For long I have been writing about the color of the indices which defines the trend.
I think the best way to know about any strategy is to backtest the strategy. So let us test the Nifty for the color system.
Time frame: Daily for year 2010. Testing only for Longs no Short trade tested.
Buy Condition: Buy color
Sell Condition: Neutral or Sell color
Commissions: 0.10% of trade.
The results
I think the best way to know about any strategy is to backtest the strategy. So let us test the Nifty for the color system.
Time frame: Daily for year 2010. Testing only for Longs no Short trade tested.
Buy Condition: Buy color
Sell Condition: Neutral or Sell color
Commissions: 0.10% of trade.
The results
The system was equal to buy and hold but the profit factor of the trade at 4.7 makes it attractive with only 10 long trades for the year.
Also the maximum draw down for a single trade was about 3% which is reasonable given that we are trading on daily timeframe.
More details later.
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