This technique uses a variable moving average and histograms to identify entry and exit points for short-term positional trading. The document analyzes Infosys stock from November 6th to November 27th to demonstrate how the technique provided more accurate signals than traditional exponential moving averages. On November 6th, the variable moving average histogram correctly showed the stock was still in a downtrend, while traditional indicators gave a false positive signal. Then on November 27th, it correctly identified an uptrend reversal, outperforming the lagging exponential moving averages. The author concludes the technique saved potential profits of 6% on Infosys over this period by avoiding a purchase on November 6th and correctly entering on November 27th.

1. Stock Entry-Exit Technique for Short Term Positional Trading
By Mohneesh Saxena
This technique involves usage of Variable Moving Average sensitivity coefficient against fabled
Simple Moving Average (SMA) & Exponential Moving Average (EMA). For this study, we have taken
Infosys as our analysis stock, but similar study and positive results were replicated on SUN PHARMA,
ITC & MARUTI. This repeatability shows the strength this technique bestows in terms of appropriate
entry and exit points in stocks.
06th
November:
Infosys
Current Market Price: 1138.3
Infosys price movement looks choppy and all the conventional EMAs’ are giving uptrend signal.
These EMAs’ are simply signifying that this stock will move up based on current trend analysis.
Technical analysts using similar techniques know for fact that only EMAs’ never reveal true picture of
price movements. That is why they use histo-grams for re-affirmation. But in this case, these
histogram were of no use and they gave false positive signal. Normally analysis would have given
buy signal with traditional EMA histograms.
With Variable Moving Average (AMA-Black Line), histograms reveals true nature of trend. Down
trend of histogram revealed that price may further go down before over-sold levels are saturated for
reversal.

2. On the basis of negative slope of Variable Moving Average Histogram, One can conclude that prices
may fall some more, and hence the Call of DO NOT BUY raised on 6th
November 2015
Traditional EMA Histogram
Variable Moving Average Histogram

3. 27th
November
Infosys
Current Market Price: 1066.35
Exponential Moving Averages are lagging indicators, due to which on 27th
November they were
giving SELL call when in fact, price reversal had taken place.(Evident from Variable Moving Average
Histogram Positive Slope reversal – as given below)
False Signal Again by
Exponential Moving Average
(Lagging Indicator)

4. Due to the Price action, Variable Moving Average Histogram has shown trend reversal giving way for
BUY Call on 27th
November 2015.
Summary & Conclusion
The above mentioned technique has saved us from taking a position in Infosys around INR 1138 on
6th
November 2015. Same technique signalled us to enter Infosys and take long position around INR
1066 on 27th
November 2015 and thus saving us 6% in potential profit yield.
Coming Week will help us verify the veracity of this technique even more.
Signs of Reversal are visible in
Variable Moving Average Histogram