This method is basically relying on the following Premise.
Buy at cost retracement. Buy at or near the "Base".
The trick is in understanding this reduction/retracement pattern.
We have a rough idea of how much the cost of the pair will retrace each week.
Rs.50 of value lost in expiry week, and Rs.30 each week, in first three weeks; This is for initial value of Rs.150 like in June 2012; Will further improve these estimates with experience.
This Rs.30 reduction may happen gradually or sharply or fluctuate. But will happen for sure. That is a certainty. Like today, the cost fell from 174 to 162 in a session. It must reach its destination of Rs.150 by tomorrow.
Hence, we know that the worst case on Friday closing will be near 150. Our purchase was for 160 hence we are prepared for Rs.10 loss+exp.
Similarly, we aim to take advantage of any sharp fall or fluctuations and buy near base or slightly higher for fear of losing out on the move.
If properly done, then one could get a good return on investment each week. People talk of 20% YoY return in MFs and beating the index. This method will be a superior substitute. Returns of 5 to 10% a month at least. Besides, I value accumulating skills over haphazardly earning money. Just a preference.