Switching between systems

[SaidBitar]

Hi I would like to know what is the best practice to switch between currently running system and a new tested one.

Suppose that you are running a system and you are ok with the results and along the way you developed a better system so :
[ol]
[li]you switch off the running one and switch on the new one[/li]
[li]wait till there is enough capital for the new one[/li]
[li]Is it beginners cycle [/li]
[/ol]

[Nick Radge]

I just switch the new one on. Might not be the best answer…but…

[ScottMcNab]

Been thinking a bit about this with regard to change from paper to real acct too….is it perhaps worth switching when the system is at (or approaching) its maxDD ?

[Nick Radge]

Technically the best time to invest is during drawdown, but bow long till the system gets to maxDD?

If taking the long term view, does it really matter?

[ScottMcNab]

Yeah…could be waiting on the sidelines for quite a while and just as easily miss some good profits I guess ?

[MichaelRodwell]

Meb Faber did some research on this and concluded the best time to switch or to start is immediately with 100% planned allocation. I haven’t seen the actual research though, just something he spoke about on one of his podcasts.

[#REF!McGrath]

I have a US momentum system that I have been trading with a small allocation now for 3 months. I am ready to allocate the full allocation to this system. I currently have 10 open positions. I’m not sure how to scale up to the full allocation given the current open positions. Was thinking:

1. Wait for index filter to switch off all current positions & then use full allocation (however don’t know when that will happen)
2. As stocks rotate off the list & replaced with new buys, those new buys are given the larger allocation.
3. Close all open positions & just start a fresh from next month.

[Nick Radge]

Why close positions?

Wait till month end then simply allocate the full amount.

[JulianCohen]

If you have an existing holding in say AAPL, and it comes up in the new month as one to keep holding, then just buy enough to top up the total holding to the new allocation amount. Just make a note that Share trade tracker will count that as 2 holdings, but it isn’t, it’s one.

[Nick Radge]

Quote:

Just make a note that Share trade tracker will count that as 2 holdings, but it isn’t, it’s one.

Or average the two purchases and amend the single STT entry.

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