Understanding Impact of Bond Yield Differential on EquitiesOver the past decade the interest rate differential between US and India has been constantly going down. This has largely been due to stronger fiscal position of India and also gradual weakening of US Public Finances.
This has led to the Rupee becoming more stable against the Greenback, thereby reducing the rate of inflation in India.
Further, this has resulted in rising of equity markets over the last decade, and more importantly, the same setup is likely to stay or become better over the next two decades.
Hence long term retail investors in India can benefit from this by placing algo based orders to buy Index ETFs on dips and reduce their cost of buying and stay invested over the long term thereby getting benefit of power of compounding.
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Trading View Script:
Yield
Nifty: A Simple Strategy Yielding Lacs.I am surprised to see how this simple strategy could yield such handsome return in the Index futures.
Time Period= 1 June till date
Chart= 15 min.
Rules:
1. Divergence on Stochastics associated with inverse price movement
2. Entry @ break above/below immediately preceding "minor" swing high/low
3. Stop @ below/above immediately preceding "significant" swing low/high
4. Target @ immediately preceding "significant" swing high/low point
5. Would not trigger entry on gap openings, wait for price to pull back to entry or else trade will be missed
6. After entry, if target missed by few points then close position on break of a succeeding minor swing or consolidation pattern, whichever hits earlier
7. Minimum Risk to Reward Ratio should be 1:1 or else trade will be missed.
8. No support or resistance from higher time frame taken into account
9. All the entries taken with Stop loss and Limit orders.
10. Carry forward as long as target or stop is not hit.
Trades:
Trade1=33 pts.
Trade2=16*
Trade3=31
Trade4=34
Trade5=32
Trade6=13*
Trade7=47
Trade8=37
Total= 243
Profit on single lot= 243*75=18225
For earning 1 Lac or more one should have traded at least 6 lots.
* In Trade 2 and 6 target was missed by a few points so as per rules the position is closed at the break of succeeding consolidations pattern.
#Trade missed @ Divergence 3 because of poor RRR
Although this strategy yielded 100% success with no Stops hit yet it should be noted that we totally missed the shorting opportunity from 9700 to 9565 on 22nd June. The strategy might be successful in sideways to moderately bearish/bullish environment. Will it be good in a trending market is still a question mark for me, perhaps we will get the answer in coming days.
Kindly cooperate if am wrong in my calculations somewhere but i suppose the purpose of this post is clear to everybody.
Trade safe, stay healthy.
Best Regards
Afraidtotrade