This document describes the 5 EMA trading strategy. It is suitable for intraday scalping and reversals, especially in highly volatile stocks like Bank Nifty. The strategy involves looking for buy signals when candles close below the 5 EMA line and sell signals when candles close above. Drawbacks include many false signals, requiring close monitoring, and potential for large drawdowns of 40-70% of capital. Modifications outlined increase accuracy to 70-80% by only taking sell trades, opening the screen after 9:30 AM, booking partial profits at 1:1 risk-reward, and shifting stops to breakeven at 1:2 risk-reward.
This document describes the 5 EMA trading strategy. It is suitable for intraday scalping and reversals, especially in highly volatile stocks like Bank Nifty. The strategy involves looking for buy signals when candles close below the 5 EMA line and sell signals when candles close above. Drawbacks include many false signals, requiring close monitoring, and potential for large drawdowns of 40-70% of capital. Modifications outlined increase accuracy to 70-80% by only taking sell trades, opening the screen after 9:30 AM, booking partial profits at 1:1 risk-reward, and shifting stops to breakeven at 1:2 risk-reward.
This document describes the 5 EMA trading strategy. It is suitable for intraday scalping and reversals, especially in highly volatile stocks like Bank Nifty. The strategy involves looking for buy signals when candles close below the 5 EMA line and sell signals when candles close above. Drawbacks include many false signals, requiring close monitoring, and potential for large drawdowns of 40-70% of capital. Modifications outlined increase accuracy to 70-80% by only taking sell trades, opening the screen after 9:30 AM, booking partial profits at 1:1 risk-reward, and shifting stops to breakeven at 1:2 risk-reward.
• Best Works in Bank Nifty • Works in high-volatile Stocks • Avoid ITC, NTPC, Government Stocks- Frequent SL Hit. • Min account balance for 1 lot Option buy 50,000/- as drawdown very fast. Basic Framework • Candle must not touch 5 EMA – Alert Candle • Use 5 minute candle for Sell. 15 minute candle for Buy. • Find buy opportunity if candle close below 5 EMA, Candle low SL • Find sell opportunity if candle close above 5 EMA, Candle high SL • Maximum 3 Stop-Loss a day & Close system.
Sell Trade Setup
Buy Trade Setup Drawbacks • Generates multiple trade signals in a day. Many false signals. • Only for Intraday, not positional trading • Have to monitor screen most of the time. • Success rate 20-60% (Depends on the week) • Can get big targets, but up to 40-70% Capital Drawdown occurs. Can’t trade same quantity after major drawdown. • Varying Stoploss from 70 points upto 300 points in Bank nifty • Option Premium Decays if no momentum Modifications Of 5 EMA Strategy • Only Take Selling Trades Increase accuracy to 70-80% • Open screen only after 9:30 Very few false signals
• After 1:1.5 Risk-reward, book 50%
• Only after 1:2 shift SL to Cost. Main objective- protect capital • After every 1:1 trail SL. Can get up-to 1:10 • Initiate trade only if these types of candle forms above 5 EMA-
Different Doji candle
Shooting Star Candle (Must Be in Red color. Green not allowed)
Ignore Trade If This Kind of Red Candle Forms above 5 EMA-
They all have a lower wick.
Generates false signals. Low = Close for better accuracy • Look for 500,1000 Levels in Banknifty. Previous day High, Low, Close are crutial level. Can exit some quantity there. Comes with experience. Beginners follow Risk:Reward ratio