Here is a very simple yet a powerful hourly strategy in MCX crude. I would like to call it as 10EMA Reverse strategy. i.e buy signal will generate in case of hourly candle closes below 10EMA and sell signal will generate if the candle closes above 10EMA.
How to Play – 10EMA Reverse Strategy
1)Every time the long and short position needs to be reversed whenever the signal arrives on the hourly timeframe
2)Position needs to be carry forwarded (Gap UP and GAP down risk is there)
3)Rs 100 brokerage is added in per leg transaction while backtesting (needs to be adjusted according to your brokerage structure)
4)Exit if the candle moves above 55-60 points on closing basis. Here stoploss is decided on closing basis.
5)Trade every time with two lots of MCX Crude
Why this strategy could be profitable in MCX-Crude?
I have only very limited set of data. I backtested only with exisitng november month contrat and the data size covers only two months. But MCX market is a extended market nature i.e more than 12 hours in a per day session makes the market to trade in a compressed manner in a higher timeframes like a hourly timeframe which generates a lot of signals with a 10EMA indicator. Probably we are profitable on most of the contra trades due to the compressed nature of the trading instrument in hourly timeframe and we will be able to eat every small profits.
Can this strategy could be applied to other markets too?
You can’t apply this strategy in stock markets due to limited session(7-8 hours session per day) trade time compared to MCX or International forex markets. These kind of strategies normally works with commodities where the trendiness is very slow on the given timeframe.
Put your opinions,observations and your experience here about this strategy and make it a better one!
Disclaimer : Strategy is provided here for study purpose only. Marketcalls will not be responsible for your losses/profits incurred. Do it at your own risk.