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SMS Trading Strategy

The document outlines general rules, entry rules, exit rules, and a performance check for trading stocks. The general rules specify position sizing based on capital, limiting positions to 3 stocks at a time, and ideal trade durations of 30-45 minutes. Entry rules look for candlestick patterns like dojis and shadows, and confirmation from indicators. Exit rules close positions on opposite colored candles or indicator signals. Performance is rated based on following the rules around position sizing.

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Mukesh Gupta
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2K views2 pages

SMS Trading Strategy

The document outlines general rules, entry rules, exit rules, and a performance check for trading stocks. The general rules specify position sizing based on capital, limiting positions to 3 stocks at a time, and ideal trade durations of 30-45 minutes. Entry rules look for candlestick patterns like dojis and shadows, and confirmation from indicators. Exit rules close positions on opposite colored candles or indicator signals. Performance is rated based on following the rules around position sizing.

Uploaded by

Mukesh Gupta
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as PDF, TXT or read online on Scribd
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GENERAL RULES

1. Position size
- Divide base capital in 3 parts and multiply each part by 2.
- Eg.: ₹ 1,00,000 : ((100000/3)*2) = 66000
- Divide the above value by stock CMP to get the position size.
- Maximum of 3 active positions at any given point.
- Super Position = Normal Position x 4

2. Trading sessions
- Morning session: 9:30 AM - 11:30 AM
- Afternoon session: 11:45 AM - 1:45 PM
- Closing session: 2:00 PM - 3:15 PM
- Ideal to open a position in the first 30 minutes of a session.
- Ideal trade duration is 30-45 minutes or up to the end of session.

3. Stock selection and trend analysis


- A stock generally moves in maximum of 2 trends per day.
- Target is to capture 1st major trend of the day for a given stock.
- No positions in a stock which has already moved its 1st major trend.
- No more than 1 position in a single stock per day.
- Select from watchlist stocks, in news stocks, market moving stocks, NR7 stocks, etc.
- Opening range preferences - same trend of the day, size 1/3rd of ATR, entry outside range.

ENTRY RULES

SN. SETUP CONFIRMATION (AO)

1. Look for doji / spinning top candle Pre-requisite

2. Candle with single side shadow (no up/lo) Bar color same as candle to trend / high bars
StochRSI in supporting overbought/sold region

3. Long single side shadow candle Bar color opposite candle to trend / small bars

EXIT RULES

SN. SETUP CONFIRMATION (AO)

1. Opposite color candle No confirmation required

2. Doji / spinning top candle of same color Bar color opposite candle to trend / small bars
StochRSI in opposite/middle region

3. Long single side shadow candle Bar color opposite candle to trend / small bars
PERFORMANCE CHECK

LEVELS POINTS CONDITIONS

Good 3 Super Position not used.

Fair 2 Super Position used once.

Bad 1 Super Position used more than once.

Poor 0 Super Position used simultaneously / exceeds limit.

Be rigid with your rules and be flexible with your expectations.

Focus on process, don’t think about the outcome.

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