A sample long-short alert tweet is below
This alert recommends to buy 9 contracts of current month NIFTY futures at Rs. 5266.1 and sell 7 contracts of current month ICICIBANK futures at Rs. 956.25. It also gives an indicator of profit potential in the form of a confidence number, whose maximum is 100.
Our system recommends that long-short trades be executed using stock or index futures, given that derivatives are highly liquid and provide the necessary leverage to amplify profits. Long-short alerts generated by Nifty Analytics are hedged positions and for the most part, immune to the gyrations of the market. A gap up or a gap down opening does not impact the profit or loss of a long-short position as dramatically as it would for a directional trade. Our models have been tuned over the last 5 years which have been one of the most volatile periods in the history of the stock market all over the world.
We have presented the detailed performance analysis for each of the alerts generated by Nifty Analytics over the last 3 years. Performance summary has been presented on both monthly and yearly basis, with NIFTY returns along side for comparison. For each alert generated we have shown profit/loss summary under 3 exit scenarios and realistic trading assumptions. Performance numbers reported are by using end of day closing prices. In each of the exit scenarios mentioned below, the trade is squared off earlier if any of the stop loss, stop profit or holding period constraints are triggered.
Trading Assumptions
- Stop Loss: Rs. -50,0000
- Stop Profit: Rs. 1,00,000
- Maximum number of holding days: 7 Trading days
- Margin required: 20%
Exit Scenarios
- First-Profit Exit: Each long-short trade is squared off at the end of the first trading day in which the trade is profitable or earlier if any trading constraint is triggered.
- Best Exit: Each long-short trade is squared off at the end of a trading day in which the trade is most profitable or earlier subject to the other trading constraints. A maximum of 7 day holding period is assumed for each alert, within which the best possible exit is calculated.
- 7-Day Exit Each long-short trade is squared off at the end of the 7th trading day or earlier if any trading constraint is triggered.