What does a study such as you describe say is the contribution of shorting to a trend-following system?
I agree that going short and long are not the same thing in different markets. I don't trade stocks at all, just forex and indices, plus occasionally crude or gold. Stock market indices have an inherent buoyancy and upwards momentum. I never short the indices. But forex pairs have no inherent movement in either direction so I short forex pairs as often as I go long. Though I admit I probably run fewer positions over a year which are long JPY and EUR and certainly not for long periods.
That's because the indexes are managed. The poor performers are thrown out and the best are added. Not so with individual stocks. The index will probably always come back. Individual stocks not so much.
Reward is not limited if you are trading stock options. You could easily nail multiples of 100%. Doesn't happen all the time but, I have gotten 3 digit returns on stock options trades, multiple times. Returns of 69%-85% are common. There is also, no rule that says, you have to give back all your profits. Nothing stops you from exiting your position and protecting your profits.
%% Good points. [1] MY insurance inverse ETFs type trades may not be the best way to do it. But i factor in\ it tends to keep me from meddling with profitable longs.. So It's good for me. And in some case i self insure it, so to speak [2]But there are other important issues, important in a capital markets. [2.777 ] Surely in this example , the fundamentals justify a short\FB. [Not long or short FB as of now 1:28 CST] NOT that any business always makes a profit every FRI. Put another way, FB censored enough people\ the chickens come home to roost+ plenty of customer left...............................
I don't understand options. When you say returns of 85% I have to assume you mean on capital invested. Are you not then risking 100% (What you paid for the option) to earn 85%
Not sure I follow you here. Hell not sure I follow you anywhere. An insurance inverse ETF is buying an inverse rather than selling a long position when the market moves against you. So the minute you buy the inverse you guarantee that which ever way the market moves you won't lose any money. Almost the same as going to cash.
%% Actually sounds like you got 97-99+% of it. But the 3% to 1% you did not mention, follows. [1]FEB can be a historic weak month, maybe not as weak as SEPT. So you mentioned cash,so yes\ more cash in FEB [2]I like good uptrends. UDOW is up 1.3% this week, cut a loss anyway. [Could have done a SDOW or DXD helper insurance type trade.] But its too close to 200day moving average to keep my longs on UDOW [Actually DIA/DOW may go up, but i dont like average UP/trends., especially if they happen in FEB] In case your canadian ticker does not show it, UDOW is 3 times ETF in DOW or DIA [2.777] So sounds like your sarcasm is right,quote '' will not lose any money'' LOL''. By the way as noted, before ,I would never pay a premium on insurance trade anywhere close to what is being insured. [3.777] IF done right its better than cash. So the main points; self insure sometimes , which means simply trend follow + cut a loss as planned. And as you noted before; my comments do not apply to single stocks ,DAL went to zero/bankruptcy......................................................................................
No study. Fire up a spreadsheet and do your own tests. Why would you believe something that has been fabricated by a random online guy? Do your own research and verify for yourself.