Study: Buy IDEA when there is bullish divergence in RSI and ADX is Trending

home > technical-strategy > idea > 47

In this study, we evaluate the performance of strategy "Buy IDEA when there is bullish divergence in RSI and ADX is Trending" under various conditions.

X Analysis

In the table below, we find out the performance of this trading strategy under following scenario: buy IDEA at the closing price whenever the signal triggers (Rs. 2Lac per trade). Then cover the position "X" trading days later at close_price i.e. sell after "X" trading days. Here are the results of this study:

X DaysNet ProfitTotal TradesWinning TradesLosing Trades% ProfitableAvg Winning TradeMax Winning TradeAvg Losing TradeMax Losing TradeWin/Loss RatioProfit FactorSharpe RatioAvg Trade
1-55586.871761135.296814.520618.56-8770.35-23911.030.780.42-0.093-3269.82
2-80513.451771041.186390.9412735.17-12525.01-47080.630.510.36-0.094-4736.09
3-1089531761135.297510.1714182.34-14001.31-63392.030.540.29-0.1-6409.02
4-98495.931771041.187612.4318813.31-15178.3-53753.480.50.35-0.099-5793.88
5-63680.031771041.1810150.7916272.19-13473.55-44114.920.750.53-0.067-3745.88
6-25977.841710758.8212199.0528318.58-21138.34-56904.540.580.82-0.021-1528.11
7-24779.39178947.0613664.9537113.4-14899.89-42261.350.920.82-0.022-1457.61
8-21261.571771041.1814931.1336657.17-12577.95-27076.921.190.83-0.021-1250.68
9-20209.391771041.1814008.2734947.77-11826.73-24859.661.180.83-0.021-1188.79
10-45358.141771041.1812420.0833618.23-13229.87-27692.310.940.66-0.048-2668.13
Although, strategy looks good but profit factor on day 3 is less than minimum accepted value so avoid this, see below for further analysis.

Strategy Analysis - Exit Criteria

In the study above, exit criterion was that hold the position for "X" trading days. That's one possible exit criterion. However, we can have more elaborate exit criteria. Now we study this strategy under other exit criteria. There are 3 things which you must get to know before proceeding further. Table below shows the performance of this strategy under various exit combinations. Note that nil,nil,-1 is a special exit combination where we just take the best result of "X" Analysis study above.

Stop LossAdjust Stop LossTargetAvg Holding PeriodNet ProfitTotal TradesWinning TradesLosing Trades% ProfitableAvg Winning TradeMax Winning TradeAvg Losing TradeMax Losing TradeWin/Loss RatioProfit FactorSharpe RatioAvg Trade
atrnil310.1-570.922151623.8145408.8182748.76-14225.94-24766.183.191-0.00028-27.19
atrnil28.71-76252.282151623.8130272.5455165.84-14225.94-24766.182.130.66-0.05-3631.06
atrtrail35.62-126991246182510448.5530019.51-10537.91-24162.90.990.33-0.13-5291.3
atrtrail-15.92-127586246182510349.429424.62-10537.91-24162.90.980.33-0.13-5316.08
atrtrail25.62-13699824618258780.820013.01-10537.91-24162.90.830.28-0.16-5708.23

In the table above, row 1 shows the best exit criterion. Profit factor is 1. Profit factor is showing that this strategy doesn't give any edge over rendomness and it is only as good as tossing a coin and doing the trade. Percentage of profitable trades is 23.81%, which is not acceptable. Avoid this strategy. Average return per trade is -0.014%, we advise you not to use this strategy.
In the chart below, we plot cumulative trade gain versus trades using the best exit criterion.
IDEA Performance, Profit Factor:0.997

Yearwise Summary of trades in above chart

YearNumber of TradesTrade Dates
2019708 Apr 2019 (-10.86%), 13 May 2019 (-7.98%), 14 May 2019 (-8.44%), 20 May 2019 (-9.22%), 06 Aug 2019 (-12.38%), 14 Aug 2019 (-12.16%), 29 Aug 2019 (41.37%)
2018315 Feb 2018 (-4.92%), 17 May 2018 (15.01%), 11 Oct 2018 (21.75%)
2016521 Jan 2016 (-4.53%), 25 Jan 2016 (-5.08%), 03 Feb 2016 (-4.85%), 12 Sep 2016 (-3.63%), 13 Oct 2016 (-3.2%)
2014110 Feb 2014 (16.53%)
2012127 Apr 2012 (-4.79%)
2009315 Oct 2009 (-4.7%), 05 Nov 2009 (-5.73%), 06 Nov 2009 (18.86%)
2008121 Oct 2008 (-11.33%)



View performance of other stocks for this trading system.

Get Clearnifty's Android App.

Get clearnifty on Google Play
Get clearnifty on Google Play