Strategy description

Breakout Strategy for NIFTY Index

Overview:

This algorithmic trading strategy is designed to capitalize on breakout moves in the NIFTY index. The strategy identifies breakout levels and enters trades when a breakout occurs, while ensuring disciplined risk management using the entry candle’s low as the stop loss. The strategy continues trading until a total target of ₹2,500 is reached, after which it halts further trading for the session.

Trading Rules:

1. Entry Condition:
   • The algorithm detects breakout levels based on price action.
   • A trade is initiated immediately when a breakout occurs above a key level.
2. Stop Loss:
   • The low of the entry candle is used as the stop loss.
   • This ensures tight risk management while allowing the trade to develop.
3. Target & Exit:
   • The strategy aims for a fixed target of ₹2,500 per session.
   • Once the cumulative target reaches ₹2,500, the algo stops further trading for the day.
4. Additional Risk Management:
   • If the stop loss is hit before the target is reached, the trade exits immediately.
   • The algorithm then waits for the next valid breakout setup.

Advantages:

• Systematic & Disciplined: Ensures trades are taken only on confirmed breakouts, following a clear entry strategy.
• Risk-Managed: Uses the entry candle’s low as the stop loss, limiting potential losses.
• Daily Target: Stops trading after ₹2,500 target, preventing overtrading and minimizing emotional decisions.

Conclusion:

This breakout-based NIFTY algorithmic strategy is ideal for traders looking to capture momentum-driven moves while maintaining strict risk management and avoiding emotional overtrading.