Let’s have a look at the chart of Punjab National Bank –
Here we first identify the key points where the exponential moving average and simple moving average crossover.
Here we took entry by selling at the red line and we exit at the green line.
Now we take the buy entry after the second key point.
Here we took entry at the green line and we see a gap up, If we wanted we could have exited at the red line, but by following the strategy we exit at the blue line as the first full candle was formed at that point.
Here we took a sell position at the red line but as we can see a sideways movement and a full candle was formed inside the inner Bollinger Band so we exited at the green line.
But we see that the stock is still falling so we take re-entry by selling at the red dotted line and exit it at the green line at the bottom.
Hence our trade using the Entropy Crossover strategy was completed.