A couple of days back, I demonstrated the outcome on 10 Stocks (all ASX200 stocks) where a buy and hold strategy took place and then compared this approach against applying stop-losses. A quick recap: The buy and hold strategy resulted just on 11% in losses compared to the stop-loss approach which resulted in 7% in gains (excluding any franking credits and dividends).
This week I want to go one step further and apply Market Timing in addition to stop-losses. Market Timing is the key! The best way for me to relay the updated BackTesting applying further money management rules is via a video.
In the video I go through:
* The 10 stock list that applied a buy and hold strategy per last week
* BackTesting using stop-losses and no Market Timing per last week
* BackTesting using different Market Timing and risk money management rules for 3 different BackTests
In summary, the results ended up as follows:
* -10.84% for the buy, hold approach. No Market Timing and no risk money management
* 7.30% for the 10 stocks purchased where just stop-losses are used
* 18.49% applying stop-losses and the Confirmed Calls. Long only strategy.
* 18.92% applying stop-losses and the Primary Wave. Long only strategy.
* 36.72% applying stop-losses and a RT Kicker Combo. Long and Shorting strategy applied.
The highest performing BackTest entailed a very interesting finding for the 10 stocks looked at. I won’t spoil the surprise, have a look at the video to find out more!
Click Here to see the video.
One last note, for the final strategy which entails shorting, you can check out all the stocks that have recently been shorted in Australia per this link.