Review of the original system has been

designed and shared by Vishwanathan

Sundaresan (Vish)
And discussion of modifications done by Shiva

3x5 MACO System

Overview

Works great on Nifty Futures (NF) or BankNifty Futures (BNF)

Time frame Daily
Use Nse Adj close price (Future Not Spot)
3EMA 3 day EMA of the Adjusted EOD close
5EMA 5 day EMA of the Adjusted EOD close
Buy when 3EMA crosses above 5EMA
Sell when 3EMA crosses below 3EMA
On last day of Future series expiry, cover existing position and

carry forward the position to next month series.

3x5 Entries on Chart

Entry & Exits What to do &

When
C/f Longs in Bank Nifty Future - Reversal Point
11,250
Markets at 9:30 am
Open below
11250,
9:30 below
11,250
Open above
11250,
9:30 below
11,250
Open below
11250,
9:30 above
11,250
Open above
11250,
9:30 above
11,250

Enter
Market
order to
cover Longs
& Go short

Enter Stop
Loss Order
@11250 to
Cover
Longs & Go
Short

9:30 to 3:00 pm
Avoid watching
markets
regularly
Never Modify
your Stop Loss
order.
You may only
enter a Stoploss
for your Intraday
order as per
your risk
appetite (I dont
enter it)
Above all try not
to worry on what
markets are
doing.

Markets at 3:15 pm

Market
order or SLO
hit in day
and BNF is
Above
11250
Market
order or SLO
hit in day
and BNF is
Below
11250

Enter
Market
Order to
Cover
Shorts & Go
Long

SLO not hit

and BNF is
still Above
11250

SLO
expires.
Longs C/f to
next day

Intraday
Shorts C/f
to next day

Entry & Exits What to do &

When
C/f Shorts in Bank Nifty Future - Reversal Point
11,250
Markets at 9:30 am
Open above
11250,
9:30 above
11,250
Open below
11250,
9:30 above
11,250
Open above
11250,
9:30 below
11,250
Open below
11250,
9:30 below
11,250

Enter
Market
order to
cover
Shorts & Go
Long

Enter Stop
Loss Order
@11250 to
Cover
Shorts & Go
Long

9:30 to 3:00 pm
Avoid watching
markets
regularly
Never Modify
your Stop Loss
order.
You may only
enter a Stoploss
for your Intraday
order as per
your risk
appetite (I dont
enter it)
Above all try not
to worry on what
markets are
doing.

Markets at 3:15 pm

Market
order or SLO
hit in day
and BNF is
Below
11250
Market
order or SLO
hit in day
and BNF is
Above
11250
SLO not hit
and BNF is
still Below
11250

Enter
Market
Order to
Cover
Longs & Go
Short
Intraday
Longs C/f to
next day

SLO
expires.
Shorts C/f
to next day

3x5 Modifications - Synopsis

Risk Management Trade in one lot of NF / BNF for every 50K of

capital invested. So if investing 2 lakhs, maximum lots I trade is 4. (This

needs to be adapted as per your risk appetite. For conservative traders
suggested level is to trade 1 lot per lakh)
Initial lots Minimum quantity of lots that is always in trade (My
personal preference is to keep this at 50% of maximum lots).
Addition to existing lots To be done after 3 days of trend & only on
3ema touch. (Reasons follow in upcoming slides)
3ema touch rule for booking profits Exiting at beginning of day to reenter at lower prices (in case of longs)
50% of capital is actually invested as margin requirement. Instead of
keeping the other half idle, Invest at least 60% of the same using 3x5
long only on cash stocks. Select Nifty 50 stocks give superior results
(DLF, SBIN, ICICIBANK for example)
20% of annual gains are set aside for donations, 30% invested on
personal needs and 50% ploughed back in the system

Adding to a current position

Add to a current position only if ALL the following criteria is satisfied.
The trend is at least 3 days old. So if the intial trade was signalled on day

1, we add only from day 4

Add on pullback to 3ema only.
Order entry follows same rule as initial trade day.
Enter order at 9:30 to buy additional lots at 3ema touch
By day end if the signal has whipped back, cover the added lots also
along with the initial lots.

Subsequent addition follows the same rule as above. Only replace first rule
that the last addition was done at least 2 days ago. So if Initial trade was on
day 1, 1st add was on day 4, 2nd add to be done only on day 6
How much to add : My personal rule is Initial lots are 50% of maximum
allowed lots and maximum 2 additions of 25% each

3EMA Touch rule to book profits

Enter this trade only if ALL the following are True (assuming you are holding long
positions)
Gap up or jump in initial 15 mins till 9:30
Your initial position was traded at least 3 days ago
Your current position is in profit (as of yesterday close)
Difference between NF / BNF and their 3ema is at least 50 / 125

Action to do if ALL above are satisfied

Sell at the most half your position at 9:30
Enter Buy order at 3ema of yesterdays close price. This is the price at which
traded price = 3ema
If Buy back order is executed you have made 50 / 125 points on NF / BNF
If the order is not executed (markets have gone up without touching 3ema, you
wait for them to do so and enter as per addition rule.
In the meantime you still have half your position to keep the cash coming in.

Backtest results analysis (Jun-05 to

Oct-12)

Backtest results analysis on trades

More profits in longs than in shorts

Backtest results analysis (Jun-05 to

Oct-12)

Backtest results analysis (Jun-05 to

Oct-12)

Moment to reflect
Double your money every year (based on backtest
results)
With Minimal knowledge of technical analysis
Investing about 15-30 minutes twice a day
No Software. Only spreadsheet is required.
Important requirement is discipline and Risk

management.
Most important task is to take all trades as
signaled by the system as the next trade could be
a big trend

3x5 Backtest Data

Disclaimer
Backtest results are not indicative of future
returns and please do your own due diligence
before investing.
I have to present all the possible scenarios in
the system and its backtest. But markets do
tend to surprise and test you in new ways
always.
So please please do some due diligence and
paper trade this system before committing
real money on this system

Any Questions