Buy-Dip / Sell-Pullback — Strategy by Praveenmishrainvestments
By Praveenmishrainvestments
Performance Metrics
- Author: Praveenmishrainvestments
- Symbol: NSEIX:NIFTY1!
- Timeframe: 1 day
- Net P&L: +51,872.00 USD (+5.19%)
- Win Rate: 46.0%
- Profit Factor: 1.724
- Max Drawdown: 28,741.00 USD (2.78%)
- Total Trades: 63
Description
Buy the Dip / Sell the Pullback – Trend-Following Strategy (EOD → Next Day Execution)OverviewThis is a trend-following futures strategy designed to participate in pullbacks within established trends, not to predict reversals.It works on End-of-Day (EOD) confirmation and executes trades on the next trading session, making it suitable for positional and swing traders.The strategy combines momentum, trend direction, volatility, and price location to filter for high-quality setups while avoiding overtrading.🔍 Core PhilosophyTrade only in the direction of the prevailing trendBuy dips in uptrendsSell pullbacks in downtrendsAvoid chasing price after extended gapsUse volatility-adjusted risk management (ATR-based SL & targets)📊 Indicators UsedRSI (20)Measures underlying momentum strengthStochastic Oscillator (55, 34, 21)Confirms pullback exhaustion within a trendSupertrend (10, 2)Defines primary trend directionBollinger Bands (20, 2)Provides structural trend biasATR (5)Used for:Entry gap filterStop-lossProfit targetSupertrend buffer✅ Long (Buy) Setup – Evaluated at EODA long setup is generated when all of the following conditions are satisfied at the close of the trading day:RSI(20) is above the bullish threshold (default: 48)Stochastic %K is above %D (confirming pullback momentum)Supertrend direction is bullishPrice is near or above Supertrend, allowing a volatility-adjusted buffer (ATR-based)Price is above the Bollinger Band middle lineThis combination ensures:The market is trending upMomentum supports continuationThe pullback is controlled, not a breakdown❌ Short (Sell) Setup – Evaluated at EODA short setup is generated when:RSI(20) is below the bearish threshold (default: 52)Stochastic %K is below %DSupertrend direction is bearishPrice is near or below Supertrend, with an ATR bufferPrice is below the Bollinger Band middle lineThis filters for pullbacks within sustained downtrends.⏰ Trade Execution Logic (Next Day Rule)Once a setup is confirmed at EOD, a trade is attempted on the next trading sessionTo avoid chasing gaps:Long trades are allowed only if price does not move more than a defined multiple of the previous day’s True RangeShort trades follow the same logic in reverseThis is implemented via limit orders, ensuring realistic backtesting and execution behavior🛑 Risk ManagementAll exits are volatility-adjusted using ATR:Stop-Loss:1.1 × ATR(5) from entry priceTarget:2.2 × ATR(5) from entry priceThis results in a risk–reward ratio of approximately 1:2ATR is frozen at entry to avoid forward-looking bias.🧠 Why This Strategy WorksAvoids low-quality trades during consolidationParticipates only when trend + momentum alignPrevents emotional gap-chasingAdapts automatically to changing volatilitySuitable for index futures and liquid stocks📌 Recommended UsageTimeframe: DailyInstruments:Index Futures (e.g. NIFTY, BANKNIFTY)Highly liquid stocksMarket Type: Trending marketsNot ideal for: Sideways or low-volatility environments⚙️ Customization TipsYou can control trade frequency and aggressiveness by adjusting:RSI thresholdsSupertrend buffer (ATR multiple)Gap filter multiplierStochastic edge parameterLooser settings → more tradesStricter settings → higher selectivity⚠️ DisclaimerThis strategy is for educational and research purposes only.Backtest results do not guarantee future performance.Always validate with paper trading before deploying real capital.