@Mudit.Kushalvardhan It is for us to define our rules. I have said several times previously also, I would like to remain invested at all times. I will not shift to cash (or gold). However, some people had apprehensions and for that I had suggested we could like at the index’s 50 and 200EMA. Instead of 200, we can choose 150 also; most strategies talk about 50 and 200 for checking market direction.
This week I checked between 150 and 200 DMA / EMA. There are no major differences in market direction based on the values. 50 EMA is 17,938. 200 EMA is 16,334 and 150 EMA is 16,902. Under both circumstances, our view would be to continue without any change.
We can follow Clenow’s suggestion when the market direction changes to a sell.
At the moment, we have used only price and SD as factors for ranking. We can add more factors (like its EMA) to shortlist scrips. Generally this will end up in reducing returns, but helping in reducing drawdowns also.
As I keep repeating, we should be comfortable with the system we have developed and we should sleep well without worrying too much.
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