Wednesday, May 16, 2012

Trading strategy: 26% return from Nifty

Here is the strategy based on price/earnings ratio of Nifty: 1. Caculate average and standard deviation of Nifty P/E over last two year. 2. Buy one unit if current P/E is lower than average minus one standard deviation. 3. Sell one unit if current P/E is higher than average plus one standard deviation. And thats it, I tested this strategy over last 10 years, the returns were 26% and the returns in no point in time fell below 20%.