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Swing trading is all about capturing
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short to medium-term price movements in
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quality stocks. In this video, I'm going
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to be sharing with you one of my
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favorite strategies, but is not only
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simple to understand and implement, but
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also has a very high success rate, at
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least based on my own personal
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experience. Hello everyone, welcome to
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Factor. In this video, it has three
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parts. First, I'll cover the strategy
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itself, its rules, and risk management
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principles. Secondly, I'll introduce you
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to a free Python screener that that I
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have built that you could use. And
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lastly, I'll share with you the actual
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performance of the strategy in one of my
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own trading accounts. Let's get
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started. If this is your first time
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here, welcome. My name is Vive and I'm a
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financially independent algo trader.
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This channel is all about building a
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community of algo traders. We discuss
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everything about a trading using Python,
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building and practicing trading
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strategies, market updates, and much
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more. Please do visit our community
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website fabtrader.in. Also, do check out
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my other YouTube channel Fab Wealth
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where I talk about my own financial
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independence journey and share tools,
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methods, and strategies that help me
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achieve my financial freedom. Thank you.
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The details that I'm about to share you
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is already fully covered in this blog
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article on our community website
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fabtrader.in. Uh this not only contains
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the the rules of the the strategy, how
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the core logic on how it works, what is
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the screening mechanism that is already
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built in, you have the free Python code
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that you could use to screen uh suitable
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stocks and also tells you how to trade
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those including the risk management
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principles of it. Let us now jump into
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the actual strategy and look at the
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details. This is a breakout strategy and
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it's also a swing strategy. The time
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frame that we would be following is
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daily candles. The trade direction, you
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could only take long trades in this, no
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short ones. And then in terms of the
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indicators used, you would need a 5,20,
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50, 100, and 200 day moving averages.
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Um, in terms of which segment you want
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to trade in, cash segment and then the
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nifty universe that I personally use is
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a nifty 200. You could also consider
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Nifty 500, but you'll have to be really
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careful about the liquidity. So, ensure
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only stocks that have high volume. um
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the screener that I'm about to provide
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you um you could run typically at the
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end of the day after the market is
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closed and then it'll give you a list of
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stocks that are eligible and then based
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on that output um you could take the top
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one or the two based on the highest
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volume within it uh depending upon how
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many stocks you would like to trade each
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day. Uh the next day you could you could
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either put this on your watch list and
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manually monitor it and then get into a
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trade when the consolidation level
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breaks out or you could also place a GTT
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and leave it there uh to be
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automatically traded. The logic of the
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strategy is pretty straightforward.
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That's what makes it one of the most
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simplest and efficient one. You're
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considering 520, 50, 100, and 200 moving
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averages. In this case, as you know,
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this basically represents the broad
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spectrum of the price movement trend,
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starting from the very short-term all
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the way up to the the long
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term. Whenever you see these five EMAs
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of a stock all coming together into a
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very tight range, often within 3% of the
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current market price. Um for example, if
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the market price is 100, then all of
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these five EMAs would stay within the
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range of between 103 and 97. This means
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that the stock is undergoing a tight
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consolidation. This tight consolidation
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is usually followed by a breakout and
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then a rally on the upside. And this is
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exactly what we are looking for. If this
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all sounds a bit confusing, don't worry.
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Uh I'll explain over a chart and then
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I'll give you a real example as well. uh
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in terms of the rules of the long trade
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the entry conditions are that you run
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the daily screener at the end of the day
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after the market hours you can do that
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in two ways one is you could run the
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charting screener uh which I'll provide
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the link to or you could run run the
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python screener which is again nothing
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but it extracts the charting screener
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results the screener would typically
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give you a long list of uh stocks that
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are currently consolidating you don't
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have to consider all of those depending
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upon how many of those you want to trade
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per day either one or two you can
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consider one or two out of the list
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usually by sorting that list by
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descending so that you have the the
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stocks that are that have the maximum
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volume of trade. Right? So that's always
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safer. You you pick up the stocks where
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there is maximum volume of trading
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happening and then you mark the high of
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the consolidation zone and then you wait
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for the price to break out of the zone
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and then you either manually monitor it
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and trade it or you can put in GT orders
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so that the automatic entry is enabled.
