SMA20/200 pullback candle
This intraday futures strategy trades pullbacks inside a trend. On 5-minute NIFTY futures bars, it waits until the 20-period SMA is above a 200-period SMA and rising, lets price dip back to the 20 SMA, and then needs a reversal candle before buying. Short trades mirror the rules in a downtrend. Three trigger candles are available; the default is a bullish engulfing bar after a short pullback.How it trades
Results
PRE-BUILT · DEFAULTSWhere it made and lost money
The only group that made money in this test was trend days, which earned ₹8,341 over 48 trades: there a pullback to the 20 SMA really was a pause, and the 2 ATR target was within reach. Choppy days lost ₹17,755 over 35 trades with a 29% win rate, as the candle stop sits just below a single bar and wide swings took it out. Quiet sessions lost ₹19,752 over 83 trades because moves were too small to reach the target, so trades ended on the six-bar time exit or the stop. Evenings with India VIX above 14.5 lost ₹18,341 over 43 trades. The averages define a trend, but not the kind of day.
About this strategy
- Build 5-minute bars from near-month NIFTY futures and compute the 20 and 200 SMA, a 14-bar ATR and a 9 EMA.
- Uptrend: price above the 200 SMA, the 20 SMA above the 200 SMA, and the 20 SMA higher than three bars ago. A downtrend is the mirror image.
- Pullback: the bar touches the 20 SMA or closes within half an ATR of it.
- Default trigger: at least two of the previous three bars closed lower, and a green bar's body engulfs the prior red bar's body. Other variants use a tight three-bar range broken by a strong full-bodied candle, or a pin bar.
- Enter one lot on the tick after the trigger bar closes, if it closed between 09:30 and 14:45. Only one trade at a time.
- Default exits: stop below the lower low of the trigger bar and the bar before it, target 2 ATR away, or a time exit six bars after entry. Everything is squared off at 15:15.
- No new trades for three sessions after each monthly futures expiry, while the averages still mix the old and new contracts.
Why traders use it
Buying a dip inside an established trend is one of the oldest trading ideas: the trend gives the direction, the pullback gives a better price, and the candle shows buyers stepping back in. The 20 and 200 SMA pair is a familiar way to define the trend, and engulfing or pin-bar candles are among the first patterns traders learn. Combining all three into fixed rules lets a trader test whether the familiar chart setup holds up on intraday NIFTY futures.
The year in plain words
With the default engulfing variant on NIFTY futures from 1 Oct 2025 to 30 Sep 2026, the strategy took 167 trades and won only 35% of them, losing ₹29,296 before costs (profit factor 0.78). Winners averaged ₹1,742 and losers ₹1,196, not enough to make up for the low hit rate. 80 trades hit the stop, 65 used the six-bar time exit and just 21 reached the 2 ATR target. March lost ₹12,542 and April made ₹7,476. Because it trades often for small amounts, costs hit hard: after ₹20 per order and bid-ask slippage the loss is ₹70,722.
What the settings do
Risks
- Average profit per trade is small relative to costs, which more than doubled the loss after charges.
- Candle-pattern definitions vary between traders, so small changes in the rules can change results a lot.
- The 200-bar average on 5-minute data spans about three sessions, so it reacts slowly to a change in trend.
- A futures lot moves fast, and stops placed under a candle low can fill worse on a sharp move.
Who it suits
Chart-based traders who already use moving averages and candlestick patterns and want to see how a fixed, mechanical version of that approach performs on NIFTY futures, with margin for one lot.
Questions traders ask
What is an SMA 20/200 pullback strategy?
It uses the 200-period moving average to confirm the trend and the 20-period average as the area to buy dips in an uptrend or sell rallies in a downtrend. A trade is taken only after price returns to the 20 SMA and a reversal candle appears.
Is the SMA pullback candle strategy profitable on NIFTY?
Not in this test. From 1 Oct 2025 to 30 Sep 2026 the default version lost ₹29,296 before costs and ₹70,722 after ₹20 per order and bid-ask slippage, with only 35% winners. Past results do not guarantee future ones, and other variants may behave differently.
What is a bullish engulfing candle?
It is a green candle whose body fully covers the body of the red candle before it. It shows buyers overpowering the sellers of the previous bar, and here it must follow a short pullback of at least two lower closes out of three.
Why skip trading right after futures expiry?
The strategy runs on a continuous futures series. At each monthly expiry the price jumps to the next contract, and the 200-bar average still contains old-contract prices for about three sessions, so trend readings would be distorted.