Entry Rules 1# A RALLY of 1% or more within 20 minutes. (For example if the script is trading at 100 then a rally of 1% means rally from 100 to 101 or more) 2# WAIT for 10 minutes 3# ENTER when there is a crossover of the rally before 60 minutes. (For example if the rally touches 101 by 10:10 am and crossover the same before 11:10 am.) Note : The rally need not be a high/low breakout. The rally can be either with the trend or against the trend.
Broadly speaking there are two approaches to trading. 1. Prediction based 2. Momentum based I strongly believe prediction based trading is gambling. Momentum based trading is controllable and profitable. This strategy is momentum (velocity) based....distance (0.18% or more) and time (within 20 minutes). Intradaytrading gives me more control than positional. The exit strategy can be anything of your own style and preference. It can be either scalping or trend trading or range bound or a hybrid version. This strategy can also be used for positional trading as an entry strategy.
You can use, play, tweak, experiment, adopt and improvise with this strategy as you wish. Except under extreme market conditions like very high volatility, I would suggest to use this strategy ANYTIME with confidence and without fear. Because there is In-Built safety measures in this strategy.
Algo-Trading VS Momentum Trading The advantage of Algo-Trading is that it purely depends on the chart pattern and nothing else. Disadvantage is that Algo scripts cannot be configured to minimise the hit rate of stop loss just before it hits the target. In effect the success rate dips. On the other hand momentum trading is purely based on chart pattern (like Algos) and at the same time the Rally>>Wait>>Enter approach controls the hit rate of stop loss. Eventually the success rate is maintained at optimal level.
As said above this strategy 100% depends on the chart pattern and nothing outside. But the problem is it has three subsequent events: 1. A rally with a a. specific price action and b. within a specified timeframe 2. Wait for a specific period. 3. Entry based on first event's price action. I am not sure if there is any Algo platform out there that allows us to write script on inter dependent events like this strategy.
This strategy is multi purpose in nature and can be used as... 1. Entry strategy for an existing trend strategy. 2. Entry strategy for an existing reverse trend strategy. 3. Signal for existing trend or reverse trend if price wont crossover within 60 minutes. 4. Scalping point. 5. Stay away zone for range bound trading.