Journey to Find a Profitable Trading Strategy

What is a Strategy?

A strategy is nothing but a set of rules for Entry, Exit, and Position sizing.

What type of strategy one should follow?

Any Strategies can be categorized as either Trending or Mean Reversion. Normally Trending Strategies would be having high risk reward ratio and lower win-rate. For Mean Reversion it is exactly reverse.

What Indicator one should use?

All Indicators are derivatives of Price and volume.

Some indicator would predict trending earlier but would be having more whipsaws and some other only after a clear trend is visible but lower whipsaws.

All indicator are trying to predict trending with different ways. But you need to find best optimal combination to start with.

Do we really need to work hard to find a profitable strategies?

Not necessarily, you just need to refer some books and Zero in on a Strategy. You just need to follow the rules rigorously with right Risk management and Position sizing in place.

Other Important parameters?

Just an example for Positional Index Trading.

Below Parameters are Most Important

  1. PROFIT FACTOR-better to have more than 1.5
  2. Max System Draw down-better to be below 30%.
  3. Continues loss trade better to be around 15.
  4. Positional trending strategies normally have 35% to 60% win rate.
  5. Annualized return good to be more-than 25%.

Other Parameters are also one should lookout for Optimization.

That’s it you’re ready to go.

Having a right strategy is just 30% to be a successful trader 70% is about Psychology and risk management,now in this technology era, you can overcome these 70% by automating your strategy.

Happy Trading!

ArunRam

ArunRam

Professional Derivative Trader With Over A Decade of Experience. Previously worked in an Engineering and Mathematical background.

2 Comments

  • Ajay says:

    Hi ArunRam,
    I am a software developer by profession but No / Very minimal knowledge of share market. Can you please suggest any good Strategy.
    I seen many strategies videos on YouTube regarding intraday trading. I am not sure about the success, but i think these all strategies can be programmed in a software. Zerodha has API which can be use. With limited efforts, I tried to google for any automated software with easy to use interface but unable find other then amibroker for which again learning is required.
    I shall be grateful for your time and guidance.

  • Admin Admin says:

    Start reading some books on Trading and Risk Management. You can become Profitable even using moving crossover. The Key is Risk Management

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