Portfolio Strategy

Discussion in 'Strategy Development' started by oldtime, Sep 17, 2011.

  1. I'm new to forex so this is a new strategy that has been working for just a short amount of time.

    I put on several positions and use hard money stops and no targets.

    No scaling in or out or moving stops.

    When I get stopped out I put something else on.

    Everytime I try to tweak this by scaling or trailing I lose money, but in it's pure form it has worked out ok.

    The exit occurs when the whole portfolio shows a decent profit, then everything, big winners, small winners and (there are never big losers) and all losers are closed simultaneously.

    The problem is starting the whole thing back up again because it usually involves getting stopped out many times before the portfolio starts moving in the right direction.

    I'm sure this is not new and somebody that tests and analyizes might have a comment on why this could be a bad idea. Hard for me to tell since I have been on the right side of CHF twice during really big moves so that has helped.
  2. Like on 9/5, among other things, I was 50% long and 50% short CHF.

    When SNB announced, my sell stops got traded through by quite a bit, but my 2 short CHF positions along with everything else gave me a total 10% profit in the portfolio, so I just closed it all out and spent the rest of the day building back up another portfolio which didn't involve CHF because I had less of a clue than I normally do what would happen to it.

    Eventually the portfolio did include some CHF, but I forget if I closed them at a profit or a loss, I just had a dollar amount in mind and when the portfolio hit it I closed everything out, took the day off and started building a new one after midnight.

    So that's how it goes.

    So far the largest drawdown has been 8%, but I can survive 50% without having to reduce size since I am way over capitalized.

    So like I've always traded, it's 90% money management and 10% trading, it's just I've always looked at each mkt individually, now I'm looking at the whole portfolio and trading it like the porfolio is the UL.
  3. So I guess when I think about it, maybe what I'm really doing is scaling in. Or averaging down.

    Get stopped out and rotate.
  4. The way I got the idea was, I was losing my ass in beans corn and crude, but I was trying to learn forex so I kept a paper account going mostly long CHF short JPY since somebody told me that was good and I was consistently making money in the paper account.

    So on 8/4 I put on 7 forex positions (just 25k each) in the real money account with no other idea than to add to winners.

    I forget what happened with beans and corn but I kept adding to the long CHF until I had 2 positions with 200k, and my account just kept growing. It was my first day to trade forex with real money and I wasn't sure what was happening.

    I had CNBC on in the back ground and Rick Santelli said something about a record day in Swiss Francs and I was confused so I just closed out everything, including the beans and corn and waited for everything to settle down and see if I had really made that much money.

    And that's when I started looking at the whole account since I guess psychologically it is easier for me to just close out everything than it is to close out my best winner.
  5. After that, I quit trading forex with real money and went back to the paper account and started experimenting with my portfolio method.

    I tried varying sizes with larger positions using tighter stops and smaller positions using wider stops, and averaging down and scaling in and scaling out and trailing stops.

    But all that did was add commissions and b/a spreads.

    Finally I just used equal amounts and the same stop on every position. About 7 positions at any one time is about what I can keep track of.

    Well, I guess it still comes down to more winners than losers, or in my case bigger winners than all the small losers, but it's just another way of looking at things.

    Hard for me to imagine a mutual fund manager closing out all his stocks just because he has a 10% profit in his fund, but at the moment it is what I am doing.

    Now for me the trading part deals more with correlation and spreading rather than entry.