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%.
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