Critique my strategy

C

CX9

I have about $500K in my trading account. Realizing that it is difficult to beat the S&P500 over the long term as a day trader, I have devised the following strategy:

Invest all $500K principle in S&P500. Swing trade with 100K-150K in margin with 10-15 x $10K position sizes(at 5.5% interest, or $400-600 per month), aiming to take $400-600 in profits each day. So far it's been working and my trading profits are about $10k per month. Here is my weekly results since May 1st (which do not include returns on the $500k S&P funds):

Week
1 $4,202.55
2 $3,016.40
3 $314.37
4 $1,790.59
5 $(1,591.07)
6 $3,400.76
7 $1,346.75
8 $2,628.01
9 $3,218.24
10 $2,218.47
11 $3,835.79

Obviously, this will accelerate losses in a down market (but seemed to still work in May's down leg), at which point I will slow down trading, but I am anticipating 2-3 more years before another downturn. Additionally, bull markets tend to run a lot longer than bear markets.

Do I have any blind spots here?
 
bloomberg1 said:
what dollar or percentage is from the LONG sp500 principle, and what amount from "swing" trading?
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The amounts listed are profits from swing/day trading. My gains from the S&P500 are about $15K.
 
Seems great really. What triggers you to buy or sell at certain points is the question. At any given time what is your open catastrophic risk, Assume you have hard stops on positions including sp500 long ?
 
bloomberg1 said:
Seems great really. What triggers you to buy or sell at certain points is the question. At any given time what is your open catastrophic risk, Assume you have hard stops on positions including sp500 long ?
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Cool. Glad someone else approves. I'm a "buy the dip" type trader. I will often scour the day's biggest losers for good companies. I only trade companies that I have researched and would be comfortable holding onto for weeks or months for price to recover. As far as timing, I try to take $50-200 on each trade. Depends on the volatility of the stock and time of day. I typically aiming for $50-200 profit on my trades, which I hold from . I do things they say you're not supposed to - like not setting stop losses, and doubling down (or triple) when a trade is not going my way. Because these are fundamentally sound companies, I have little fear in this "reckless" approach.

I have only had a few stocks I had to give up on, taking about $3,000 in losses from those trades. So yes, my risk management strategy need some work. As far as the main S&P500 position, I do not plan to try and time the market on that, except I did average in over December and January, which served me well.

Here are my trades so far in July. I am sitting on about $1.5K in unrealized losses that I plan to ride out until price recovers:

