Aug. 12, 2021

This HTML file can be very helpful to anyone designing automated short-term stock trading strategies. It has deep implications. It deals with correcting for long-term portfolio return degradation, how to fix it, and even how to reverse it.

It builds on mathematical equations used in describing the outcome of our trading portfolios and shows how easy it is to improve on these designs with simple trade-triggering techniques. As if saying that your trading procedures can be greatly improved just by requesting more and letting long-term compounding do its job.

The main idea is to stop long-term return degradation, which tends to make trading strategies break down or fail going forward. Not only can we stop return degradation, but we can also easily reverse it to make our strategies prosper and thrive instead of their overall return degrading and dying. As always, it is only if you want to do it. But regardless, you should be aware of how to compensate for return decay, overcome it, and reverse its detrimental effects.

Take the time to play with the equations provided and adapt them to your own trading strategies. Study the limits of what you could do or can do. It will open portfolio building and portfolio reengineering to anyone wanting to make it big for whatever purpose. Evidently, there will be work to do, but it will be based on a solid foundation from which one can soar. And yet, you should find it so simple. Make the following trade imbalance hold: (1 + fW) ∙ (1 – fL) > 0.


Click tor the HTML version.

The article is a little long, I agree. It is there to protect your portfolio, not mine. So, you be the judge.

Related Articles: 

The Makings of a Stock Trading Strategy – PART I

Your Automated Stock Trading Portfolio

On The Use of a Rebalancer, a Flipper, and a Flusher

Making Money with no Fault of Your Own

Designing Successful Stock Trading Strategies

Winning The Automated Stock Trading Game

Stock Portfolio Backtesting

The In and Out Stock Trading Strategy

Aug. 12, 2021, © Guy R. Fleury. All rights reserved.