In Entropy, we take leverage of the fact that the stock market follows the normal distribution and we apply the methods using Bollinger Bands and other means of mean reversion. We have a few in-house strategies modified for NSE which is namely BRS, 3BB, F3BB, FIBS.
As the strategies are in-house, we had to code our own scanner using Python which is right now linked with our slack as well as Zerodha directly. It’s a profitable strategy and running successfully!
Currently, the scanners/trades are free, and you can use it by joining our slack group. Also, You can check the last 80 scans/triggers here. (It gets updated daily EOD). There are two types of Scanner –
It checks the stock prices in 15 minutes timeframe that trips over 3 SD Bollinger Bands with some additional parameters. Now, if this is no external fundamental news, We have our watchlist!
It checks for all the things in 3BB Scanner, which is the base of all entropy trades. But, It also checks for a few things like –
- Weekend Strategy Validity in 15 Minutes and 5 Minutes Timeframe (Case Basis)
- Narrow Range (Compression i.e Inside Bars and modified NR Theory)
- Bollinger Width
- Proper 3BB Pattern Formation
- Candlestick Type in some cases
Also, There are always constant changes based on market conditions. So the entry rules are not specific. For Example, in a consolidating market, We need to loosen up on the validity of weekend logics while it is vice-versa for the case of the market at the time of results season because it becomes highly volatile.
We have also added a few more filters and conditions to minimize false breakouts. It also checks an immediate daily trends to ensure more profitability.
How To Trade –
Entry: Any moment a stock comes into this scanner, one can immediately put short trade at the low of the previous candle’s low in 15 minutes timeframe. Once triggered,
Stop Loss: The Stop Loss should be updated to the high of that very day.
Exit Strategy: There are several exit strategies.
- Exit when price cross-median of 1SD Bollinger band on 15 minutes time frame.
- Exit after 30 minutes irrespective of the Profit/Loss.
- Let it auto square off at day’s end! (Recommended)
- TSL with Weekend or Bounce Strategy!
Past Performance –
Here go the Past trades that triggered from the watchlist of Entropy scanner –
You can backtest using the Bar Replay Method of any charting software like Tradingview with your exit strategy.