1. An EOD strategy to gain from futures trading using only 3EMA & 5EMA
3x5 MACO System
An EOD strategy to gain from futures trading using only 3EMA & 5EMA
Review of the original system has been designed and shared by Vishwanathan Sundaresan (Vish)
And discussion of modifications done by Shiva Galrani

2. 3x5 MACO System Overview
Works great on Nifty Futures (NF) or BankNifty Futures (BNF)
Time frame – Daily
Use Nse Adj close price (Future – Not Spot)
3EMA – 3 day EMA of the Adjusted EOD close
5EMA – 5 day EMA of the Adjusted EOD close
Buy when 3EMA crosses above 5EMA
Sell when 3EMA crosses below 3EMA
On last day of Future series expiry, cover existing position and carry forward the position to next month series.

3. 3x5 Entries on Chart

4. Entry & Exits – What to do & When
C/f Longs in Bank Nifty Future - Reversal Point – 11,250
Markets at 9:30 am
9:30 to 3:00 pm
Markets at 3:15 pm
Open below 11250,
9:30 below 11,250
Avoid watching markets “regularly”
Never Modify your Stop Loss order.
You may only enter a Stoploss for your Intraday order as per your risk appetite (I don’t enter it)
Above all try not to worry on what markets are doing.
Enter Market order to cover Longs & Go short
Market order or SLO hit in day and BNF is Above 11250
Enter Market Order to Cover Shorts & Go Long
Open above 11250,
9:30 below 11,250
Market order or SLO hit in day and BNF is Below 11250
Intraday Shorts C/f to next day
Open below 11250,
9:30 above 11,250
Enter Stop Loss to Cover Longs & Go Short
SLO not hit and BNF is still Above 11250
SLO expires.
Longs C/f to next day
Open above 11250,
9:30 above 11,250

5. Entry & Exits – What to do & When
C/f Shorts in Bank Nifty Future - Reversal Point – 11,250
Markets at 9:30 am
9:30 to 3:00 pm
Markets at 3:15 pm
Open above 11250,
9:30 above 11,250
Avoid watching markets “regularly”
Never Modify your Stop Loss order.
You may only enter a Stoploss for your Intraday order as per your risk appetite (I don’t enter it)
Above all try not to worry on what markets are doing.
Enter Market order to cover Shorts & Go Long
Market order or SLO hit in day and BNF is Below 11250
Enter Market Order to Cover Longs & Go Short
Open below 11250,
9:30 above 11,250
Market order or SLO hit in day and BNF is Above 11250
Intraday Longs C/f to next day
Open above 11250,
9:30 below 11,250
Enter Stop Loss to Cover Shorts & Go Long
SLO not hit and BNF is still Below 11250
SLO expires.
Shorts C/f to next day
Open below 11250,
9:30 below 11,250

6. 3x5 Modifications - Synopsis
Risk Management – Trade in one lot of NF / BNF for every 50K of capital invested. So if investing 2 lakhs, maximum lots I trade is 4. (This needs to be adapted as per your risk appetite. For conservative traders suggested level is to trade 1 lot per lakh)
Initial lots – Minimum quantity of lots that is always in trade (My personal preference is to keep this at 50% of maximum lots).
Addition to existing lots – To be done after 3 days of trend & only on 3ema touch. (Reasons follow in upcoming slides)
3ema touch rule for booking profits– Exiting at beginning of day to re-enter at lower prices (in case of longs)
50% of capital is actually invested as margin requirement. Instead of keeping the other half idle, Invest at least 60% of the same using 3x5 long only on cash stocks. Select Nifty 50 stocks give superior results (DLF, SBIN, ICICIBANK for example)
20% of annual gains are set aside for donations, 30% invested on personal needs and 50% ploughed back in the system

7. Adding to a current position
Add to a current position only if ALL the following criteria is satisfied.
The trend is at least 3 days old. So if the intial trade was signalled on day 1, we add only from day 4
Add on pullback to 3ema only.
Order entry follows same rule as initial trade day.
Enter order at 9:30 to buy additional lots at 3ema touch
By day end if the signal has whipped back, cover the added lots also along with the initial lots.
Subsequent addition follows the same rule as above. Only replace first rule that the last addition was done at least 2 days ago. So if Initial trade was on day 1, 1st add was on day 4, 2nd add to be done only on day 6
How much to add : My personal rule is Initial lots are 50% of maximum allowed lots and maximum 2 additions of 25% each

8. 3EMA Touch rule to book profits
Enter this trade only if ALL the following are True (assuming you are holding long positions)
Gap up or jump in initial 15 mins till 9:30
Your initial position was traded at least 3 days ago
Your current position is in profit (as of yesterday close)
Difference between NF / BNF and their 3ema is at least 50 / 125
Action to do if ALL above are satisfied
Sell at the most half your position at 9:30
Enter Buy order at 3ema of yesterday’s close price. This is the price at which traded price = 3ema
If Buy back order is executed you have made 50 / 125 points on NF / BNF
If the order is not executed (markets have gone up without touching 3ema, you wait for them to do so and enter as per addition rule.
In the meantime you still have half your position to keep the cash coming in.

9. Backtest results analysis (Jun-05 to Oct-12)

10. Backtest results analysis on trades More profits in longs than in shorts

11. Backtest results analysis (Jun-05 to Oct-12)

12. Backtest results analysis (Jun-05 to Oct-12)

13. Moment to reflect
Double your money every year (based on backtest results)
With Minimal knowledge of technical analysis
Investing about minutes twice a day
No Software. Only spreadsheet is required.
Important requirement is discipline and Risk management.
Most important task is to take all trades as signaled by the system as the next trade could be a big trend

14. Disclaimer
Backtest results are not indicative of future returns and please do your own due diligence before investing. I have to present all the possible scenarios in the system and its backtest. But markets do tend to surprise and test you in new ways always. So please please do some due diligence and paper trade this system before committing real money on this system

15. Any Questions