Another “what’s your edge” thread
- Thread starter KGTrader4
- Start date
I'm a momentum trader, long only. My universe is Jakarta Exchange.
Yes, there is an etf.
In your opinion, is there any other alternative than just saving cash during a bear market?
Short the etf, vs your long momentum exposure.
I would also analyze the drivers of momentum and look for non-macro momentum drivers such as earnings. Then filter your long ideas by your factor preference.
so: long factor filtered momentum names vs. short etf
You should be beta neutral (beta of 0). Weighted bets of your longs should cancel out the beta of your short etf.
The problem is... I can only trade long. Short is prohibited here.
Ah… yeah you’d need to open up like an IBKR account in another country to go short.
if you don’t have a way to go short then the way you theoretically would reduce risk is by creating a benchmark of returns comprised by equity returns and cash yield, weighted to your risk preference (how much volatility you will accept).
that may result in an allocation of 20% stocks 80% cash lol. Probably not a great fit, so you may need to think about accepting beta risk into your strategy.
I'm a long only trader. In a down trending market I find somewhere to park cash that pays a little interest.
Thank you deaddog,
What instrument is it? CD?
I assume your universe is S&P.
If I may ask, what prevented you from going short in a down market?
Risk management is not only amount of stops or where placed. Often times it is negate signals based on chart pattern percentages, news reports, holidays etc. My style of trading is all about percentages and hedging, using the correct hedge can make a losing trade be overall profitable.
Im assuming you are talking some form of gamma/vol hedge,perhaps with correlation risk,i.e Spx vol vs Stock Delta or Vol