๐ธ We buy a basket of 5 stocks every Monday and sell them all on Friday.
๐ธ Yes, it's that simple.
๐๐ถ๐ด๐ต ๐๐ถ๐๐ฒ๐ก
A backtested ๐ฏ๐ฎ๐๐ธ๐ฒ๐ ๐ฎ๐ฝ๐ฝ๐ฟ๐ผ๐ฎ๐ฐ๐ต trading strategy ๐ ๐
Thread ahead ๐งต
RT to get a free PDF and a link to our beta program in your DM ๐
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๐ธ We buy a basket of 5 stocks every Monday and sell them all on Friday.
๐ธ Yes, it's that simple.
๐ธ Stocks in general keep going up & down, no rocket science there.
๐ธ But, interestingly some stocks when they go down considerably, they bounce back to some extent.
๐ธ This model tries to profit from such up moves through a basket of stocks
๐ธ Universe - NSE500
1๏ธโฃ Create a basket of stocks that have the lowest returns in the past.
2๏ธโฃ Filter the stocks based on turnover to check for liquidity.
3๏ธโฃ Select stocks with the best odds to go up.
๐ธ ๐๐ ๐ถ๐ - Exit anytime during the day on Friday.
๐ธ Stocks are known to mean revert, meaning if a stock goes down, it tends to move upwards again, this model tries to capture that reversion.
๐ธ This phenomenon is more common and profitable in NIFTY 500 stocks when you have an upward bias.
๐ธ Works well when the stocks correct for a couple of days to weeks and bounce off from their lows.
๐ธ In a secular bull market when most of the stocks are in an uptrend with minor or no corrections and in the sideways market, as there won't be any stocks that pass through the model criteria, that's very rare though.
๐ธ If you have some funds to allocate to a positional model & can take time out just once a week to rebalance the stocks. Then, this is an ideal strategy for you.
๐ธ Being a positional strategy, it has limited risk and offers a consistent return profile.
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A THREAD ON @SarangSood
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
Decoded his way of analysis/logics for everyone to easily understand.
Have covered:
1. Analysis of volatility, how to foresee/signs.
2. Workbook
3. When to sell options
4. Diff category of days
5. How movement of option prices tell us what will happen
1. Keeps following volatility super closely.
Makes 7-8 different strategies to give him a sense of what's going on.
Whichever gives highest profit he trades in.
I am quite different from your style. I follow the market's volatility very closely. I have mock positions in 7-8 different strategies which allows me to stay connected. Whichever gives best profit is usually the one i trade in.
— Sarang Sood (@SarangSood) August 13, 2019
2. Theta falls when market moves.
Falls where market is headed towards not on our original position.
Anilji most of the time these days Theta only falls when market moves. So the Theta actually falls where market has moved to, not where our position was in the first place. By shifting we can come close to capturing the Theta fall but not always.
— Sarang Sood (@SarangSood) June 24, 2019
3. If you're an options seller then sell only when volatility is dropping, there is a high probability of you making the right trade and getting profit as a result
He believes in a market operator, if market mover sells volatility Sarang Sir joins him.
This week has been great so far. The main aim is to be in the right side of the volatility, rest the market will reward.
— Sarang Sood (@SarangSood) July 3, 2019
4. Theta decay vs Fall in vega
Sell when Vega is falling rather than for theta decay. You won't be trapped and higher probability of making profit.
There is a difference between theta decay & fall in vega. Decay is certain but there is no guaranteed profit as delta moves can increase cost. Fall in vega on the other hand is backed by a powerful force that sells options and gives handsome returns. Our job is to identify them.
— Sarang Sood (@SarangSood) February 12, 2020
Iโm torn on how to approach the idea of luck. Iโm the first to admit that I am one of the luckiest people on the planet. To be born into a prosperous American family in 1960 with smart parents is to start life on third base. The odds against my very existence are astronomical.
Iโve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the personโs part, whereas โsmartโ luck involved awareness followed by action before the circumstances changed.
So, was I โluckyโ to be born when I wasโnothing I had any control overโand that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write โWhat Works on Wall Street?โ Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
Ironies of Luck https://t.co/5BPWGbAxFi
— Morgan Housel (@morganhousel) March 14, 2018
"Luck is the flip side of risk. They are mirrored cousins, driven by the same thing: You are one person in a 7 billion player game, and the accidental impact of other people\u2019s actions can be more consequential than your own."
Iโve always felt that the luckiest people I know had a talent for recognizing circumstances, not of their own making, that were conducive to a favorable outcome and their ability to quickly take advantage of them.
In other words, dumb luck was just that, it required no awareness on the personโs part, whereas โsmartโ luck involved awareness followed by action before the circumstances changed.
So, was I โluckyโ to be born when I wasโnothing I had any control overโand that I came of age just as huge databases and computers were advancing to the point where I could use those tools to write โWhat Works on Wall Street?โ Absolutely.
Was I lucky to start my stock market investments near the peak of interest rates which allowed me to spend the majority of my adult life in a falling rate environment? Yup.
The YouTube algorithm that I helped build in 2011 still recommends the flat earth theory by the *hundreds of millions*. This investigation by @RawStory shows some of the real-life consequences of this badly designed AI.
This spring at SxSW, @SusanWojcicki promised "Wikipedia snippets" on debated videos. But they didn't put them on flat earth videos, and instead @YouTube is promoting merchandising such as "NASA lies - Never Trust a Snake". 2/
A few example of flat earth videos that were promoted by YouTube #today:
https://t.co/TumQiX2tlj 3/
https://t.co/uAORIJ5BYX 4/
https://t.co/yOGZ0pLfHG 5/
Flat Earth conference attendees explain how they have been brainwashed by YouTube and Infowarshttps://t.co/gqZwGXPOoc
— Raw Story (@RawStory) November 18, 2018
This spring at SxSW, @SusanWojcicki promised "Wikipedia snippets" on debated videos. But they didn't put them on flat earth videos, and instead @YouTube is promoting merchandising such as "NASA lies - Never Trust a Snake". 2/
A few example of flat earth videos that were promoted by YouTube #today:
https://t.co/TumQiX2tlj 3/
https://t.co/uAORIJ5BYX 4/
https://t.co/yOGZ0pLfHG 5/