QUANT SYSTEM TRADE METHODOLOGY DISCUSSION -22.03.26

From the desk of Capt.D.Ganesh Raja

DISCLAIMER

Please be informed that the author of this blog by Capt Ganesh Raja Dhanuskodi (Hereinafter called Capt Ganesh) is not a SEBI registered Research Analyst or Financial Advisor. Capt Ganesh writes this blog to express his views based of more than two decades of experience in capital markets and based on the Quant system which he has invented and he does not do this for “consideration” as per SEBI regulations, which means he does not receive economic benefit through it. Readers of this blog must seek advice from registered Investment Advisors / Research Analysts before taking any trading or investment decisions.

Capt Ganesh has been investing and trading actively since 2001, building trading models since 2013 and has invented an AI based intraday trading system, which has a pending patent approval.

Dear friends ,

I have been travelling and meeting people to explore means of implementing this Quant strategy and also simultaneously working on investor pitch for my AI intraday system. I am going full throttle now, since I have already been working on these for past several years.

I was monitoring markets but since mine is a positional system there is no necessity to keep updating frequently. Some of the people, with whom I discussed wanted me to give calls on a daily or weekly basis. They didn’t quite understand what the overall methodology of the system was. If a model portfolio is recommended based on system readings and it has its logical timeframe of holding the position, then getting out of a profitable trade and jumping into a new trade does not guarantee that it will be more profitable. Also, I have to be cognizant of that to monetize the system, I might have to give clients what they seek but not compromising safety of capital.

Giving stock call is a routine business, which many Indore based firms are doing where to 50% of the clients they give buy calls and for the same stock they give a sell call to other 50% of the clients, brilliant isn’t it? Someone ought to go right but someone would have lost an awful lot of money. So is it brilliance or some kind of con, has to be figured out by the people who opt for such things. I was clear from the very beginning what I wanted to do and as per my principles, doing no business is much better than doing business based on untruth. It takes longer to build consensus and once people are convinced that there is a method to the madness, the mandate received from those is what matters and would build the business on a firm footing.

Markets are at an all-time high and we have discussed that the probability of a “risk on” mode in global markets might be developing. But there are grapevines saying that since domestic equity markets are at an all-time high, weather one should sell equity portfolio, so on and so forth. Of course, there are many who are waiting for a correction declaring that the rally is overextended and there is no fundamental basis for this rally. A friend of mine posted a picture in one of the groups taunting people who were waiting for correction, where a plane is depicted as market, about to take off and people waiting to board and again when it has soared high the same people still waiting to board it. “Truth hurts”, this is so often said by chess GM Ben Finegold in is chess lectures.

Over course of several years, I had demonstrated my system to few brokers and fund managers and each time there were unique set of questions which were asked, some were relevant and some were irrelevant. When I demonstrated returns varying between 4 to 7.2% per month, they said that it could be just luck for a few months and it has to be proven over a longer period of time. This was a valid argument and that is one of the primary reasons I started writing this blog and collecting data, because whatever I have written in the blog can be verified by follow through price action. Some said it has to be benchmarked against Nifty , some said against a mid-cap index, some said the frequency of the recommendations had to be cranked up , some said trading gold and other indices has to be excluded etc. etc.

I realized one thing, no matter whatever is demonstrated there will be some flaw which would be pointed out and again that is every individual’s right.

The acid test for anyone investing markets is the trade sheet, weather one has made or lost money and rest all is secondary or fancy decorations to hide underperformance. The peak returns based on my Quant system was 94.5% as on 20.06.23, since 04.07.23, about 35 months, translating into CAGR returns of 25.69%. It is normal for it to give up part of the gains during a minor correction, but is reasonably equipped to detect any major corrections and again give an entry signal into any market / asset when system parameters warrant so.

Strictly this system should not be compared with a “buy and hold” strategy, which we have already discussed in details in one of my previous posts. All I can say that, if any strategy or system is consistently able to generate positive returns keeping drawdown minimum, is worth a try and weather it is able to beat the benchmark indices or even a passive index fund is worth the discussion. I have always stated that allocation to any trading strategy must not be more than 30 to 40% of the investable capital, because even if the strategy generates super-normal returns, one would definitely want some stability for long term financial goals. Having said that, if regular trading gains can augment the income that definitely needs a place and investors must evaluate carefully on their own and then and only then adopt such strategies.

From here onwards, due to paucity of time to pay attention to the AI project and also to clear the Research Analyst exam, I might not write a detailed post, but rest assured I would inform if the recommendations given indicate an exit.

New recommendations would be directly updated on TRADE RECOMMENDATION LOG, where you can also refer details of the recommendations and the profit / loss of individual trades.

RECAP ON RECOMMENDATIONS

1. HDFC BANK has given a system exit as of today’s close of 1644.80.

Rest all the recommendations remain valid.

RETURNS TILL DATE SINCE 04.07.20 : 92.19% (AS OF THURSDAY 22.06.23 CLOSING)

TRADE RECOMMENDATION LOG.pdf

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