Because you are retired this is ALL THE MORE REASON to not allocate money based on strict $60K amounts. Limit risk with setting stops as I described. You can not afford to lose precious capital when you are retired.
Please Critique (Poke Holes) in My Entry/Exit Strategy
- Thread starter baggs
- Start date
Because you are retired this is ALL THE MORE REASON to not allocate money based on strict $60K amounts. Limit risk with setting stops as I described. You can not afford to lose precious capital when you are retired.
I scanned through most replies and didn't see any mention of what I will say. If you don't have experience trading, we don't need to poke any holes in your math because your psychology will be plenty enough to do all the damage. Its one thing to look at your backtests and see you have a very nice edge. Its another to live it day in, day out, fighting the urge to exit because bad shit might be happening in the world. Your backtest takes maybe one afternoon, and yet, it covers weeks/months/years of actual time. When you're in the trade, in real time, you might be second guessing everything.
If you put up a chart that shows your expected equity curve with max drawdown, I would like to pick the worst part of that curve and say assume you start here, right at the very top, so that in your first 3 months, you lose 10% from the get go. Losing 10% might not look so bad if you're already up 30-40%, but if this is how things start, what will this do to your plan going forward.
I don't want to be making any future predictions, but putting 900k into the market right now at all time highs without real market experience can be, well, tricky. My biggest concern though is the holding period, as I outlined above. In your backtest, its easy to say "just sit through the drawdown" because its obvious on your chart that it works out, or you have your stop and then you move onto the next trade. In real time, every minute might leave you sweating bullets, and since your trades are based on weekly charts, I'm not sure if you will have the mental fortitude to practice such good discipline.
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What I like: well capitalized, reasonable ROR goal, position sizing is sound @ 6.6% of capital, using weekly charts (I think that's what you are doing), layering out of profitable trades.
Improvements: As opposed to planting a single position of 6.6.% consider layering in as well with 3 separate positions of 2.2% of capital to minimize your loses - adding on only to winners, have a set # of trades per week to reduce taking on to much risk at once, have a limit of your composite risk on correlated stocks - mine is 100 basis points (1% of capital), have a draw down plan as to how to manage losing periods - such as reducing size and/or tightening up on your stops.
Food 4 thought: Keep an open mind about blending in futures on the stock indexes - and using less capital for stocks/ETFs. This will reduce your capital exposed to risk and allows you to pay less in capital gains.
Having traded large accounts during several shock events causing large overnight gaps like 911 makes you realize just how vulnerable your capital is. Preserving capital is always the priority - futures allows you to trade stock indexes with far less exposure.
Improvements: As opposed to planting a single position of 6.6.% consider layering in as well with 3 separate positions of 2.2% of capital to minimize your loses - adding on only to winners, have a set # of trades per week to reduce taking on to much risk at once, have a limit of your composite risk on correlated stocks - mine is 100 basis points (1% of capital), have a draw down plan as to how to manage losing periods - such as reducing size and/or tightening up on your stops.
Food 4 thought: Keep an open mind about blending in futures on the stock indexes - and using less capital for stocks/ETFs. This will reduce your capital exposed to risk and allows you to pay less in capital gains.
Having traded large accounts during several shock events causing large overnight gaps like 911 makes you realize just how vulnerable your capital is. Preserving capital is always the priority - futures allows you to trade stock indexes with far less exposure.
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What I don't like about the setup is that each position is given the same amount of capital (60k USD per position). Some stocks have a higher price fluctuation than others. They have a higher volatility. I would compensate for that and assign a smaller investment to stocks with higher volatility and assign a higher investment to stocks with lower volatility.
The way to make, as you say, "Buy and hold more efficient", is simply to buy and hold.
When looking at your charts, I am struck by the strong uptrend they all exhibit, which makes perfect sense given your testing time frame. So it would be unusual NOT to have a system that trades from the long side make money.
I would suggest that you get your head out of the weeds of coding and backtesting, and look at the big picture of a nine year uptrend. Don't confuse brains with a bull market. Because as has been pointed out by others, the realities of the market, day in day out, will test your strength and resolve beyond levels you've experienced, or likely even imagined.
Go ahead and put your system to work, but with only minimal capital. It will take you 2-3 years of market action to determine if you really have something worthwhile. But don't count on it.
Good luck.
I would put 400k in a savings account
Use 500k with 2/1 leverage + short 1M of stocks too, this way you won't be down 200k if a nuclear reactor blows up, etc
Use 500k with 2/1 leverage + short 1M of stocks too, this way you won't be down 200k if a nuclear reactor blows up, etc
Some of you entries if getting in on the close? God aweful for various reasons of what it to the left of the entry, you getting in late. I do take so much off at a target of so much percentage then let remainder keep breakeven plus fees stops. I only BUY stocks that have dividends and have options. Almost, at bottoms like 2008/2009, I buy a "core" of dividend stocks that pay well in percentages and will keep them for years, I will add as price goes up, some I started with have 3 times the number of stocks. All other stocks will have to prove themselves to keep longer by going up, but I look at speed of price before entry, too fast, I will delay entries as often these will drop below where I would have gotten in. I do hedge ALL my entries in stocks/commodities for anything over 59 minute timeframes, this way I can get risk way way down, but it is expensive, long run does me well. As stock goes higher, will do Put credit spreads. I would not use angles for staying in trade as they change depending on how many bars you looking at on screen, what is great for some can be losses for others.
I average down in scalping the markets cause of low losing percentages but not so in longer term, the costs are too great, my backtesting shows possible ruin in stocks and commodities as they usually will happen when you trading the very most and end of price cycle within trend or end of bull market, but with President Trump, possible extension of this market another 4-8 years? No one knows.
Also, if you have sell signals to very good dividend stock, hedge the open profits, buy Puts to retain the stocks' dividends.
I average down in scalping the markets cause of low losing percentages but not so in longer term, the costs are too great, my backtesting shows possible ruin in stocks and commodities as they usually will happen when you trading the very most and end of price cycle within trend or end of bull market, but with President Trump, possible extension of this market another 4-8 years? No one knows.
Also, if you have sell signals to very good dividend stock, hedge the open profits, buy Puts to retain the stocks' dividends.
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Nice moves on your chart,Baggs;
even if you scale in[taxable acc], sound$ like too much risk.15X60K=>> 900k. Even with profit, mutual funds[full time pros ]you could say,LOL dont do that single stock risk like that.Nice charts
While I very much appreciate you taking the time to respond, I don't think you read my initial post. I've been trading/investing for years. In my initial post I clearly mention what I'm trying to achieve and that all strategies "look good, until they don't". I was hoping you guys could shoot down my scaling strategy with math/data, instead of general opinions, or relating this method to how each of you personally does things.
No one knows what will happen going forward, and as I mentioned earlier, I do have plenty of experience.
Thanks for the reply.
The problem with this is that it's taken me a long time to build an indicator that was this "accurate" for my mid-long term style. Unfortunately, I can't simply make a few tweaks and get additional entry signals.
These are the signals I have to work with and I'm trying to figure out how to get the most out of them.