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This friend of mine was ultra secretive about his nifty trading system when I initially met him. He was not at all interested in sharing his system. He was not even willing to let me see a picture of the trading signals !!
Anyway he is a gr8 professional trader.
Last 1.5 years or so he made 40 lakhs on an initial capital of 10 lakhs
Trading a fixed position size of 3000 nifty.
See to him: He didn't dare to share his trading system because he thinks its a money spinning machine.
I know I can come up with a million gr8 ideas.
Trading is not about trading systems. One also needs the patience+Discipline to trade the system!!
I am not entirely sure what prompted my pro trader friend to share his system with me, might have been my last post. Still don't know.
It took me around 10 minutes to figure out the entry trigger.
Check the following picture on the left
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Once I had all the entry triggers nailed I knew all I needed was a trend filter.
Step 2: Adding the trend filter. Look at the picture on the right side now
Once I added the trend filter. I had all of the good signals + I got rid of quite a few bad ones.
After i had done that
I ran a test of the system using nifty-I data over the period that my esteemed friend had traded.
All trades were taken on closing basis as per the system rules.
Statistics
All trades Long trades Short trades
Initial capital 1000000.00 1000000.00 1000000.00
Ending capital 5792113.67 5669809.63 1122304.03
Net Profit 4792113.67 4669809.63 122304.03
Net Profit % 479.21 % 466.98 % 12.23 %
Exposure % 28.21 % 23.89 % 4.32 %
Net Risk Adjusted Return % 1698.48 % 1954.63 % 282.90 %
Annual Return % 228.53 % 223.82 % 8.13 %
Risk Adjusted Return % 809.99 % 936.83 % 187.98 %
So it seems in theory my replica of his system with the tiny improvement of a better signal filter outperforms his original trading system by a very tiny margin
If my friend were to trade my system with his iron will/discipline he would be making a little more money with less risk.
Amazingly enough even he is debating getting a tutorial from me on how to improve his nifty trading strategies. Then again he probably just said that didn't mean it :)
It is hard to read a person's face/intent online which prompts me to be excessively cynical at times.
So we're talking about a professional trader here who has had a trading system given to him by a member of his family who is also a trader and even he could stand to learn a trick or two from . Anyway trading most likely runs in his family , I am not saying any of you out there can turn 10 lakhs into 40 lakhs in even 4 years.
My point is computers give me the power to acquire the knowledge that often comes to people after only years and years of experience.
Then again I have read maybe a few hundred books on trading and I have watched the markets closely now every day for almost 2 years now.
For instance compare the stats of my hourly/10 minute trend follower with my friends system.
statistics:
Statistics
All trades Long trades Short trades
Initial capital 1000000.00 1000000.00 1000000.00
Ending capital 6087481.30 5994610.30 1092871.00
Net Profit 5087481.30 4994610.30 92871.00
Net Profit % 508.75 % 499.46 % 9.29 %
Exposure % 34.17 % 28.11 % 6.06 %
Net Risk Adjusted Return % 1488.89 % 1776.81 % 153.27 %
Annual Return % 239.79 % 236.27 % 6.20 %
Risk Adjusted Return % 701.75 % 840.51 % 102.29 %
Max. trade drawdown -1176537.50 -685988.16 -1176537.50
Max. trade % drawdown -9.04 % -6.07 % -9.04 %
Max. system drawdown -2013407.76 -1423914.44 -2211353.29
Max. system % drawdown -37.44 % -32.39 % -76.85 %
Also here is another random fact , I spent almost 1 hour trying to replicate the system supplied by my friend down to the last signal!!
No matter what I was doing I would be off by one signal here or there.
I can be quite obsessive compulsive. Focusing on irrelevant details at times :)
The system replica which I had created is actually 'superior' from a raw mathematical standpoint.
Let me conclude with an important analogy.
My friend gave me the following analogy. He said, If I have a gun that works I would not give it to anyone else.
Here is how I think.
A blacksmith can give you a sword and a shield, even show you how to wield it, but in the heat of battle only the courageous triumph. You must know when to hide behind the shield for instance against ranged archers and you must know when its time to rush head on into battle. If you wait to long the opportunity will be gone. End of the day: no guts no glory, no risk, no reward.
For those who want a 'trial version' please reread the last line carefully.
The 5000 rs is your risk.
If anyone wants to learn how to trade the nifty futures, contact me.
Just make sure you are rich enough to waste 5000 rs.
Going by standard risk management rules i.e 2-3% risk, you should be having 1.5-2.5 lakhs if you are going to give me 5000rs.
My tutorial would probably save you 2-3% within 1 week itself in the form of trades which you should have avoided but took because some punter was teaching you how to trade.
(Punter is a term i sometimes use in a derogatory fashion to exemplify a person who buys on a whim, sells on a whim and doesn't understand risk management)
I am going to offer a short tutorial on how to trade the nifty futures profitably
Whether you use 10 minute charts , hourly or eod is up to you
But always keep in mind the big money is made by holding positions for atleast 2-3 days if not 2-3 weeks.
Since a few people asked I will post this general info here:
Cost for nifty futures trading tutorial is 5000 rs. I will only offer this tutorial to people who have atleast 1.5 lakh rs trading capital.
Duration of this tutorial is 1-2 hours.
I will give you 2 trading systems
1) is for eod
2) is for hourly/10 minute.
The following points will be covered.
a) Trading eod charts (based on an improved version of the trading system used by my professional trader friend)
b) Trading hourly charts with stoplosses (my own custom optimized system which takes low risks and gives big rewards)
c) Trading 10 minute charts for intraday trading (same method as hourly system but for shorter term traders)
d) I will also give you the trading system so that you can use it with amibroker
You will need some kind of intraday data feed to make full use of this.
If you are trading with indiabulls I can help you get intraday data from indiabulls into amibroker.
Cost of plugin is an additional 4500 rs but its a one time cost
and it will save you from a lifetime of costs for intraday data.
Most data feeds will cost you 15,000 - 20,000 - 30,000 rs per year.
So a one time investment of 4500 rs for my plugin + 1500 rs or so for an indiabulls account is not a bad deal.
One can even consider switching accounts to indiabulls just for the datafeed.
Getting the data feed is up to you, your choice.
If you have any questions contact me: niftytradersinc@yahoo.com
Also if interested in getting data from indiabulls into amibroker visit my site.
http://niftytraders.dyndns.org:8080/Niftytraders
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