Downside Protection

Discussion in 'Strategy Development' started by pistolpt, Jan 14, 2013.

  1. What attributes do you all look for in your respective strategies for downside protection?
    Besides the typical stop loss.

    My trading strategy is longer-term, so I use a moving average overlay over the entire underlying strategy. i.e. if the 10-day SMA of the underlying strategy goes below the 30-day SMA of the underlying strategy it turns off, until the 10-day gets back above the 30-day.

    I figure there have to be better tools out there...
  2. Sorry, is not a full answer to your question, but some related concepts were discussed in the following thread ...
  3. Interesting thread. I agree with the whipsaw the moving average does on you.
    My answer was to cut the moving average to 50%. That way if your strategy does start failing, at least you took some risk off the table, whereas if your strategy goes on a tear, at least you didn't sell everything.