June 10, 2018
Part IV of this series considers what goes into building a stock portfolio for the long term. A look at the magnitude of the problem of finding the best portfolio mix possible to the acceptance of the best you can do which is designing a good trading system able to prosper for decades. In the end, it is the account balance that will really matter.
We need something on which to base our decision-making. It can be complex, sophisticated, or as simple as we want. But for sure, we will need some kind of "excuse" to execute a trade, whatever the decision process may be. You need a trade triggering mechanism ready to make those trading decisions, sequenced, and distributed over its 20-year simulation interval. And that strategy should be able to do the same for the next 20+ years after that, which should start now.
The following HTML file explores the possibilities of a stock trading strategy's payoff matrix with some design considerations.
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Created...June 10, 2018, © Guy R. Fleury. All rights reserved.