@Mohana_kri You backtesting is showing very impressive results for this strategy.
All your points are valid. The only thing we have to remember is that this strategy should be looked at on a pf basis and not on individual stock basis.
Drawdowns will be there. You should be willing to digest these. Enter only when you are comfortable with the system you have developed.
Equity investing is long term; even for momentum investing. Always look at pf level performance.
We started tracking DMA and EMA for the two time periods. Suggestion is to look at EMA as EMA gives more importance to near term data.
When 50EMA crosses 200EMA from above, it is time to shift to cash or gold.
@Bhavyesh_Solanki SIP can be practiced in a momentum strategy in 2 ways.
We start with equal weightage for all stocks in the pf. Thereafter, we track performance on a weekly basis. We will have stocks going out and newer ones coming in at regular intervals.
If you are planning SIP on monthly basis, then you can add money to the stocks with lower weightage so that we equalise all stocks in the pf. You will end up money to a few stocks only.
The other way is, not to do this on a monthly basis, but once in 3 months or 6 months where you have more money to invest. Again plan will to be equalise weight for all stocks. One advantage is that you will be allocating money to virtually all stocks if you do this way.
Bhavcopy is still available on nseindia.com. One format is *.dat. Just renaming this to *.csv.
There is one more version. Though it is shown as zip, on downloading you will see it is a csv file.
For example, the respective files are:
FCM_INTRM_BC26072024.dat, can be renamed as FCM_INTRM_BC26072024.csv and it works.
BhavCopy_NSE_CM_0_0_0_20240726_F_0000.csv is the downloaded file shown as zip on site.
sir when 50 ema crosses 200 ema from above , is it advisable to exit whole portfolio and when 50 ema crosses 200 ema from down again start building portfolio from scratch. please share your view in detail if time permits. thank you
@Bhavyesh_Solanki If you see some of my previous messages, you will see that I like to remain invested. As people raised some concerns about this pf falling during downturns, I made some suggestions.
It depends on when you entered the pf that will tell you how much downturn you can digest. I have been doing this for over 20 months and built up a healthy XIRR, therefore, I can withstand a fall.
However, if someone is starting now, they might find the same, difficult.
I suggested that if 50 EMA crosses 200 EMA of the index from above, then we are seeing bearish signals. We could shift some portion of our pf to gold or cash. Thereafter, if it remains like that for couple of weeks, we could move completely. Similarly, when 50 EMA crosses 200 EMA from bottom, it might be good time to start investing a portion of the pf. If the trend sustains for a couple of weeks, we could invest our entire money.
These are only suggestions; we should adopt what we are comfortable with.
Hello sir
Good morning
If you are comfortable can you share how much alfa this strategy had given in last 1.5 years( since you have started ) in comparison with microcap 250 index?
I just want to create proper mindset and expectations before starting practicing this strategy for long term.
Thanks
Really appreciate your efforts.
Take care
@Bhavyesh_Solanki I have written about this earlier also. A direct comparison with the index may not be very helpful; it is better to compare with NAV of some mutual fund based on this index.
There is a MF offered by Motilal Oswal with this underlying index.
I started to calculate NAV of this pf since 9th of May this year. Comparing the NAV change of this pf and the NAV change of Motilal Oswal MF, I find that this pf has underperformed. Motilal Oswal has returned 20% in three months while this pf has returned 14.4%. Motilal Oswal has indicated a CAGR of 69.1% for their MF since July 3rd 2023. The XIRR (not CAGR, as there is periodic cash inflow and outflow) of this pf since November 2022 is 78.3%.
I believe this pf can give a few % points more than index over longer periods of time.
If we doing Technical analysis for investing, this would have been considered before investment.
In our case we are just following price action (momentum). These stocks qualify in our index on account of their ranking. If we follow our system, we have to just buy or remain invested.
