Help me Refine 1 of my trading strategy

[babymush]

Hi

I have this following trading strategy that works for me but during this recent market correction, I found that I was taking a little too big risk of my capital.

Please help to see if you can fine tune the system

1) I buy options of ETFs of the Straits Time Index (Singapore) which is my home country

2) I buy them ONLY when there is a long term uptrend in the market (like now)

3) I buy them ONLY on the day where is is more than a 1% or more drop in the STI index
This is based on the assumption that we buy on dips during a uptrend

4) I sell when there is a spike upwards of more than 1%.

5) If the market continues falling for the 2nd day, 3rd day where there is a 1% or more drop, I will continue buying into the market.

however, I found that during this correction, Singapore STI actually fell by more than 1% for 6 - 7 days and I have maxed out my total money on the 4th day which is bad for me as I am unable to buy more

How can I avoid this situation happening again so that I will still have cash on hand to buy when the market suffers a BIG correction like 10% or more

and when the market goes into a recession breaking its uptrend.

As the warrants that I purchase are short term by nature expiring in 2 months or so, I don't have the luxury of holding them.

Please assist.

Thank you very much for any advice.

 

[tightstops]

i think the first problem is if you continue to add as the market goes down its not whether you will lose your money but when. sooner or later a market will retrace more than a few percent. you will face the same problem again if you decide to buy after a 10% drop just because the market has dropped 10%. what happens if it then drops 15%?
im also a fan of buying dips in a bull market but hard as it is you need to be able to say that ones wrong and close rather than its dropped 1% this is an even better deal until theres no bankroll left.
how about if it drops 1% buy if it drops a further 1% close if it gains 1% close or close half and the rest at 2%.
if youve judged that the trend is up correctly you will mantain a modest edge but if youve judged wrong you live to fight another day. that the market will head up again after you close for a loss sometimes is just the way it will be sometimes.

 

[fibonelli]

Hi BM,

Have you backtested this strategy in a bear market?

Fibonelli

 

[babymush]

Hi

The first thing is to determine the long term trend if we are in a bull market or a bear market (of course this would be subjective)

If it is a Bear Market, I will sell on 1% increases instead of Buying on dips.

however, the only problem is the entry strategy ..