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This strategy will work in sideways to bullish days but when there is going to be a trend day down it will get killed if it gets caught in a move down.
The good thing is that we probably won’t get a big move down in the near term but who knows as the markets tend to be highly emotional at times…lol
I AutoTrade it. I max the number of contracts in Collective2. He usually makes money with the smaller size trades and he only increase the number of contracts when he needs to double down. This will allow to limit the size of the drawdowns while still profiting from most of the profits. I just wonder why he does not implement this himself. When he is in a loss position, his strategy is just to wait until it moves into profit again or sell at the end of the day. It is pretty basic from that perspective, he could build in a little bit more intelligence and he would do better overall.
Because you can’t just martingale endlessly into losing trades. Especially if you are using leverage like he is. After doubling down and still wrong 2-3 time, you will be in margin call.
That’s exactly what happen with both of those large draw down.
Well, he has a certain maximum number of contracts he uses. But yes, it is a very risk strategy but also with high potential results. Are there any other high-return strategies you can recommend with a lower risk profile?
Good luck finding that answer. High return low risk.
There is only high risk high return or low risk low return.
If they found that unicorn, usually they won’t share or it only last a couple years. The market is constantly changing so fast, even for 2yr+ of high return is already a good strategy. Risk level is all depend on the person. Some think 10% draw down is high risk, some thinks 50% draw down is high risk. If a strategy avg 20% a year then you can expect drawdown to be around 20%. And I would say that’s still a pretty good strategy in my book.
We will go live in the next week with 2 of our own Quant Algorithm based strategies. Those have an average return of 80-85% annually (over the last 15 years) with a sharp ratio of roughly 2.0 (which is high for a strategy that only trades once per day).
So it is possible to have a consistent long-period profitable strategy, it is just very difficult to develop it. We have worked for 1,5 years to develop it.
