The KPLSwing indicator is a simple trend following mechanical trading system which automates the entry and exit. The trading or investing logic is simple No targets are given as profits are unknown and is whatever the market gives.

Losses are limited via position sizing. It is not recommended for stocks with poor liquidity for that matter, any indicator. When any stock has to rally, it has to cross some levels. This can be prior resistance, last week's or month's highs etc etc. Here I have chosen 20 days high as the reference level. Because there are 20 trading days in a month.

This holds true for any system and statistically speaking, over a large number of trades a million? First you need to understand why people lose money. There are only 2 reasons a trading beyond one's capacity and b holding to loss making positions for long time while 'booking profits' urgently in winning positions.

All indicators give whipsaws and the KPLSwing indicator is no exception. But it is easy to know when a signal is likely to generate a whipsaw.

The first warning will be where the stock is trading in a small range for a long time. Here it is possible to get a buy signal today followed by a sell signal in next few days.

But by staying in a trade as long as possible, you vastly improve the chances of atleast capturing a significant percentage of the big move. This is the most neglected aspect of trading and the reason why most people lose money on a regular basis. In the stock market, everyone likes to know how much money they can make. No one asks how much they can lose. So it makes sense you predefine your loss - this will help manage a trade. It does not matter if your trades are wrong.

Half your trades are anyway bound to fail statistically speaking so following this simple rule will automatically limit losses and help you stay in the market.

If you cannot quantify the loss before taking a trade, stay away from stock markets and do something else. Assume an initial trading capital of Rs. You want to buy a stock trading at Rs.

You are investing Rs. In above example, say the stoploss is Rs.

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You are now investing Rs. Note that your capital is reducing but the rate of reduction will also reduce. It is obvious that this simple exercise will ensure that you still stay in the game and have a good chance of a profitable trade. The trading system is extremely simple and easy to use and removes emotions from trading. You can of course choose some other number like 30 or 55 etc. The concept remains the same.

By same logic, beware of any system or analyst who claims an exceptionally high success rate! So how is money made? If you cannot do the above, then you will better off doing something else in life. About whipsaws All indicators give whipsaws and the KPLSwing indicator is no exception. Ditto for the sell side.

KPL Swing (breakout trading system)

Now the indicator in action - same stock, different charts You must have Amibroker installed in your PC. If you do not have this, download a trial version from Amibroker.

Initiate a long trade when indicator generates a BUY signal arrow. Stoploss and Exit Strategy delivery: Indicator gives a sell If you do not have Amibroker: Vist any of these sites.

Buy on close above previous month's high. Position sizing will take care of the risk. Position sizing answers the question: Let's assume your stoploss gets hit. You are now left with Rs.