A high profitable strategy with hedges that has a decent drawdown of 4% and expectancy of 0.88. Note that 0.5% inbuilt slippage is also included.
Strategy Details:
| Capital required | 2.25 Lakhs approx |
| Time frame | Intraday |
| Instrument | Bank Nifty, Nifty, Fin Nifty |
| Backtesting period | 1 year (Nov 1, 2022 to Oct 31, 2023) |
| Slippage | 0.5% |
| Hedging | Yes |
| Backtesting platform | https://www.stockmock.in/ |
Backtested Result Summary:
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Key points:
| Avg Yearly Profit | 1,01,000/- (Approx) |
| Avg Yearly Return | 45% for 3 expiries (75% if extrapolated to all 5 expiries) |
| Max Drawdown | 3.65% (Approx) |
| Expectancy | 0.88 |
| Return to MDD ratio | 12.27 |
| Accuracy | 67% |
| Max loss | Rs.3075/- |
Monthly Breakup:
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Equity curve:
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Strategy Parameters:
| Instrument | Bank Nifty, Nifty, Fin Nifty |
| No. of daily entries | 3 |
| Entry Strike | Closest Premium (CP) |
| 1st Entry time | 09:50 AM |
| 2nd Entry time | 10:50 AM |
| 3rd Entry time | 11:50 AM |
| Nifty CP Value (for all 3 entries) | 15 |
| Bank Nifty CP Values (for all 3 entries) | 50 |
| FinNifty CP Values (for all 3 entries) | 20 |
| Exit time (All 3 strategies) | 3:00 PM |
| Stop loss for each leg | 100% |
| Hedge CP value for Nifty (all 3 entries) | 2 |
| Hedge CP value for BN (all 3 entries) | 3 |
| Hedge CP value for FinNifty (all 3 entries) | 2 |
Note1 : We make 3 entries daily on all expiry days so that every time we enter into new strikes at different times and avoid stop loss hits in all 3 strategies at once. Also good from diversification perspective.
Note 2: On Friday and Monday, Bank Nifty with same parameters except stop-loss will be 25% (instead of 100%). This is temporary until Midcap Nifty and Sensex are traded.
Sample Entry:
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How to automate this strategy in Tradebots (Desktop)?
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- Login to Tradebots desktop version (WhatsApp us on 9398840360 to get free 7 day trial)
- Click on “Add Strategy” and a pop up will open as shown in the image
- First configure for 9:50 to 15:00 strategy – give entry time, exit time, SL and other parameters
- Make sure to check all days since this is a low drawdown strategy.
- Hit on “save” as shown in the image.
- Repeat same process to configure other 2 strategies as well – 10:50 and 11:50
That’s it. Every day this strategy will automatically gets executed after you login.
How to automate this strategy in Tradebots (web)?
click on the image to enlarge
- Login to Tradebots web version (WhatsApp us on 9398840360 to get free 7 day trial)
- Click on “Add New Strategy” and a pop up will open as shown in the image
- First configure for 9:50 to 15:00 strategy – give entry time, exit time, SL and other parameters
- Make sure to check all days since this is a low drawdown strategy.
- Hit on “Add” as shown in the image.
- Repeat same process to configure other 2 strategies as well – 10:50 and 11:50
Every day all 3 strategies get automatically executed after successful login.
Summary:
There are a few things that make this a good strategy.
- High profitable – This strategy has potential to give profits up to 75% per year (after 0.5% slippage) as per backtested reports.
- Low drawdown – This strategy has decently low drawdowns of around 4%
- Good expectancy – Even after deducting 0.5% inbuilt slippage, this strategy has 0.88 expectancy which makes this one of the safest strategies.
This strategy might be a good choice for those who has high capital (above 5L) and also want to make slow and steady returns.
Note: Drawdown is around 4% for this strategy but even lesser drawdowns (and lesser profits) Expiry Strategy (stg #8) is suggested which has only 2% drawdown as per backtested reports.
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