Mean Reversion Strategy Journal
- Thread starter StockChartist
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I go through my preset screen on TradingView each day looking for trades, and if there's a stock I want to buy then I'll put in a limit order 1 tick underneath the current day's lower Buy Sell Band, and with Hayward $HAYW yesterday's lower Buy Sell Band was $22.67 so I had a order in today to buy at $22.66 which was partially filled for most of the shares I wanted to buy (188 out of 218) as I ended up printing the low for the day.
So with Carmax a few weeks back there was some reason you didn't want to buy.
I don't buy every stock that goes below the lower Buy Sell Band, for example if I've already got 15 trades open then I don't open anymore trades until 1 or more closes as I have a gross exposure limit I don't cross, plus one of my rules is not to buy stocks within 30 days of earnings releases as they're binary events and $KMX released earnings on the 22nd Dec so even though price was oversold a few days before that I wouldn't have bought it.
Also as previously stated I use some discretion when choosing what stocks to buy, things I take into consideration is the diversification of my open portfolio as I don't want too much sector/industry concentration, I also look at the business quality and valuation of each stock I buy as I don't like buying high flyers as generally speaking they have more downside risk than stable businesses. With mean reversion strategies typically low beta stocks perform better, the opposite to trend following strategies.
2 new trades opened today $FND and $BBWI
One trade was closed today $CLH for a $118 net profit
1 new trade was opened today $RCM
Hey, good to see you're rockin and rollin.1 new trade was opened today $RCM
You have a link to your cumulative results?
Yes see the Collective2 link above, I was just about to post it as I already have throughout this thread, that's the best way to keep track of the performance of this strategy as all trades are automatically copied from my IB account into the Collective2 platform.
Currently going through a small drawdown as the broader small/mid cap market and tech has had some downward pressures lately. I expect to have at least one 10-20% drawdown yearly, one 20-30% drawdown every 2-3 years and one 30-50% drawdown every 4-7 years. There's no equity volatility risk premium without the volatility, there's no hiding from it.
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