The key is to roll into multiple trades with a highly accurate system. Taking profits out after each trade is spinning your wheels. Random gambling will get you killed. Take the “almost” sure thing and ignore the rest. Take a 5 year view.
Obtaining Alpha with a technical/fundamental systematic approach to trading the leading US stocks long only. If you find the very best fundamental stocks at the right time not only can you achieve a high reward/risk ratio but your accuracy can be high. IE no random trend following. You shouldn’t be at less than 80% winners. With 4:1+ a reward ratio. If you simply pick trends and follow them regardless your win ratio plummetes.
Ultra aggressive would be to trade one stock at a time for 5 successive trades. Huge rewards possibly but comes with huge risks. Trade very light here. Accounts less than six figure I would recommend doing this. Diversify as it gets bigger.
Portfolio of eight positions for a smoothed approach.25%-40% per annum less than 20% draw-downs. (IN bull markets)
Average trades per 12 months: 8
- US equities
- Long only
- High priced, highly liquid stocks
- Technical and fundamentals
- 5-12 months moves on average
A good single stock manager will always outperform a huge diversified fund. You don’t even have to be exceptional. Just disciplined. Hold less than 10 positions (the lower the better but go too far and you will suffer huge losses)
Ed Seykota and Tom Basso are two traders you should follow and read up on.
Past performance does not guarantee future performance.There is a risk of losses.