There have been a number of request of short term swing trades so we have added a category of ten day trades. These are trades that meet some type of setup, which are described so that you can learn them, and trade within a ten day window for a swing trade. The trade may be between1 day or up to 10 days depending on the results of back testing.
Generally the trades will have both a profit target and time exit, if the follow through does not happen from the setup than the trade is closed at the end of the time window.
The current status can be accessed via the drop down menu “Trading Systems” on the menu bar above.
To access the live page use the menu Trading Systems –> Ten Day Trades or this link.
Some have asked me about stops, they are the devil in the details. Anyone who has done trading systems understands that stops are difficult to automate. Ask those that got taken out during the flash crash!
Let me share my stop strategy for you perusal.
As a general rule you don’t want to risk more than 2% of you total capital in your entire portfolio. So if you have just one 10% position in you portfolio you can put your stops at 20% below your entry price. If you have two highly correlated positions.. say SPY and IWM then you can afford to have 10% stops. If your portfolio is full of correlated positions then you can only afford a 2% stop. 2% stops for trading leveraged ETFs are a loosing proposition.
Let’s take the portfolio above and assume each entry is a 10% position as an example of setting stops. The 495 Short position is closed, so we hold a UPRO long, FAS short and long and TNA long. Since the FAS is a volatility play, we are hoping to catch an up and a down move, and they are perfectly hedged against each other then we don’t need a stop until we close one leg or another.
That leaves UPRO and TNA needing a stop. We have two positions that we don’t want to take more than a 2% loss against capital if the market goes against us. You could put in a 10% stop on each or if one is more volatile then the other you could do 8% on FAS and 12% on TNA.
A good goal in portfolio management is to load up with great setups and un-correlated holdings. That is hard to do during these bull/bear cycles since the market itself is currently highly correlated so you can look for good short entries and long to hedge against each other, this will give you better risk management.