What it does
The simplest idea on this site. Instead of judging ten companies one by one, it judges the market once, using NIFTY, and buys or sells all ten on that. When the market is in a rising mode you own the basket; when it is not, you hold cash.
It is close to what a cautious investor does by instinct, 'I'll get back in when things look better', except that 'better' has a definition and the robot acts on it the same day.
How it makes money
NIFTY has a 20-day average and a 200-day average. When the 20-day crosses above the 200-day, the market has turned up, and every company in the basket is bought, each at a fixed share of the account. When the 20-day crosses back below, every company is sold.
Each stock also has its own stop, in case one of them falls on its own while the market holds up. Nothing else: no stock-level opinion, no picking.
A worked example, in rupees
Illustrative. ₹1,00,000 account, balanced version, NIFTY's 20-day average crossing above its 200-day.
- Entry
- all 10 companies, 8% of the account each, ₹80,000 invested
- Stops
- 10% under each stock, independently
- Eight months later
- NIFTY's 20-day crosses back below the 200-day
- Exit
- all 10 sold the same day
- Result
- whatever the basket did over those months, less any stock that hit its own stop
The strategy earns roughly what the market earns while it is in, and nothing while it is out. Its value is not in beating the market during a rise; it is in being in cash for most of a long fall.
When it does well, and when it hurts
Does well when
- Long rises and long falls, the kind that last many months. One cross each way, and the strategy is in for the rise and out for the fall.
Hurts when
- A market that cannot make up its mind. Each false cross buys ten companies and sells them again a few weeks later, at a small loss each, plus charges on twenty trades.
- Sharp V-shaped recoveries: the sell comes after the fall and the buy comes after the rebound, and both ends are missed.
What the robot does when a trade goes wrong
These are the real rules, in the order the strategy checks them. Nothing here needs you to be watching.
- 1
Sells everything when the market turns
NIFTY's 20-day average crossing below its 200-day sells the whole basket, the same day.
- 2
Stops a stock that falls on its own
Eight to twelve percent under each entry, independently of the others.
- 3
Fixed share per company
Five to ten percent of the account each, by version, so the basket is never more than the whole account.
- 4
Buys again on the next up-cross
A stock sold on its stop is not bought back until the market switches off and on again.
Adjustments, and why it does not make them
People adjust market timing constantly: 'the cross is late, I'll anticipate it', 'this fall is different'. Every one of those is the instinct the rule exists to override.
This robot acts on the cross and on nothing else.
The three versions
Each strategy comes as conservative, balanced and aggressive. They share the idea and differ in how much they risk once in.
| Setting | Conservative | Balanced | Aggressive |
|---|---|---|---|
| Companies | 10 large caps | 10 large caps | 10 large caps |
| Buys when | NIFTY's 20-day average crosses above its 200-day | same | same |
| Sells when | it crosses back below | same | same |
| Share of the account per company | 5% | 8% | 10% |
| Stop under each stock | 8% | 10% | 12% |
At 10% each, the aggressive version puts the whole account into the basket when the market switches on, and holds no cash until it switches off.
Entry: When NIFTY's 20-day EMA crosses above its 200-day EMA
Action: Buy all 10 large-cap NSE companies at 8% of account equity each
Exits: Sell the entire basket when NIFTY's 20-day EMA crosses below 200-day, or if an individual stock falls 10%
Want a stricter filter, a different stop, or your own stock list? Open a working copy in the builder and run a backtest.
Customize this ruleRisks you should know
- Ten trades at once, in and out, so charges are paid ten times per switch.
- Lag at both ends. It is in the nature of the rule to miss the first and last parts of every move.
- Long only. Out of the market means cash, not short.
The jargon, explained
- EMA
- An average of recent prices that leans towards the latest ones. Price above its EMA is drifting up; below, drifting down.
- Delivery (CNC)
- Shares bought to hold overnight or longer, paid for in full. No shorting.