Today We have given pair trade call for
SBIN and IDBI FOR JULY FUTURE as :
Sell SBIN future @1925
Buy IDBI future @67.50
Today we booked profit as :
SBIN future @1920
IDBI future @69
Booked profit : INR 6625
Our Brave hearts still HOLDING
=============================
For Steady Growth of Wealth
'Trade Less Trade Smart'
WITH
JUST BANKNIFTY
Vikram
ReplyDelete10:17 PM (8 hours ago)
to me
Vikram has left a new comment on your post "PAIR TRADE CALL UPDATE: SBI AND IDBI":
Hi,
Your pair trading strategy is excellent. However, isn't the risk reward ratio a bit skewed , because I checked on the PNB/ALBK pair given on 14th May where it was eventually exited with a very small profit.But I checked the graphs and at one point of time it was in huge loss, so my question to make a small profit of Rs.2100 is it worth taking such a huge risk?
Also, would be nice if on your performance sheet you mention which are the Jackpot calls issued.
Thanks, Vikram
Hi Vikram,
ReplyDeleteTill date we have given 98 pair trade calls and
very much near to complelte our 100 calls. It means
that our pair trade strategy has pass through all
types of market situation during this phase.
So out of 98 calls there are 3-4 calls which were
in huge loss after entry and than returned into profit.
So I see other way round that means instead of seeing
individual pair's risk reward ratio, I will see my overall
risk reward ratio.
For Eg. our accuracy ratio is above 90%
that meanse out of 100 calls 90 calls were profitable.
So if i book on an average 3500 profit per trade and takes the
max risk of 10000/20000 loss than
90 calls * 3500 = 3,15,000 profit
10 calls * 10000= 1,00,000 loss
than also I am in net profit of 2 lac plus
even We take max risk of booking
20,000 loss than also my net will be in profit by booking
just profit around 3500 .
This is the one reason we take risk of holding those 3-4 calls
and wait for pair to come into profit or atleast its loss come
down to our comfort zone. ofcourse decision of holding or exiting
from pair will be purly based on technical grounds i.e. pair charts,
ratios etc...
Secondly, such things happens in exceptional situation.. Which
we all observe in result months... where some stocks shoots up
or down due to insider information... which we are not knowing
and even not in controls of small trader/retail trader like us.
We will consider your suggestion for "would be nice if on
your performance sheet you mention which are the Jackpot calls
issued "
But it won't be possible to write into performance sheet due to
space limitation... Besides your suggestion we even wanted to
write the reasons of those 3-4 exceptional situation..
but now ofcourse will mention on individual 'pair trade call update'
ReplyDeletepost.
Hope I cleared your doubt...
Regarding PNB/ALBK pair though we exited in small profit of 2100 (due to expiry near by) but if we holded that pair and even roll over
ReplyDeleteto next series that pair has given good return upto 7000-8000 profit on 3rd and 4th june 2013.
Our strategy is to book profit around 3000-4000 for those who are trading in one lot per pair. But those who has more capital can part book here and hold the pair for higher profit till the pair reverts to mean.
Thanks for the clarification sir. Another suggestion I have is why not expand the pair trading strategy to other sectors as well and not just stocks, maybe the index? - Nifty/Bank Nifty?
ReplyDeleteAlso, what would be the margin requirement to be considered for trading 1 lot per pair? Approx 1 lakh?
Thanks,
Vikram
We have included other sectors like IT,FINANCE ETC...
ReplyDeleteI dont consider INDEX as a sector thats why not doing it.
ya i lot reqd approx capital of 80,000 to 1 lac