Volatility vs Risk
- Thread starter ironchef
- Start date
On individual stocks?
contrary to what people think, equity index is actively reviewed and managed each quarter.
individual stocks, it is all about alpha, monthly quarterly and yearly with a break even stop loss and retracement profit target. it is doable but lot of work and need a sizable portfolio to see any decent results, because literally there are 2000 stocks out there at minimum.
Going back 46 years 97.5% of my trades, long term and intraday been against major trends. Unlike most, long term trades show lowest winning percentages as system is seeking major reversals and requires hedging. I have learned how to profit overall on 98% of losing trades because of hedging, took years of testing to find correct hedging. System seeks homerun moves and nails eventually nearly all major turns, however may take hundreds of trades. Hundreds of losses in future trades and hundreds of profits in hedging to overcome losses. So am seeking huge volatility after entry.
Intraday trading is opposite, do have losing trades up to 8 points, $400, while profits capped at 4-5 ticks, daily net $100-200 per contract goal. Seldom have losing days. Am seeking volatility after losing trades to capture losses. If too much volatility occurs where risk greater than 8 points, signals are ignored. It trades over 30 commodities now.
You do enough trading you become a machine, do enough trades, you don't notice losses, only trading per rules. You become a machine, no emotions. The fun is long gone, desire turns into another day behind machines and can't wait to stop for the day. Will never retire, took too long to get good. What's really amusing, trading becomes so simply as far as rules but when learning you think it is complicated.
Volatility or risk are just words cause not enough testing to show stats you can handle.
A slight correction. For me the risk is time.
These are the results if you bought SPY at the top on Dec30 2021 and averaged down the whole drop.
In 1 year your position is worth 275k so a return of 25K (10%)
Today its worth around 325k with a return of 75K (30%)
Do you think you can outperform 30% by making 4 trades in 2 1/2 years? It works out to returning $2500 per month. And technically you weren't all in until late 2023 so its even a better than that.
Plus SPY's dividend would have paid you an additional $342 per year lol.
At 5% dividend you are making $1035 per month. So buying, averaging down and holding returns better than any dividend stocks, better than bonds, and carries no risk.
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The longer the holding period, the smaller the risk QQQ under performs compare to SPY. Does that mean the risk is getting lower as time progresses?
Very interesting perspective. I wonder why @taowave gave you a hard time?These are the results if you bought SPY at the top on Dec30 2021 and averaged down the whole drop.
In 1 year your position is worth 275k so a return of 25K (10%)
Today its worth around 325k with a return of 75K (30%)
Do you think you can outperform 30% by making 4 trades in 2 1/2 years? It works out to returning $2500 per month. And technically you weren't all in until late 2023 so its even a better than that.
Plus SPY's dividend would have paid you an additional $342 per year lol.
At 5% dividend you are making $1035 per month. So buying, averaging down and holding returns better than any dividend stocks, better than bonds, and carries no risk.
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In a long term bull market anyone who did what @mervyn said buying on a f... dip is a trading genius.
Black Swans do come by once in a while....
I would rather start legging into a stock (long) and have the price drop versus have the price go up...the more it drops the better.
Yes, insurance companies do it