Threshold-Based Trading Strategies using Drawdown-Triggered Entries & Profit-Target Exits in The Indian Stock Market: Index Based Comparative Analysis
Year: 2025
Type: article
Abstract: This study investigates the effectiveness of rule-based, price-action-driven trading strategies in the Indian equity market using a systematic back testing approach with respect to its index Nifty 50. The strategies are built around fixed-entry and exit thresholds based on historical closing prices, where entry signals are triggered upon price drops of 3%, 5%, or 7%, and exits occur once a gain of 3%, 5% & 7% is achieved in all possible nine combinations. Daily OHLC (Open, High, Low, Close) data from January 2010 to June 2025 serves as the basis for testing, simulating nine distinct strategy combinations. VBA-based automation is used for precise and repeatable back testing execution, recording trade-level metrics and cumulative returns. The findings reveal that deeper entry discounts (such as 7%) combined with moderate exit targets (5–7%) generally yield higher cumulative returns and success rates. Strategy performance is evaluated using statistical measures including win ratio, average return, and standard deviation. This research contributes to the literature by quantifying the impact of structured entry-exit rules and by providing a robust framework for evaluating price-based strategies. The results offer practical implications for technical traders, retail investors, and quantitative analysts aiming to optimize return while minimizing risk exposure.
Authors: Dr.Tuhin Mukherjee, Subhrajyoti Mandal
Language: English
Subfield: Finance
Domain: Social Sciences
Open Access status: green
OpenAlex ID: W6893430311
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