Tips


A few tips that can be very useful if you want to put together strategies for your trading:

 

1. Number of strategies

 

The more strategies you run, the better it is. If you only have 1 or 2, you are very much depentent on these 2 strategies. If you have 5 and 1 or 2 go into a drawdown, the other 3 can probably absorb losses! I run 10 at the moment!

 

2. Diversification of your strategies

 

Minimize your risks by running strategies with different nature. Example: If you have many breakout-strategies, chose 1 or 2 you think is/are the best but don't trade only breakout-strategies!

 

3. Different markets

 

Don't trade only 1 market! Markets can be very difficult for a very long time. It can happen that there is not any mouvement in the market (which is very often not really good for breakout-strategies). Every market has phases where strategies run against you! With different markets you can avoid this problem.

 

4. Well balanced strategies

 

Your strategies should have almost the same importance (in this case: importance= max. drawdown). Example: If you run 7 strategies and 1 has the same importance than the others, then nothing is well-balanced. If that strategy goes into the drawdown, it can ruin your performance! Of course such a strategy can also boost your performance, but you should always start out from the worst!

 

5. Multi-utility of your strategies

 

If you find something that works (at least you think it should) in a market, find out if it also works in different markets! The more markets working with the same strategy, the better it is! Of course, values can be a bit different, but the nature of your strategy should be the same! But it is also possible that a strategy works very well with commodities but not at all with an index (f.ex. s&p 500)! Don't forget: If you have more markets that work with the same strategy, you also have more cases and reliable data!

 

You can always find a strategy that works well on the paper, but is a completely failure in live trading. Therefore, if I have a strategy that only works in 1 market, I wait up to 12 months to see how it performs in the future!

 

6. "Less inputs" is the key

 

next tips will follow...