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A bit of an early morning slap Nick, but these things happen. Somebody wise might say “…next 1,000 trades…”
However, it does reinforce my ‘issue’ with shorting…this is exactly the thing that I have been fretting about, not specifically AMC, but generally. I know I’ll lose some diversification but I’m strongly considering canning my short systems. I just don’t like the unlimited risk.
Ironically, given the discussion on my progress journal, this is much more annoying to me than the (in my opinion) much smaller risk of some huge market wide one day down move. I know there is Black Monday, but even the Flash Crash rebounded on the day.
Hi Howard,
I place a maximum of 10 orders (per system) into IB each night. Each trade has the larger position size, so all other things being equal, if all of my trades triggered I’d overdraw.
However, I usually don’t place orders for all of my systems each day and, even if I do, I don’t ever have all of my limit prices reached. For example, last night I placed 0 orders across my 12 MOC systems. Even when I place the entire 120 orders, I’ve never had more than (approximately) 20 trades result.
So, I’m not concerned about overdrawing, but now I’m wondering whether maybe I should be
My (niggling) concern is about the leverage.
Best wishes,
Terry
I have 4 MOC systems operating on the R2000. I’ve allocated roughly 20% of my capital to them. I trade 10 positions on each and use the full leverage. Where the same stock comes up in more than one system, I take all of the signals. So in the ‘worst’ case, up to 2% of my total capital can be exposed to one stock.
BUT
I’m doubling up on profits/(losses) in calculating position size. An example – assume an opening portfolio of 100 and YTD profit of 10, standard position size (based on 10 positions) would be 11. I’m using double the profit in the calculation so my position size becomes 12. This sounds fine but I’ve had a good year so far, which means instead of adding 50 profit to 100 portfolio, I’m adding 100. In this example each position is 20 where it would usually be 15. This is a change I made after reading one of Nick’s articles suggesting something similar (I hope I’m not misquoting you Nick?). Obviously this can’t go on because in a few years I’d have enormous positions, but my current thinking would be to reset beach year. However, even backing the impact of that out, my profit would reduce by a quarter, so not 44% but 33%.
A couple of other points:
– I got lucky in May – I hit a pile of big movers (e.g. LMND, PLUG, SPCE) mid month. If I recall correctly, each of them made 30% ish. This is the change in their price from entry to exit, not the leveraged profit.
– I use a large stretch, so I get fewer trades,so my downside risk is reduced. As well, my upside potential is increased (I think) once I do get a trade.So, I get that I’m running a somewhat larger position size but my balls are very small so even if they’re deep, I don’t think they’re very deep.
I’m really interested in opinions on this – as I mentioned above, I’m not sure I’m doing it right.
Best wishes,
Terry
Well, from the sublime to the…whatever this is
MOC 1000 (2.1%)
MOC 2000 0.74%
MR 2000 8.27%
MOC Short 0.56%
Momentum (2.37%)
Total (0.24%)My first losing month…not losing any sleep of course, just acknowledging that the inevitable has happened.
I’m now fully live ‘systemed’ – thanks for your help with the Api Nick – with not much to do. I have started trying to make some sense of market breadth indicators, although it’s very early days. Has anybody else spent time looking at this? I’d appreciate hearing your thoughts if so
Best wishes,
Terry
