Plain-English explanations of the specific strategies used in Walk-Forward Analysis and Monte Carlo, with worked rupee examples for each.
Every strategy has two halves: a rule for when to enter a trade, and a rule for when to exit it. Together they define the entire behavior.
An entry rule is a condition. It says "buy when the RSI drops below 30" or "buy when the 50-day average is rising and price is above it." When the condition is true on a given day, the strategy enters a position at the next day's open.
An exit rule is another set of conditions. It could be "sell when RSI rises above 70," or "sell when the price has risen 15%," or "sell if the price drops 8%." Whatever the specific wording, the exit rule is what closes the position and locks in the profit or loss.
The strategies below are standard templates. StockWise uses them because they're well-known, easy to reason about, and each captures a different market behavior.
Important: the same strategy can be profitable on one stock and unprofitable on another. That's exactly what walk-forward analysis reveals — whether a strategy's historical profits come from a real pattern or from luck.
Ride an established uptrend until it shows signs of ending.
Buy strength, hold while the trend is intact, exit when momentum fades.
Imagine Reliance is trading at ₹2,400 in January 2023 and all three entry conditions are true: the 50-day average is rising, RSI is 58, and MACD has just turned bullish.
The strategy stayed in the trade for five months and exited when the trend flipped. It captured most of the move — not the exact top, but most of the rise.
Capturing big sustained moves. In a strong bull market, this strategy often beats buy-and-hold because it exits before big declines.
Choppy sideways markets. Frequent false signals can cause many small losses that add up.
Buy when a stock has fallen too far, too fast — expecting a bounce.
Buy weakness, exit on a fixed target or stop, hold for a short period.
HDFC Bank has fallen 8% in two weeks on no news. RSI is 27 and the MACD histogram has just started rising. All entry conditions are met.
The trade lasted nine days and closed at +5%. In a losing scenario, a stop at -3% would exit the position before a larger drawdown developed.
Range-bound markets. When a stock oscillates between support and resistance, buying near support and selling near resistance works repeatedly.
Downtrends. In a sustained decline, "oversold" keeps getting more oversold — every dip-buy hits the stop. This is why the -3% stop matters.
Buy after a decline, but only once momentum has clearly started to recover.
Wait for the reversal to confirm, then enter alongside it.
Infosys has been in a downtrend for weeks. Then in early August 2023, RSI crosses above 40, MACD turns bullish, and the trend flips to UP. The reversal is confirmed.
The difference from Strategy B is the confirmation: Strategy B acts on the reversal beginning, Strategy C waits for it to be visible in two indicators. The trade-off is a slightly later entry but fewer failed signals.
V-shaped recoveries. When a stock bottoms and starts a new leg up, this strategy catches most of the move without being whipsawed.
False bottoms. Sometimes what looks like a reversal fails and the decline continues. The -5% stop is what limits the damage.
Build your own entry rules by combining the 11 indicators StockWise tracks — and pick your own exit mode.
Full customisation: entry thresholds you set, plus one of three exit modes.
You configure entry as "Trend ANY + RSI < 40" and exit as "Bounce: target 5%, stop 3%, max hold 15 days."
With Bounce mode, the trade exits the moment any of the three exit conditions is met — target, stop, or time limit. This gives a clean, predictable holding period.
The exit mode you choose changes the strategy's character. Bounce is best for range-bound markets. Momentum is best when you expect a sustained move. Trailing is best when you want to capture a big trend but protect gains.
The four templates above are starting points. Any of them can be combined, simplified, or built from scratch using the same building blocks.
A strategy is just a list of entry conditions and a list of exit conditions. The condition types are the same regardless of the strategy — indicators like RSI, MACD, DMA trend, and Bollinger Bands.
The full menu of conditions StockWise supports for stocks:
| Condition | Types of rule | Common use |
|---|---|---|
| RSI | > 70, < 30, crosses above/below | Momentum & oversold signals |
| DMA Trend | UP, DOWN, SIDEWAYS | Overall direction filter |
| MACD | Positive cross, negative cross, unchanged | Momentum confirmation |
| Bollinger Bands | Near upper, near lower, within range | Mean reversion entries |
| Strategy Signal | Trend momentum, early momentum, reversal | Combined multi-indicator signal |
| Breakout | YES / NO | Price breaking a range |
| OBV | Rising, falling, stable | Volume confirmation |
| VWAP | Bullish, bearish, strongly so | Intraday trend context |
| ADX | Strong / weak trend, directional | Trend strength filter |
| Stochastic | Oversold, overbought, momentum | Short-term reversal |
For indices, the vocabulary is smaller but the idea is the same — trend direction, RSI level, MACD cross. Indices don't have earnings or volume spikes, so volume-based conditions don't apply.
A note on building: adding more conditions usually makes a strategy look better in a backtest but perform worse in practice. Simple strategies (2 or 3 entry conditions) tend to survive walk-forward and Monte Carlo analysis better than complex ones. If your strategy has 6 conditions, try removing half and see if the results hold up.
Whatever you build, the two reports tell you whether it holds up:
A strategy that passes both is worth taking seriously. A strategy that fails either is a hypothesis, not a system.
Download StockWise, pick a template, and run the analysis.
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