      1 month ago

    Nice analysis. So did it mean to buy Nifty 50 stocks...

    Reply 0 comments

  • Tags | Trading Strategy,mutual funds strategy,LONG TERM INVESTMENT,Nifty investment strategy,Nifty Trading strategy,swing trading strategy,algorithm trading strategy,Positional Trading strategy