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In terms of risk management position
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sizing, the way I'm currently doing it
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is I I limit my position size to either
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10,000 or 15,000 max. I do not exceed
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that limit per order. The exit condition
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is quite simple. There are two ways of
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doing it. One is you can have a set
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target percentage which in this case is
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5%. Uh or if you're somebody don't mind
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sitting on a trade for a longer time and
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want to ride out the the trend, then you
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can start you can keep trailing it. The
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only difference is the in the the first
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case uh people who want to churn their
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trades quicker and then move on to the
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next trade don't want to sit on a trade
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for months. uh they prefer as a target
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like 5%. People who don't mind basically
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their money in the market for a longer
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time and they can ride it out for a
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month or two or more, they tend to
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typically trade it. So depending upon
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your risk appetite, you could use one of
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those uh methods. For stop- loss, I
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usually don't keep any stop- loss. U
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given this is trend following and I've
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picked up only good quality stocks from
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uh stock universe like say Nifty 100 or
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200 with good liquidity. Uh I don't
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worry too much about that stock. Uh no
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striving. So that's why I personally
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don't keep stop loss but it again it
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depends on your uh risk appetite.
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If you haven't joined our telegram
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group, please do so. I share market
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insights, algo trading tips and new
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video notifications. And this way you
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can stay up to date with our community
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events. I talked about providing two
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types of screeners for it. This is the
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first one which is a charting screener.
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The logic that we already discussed is
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already coded in the link to this
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particular screener. I'll provide it uh
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article. At the end of the day, you can
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do a run scan and then you will get the
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the list of stocks that are currently
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consolidated. Always do remember to sort
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this based on volume. So that way you
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pick up the stocks that has the most
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volume. Here the Python utility in
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question is going to directly scrape
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this particular screen and then download
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the output from this screen into a data
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frame. And this is the Python utility
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that I'm talking about. You would need
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to install these dependencies which are
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request spanders and beautiful soup 4.
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And the utility takes two primarily two
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inputs. One is the the URL of the the
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screen which is which is this typically.
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And then the number two is the scan
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clause. To find out the scan clause for
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your respective screens, all you need to
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do is just right click on your web page,
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inspect, then go into
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network and then try running scan. You
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would see a process, one of these
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processes comes up and then click on it
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and then go into payload and the scan
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class is right at the top. So all you
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need to do is just copy this
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part and then input that as part of your
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input into the function
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here. So as I said, it takes two inputs.
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minus the the URL that we looked at and
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then the scan class and then once you
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provide this and then
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run you would get the exact same results
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as you see on the scanner
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itself and this is in a data frame. So
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now you can go ahead and use this
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directly in your algo and then apply
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various strategy rules on top of it. So
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this is how simple it is description.
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Now that you know how the utility works,
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let me just give you an example of how I
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use it for my strategies. In fact, I use
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charting screen for multiple strategies
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of mine. Here's one example of how I do
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it. For example, in the scan that we
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just ran, HDFC came up as one of those
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eligible stocks. So, you see there is a
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a tightening of all the SMAs happening
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here, the SMAs are all squeezed up in a
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very tight spot within the 3% uh range
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of the the last closing price. And then
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whenever this happens, for example, in
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the previous time this happened, you see
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this huge breakout rally happening. And
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this is what we are actually looking
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for. And this is my Algo dashboard that
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I had built as part of my Algo trading
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platform. And Pravi, I've been running
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this on one of my smaller accounts. And
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uh the brown part is the the equity
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curve of the strategy and the white part
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is the nifty50. So you see the the
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equity curve looks pretty good. The draw
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down the underwater plot is also like
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less than 3%. This is actually 0%
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because this particular strategy does
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not have a stop- loss. I had uh made a
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couple of mistakes due to which I had to
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close two of the trades because of which
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you see this otherwise you don't close
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any trades. You just keep it open until
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your targets are hit. And even if you
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look at the benchmark versus strategy um
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there's almost a three multiplier
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difference. It the strategy beats the
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benchmark. So, it's a very simple
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strategy and yet at at the same time
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very effective. Hope you like this
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strategy. If you'd like to see more
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content like this, please do like this
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video and that'll motivate me to keep
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doing this. If you'd also like to share
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some of your strategies with the
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community or you would like me to back
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test any of your strategies, please do
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email me with the details and I'll do my
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best. Thank you. If you genuinely found
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this video useful, please consider
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subscribing and liking the video and I
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will see you soon in another video. And
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until then, take care and happy trading.
