Well, absolutely no fundamentals in this strategy…having said that, I have kept room for some discretion if there is a big red candle but lets say my sell signal is still not triggered, i might look around to see what caused the red candle…if there are things like fraud or ethical violations that have been detected, i might exit the stock. But other than that, just technical indicators.
Hi Sandeep… Nice strategy… Which main technical parameters you usually see while entering a stock and while exiting a stock…
RSI + Stochastic + Moving Averages ( if any unexpected movement in Stock )…
Having done extensive backtesting using different parameters though, I have to say it doesnt make much difference what you use over the long term. What matters is if your psychology is in tune with that strategy and can you stick with it through its ups and downs. Most momentum strategies have a positive expectancy at the end of the day. You need to pick what suits you.
Stability continues. No change in portfolio. Looks like only an unexpected election outcome can trigger a big down trend. I do anticipate some correction in the consensus case as well. In any case, so far so good with my portfolio.
Portfolio start date → Jan 23, 2024
Total returns → 17.5%
Hello sandeep,
Are you using any kinda algo method to track weekly closing prices… i googled on weekend trend trader, i got python script… by any chance you have created same thing for yourself… let me know… thanks
Regards
Manjunath C A
Hi Sandeep, Do you mind advise on top 3 Indicators. which you prefer to use.
Advance Thanks,
Well, my universe is the Nifty 500 and I have written a scanner to go through these 500 stocks and rank them as per my parameters. I only run this scanner if there has been an exit from my existing portfolio.
Looking through the portfolio for exit signals is a manual process since there’s some discretion there. But this doesn’t take much time since its just 20 stocks.
RSI, Stochastics along with moving averages.
But through my backtesting experience ( tested multiple strategies for the last 5 year period ), my conclusion is that if you want o use momentum as a strategy for investing, it doesnt make a lot of difference what indicators you use. Its optimal position sizing, robust execution and most importantly ruthless discipline is what will make your strategy triumph.
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There was some turbulence last week but nothing major so no sell signal was generated for any of the portfolio stocks. Portfolio continues as it is - while volatility might continue through the month of May, the real test for factor-based investors might come in June if election results are not in line with Market expectations.
Portfolio start date → Jan 23, 2024
Total returns → 12.2%
Turbulence didnt last very long and we are back to a small little pre-election bull run. NO changes to the portfolio. Started this portfolio in Jan this year and while most stocks are in the green, Cochin Shipyard has already become an outlier just in 4 months. 90% up since I bought it.
Portfolio start date → Jan 23, 2024
Total returns → 21.2%
can you please share that python script
Hi Sandeep, just curious, what is your exit criteria…u mentioned u do it manually. I had earlier kept 30 week EMA breach as exit criteria…but sometimes CMP is faar away from 30 w EMA, sometimes even more than 25% away…and that much loss taking is uncomfortable for me…what would you suggest?
Yes, thats part of the game Mudit.
This happened for real in the case of RVNL for me in the Feb-Mar turbulence for the stock. From the Jan high of around 345, it made an intraday low of 213 and a weekly low of 237 in Feb. Now that was quite a hit but it hadnt breached my sell criteria. I infact look at 50EMA and for RVNL in particular, I had the big Jan candle as a reference where the low was 203. So I stayed put and if you see, RVNL is back in the mid 300s…
One way to think of it in the scenario you mentioned is if you have an equal-weighted portfolio, a 25% hit on one stock is less than 1.5% hit on the portfolio.
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So the pre-election volatility is all done without inflicting any damage or even changes in the portfolio. Portfolio stays the same but maybe the 1st real test will be the next 2-3 months ( more so if election results are against what the market has priced for )…Lets see.
Portfolio start date → Jan 23, 2024
Total returns → 26.4%
@sandeep17 : Good Day
Nice to see your portfolio.
But most of the names that i do see here is in overvalued stage from the likes of APAR, KAYNES, KPIT much more.
I would play by caution or would basically invest around second cycle.
Hi @sandeep17 You haven’t given any criteria for selecting the stocks, how’s the working of your calculations according to which you decide these are the top 20 stocks I want to invest in under Nifty 500? A bit more transparency on the method, would be more helpful to the readers, so I would request if you could share a thread on the same please.
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Well, by any conventional valuation model, some of these names were probably over-valued even in Jan when I went live with this portfolio…but then some of these are up 20% or more in the last 4 months…
Thats the whole premise of factor based investing…you detach yourself from everything else other than price. So while price dictates my entries, price will also drive my exits.
Well, nothing rocket science. Past 6-12 months stock performance overlaid by RSI and Stochastic parameters. Point is to buy stocks that have done well in the preceding 6-12 months…
What I can add is also this - its largely irrelevant what exact methodology you use to rank stocks if you want to do factor investing. I back-tested multiple strategies and they all gave market-beating returns…the challenge is to stay put with the strategy over the long term which is not easy.
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First real turbulence today but then today was a market wide tremor. But no action taken since its mid week so I dont even check if any stock is eligible for an exit. Earliest I will check is on Thurs so lets see. Today’s hit is 8% on the portfolio.
Portfolio start date → Jan 23, 2024
Total returns → 19.3%
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Turned out to be a 1-day event…since I only do weekly rebalancing, I didnt even look closely at what was happening to the stocks in my portfolio except that I saw the portfolio had a 8% hit that day. But since then market has recovered and so has my portfolio. Went through it today and saw that no changes are needed. Portfolio stays as it is.
Portfolio start date → Jan 23, 2024
Total returns → 28.4%
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