Can long term investments also be done using systems ? Yes !
I’ll share the process that we use to build long term systems (100% systematic in nature)
1) Trend should be up
We can objectively decide the trend using a moving averages
(1)
2) Should be near support for better risk:reward
One can use MA for dynamic S&R
Market reverts back to moving averages and they provide dynamic support.
See the stock in the image , for past decade the MA is providing good support
(2)
Important aspect in wealth creation is CAGR
How can we achieve high CAGR ?
**Check the attached image**
Credit to @InvesysCapital for his presentation in Decma.
Learnt the concept from him. (3)
For eg: Reliance
CMP -600 in 2009 &
CMP -600 in 2017
So that’s 8 years of 0 return.
So we use a momentum filter to scan for stock which are in good momentum.
“Stocks are good only when they are going up”
Credit :@markminervini for sharing why not to buy familiar names (4)
Finally, we analyse the stock using our fundamental systems which are inspired by @drvijaymalik and his book peaceful investing
Finally we have a stock-
-Which is in uptrend
-Near a support for better risk to reward
-Is in momentum so that we can achieve high CAGR
-And fits our fundamental criteria
Can you figure out such stocks in current condn’s ?
Thread:
As 2021 begins, I would like to highlight the importance of perseverance & positive thinking.
The aim of this thread is to motivate people to stay committed to their goals.
Sharing few of accomplishments which I never thought would have been possible.
Dream BIG !
1)I did a 2 day quantitative trading seminar @iitbombay focussed on system driven trading and got a great response.
Being a introvert,I always shied speaking on the stage & this was my first public speaking apperance & learnt the importance of people’s skills.
2) Seeing my IIT Bombay seminar post, I got approached by @JBIMS, a top MBA institute to share my insights on system driven and markets for their MBA students.
I realised the importance of brand building and self promotion.
2) Instead of sending recommendations(like traditional brokers) .. plan is to help traders learn & let them independently take trading decisions.
Ideas:
-Create a telegram channel and share ideas & explain trades with logic
3) Plan is to help traders learn about
-options trading,
-long term investing
-intraday momentum trading
-event trading
-expiry trading and let them decide what suits them
Don’t charge any advisory fee but earn a share from their trades as brokerage
Thread
How to manage strangles dynamically incase of a violent move or IV spike ?
1) Yesterday and infact entire last week if you had created strangles you would have experienced that during upmove only call side were increasing but puts weren’t decaying.
2)In morning I had created a short strangle
200 lots 25000 PE sell at 102
200 lots 27000 CE sell at 161
You can sell from below image that if I had waited in this strangle till day end I would have lost around -4.5 L
So lets see what all adjustments did I do logically.
3)After creating strangles the premiums strarted increasing as puts were not decaying and calls were increasing.
So I had kept 100 lots buy on 26500 CE at 400(day high)
My buy got executed at 400 around 12:15 pm & I exited 25000 PE at 75