I was trying to find out which is better option for the swing trading, I have tried with both 20 DMA or 52 Week Low. The buying condition is that we should buy something which has fallen the most in 20 DMA or 52 Week Low. Now it is not about catching the falling knife. It is all about doing the swing trading.
20 DMA means we will look at the 20 days moving average to see which has fallen the most in the last 20 days. 52 week low is that we will calculate which has fallen the most in 52 week low. Now looking at it, it's always better to buy something which has fallen the most in last 52 weeks because the tendency of its is going higher is high.
And we are trying to do this in both ETF and Nifty 50 stocks so that it helps us to reduce the drawdown. The thing is we will nit be selling any stock for loss. We will buy when the share continues to fall like a Downward averaging but again we will only average 3 times not more than that.
Now when we have ran this in ERF, the 52 week low has given more returns than the 20 DMA which was somewhat expected. And we are also not expecting crazy returns, we were only keeping 3 to 6% returns which is good enough to get in the bull market whereas it is achievable in bear market too. And that's why the swing trading strategy was working great in both bull and bear market.
So if you also have this type of strategies, do let us know. We will also try to simulate that using the ETF and stock to see how good it performs.
