High Five: Active Trading Strategy

Introducing High Five, an active trading strategy specifically designed to capitalize on mean-reversion opportunities. The strategy allows traders to stay within a trade during the weekdays with no carry over to the next week, for a stress-free weekend.

In this post, we'll delve into the key features and benefits of High Five, providing insights on how it can complement your existing strategies.

What Is High Five?

High Five is a positional, medium-volatility trading model that identifies up to five stocks from the NIFTY 500 universe that are most likely to bounce back from previous lows. It initiates a buy signal on a set of five stocks every Monday and exits these stocks on Friday, allowing you to enjoy your weekend.

How Does High Five Work?

The model is based on the principle of mean reversion, which states that if a stock has gone down considerably for a certain period, it is bound to go up for the next few days. The model uses this principle to identify the best set of stocks to go long on and exit within the week. This allows the model to capture the reversion of the stock prices.

Is High Five Suitable For Me?

High Five is suitable for investors who have some funds to allocate to a positional model and can take time out just once a week to rebalance the stocks.

*Note: The principle of mean reversion may not always hold true and there is no guarantee that the stocks selected by the model will experience a reversal in their prices. Furthermore, the strategy is based on the assumption that you will be able to act on signals and execute trades within the specified timeframe of Monday to Friday. Any delays or inability to execute trades may impact the performance of the strategy. It is important to keep these factors in mind when considering the High Five strategy.

Kindly conduct thorough research and consult with a financial advisor before committing to the strategy.

Model performance

The returns stated below are calculated on a base capital that includes a 30% reserve that earns no returns.

*Backtest period for Performance Metrics is Apr’ 2014 to Aug’ 2022.

Returns include slippages.

Frequently Asked Questions (FAQs):

Q. How is High Five different from other trading models?

High Five is a positional strategy that utilises a mean reversion strategy and allows you to buy and sell stocks within a week, making the most of your weekends.

Q. What are the chances of success with High Five?

The model is designed to work well when the stocks correct for a couple of days to weeks and bounce off from their lows, which is a common phenomenon in NIFTY 500 stocks.

However, although rare, in a secular bull market when most of the stocks are in uptrend with minor or no corrections and in a sideways market, as there won't be any stocks that pass through the model criteria.

Q. What is the minimum capital requirement?

The minimum capital requirement for High Five is ₹1,00,000.

Q. How often do I need to act on signals?

It is recommended that you act on 2 signals per week.

Q. How long should I subscribe for?

A minimum period of 1 year is recommended for optimal results.

Final Thoughts

High Five is a unique trading strategy that allows you to make the most of the weekdays and stay away from weekend stress. If you have some funds to allocate to a positional model and can take time out just once a week to rebalance the stocks, then this model may be suitable for you.

Disclaimer: The information provided in this post is for general informational purposes only. It should not be considered as financial or investment advice. Please conduct your own research and consult with a financial advisor before making any investment decisions.

Past performance is not indicative of future results and all investments involve risk.The authors and the company they represent do not guarantee any specific outcome or profit.

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