What six months of trading and a 400% overall portfolio increase looks like.
Managing your losses is essential. If you don't have a plan to protect your funds in the red, you wont have anything left to play with in the green.
Safety nets and alternate plans are a must. This chart shows the results of a combination of buy/sell rules that change on the circumstance.
This chart heavily utilized offsets, rebuying at low points after an initial buy to exit immediately at a pre-defined price point for minimal loss or break even to keep funds available for use.
This method used half of the funds for the initial purchase, and the second half to offset when needed.
A strict set of rules for each phase allowed for immediate exit, but left room on the top end to ride a rising price and not sell too early.
84% of all trades were successful. 36% of those trades required an offset. Without this loss management, the success rate drops to 57%.
Of the offsets in this chart, 42% were losses, but only for -6% overall.
Without the loss management structure, this would have been much higher, and likely wiped out the account.
Point of the story - Develop a strategy for loss before you develop a strategy for profit.
Managing your losses is essential. If you don't have a plan to protect your funds in the red, you wont have anything left to play with in the green.
Safety nets and alternate plans are a must. This chart shows the results of a combination of buy/sell rules that change on the circumstance.
This chart heavily utilized offsets, rebuying at low points after an initial buy to exit immediately at a pre-defined price point for minimal loss or break even to keep funds available for use.
This method used half of the funds for the initial purchase, and the second half to offset when needed.
A strict set of rules for each phase allowed for immediate exit, but left room on the top end to ride a rising price and not sell too early.
84% of all trades were successful. 36% of those trades required an offset. Without this loss management, the success rate drops to 57%.
Of the offsets in this chart, 42% were losses, but only for -6% overall.
Without the loss management structure, this would have been much higher, and likely wiped out the account.
Point of the story - Develop a strategy for loss before you develop a strategy for profit.