Paper Trade Exercise: Throw a dart, roll a dice, blindfold pick… whatever, make a random stock selection from a bunch of liquid, relatively high beta stock. Your strategy for trading this stock is simple:
- Purchase only when the main index is trending up (say two consecutive ‘up days’)
- 1% stoploss
- 7% profit (sell) target – you may let it run past this point and make a discretionary exit, but not let it drop back below the 7% target.
- If the stock price moves up, move your stoploss up to your purchase price so that the worst case scenario from this point will be a scratch trade (no profit or loss)
You will make a profit over the long term (100 trades plus). But you will not adopt this as a real life trading strategy – why?
Regards
Kevyn T
- Purchase only when the main index is trending up (say two consecutive ‘up days’)
- 1% stoploss
- 7% profit (sell) target – you may let it run past this point and make a discretionary exit, but not let it drop back below the 7% target.
- If the stock price moves up, move your stoploss up to your purchase price so that the worst case scenario from this point will be a scratch trade (no profit or loss)
You will make a profit over the long term (100 trades plus). But you will not adopt this as a real life trading strategy – why?
Regards
Kevyn T
