I started trend following (deep stop orders for fairly long hold periods, no shorts) in 2015. I knew I hadn’t hit a bear market or flash crash yet and that my system wouldn’t work anymore. I didn’t know how to define my bear market strategy in advance but when the time came, beginning in late February, I managed. Basically I stayed in cash until overall markets seemed to have bottomed, then bought deeply oversold things with decent fundamentals for holding indefinitely without stop orders. That has worked well, but now I need to start modulating back toward my original system, or at least start qualifying those indefinite durations. I mention my adjustments only as an example, understanding that most of you don't hold as long. What I hope to hear from others is how you adapt, modulate, and switch between trading systems.
Well for drops you can use weekly MACD as a basic indicator you will get false signals here and there but many less than daily MACD I dont know your holding time But mine is about 20-70 days and i do NOT use weekly however i look at it, i use daily, if your holding period is longer then you should use weekly MACD I heard not sure and not verified weekly MACD tends to line up with the moving averages of 200 days which i do NOT use but can be useful to you as far as your hold period iam like you i hold Long time but the trade might be switched several times , thus i might be in the instrument for a year but with many trades on it in between you can use options after or before you have a profit as a way to limit the loss (stop) and as a way to define the duration of the trade how long of an option depends on you ke personally i have a simple formula that an option total cost should be no more than 20% of overall stock with 15% of that in the money and max 5% out of the money this can filter out which options month to use and how deep in the money to go this also shows you key differences as iam starting to notice recently
Which is some options cost more than others i dont know exact reason but if i guessed a whole a lot of factors than just dividend volatillity etc etc if i had to pick one i would say supply and demand For example Ford today i made an exception and bought on it options that cost 30% of the total stock value and 6% of that is extrinsic value, that put me in September month, meanwhile today also i bought T options that were in Jan 2021 and those costed less overall percentage and even less extrinsic, thats most likely Due to the dividend but yet that 7% alone doesnt justify the math if such a difference telling me there is more reasons fords calls are more costly which any ways is beyond me at the moment as it doesn't impact my trading overall strategy drastically but i like to know it to keep in mind and to get to it at some time in the future should it become of too much of an integral in the overall realm, my realm