Bank Nifty Focused Algo for Retail Investors
Bank Nifty Focused Algo
Invest in systematic Bank Nifty Straddle with built-in risk management and discipline through our Focused Algo.
Capital Required – 2.25 Lakh
Bank Nifty weekly straddle
Purely Option Selling
Fixed Position Sizing and Variable Stoploss.
No Overnight exposure.
This is the strategy that I use every day, day in day out for a steady monthly return with the least possible capital required.
Risk:Reward of the strategy is 1:0.7 and we capture pure theta decay. We are providing here backtest of the system from May 2018 till December 2020 i.e. 2.8 years during which the following is the equity curve of the strategy after deducting brokerage cost (assuming brokerage per order is Rs. 20/order)
This strategy is a consistently performing strategy.
Running over a period of 34 months, strategy has a win % in 27 months i.e. a winning probability of 80% even when markets were highly trending during Covid19 pandemic and post covid rally.
Above are the results on the base capital of Rs. 2 lakh. For the safety of Capital and mark-to-mark swings, we have kept the minimum requirement to execute the strategy with Rs. 2.25 Lakh.
Return in 2.8 years of backtesting is 152% i.e. 300,000/- over a capital of 200,000/-.
Here are some more statistics about the strategy.
Average Net ROI on total capital – 3% per month
Average Net ROI on margin utilized – 4.7% (as extra capital was lying vacant because of less margin)
Maximum Gain in a day – Rs. 10,843/-
Maximum Loss in a day – Rs. -12,511/-
Maximum Profit in a month – Rs. 39,450/-
Maximum Loss in a month – Rs. -12,511/-
Maximum Series of Losing days – 5
Maximum Series of Losing Months – 2
Back Test period – 34 months
Winning Months – 27
Losing Months – 7
Fee – 15% of profits + 2% Fees +750 pm for algo cost
On a base capital of 2.25 lakh, considering an average ROI of 51% i.e. 90,000 followings are the cost:
1. 9000 For Algo Running Platform (deducted monthly from trading account monthly at 750 per month and posted to ledger)
2. 4500/- (2% Fees of KAM)
3. 15% on profits i.e. 12000 annually
Adjusted Yearly return = 36% approximately (please note we are basing these figures on return on margin utilized and not total capital). Even if total capital is 3,00,00/-, at any given time, the total utilized margin will remain 1,80,000 i.e. Unless total fund value reaches 4,50,000/- where in algo has capital for 2 lots, it will continue to use 1 lot margin.
What if you want to trade 2 lots?
We will set the account for a multiplier of 2 i.e. 4,50,000/- capital will be required and 2lots will be executed. The same goes for if someone wants to avail the facility of 5 multipliers. But minimum capital is 2,25,000/-.
Here is the breakup of individual months of backtest:
How to start:
1. Open your trading account through KAM with Nirmal Bang Securities Ltd.
2. We will require an Algo Agreement which has to be mandatorily sent by the client before algo starts. We will provide the format.
3. Define the Multiplier you want to trade. 1 Multiplier requires 2.25 Lakh capital.
4. We will set Bank Nifty brokerage to Rs. 9/lot
5. Pay up 2% annual fees to KAM. For 2.25 lakh its, 4500/-. (non-refundable)
6. Fund your account.
7. 15% profit will be charged quarterly every 3 months (not monthly).
If you have any queries, feel free to contact me at 70180-13195. If interested in availing the services, kindly fill the consent form below and we will get in touch with you for account opening purposes and initiate the process: