A Profitable Swing Trading Strategy: Live Signals and Backtest Results

Swing Trading is a popular short term trading method which is less riskier as compared to Intraday trading. In swing trading, positions are held for an average of 2 to 6 days, but in some cases can be extended beyond that. Most of the strategies that we have discussed in this blog belong to this category. The one that I am going to talk about now is yet another swing trading strategy with exceptional profit potential. And the good part is,  you need not to monitor the markets all the time following this strategy, you can just spend 30 minutes a day in front of your trading terminal and still make good profit. The average CAGR for last 8 years in Nifty is 132% which we would see further in backtest results . This strategy is also known as 3*5 MACO method, and was first developed by Mr.Viswanathan, and then modified by Mr. Shiva Galrani. We have further modified the strategy and added essential risk management rules. Also, we have replaced offline excel with google sheets to make this real-time.

Note: To best view this post and embedded Google sheets use Firefox browser.

Also Read: Online Stock Market Courses for Absolute Beginners

Swing Trading Strategy Rules

Parameter Value
Time-frame
EOD
Indicators Used EMA 3, EMA 5
Buy Condition
  • EMA 3 crosses above EMA 5
  • Position should be taken at reversal price mentioned in the ‘Live Signals’ section below.
  • In case of Gap up or Gap down, position should be taken at market price after first 15 minutes of open.
  • Position should be squared off and another Short position should be taken in case price crosses below reversal price near EOD (Intraday Whipsaw)
Short Condition
  • EMA 3 crosses below EMA 5
  • Position should be taken at reversal price mentioned in the ‘Live Signals’ section below.
  • In case of Gap up or Gap down, position should be taken at market price after first 15 minutes of open.
  • Position should be squared off and another Buy position should be taken in case price crosses above reversal price near EOD (Intraday Whipsaw)
Stop Loss 50 points for Intraday whipsaw. Configurable in the Google sheet
Targets No fixed target. Governed by the signals
Position Size 100% of Equity
Initial Equity 100000. Configurable in the Google sheet.
Brokerage Not considered for backtesting
Margin Approx 10%  , Margin per lot configurable in Google sheet

Note: The live signals and backtest report in the below sections are fetched directly from Google sheet. So sometimes, they do not load properly in the first attempt. Please refresh the page to see the signals, and use Mozilla Firefox browser for best results.

Live Signals for NSE Nifty

This section auto updates everyday to provide reversal point and trade signal for the next day. Below signal is based on Nifty spot prices. Its always recommended to apply your strategy rule on spot price and trade corresponding futures based on it.

Strategy Illustration

Check below couple of illustrations on how to use this swing trading strategy in live market. Each illustration starts with a screenshot of current day signal followed by various use-cases on possible trade scenario for the next day.

Illustration 1: Buy to Short

illustration1

Use Case
Action
Open Price is greater than 1015
  • Put a Stop Loss limit Sell order at 1015 (reversal price).
  • Number of lots should be twice the current number of lots (to square off and take opposite position)
  • Once the SL-Limit order is fulfilled, put a stop loss of 50 points on the open Short position to avoid unexpected loss if price again crosses above reversal price at EOD. Stop loss points depends on the scrip which you are trading.
  • If price crosses above 1015 (reversal price) at 15 minutes before market close, square off the Short position and Buy again at market price. This condition is called Intraday whipsaw in this strategy terms.
Open Price is less than 1015 (Gap down)
  • Put a Sell market order after 15 minutes of market open.
  • Number of lots should be twice the current number of lots (to square off and take opposite position)
  • Once the market order is fulfilled, put a stop loss of 50 points on the open Short position to avoid unexpected loss if price again crosses above reversal price at EOD. Stop loss points depends on the scrip which you are trading.
  • If price crosses above 1015 (reversal price) at 15 minutes before market close, square off the Short position and Buy again at market price. This condition is called Intraday whipsaw in this strategy terms.

Illustration 2: Short to Buy

illustration2

Use Case
Action
Open Price is less than 1035
  • Put a Stop Loss limit Buy order at 1035 (reversal price).
  • Number of lots should be twice the current number of lots (to square off and take opposite position)
  • Once the SL-Limit order is fulfilled, put a stop loss of 50 points on the open Buy position to avoid unexpected loss if price again crosses below reversal price at EOD. Stop loss points depends on the scrip which you are trading.
  • If price crosses below 1035 (reversal price) at 15 minutes before market close, square off the Buy position and Sell again at market price. This condition is called Intraday whipsaw in this strategy terms.
Open Price is greater than 1035 (Gap up)
  • Put a Buy market order after 15 minutes of market open.
  • Number of lots should be twice the current number of lots (to square off and take opposite position)
  • Once the market order is fulfilled, put a stop loss of 50 points on the open Buy position to avoid unexpected loss if price again crosses below reversal price at EOD. Stop loss points depends on the scrip which you are trading.
  • If price crosses below 1035 (reversal price) at 15 minutes before market close, square off the Buy position and Sell again at market price. This condition is called Intraday whipsaw in this strategy terms.

Please read the above illustration carefully to understand this swing trading strategy in-depth. The strategy may sound difficult at a single glance but once you get comfortable it is like a cakewalk. In the next sections, we would see the backtest results of this strategy on NSE Nifty. All the backtest results and charts gets auto updated everyday from the underlying google sheet.

Backtest Summary: NSE Nifty

Monthly and Yearly Profit/Loss Points

Also Read: Options Trading Strategies for consistent monthly income

Trades from last 50 days

Access to Google Sheet

As mentioned earlier, this swing trading strategy is coded in a Google sheet which auto updates everyday. The prominent sections of this google sheet is already embedded in this post above, but there are lot more things to explore in the real sheet.

  • Change symbol name. You can pick any symbol from any exchange in the world as long as it is supported by Google Finance.
  • Change time period for backtesting. Default is 3000 Days.
  • Change Initial capital, lot size, margin per lot.
  • Change EMA parameters and intraday stoploss.
  • Access to excel formulas used for coding the rules and backtesting.
  • Flexibility to modify the current rules as per your needs.
  • Add your own risk management rules.

Swing Trading Strategy

MACO Backtest

The development of this tool is in final stages. We are trying hard to make sure it is error free and useful. Drop you email in the below form to get early-bird access to this google sheet.

4 Comments

  1. I have read the details above but how can I get the excel formulas for getting the reversal price. can you give the link for google sheet.

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