Date Company Quanity Purchase Sell Profit/Loss
1-Jul FRO 1,200 $7.99 $8.25 $312.00
1-Jul BX 225 $44.87 $45.86 $221.63
1-Jul UNH 40 $241.82 $242.50 $27.20
3-Jul SIG 500 $16.84 $16.82 $(10.00)
3-Jul SIG 750 $16.67 $16.82 $112.50
3-Jul SIG 750 $16.46 $16.82 $270.00
3-Jul TLRD 2,000 $5.47 $5.46 $(20.00)
3-Jul TLRD 2,000 $5.36 $5.46 $200.00
3-Jul SIG 750 $16.59 $16.66 $54.60
3-Jul DD 150 $73.52 $73.70 $27.17
3-Jul TLRD 2,000 $5.36 $5.39 $61.80
5-Jul SIG 750 $17.35 $16.90 $(335.33)
5-Jul SIG 750 $16.54 $16.90 $273.60
5-Jul SIG 750 $16.31 $16.90 $444.68
5-Jul CCL 225 $46.25 $46.82 $129.38
5-Jul SIG 750 $16.73 $16.99 $188.43
5-Jul SIG 750 $16.87 $17.07 $142.07
5-Jul IRM 340 $31.35 $31.55 $60.00
5-Jul DD 150 $73.35 $73.79 $58.75
8-Jul MMM 30 $160.09 $169.55 $275.65
8-Jul FRO 1,200 $8.12 $8.27 $172.00
8-Jul DD 150 $72.79 $73.15 $45.34
8-Jul BP 250 $40.97 $41.16 $39.45
9-Jul SPXS 557 $17.96 $17.87 $(58.07)
9-Jul X 700 $13.38 $13.67 $196.66
9-Jul BX 225 $46.13 $46.43 $57.61
9-Jul GS 50 $206.29 $207.45 $49.94
9-Jul BBBY 400 $11.42 $11.55 $44.00
9-Jul BBBY 600 $11.42 $11.51 $50.00
10-Jul ATVI 275 $46.48 $47.02 $141.93
10-Jul FRO 2,000 $8.07 $8.23 $303.00
10-Jul RTN 60 $174.53 $176.63 $118.21
10-Jul LEVI 500 $21.06 $21.20 $62.05
10-Jul IP 200 $43.22 $43.61 $70.00
10-Jul OLN 500 $20.61 $20.88 $127.00
10-Jul X 750 $13.53 $13.64 $74.50
10-Jul RTN 60 $174.95 $175.77 $41.20
10-Jul BX 225 $45.90 $46.24 $69.62
10-Jul EA 100 $92.51 $93.31 $76.40
10-Jul TVTY 600 $16.35 $16.46 $58.90
10-Jul BP 250 $40.97 $41.14 $34.50
10-Jul TVTY 600 $16.36 $16.49 $70.06
10-Jul BBBY 1,000 $11.43 $12.30 $862.00
10-Jul BBBY 1,000 $12.00 $11.85 $(163.00)
10-Jul BBBY 1,000 $11.48 $11.85 $361.00
11-Jul GOOG 10 $1,140.56 $1,148.00 $66.40
11-Jul TGT 120 $85.89 $86.54 $70.00
11-Jul TVTY 600 $16.33 $16.43 $52.00
11-Jul X 750 $13.56 $13.64 $52.00
11-Jul FRO 1,200 $8.08 $8.12 $40.00
12-Jul M 500 $21.59 $21.92 $157.10
12-Jul M 500 $21.82 $21.92 $50.10
12-Jul IRM 350 $30.20 $30.19 $(11.50)
12-Jul IRM 350 $29.69 $30.19 $168.65
 
wow, sounds like a plan, just try to prepare for the big day when markets DONT recover, nobody really knows when that is, just have some stops on the "main" sp500 buy some insurance in otehr words ..
 
I like it due to your returns, but since you’re looking for critique: I’d be scared juggling so much capital with seemingly high risk here. And it’s definitely way too short period for you to understand the risks until you get through some major losses.

Your blind spot is your own statement that you will slow down in a down market. I just listened to an interview with one of the top algorithmic traders, Ernie Chan, who wrote a few good books on algo trading, and he stated that down markets can only be judged in hindsight because no one can know they’re in down market until way later, looking back. I not only agree with that, but I cringe every time I hear someone saying that they will adjust their strategy in down market.
 
What is your losing % and Drawdown since you rather double or triple down ave losing? If you continue like this without hedging, the worst day of your life most likely will happen down the line wiping out more than you have made. I have automation and every trade I ave down, but I hedge every position over 29 minute timeframes.

It won't matter if they are great companies or not, when internals you do not have this information quick enough happen, $3,000 loses will look small.

If your method will not work using protecting stops, it really NOT a good method to trade.
 
guru said:
I like it due to your returns, but since you’re looking for critique: I’d be scared juggling so much capital with seemingly high risk here. And it’s definitely way too short period for you to understand the risks until you get through some major losses.

Your blind spot is your own statement that you will slow down in a down market. I just listened to an interview with one of the top algorithmic traders, Ernie Chan, who wrote a few good books on algo trading, and he stated that down markets can only be judged in hindsight because no one can know they’re in down market until way later, looking back. I not only agree with that, but I cringe every time I hear someone saying that they will adjust their strategy in down market.
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Thanks for the feedback. By keeping my positions limited to $10K, I think my biggest risk would be about $3-5K (~50% loss), which is less than 1% of my portfolio. I get what you're saying and I do have to limit the times I double down. However, it's hard to stop such a bad habit when it's been working out for me. But in the end, you're right, when it doesn't work it will be BAD. I think worst case scenario would be a $12.5K loss (assuming I double my position when price is halved, then price halves again). I hope I would have the good sense to stop myself out way before that happened though. But my thesis is to go against conventional wisdom and take losses by "feel" rather than by formula.

Biggest risk would be black swan event hitting my S&P500 position, which would hit me hard if I was not a trader anyways, since I would likely be invested in the S&P. I would just wait for it to recover like I did in '01 and '08.
 
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