Strategy Bias

Sell the highs, buy the lows, take their money, bash their nose.
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ronin
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Joined: Thu Jan 01, 2004 12:00 am

Strategy Bias

Post by ronin »

> make a trade everyday, but close end of the day to avoid holding it overnight



Yes, that is my point. You are closing at the end of day because it is convenient for you, not because it is good for the strategy.



Let me give you two examples.



Example 1



E-mini S&P ticks up. Single stocks don't tick up (yet). You can get the same exposure for two different prices. So you buy single stocks, sell futures.



And then... you hold until close?



Example 2



Tesla and General Motors are valued roughly the same. GM has a lot more value, Tesla has a lot more growth. But you look at it, and there is no way Tesla can grow to be as big as GM within any reasonable time frame. So you buy GM, sell TSLA as a value against growth play.



And then... you hold until close?



You get the idea. They are both reasonable strategies, but not if you hold until close.



First work out how your strategy should work. What's the holding period, and why. Why is the most important thing of all. If you don't know why it works, don't trade it. Nothing good will come of it.



Once you know how and why it should work, then look at your constraints and see what is the best you can do within the constraints.
"There is a SIX am?" -- Arthur
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