Velocity Strategy Bearish

Strategy Type: Positional
Direction: Bearish
Instruments: Futures, Cash, ETF, Options

You can select the instrument type and exchange. This is a system-based Algo and is applicable across all instruments. You can define your own group, apply filters, decide the investment amount or quantity, and customise it as per your preference.

If the DAM strategy was about structure and trend, the Velocity Trading System is about speed and momentum. This is not a “sit and wait for perfect trends” setup. This is about identifying strength early, riding it fast, and getting out before the crowd even realizes what happened.

And yes, this one is perfectly built for automation on Algostra.

First, understand the psychology behind creating the strategy.

Velocity is not trying to catch the entire trend. It’s trying to capture the strongest part of the move.

That means:

• You enter when momentum is already building.
• You exit when momentum fades.
• No prediction. Just reacting with rules.

Step 1: Hunt Only Strong Stocks (This Is Your Edge)

Again, no random stock picking. Your universe is tight:

• F&O Stocks within 10% of 52-week high → Long trades
• F&O Stocks within 10% of 52-week low → Short trades

This is where most traders underestimate the power of selection.
You don’t need to find momentum. You need to go where momentum already exists. .

On Algostra: Build this as your base scanner. If a stock is not in this zone, it doesn’t exist for you.

Step 2: Switch to Heikin Ashi (Clarity Over Noise)

Here’s where Velocity gets sharp. Instead of normal candles, you use Heikin Ashi charts.

Because:

• It reduces Noise
• Trends look cleaner
• Indicators behave better

You stop reacting to every small price fluctuation. This is critical when you are trading momentum. You want clarity, not chaos.

Step 3: Confirm Momentum (RSI Is Your Filter)

Now we bring in RSI. Rule is simple:

• RSI > 50 → Bullish momentum
• RSI < 50 → Bearish momentum

This is not about overbought/oversold. This is about who is in control:

• Above 50 → Buyers dominate
• Below 50 → Sellers dominate

If RSI is not supporting your trade direction, you walk away.

Step 4: Trigger the Trade (MACD Does the Timing)

Now comes execution. MACD crossover is your entry trigger:

• Bullish crossover → Enter long
• Bearish crossover → Enter short

But remember – this only matters if RSI has already confirmed momentum.

• RSI tells you momentum exists
• MACD tells you momentum is accelerating

That’s your entry window.

On Algostra: This becomes your final trigger condition.

Strategy Rules

The strategy should be executed on the hourly (60mins) chart.

Short Entry Rules

1. RSI < 50
2. MACD bearish crossover

Short Exit Rules:

MACD bullish crossover

Example of Trade Setup

No targets. Momentum decides how long you stay. Not your opinion.

Where Traders Go Wrong (And Kill This Strategy)

Let’s call it out:

• Taking trades without 52-week filter
• Using RSI as overbought/oversold instead of momentum
• Entering late after big moves
• Ignoring exits because “it may bounce back”

That last one is dangerous. Velocity works because of fast exits. The momentum weakens, you are out.

Why This Works Beautifully on Algostra

This strategy is made for automation.

Consider this:

• Stock selection is quantifiable.
• The RSI condition has a clear threshold.
• The MACD crossover provides a precise trigger.
• Exiting is mechanical.
• No subjectivity.
• No room for personal judgment.

The Real Shift You Need to Make

Velocity is not for traders who:

• Want to catch tops and bottoms
• Need confirmation from 10 indicators
• Hold losing trades hoping for recovery

This is for traders who:

• Trust momentum
• Act fast
• Exit faster

You will miss some moves. You will take small losses. But when momentum hits, you will be in it.

Filters

You can further enhance the strategy by adding filters: additional rules, indicators, or pattern-based conditions.

One effective approach is to incorporate a higher timeframe trend filter, such as the daily trend of the stock.

You can also apply intraday-specific filters to improve trade quality.

With the right filters, you can further refine and personalise it to suit your trading style.

You can modify it, test it, and deploy it on the Algostra.