Algo Trading in India |
  • January 20, 2020
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  • 10

Many traders follow different types of moving average crossover trading strategy but the main problem with such MA/EMA cross over system is whipsaws. When market goes in range bound, many times you get false breakouts which increases your losses/drawdown. How one could avoid such false breakouts and also gain from large trend the stock establishes?

The answer is move to larger time frame. Yes, This strategy explains how trader can benefit from Trend Following by following a simple EMA crossover system when applied on weekly time frame.

Buy rules: Go long when 10 EMA is greater than 50 EMA

Sell rules: Exit when 10 EMA is lesser than 50 EMA

Time frame: Weekly

Many of you must have invested in stocks like Yes Bank, DHFL, Graphite, HEG etc. All these stocks were once a fundamentally strong stocks but due to sudden shift in their business prospects all these stocks tanked and many traders/investors do not know when to exit. Following this strategy rules would have helped you to exit at the right time.

DHFL Trade results: It gave only two trades, both together ended up with 130% returns.

Graphite Trade results: Graphite gave multi fold returns with 653% returns in just one trade,

Stock went from 90 Rs. levels to Rs.1000 levels but many investors were stuck in this stock as it tanked to Rs.200 levels now, however following this strategy would helped you to exit at the right time, as it gave exit signal when stock was at Rs.700.

Even if you apply to Index heavy weights stocks like HDFC, KOTAKBANK you make exception returns.

And this EMA cross over system helps you in identifying multi-bagger stocks as well, we tested this strategy with huge historical data sets. These are some of the stock list that returned multi fold returns.

You can download the historical results of all NSE stocks from this link, it has been tested from 1994 to 2019.

If you liked this article, please do share share it (WhatsappTwitter) with other Traders/Investors. 

10 comments on “A simple EMA crossover trading strategy with exceptional returns

  1. Thank you for sharing this amazing back testing results of how EMA crossovers have been profitable for all these years on various stocks.. Data gives the confidence Thanks.. Hope we apply the same on Indices also..

  2. Amazing. I computed IRR of this strategy, basis which annual compounding return works out to be 45.13%. Beats almost all mutual funds.

  3. In this or any strategy, stock selection is the key. If one bought and held these stocks for long term, even then he would have made as much money.

  4. Squareoff always come with innovative amd data-backed strategy. Keep it up. Definitely many are beneficiaries of all the strategies shared by you.

  5. Even on lower timeframes this seems to be giving good returns. Any way to test this on options automatically?

  6. Kiruba, super duper data crunching, the amount of efforts and time you invest in show casing these outcomes/results is just amazing, hats off to you Sir for such a benevolent service to the traders/investor community.

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