M20 BULLISH ANTS 29-12-2023

 

NH

                          PRITIKAUTO

PAISALO

Learning About Breakouts and PEAD

 It seems like the color red, loves me. Many people call me a "red flag", but one other thing which is indeed red as fuck apart from the CPI(M) flag in my almirah is my equity curve /s. Since the desert cults started fighting, and before that the infamous one-day midcap crash (when the indices fell by ~4%), I am now sitting upon a pile of booked losses, around -5% returns since I started delivery trading on May 20th, 2023. 

The major problem seems to be a lack of a confirmed setup. Ameritrade and IB ain't doing shit to get my applications approved so I am still trading the Indian markets, where stocks are capped by circuits of 5, 10, and 20%. No stock moves or goes down more than 20% in a day. So, that seems to have limited the winning stocks. As of now multiple blogs on swing trading, and some books are the only source of my learning. I want to retry the method of delivery volume percentage, but it seems that this method has an incredibly high amount of capital required per trade, which constitutes around 10% of my total capital implemented. This needs to be solved with time, which can probably be done once I have my account size grown. But that's for later to ponder upon. Right now, a market monitor on chartink seems to be providing some value for thought. 

Chartink, no doubt, as been helpful for me to scan the stocks and select candidates from trading. Anticipation also seems like a nice way to pre-select stocks before the market opens, and put GTT orders on kite, in order to enter a particular stock once it starts to break out of a base. I would try reading up, and learning from the different blogs, in order to refine these processes.

Au revoir! 

:3

Still Alive and Trading (Some Backtests & New Theories)

The delivery trades have been pretty good, apart from two fucked up stocks namely Borosil Renewables and Cummins (although it seems to be a fundamentally great stock with a healthy dividend yield). These two stocks went down around -10% before which I had to close my positions in order to get back my funds to look for better trades. Although a great strategy, a large share of my portfolio must be allocated for a single trade, which certainly is unhealthy. Even after the drawbacks, I tried backtesting some of the stocks that regularly go beyond 65% delivery volume, and the returns over a period seem promising. In some cases the stock may have generated single-digit returns in a year, or even negative, but the delivery volume strategy has outperformed the aforementioned.

Stocks that were used for the backtest are:

(1) Bharti Airtel:

Entry Condition: Buy @ (Day Opening Price on Day n+1) if (Delivery Volume on Day n >= 65%)

Exit Condition: Sell @ (Day High) or (Next Day High) 

[Dubious af, because how the hell is one supposed to know the day high]

 The Backtests; The Rightmost column shows the return generated on every trade from Sep 2, 2022 to Sep 1, 2023

(2) Emami Ltd.

You can try the same for Emami, it generated around 100% over a period of time when the stock fell like 27%. Cringe Excel did not save the files for some reason and I'm too tired to backtest it now lmao.

 

 

 

Some of the trades analyzed

Although I didn’t update over a past few days, it seems like most of the trades did went according to the plan except two of them which got stuck hard. One being Emami Ltd and the other being Fortis Healthcare. These are the two trades where I have some funds stuck, and in red. The Mahindra Logistics stock is also in red but not that deep. Apart from those, the other trades have been in my opinion really nice. The best one has been (could have been better), Mold Tek Packaging’s 70 shares bought and sold at 940₹ and 960₹ respectively. 

Mold Tek eventually crossed 1000₹ per share as I write this blog rn. Although what jt seems to confirm is that there can be potentially more upside to particular trade and it can be used as a way to reduce the brokerages and other charges. 

Some stocks such as Emami and Fortis were in the red ranges for some time. Although I still hold the former, Fortis was sold at a profit of roughly ~300₹; funny thing is this trade could have made big too had I hold it for the next day. There has been multiple such incidents, where the profit booking could have been sweet, but I closed the positions earlier. Jindal Stainless, Natco Pharma are two such examples where I lost almost 1000 - 1400 Rs of potential profits. 

investing.com has been a good tool, in order to find solid stocks which can be potentially showing some upside or downside. Combined with this, and delivery percentage, it could prove to be a good method to select the stocks. Also, technical analysis has helped, the concepts of divergences, combined with other indicators. More milestones to hit! :)

Some NSE Data Backtests & Possible Scenarios

The NSE website, although sometimes laggy and devoid of any data at all for particular securities, is indeed helpful for testing strategies. I was pondering over the delivery volume percentage data and the relative changes in prices of the particular stock. It can be seen that two possible situations are arising: 

- Whenever the equity delivery percentage is greater than roughly 65%, on say day 't', there is a spike observed in the price on the day 't+1'. This is the most likely case observed.

- The other possibility is the stock price spikes on the day 't+2'. 

- Of all the cases observed, there had no need to be worried about holding the stock.

I was going through the data for Emami Ltd, Birlacorp, DBCorp, Sun Pharma, and Eveready Industries and it seems that most of the time the hypothesis holds true. 

[26-05-2023] Trades Done

Some of the trades I did on 26-05-2023 are given below. The same delivery volume percentage criteria were used for selecting the stocks. 

Profits Booked in: Sun Pharma, Eveready, Cupid

Losses Booked in: Emami Ltd, Redington

Holding: M&M, Birlacorp, Fortis.

Some Learnings: 

- The taxes are significant, a bit of patience while holding the positions can help. Apart from this, the spikes usually occur after 2 PM, so there's a good chance that the stock will stonk towards the end of the day. 

- Do not buy stocks at peak. Stocks that are close to the previous day's close are safer bets, it seems. 

Volume Day Trading

One of the methods I'm currently experimenting with is the equity delivery volume percentage and assisting it with basic technical analysis. I was in Indore, Madhya Pradesh recently during my summer vacation and learned the same technique from my mama ji. 

The basics of a BUY signal are:

- Delivery Volume Percentage (DVP) > 65%

- LTP > Rs 100 (Basically any share above Rs 100)

- High volume overall can also help. 

These can be assisted with technical analysis such as basic bullish or bearish divergences on RSI, Stochastic RSI, or MACD (which can be seen on Zerodha KITE). 

SELL: As I followed my mama, most of the trades he used to close at around +500 Rs. A spike in price usually is seen during the day, when the positions can be closed. Although the sizes were significant, it is comparatively less volatile and riskier than options trading. If implemented correctly, can help generate consistent daily profits. 

- If the stocks are good enough fundamentally, these can be held for a longer period too, with less risk of losing much money.