%%
1998
NEVER torment a tiger, polar bear, elephant or snapping turtle;
it may be fun for a while, but risk\ reward IS ALL WRONG................................
Like mr Forbes notes; with all thy getting, get understanding.
Americans Can’t Get Enough of the Stock Market
- Thread starter ajacobson
- Start date
NEVER torment a tiger, polar bear, elephant or snapping turtle;
it may be fun for a while, but risk\ reward IS ALL WRONG................................
Like mr Forbes notes; with all thy getting, get understanding.Here is how to beat the market with limited risk.
1: Buy when the SP500 drops 10%. (black line)
2 : Put a 5% stop. (red line)
3: Take profit at the 15% level (green line)
This is a 5 to 1 reward risk trade plus you will never eat another 50% drawdown (or more) again, during a stock market crash.
See the S&P 500 Historical annual returns graphic below for more details (last 60 years), and notice what happens next each time the market loses 10% of its value (black line below the zero), on an annual basis....
We can also do the reverse and short the market after a 20% move (10% stop) and take profit at the zero line.
(I am sure this simple system can be used with other equity indexes as well, worldwide).
Click here to see a bigger chart : https://datawrapper.dwcdn.net/UZZDG/8/
Interesting concept Tradex. I might be able to model this, your 1, 2 and 3 above. So to be clear, once you are out at a 15% gain, you are not back in again until a 10% loss? If that is right I suspect this strategy will miss huge amounts of upside, but I think I can test it.
Hi Saltynuts,
Yes, for long positions when the profit target is reached we simply wait for another 10% down move (on paper of course).
Sure, the market can go even higher but why risk an almost certain profit?
For short positions, when the market moves 20% (or even better, 25%) we go short and collect our winnings at the zero line. Then we wait for another trading signal.
The idea behind this system is to profit from the regular up and down cycles of the market.
Please keep in mind that the performance is calculated as the % change from the last trading day of each year from the last trading day of the previous year.
Here is that graph again (see link below), notice how regularly the market oscillates between the +20% (or 25%) line and the -10% line. I didn't backtest this strategy (holding a position for a year or two is REALLY not my cup of tea, LOL) but I think it can generate some very interesting profits with limited risk.
Keep us posted my friend.
https://datawrapper.dwcdn.net/UZZDG/8/
Would that beat buy & hold?Here is how to beat the market with limited risk.
1: Buy when the SP500 drops 10%. (black line)
2 : Put a 5% stop. (red line)
3: Take profit at the 15% level (green line)
This is a 5 to 1 reward risk trade plus you will never eat another 50% drawdown (or more) again, during a stock market crash.
See the S&P 500 Historical annual returns graphic below for more details (last 60 years), and notice what happens next each time the market loses 10% of its value (black line below the zero), on an annual basis....
We can also do the reverse and short the market after a 20% move (10% stop) and take profit at the zero line.
(I am sure this simple system can be used with other equity indexes as well, worldwide).
Click here to see a bigger chart : https://datawrapper.dwcdn.net/UZZDG/8/
Well, beating the market means you are beating buy and hold.
Our friend SaltyNuts is supposed to backtest the idea, let's wait for his results.
Assuming he won't simply keep them to himself and make a fortune quietly and secretly, hahahahaha
Just kidding SaltyNuts.
