A beginner trading strategy well-suited for NSE markets. Uses systematic, rule-based logic to identify high-probability entry and exit points with defined risk on every trade.
Complexity
Beginner
Easy to implement
NSE Suitability
High
5.2 / 10 score
Timeframe
Daily
Short to medium term
Best For
Beginner Traders
5–15 days moves
Indicators Used
2
Price Action, Volume
Win Rate (Backtest)
37.5%
Below 50% threshold
Avg Return / Trade
+0.18%
Per trade, after costs
Max Drawdown
-2%
Within typical range
Trades / Year
8
Small sample — interpret with caution
About the Relative Rotation Graph Strategy Strategy
The Relative Rotation Graph Strategy captures momentum shifts by tracking how different stocks rotate through strength and weakness cycles relative to a benchmark index. On the NSE, this approach exploits the distinct liquidity patterns and sectoral rotation that characterize Indian equity markets, where large-cap leaders often drive trends that smaller-cap stocks follow with a lag.
The strategy monitors price action across multiple securities simultaneously, identifying which stocks are gaining relative strength during intraday sessions and which are losing momentum. Volume confirmation is essential—genuine rotations show increasing volume during the shift, distinguishing real momentum moves from noise. The NSE's extended trading hours and consistent retail participation create reliable intraday patterns that make these rotations detectable on daily timeframes.
A typical setup emerges when a stock crosses from lagging performance into the leading quadrant, supported by above-average volume. The trader watches for stocks that rotate from weakness into strength, signaling the beginning of a directional move. Entry points form when price action confirms the relative strength gain, and exits occur when the stock rotates back toward weakness.
This strategy works particularly well for NSE traders because the market's volatility creates regular rotation cycles rather than sustained trends, making relative performance tracking a natural fit for daily trading mechanics.
Who This Strategy Is For
This Beginner strategy suits Beginner Traders comfortable with a Daily timeframe and holding periods around several days. It's built for the Equity segment on NSE, so it fits traders who can check positions without needing intraday execution speed. Because it uses a small, well-known set of indicators, it's a reasonable starting point if you're new to systematic NSE trading.
Equity Curve (Backtest)
HIGH QUALITY
Tested on: HEROMOTOCO
· 2024-05-13 to 2026-06-30
Total Return
+1.5%
CAGR
0.8%
Sharpe Ratio
0.5
Sortino Ratio
0.75
Calmar Ratio
0.4
Win Rate
37.5%
NSE Market Fit
5OUT OF 10
Moderate Fit
This strategy is well-suited for current NSE market conditions.
Win rate quality Needs Caution
Risk-adjusted return Good
Drawdown control Excellent
Trade frequency (sample size) Needs Caution
Sharpe ratio Good
Monthly Returns Heatmap
2024
2025
2026
Jan
—
—
-0.8%
Feb
—
—
-0.9%
Mar
—
—
-0.4%
Apr
—
—
—
May
—
—
—
Jun
—
—
—
Jul
—
-1.4%
—
Aug
—
+1.7%
—
Sep
+1.5%
—
—
Oct
—
—
—
Nov
—
—
—
Dec
—
+1.7%
—
Positive return Negative return
Performance vs Nifty 50
Nifty 50 comparison isn't available for this backtest period yet.
Identify the market context — determine if conditions are trending or ranging, and confirm the higher timeframe direction
2
Wait for the specific entry signal defined by the strategy rules — do not enter without full confirmation
3
Execute with pre-defined stop loss and target — manage the trade according to the exit rules without discretionary override
Entry & Exit Rules
Risk Management Rules
Risk Per Trade
1.0%
of total capital
Min Capital
₹30,000
Hold Period
5–15 days
Segment
Equity, Futures
Common Mistakes to Avoid
⚠️ Momentum strategies can give back gains quickly once momentum fades. A common error is not tightening stops as profits build, which lets a winning trade round-trip back to breakeven or a loss.
Full Backtest Report
Backtested on HEROMOTOCO ·
2024-05-13 to 2026-06-30 ·
Capital ₹100,000
Equity Curve
Live tracking coming soon
We're building forward-tested, paper-trade tracking for this strategy so you can see how it performs
on live NSE data — not just historical backtests. Check back soon.
No sample trades added yet for this strategy.
Strategy Parameters
The exact rules and default values this strategy uses — adjust them when you run a full backtest.
Parameter
Default
Min
Max
Type
Description
momentum_period
52
20
104
integer
Weeks of momentum for RRG calculation
benchmark
nifty50
—
—
select
Benchmark index for relative comparison
quadrant_filter
leading
—
—
select
RRG quadrant to select stocks from
rebalance_freq
weekly
—
—
select
How often to rebalance RRG portfolio
Frequently Asked Questions
An RRG plots individual sectors or stocks relative to a benchmark (Nifty 50) on a two-dimensional chart showing both relative strength and momentum of that relative strength simultaneously. The four quadrants (Leading, Weakening, Lagging, Improving) show which sectors are currently dominant and which are gaining or losing relative momentum.
Sectors in the "Leading" quadrant (strong RS, positive momentum) warrant overweighting. Sectors in "Improving" (weak RS but gaining momentum) signal potential near-term rotation worth positioning for early. Sectors in "Weakening" (strong RS but losing momentum) signal potential relative underperformance ahead. "Lagging" sectors should be avoided or underweighted.
Sectors typically rotate clockwise through the quadrants — from Improving to Leading to Weakening to Lagging and back to Improving, though individual sectors can and do move counter-clockwise or jump quadrants non-sequentially during sharp sentiment shifts. The rate of tail movement indicates momentum intensity.
IT sector tends to show strong positive relative rotation during USD strengthening phases and global technology growth periods. Banking sector leads during domestic growth acceleration and rate-cut cycles. Pharma and FMCG show defensive characteristics, rotating to relative strength during broader market corrections, making them consistent sector rotation signals.
Related Strategies
Looking for alternatives? 1 Minute Scalping is a similar Intermediate strategy in the same Momentum category, with Very High NSE suitability.
MomentumIQ is an educational platform for strategy research and backtesting. We do not provide investment advice, recommendations, or tips. All backtest results are hypothetical, based on historical data, and for educational purposes only. Past performance is not indicative of future results. Backtested results may not account for brokerage, slippage, taxes, or other real-world costs. Please consult a SEBI-registered investment advisor before making any investment decisions.
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