I know it is ridiculous if any body says any strategy working 100% in all market conditions.
I am here assuming a hypothetical scenario. Suppose if any strategy developer proves that the strategy works 100% in all the cases; which is easy to execute; which gives a swing profit of say e.g. 5% move in stock or index; would big people like e.g., mr.nithin of “zerodha” or mr.nikhil of “true beacon” would consider buying it? If so what would be the market price for such 100% working strategy they would be paying it to the strategy developer?
Works 100% fine, but what about the longevity of the success, and the refinements one could do to better the model, the competition that will be coming up, will there be an alternative, a replacement, will it be treated as a nice product or a commodity, will it have geographical constraints like working in only emerging markets, rapid growth markets or does it also work in matured markets, will the return be the same or changes in different scenarios etc etc.
So yes, just like any other product, just like any business, there are a lot of things that should be and will be considered.
I do believe in the Risk- return tradeoff theory.
Any strategy that’s giving more than risk free rate of return, must carry some inherent risk.
In case you find something that’s 100% safe, and makes money - you should know you’ve not considered all scenarios.
There is a strategy that has worked 100% since time immemorial.
ACC is trading at 2369.25.
It’s 2300 CE is trading at 136.
Buy the shares, 250 qty and sell 1 lot of 2300 ce.
Your profit will be (2300-2369.25+136)*250 = 16,687.
Total capital required for that trade will be around 7.41 lakhs. Which makes the monthly return to around 2.25%.
Now, please anyone, give me around 10 crores of capital as a loan. I promise I’ll pay an interest of 12% per annum. Please.
Edit- There’s a way to earn even more than this. Ofcourse we can short a OTM call. Say we short the 2400 ce which has a premium of 83.95. By expiry, if the stock remains between 2380 and 2400, you’ll have your cake and eat it too.
If say, the stock by expiry reaches anywhere below your buy price, close the 2400 ce (which has already by that time given you a good theta decay) and short any ITM call that maintains the difference in strikes.
There have been years when I netted 30-35% roi. The only limiting factor here is the constant rise in the stock value, which means you’ll have to put in more money to buy 1 lot in the future.
Unlike the US, where a lot is 100 shares of anything valued at anyprice.
Like I said before, you have just not considered all scenarios. You are just selling a covered call. What if ACC falls to 1500 afterwards. You pocket the 136 premium but lose the value of your holdings.
I guess next you’ll sell 1500CE, and before you know, ACC will go back to 2300. You may be able to keep your CE premium but how about the 800 loss in the holdings?
If stock falls below 2300, your 2300ce isn’t exercisable. Whatever you have suggested is same as selling 2300pe. Why even block funds in buying the underlying? Just sell 2300pe with 1 lakh margin.
If you think you have dug 20 feet and got gold then definitely it’s not, FYI there are big fathers fore fathers great grand fathers who have for so many years have already dug 100, 1000 foot and still found nothing.
there is no holy grail or 100% fool proof strategy in market. No strategy ever works 100% in all type of markets.
You do one thing, do yourself the same thing for next 15 months, validate yourself, even after that you find your strategy as fool proof then you can sell it. Still this is a place to share knowledge not market place.
Back in 2015 , a large number of traders did find a 100% working strategy in the currency market.
See swiss national bank i.e central bank of Switzerland literally pegged the CHF to the euro i.e 1.2 CHF per euro. It was guaranteed by SNB that price won’t fall below 1.2
So everyone got a 100% working strategy. Trade the EUR/ CHF use the peg as pivot and initiate long positions.
See that horizontal line before that big short candle. They were all using that 100% strategy because SNB gave guarantee price won’t go below 1.2.
But the question is what happened ? Are there powerful institutions that can exert influence ? Are big whales , big institutions & big banks that strong?
Yes, there was 70:1 long traders i.e for every 1 short trader there was 70 long traders . Those big guys consolidated all the traders , exerted enough influence for SNB to remove peg and poof crash. I probably think whales had a crazy party that night.
Don’t get me wrong , if there was legitimate reasons price would have moved in stages not one big short candle. Everyone knows it’s the work of those big institutions especially big banks.
The lesson overall is :-
If there is 100% working strategy the big whales , big institutions & big banks can see it and can smell blood . They can easily consolidate traders in one place and finish them off.
Having your own strategy with MM keeps away from the popular crowd. Popular guys are always picked (even in real life). Just being ghost and doing well helps a lot. (IMO I believe that’s why price action especially support & resistance sometimes doesn’t work at all ).
Compulsory Physical Delivery is only for ITM options, what is ITM at the time of initiating the trade may not be ITM at expiry. As the other poster had mentioned, if spot went from 2300 to 1500, the 2300 calls that you sold are no longer ITM. The option buyer chooses if he wants to exercise, the option seller cannot compel the option buyer to buy his junk for 2300 which is actually going at 1500. You would end up bag holding the junk at 1500 value, losing more than 800 Rs. per share.
Not going into the veracity of whether your quoted returns are true with this strategy, but one black swan event could wipe out n months of profits that you get from this strat.
There is nothing 100% risk free that can generate the returns that you mentioned. If it were, every Tom, Dick and Harry will be on it and thats just retails traders. Think of MFs and PMS with hundreds and thousands of crores, that can guarantee 30-35% returns and entirely ‘risk free’ with your strat. Have you ever wondered why no one is doing that?
In your hypothetical scenario, there are Algo trading platforms where you can essentially sell your strat for a commission. So, essentially, you get a cut on other traders’ profits from trades executed using your algo or strat.
No one would be dumb enough to buy a strat for lifetime, since strats will always have to be tweaked on a ongoing basis even if it were successful.
But, general advice is to never reveal your success strats. Be a ghost if you want to make money in the markets legitimately. Generally, those who would give away their strats would actually want the herd to follow, it would be imperative for the herd to follow for their strategies to work for them akin to pump and dumping. OR make ridiculous youtube videos advertising high returns that are ‘risk free’ and make more money from the youtube ads than what the strat would even be capable of.
No, it is not ridiculous. There is in fact one strategy that works 100% in all market conditions.
Identify the primary trend and go with it.
It has been stated one hundred years ago that primary trends cannot be manipulated. This is time tested theory.
