Skyline Strategy: A Long-Only Strategy
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In the ancient philosophy of Yin-Yang, the concept of duality teaches that within every bad, there is something good, and within every good, there is something bad. This dynamic balance is not just a mystical idea; it has practical applications in various aspects of life, including investing.
Looking at the present market momentum, we see a classic example of the Yin-Yang principle in action. The Nifty50 and Nifty500 indices are both down more than 10% from their respective highs, signalling a bearish phase. Yet, despite the broad market pullback, some stocks continue to show outperformance, trading at or near their 52-week or all-time highs.
The Skyline Strategy
For traders with a Long-Only Strategy, focusing on stocks that are holding up well despite a broader market decline can be a smart strategy in challenging market conditions. We call this approach the Skyline Strategy. The idea is simple - identify stocks within a 10% range of their 52-week or all-time highs. These are stocks that have shown strong relative strength compared to the broader market and may continue to perform well, even as the rest of the market is struggling.However, finding stocks near their highs alone is not enough to form a reliable trading strategy. To refine the approach further, we add a layer of volume-based filter. Specifically, we look for stocks where the trading volume is at its 10-week high. The rationale behind this is simple - strong volume at or near highs is often a sign of institutional interest and indicates that the stock has the necessary momentum to continue moving upward.
When using this strategy, it's important to scan for stocks using a weekly chart, as the 10-week volume criterion applies to weekly trading data. For traders using RZone, we have made the scanner for this strategy available in the public library, so you can quickly implement it and start identifying stocks that meet the criteria.
Backtesting and Risk Management
As with any trading strategy, it’s essential to backtest the Skyline Strategy to ensure it aligns with your risk tolerance and trading goals. We recommend a risk management approach where the stop loss is set at 10% below the entry price while the target is set at a 25% gain. This risk-to-reward ratio ensures that the potential reward justifies the risk even if a trade doesn’t work out. -
Thanks Brijesh sir. Only BANCOINDIA qualified from Nifty 750 group. Is it because of the current market condition?
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@Nisanth TS Yes.
Many stocks are within the 10% range of the 52-week high, but only Banco qualifies due to volumes.
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@Brijesh-Bhatia can you please all this public scanner into RZONE @ definedge.com. I don't have securities account, but paid definedge.com membership. i can't see this scanner in public library in definedge.com. Please add
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Strategy looks effective and interesting . please make a video on this strategy for better understanding .
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@Brijesh-Bhatia @Definedge
Once again the above mentioned scanner is available only in Zone and NOT in TradePoint ,
Definedge Team should make these scanners available for Paid Subscribers of TradePoint also instead of restricting it to only definedgesecurities Zone Subscribers -
@Deepak Singla Thank you for your message.
Sir both the entities and the server are separate, which makes it challenging to synchronize all the data between them.In case you wish to create the system in your login, here is the screenshot of the system builder.
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@Brijesh Bhatia Here the volume you are considering is 5 week high or 10 week high? The formula in the SS will consider 5 week high.
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@Ashutosh Jain 10 Weeks...I am not considering average.
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@Brijesh-Bhatia @Definedge
i am defineedge demat account holder...still i can access Rzone strategy section.. Can u tell me why is it so???
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@Tejas Shah Sir Scanner facility is available in RZone Pro. Request you to check here https://www.definedgesecurities.com/products/rzone/
