Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

Understanding Classical Technical Analysis with 200EMA

1 min read

I would like to start a series of articles in understanding about classical technical analysis indicators. First we are starting with simple 200EMA trading system where one will enter long if the candle closes above 200EMA and enter short if the candle closes below 200EMA.

Nifty 200EMA
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How to understand the nature of 200EMA?

1)Backtest the trading system across multiple timeframes like 1min, 5min, 7min, 15min, 30min,Hourly and Daily Timeframe
2)Brokerages are not included in the result. Just a plain backtesting without including the Brokerages and Slippages
3)Used Amibroker for Backtesting the Simple 200EMA trading system with the backtesting period of 4 years.

Here are the backtest results obtained across different timeframes

Nifty Spot Backtesting 200EMA

What is the Inference?
1)Winning Ratio of the Trading system ranges between 15-26% across different timeframes
2)Consecutive losses are huge in lower timeframe which makes difficult to trade as human emotions doesn’t allow to take more than 20+ consecutive trades mentally.
3)Profits are higher in lower timeframe compared to higher timeframes. And 1min,5min could not be profitable after taking brokerage plus slippages into account.
4)15min and 30min are the ideal timeframe to trade such strategies however one should aware about the risk involved in the trading system and what kind of winning ratio he can expect from the trading system.
5)200EMA strategy is not profitable in Daily Timeframe and the Winning ratio is lowest when compared to other timeframes.

Is this Trading system Recommended?
Though this trading system is profitable in lower timeframes like 15min,30min after deducting brokerage, however it is not advised to trade such system due to too much of consecutive losses in trading system. And the risk involved in such trading system is very huge.

Rajandran R Telecom Engineer turned Full-time Derivative Trader. Mostly Trading Nifty, Banknifty, USDINR and High Liquid Stock Derivatives. Trading the Markets Since 2006 onwards. Using Market Profile and Orderflow for more than a decade. Designed and published 100+ open source trading systems on various trading tools. Strongly believe that market understanding and robust trading frameworks are the key to the trading success. Writing about Markets, Trading System Design, Market Sentiment, Trading Softwares & Trading Nuances since 2007 onwards. Author of Marketcalls.in and Co-Creator of Algomojo (Algorithmic Trading Platform for DIY Traders)

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9 Replies to “Understanding Classical Technical Analysis with 200EMA”

  1. Nothing helpfull i can find in this post.Are you saying it is suitable to trade 15 mins 30 mins or its risk to trade.Can you pls explain clearly.Is it good to trade in 60 mins.??

  2. nice and ccontine to post your trading lessons.I want to know happened to the charts that you had posted on your site. whether you are updating or permenantely removed

  3. Now days the National and international crisis affect the trading due to these assignable causes. Further the individual institutions stocks are also valnarable due to the management policies /products/ competitivenss etc. MCX trading slightly better as the trading timing is more but have to closely watch the entry timings of other big countries.
    All the classical technical/statistical analysis will work only during the chance causes.

  4. hello

    can we go the way of combining 2 or 3 different indicators like supertrend with rsi

    or which technical indicators or models u suggest

  5. I am using EMA to trade. You said it’s not good to trade with MA, then kind to suggest another one, with back test.

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