I've been working on a variation of my One Percent a Week (OPPW) strategy that introduces a new optimizable parameter: a profit-taking threshold. When a trade closes with a profit of at least X%, the strategy exits the position.
The results have been interesting. With the threshold set to 6%, the new variation actually outperforms the current OPPW strategy in backtesting.
But the 3% setting might be even more interesting from a practical trading perspective. While its overall performance isn't quite as strong, it still produces respectable returns with significantly lower market exposure. Taking profits earlier also makes it psychologically easier to trade, at least for me. There's something appealing about locking in a decent gain rather than watching a profitable position potentially give it back.
It's a good example of how the strategy with the highest backtested return isn't necessarily the one you'd be most comfortable trading in real life.
I'll be exploring these variations in more detail during Tuesday's Patreon live stream, comparing performance, exposure, and the tradeoffs between maximizing returns and making a strategy easier to stick with.
If you're interested in following along, you can join us here:
https://www.patreon.com/c/GlitchWealthLab
The results have been interesting. With the threshold set to 6%, the new variation actually outperforms the current OPPW strategy in backtesting.
But the 3% setting might be even more interesting from a practical trading perspective. While its overall performance isn't quite as strong, it still produces respectable returns with significantly lower market exposure. Taking profits earlier also makes it psychologically easier to trade, at least for me. There's something appealing about locking in a decent gain rather than watching a profitable position potentially give it back.
It's a good example of how the strategy with the highest backtested return isn't necessarily the one you'd be most comfortable trading in real life.
I'll be exploring these variations in more detail during Tuesday's Patreon live stream, comparing performance, exposure, and the tradeoffs between maximizing returns and making a strategy easier to stick with.
If you're interested in following along, you can join us here:
https://www.patreon.com/c/GlitchWealthLab
Rename
@Glitch,
That's great. There are many possible variations of the OPPW core strategy.
You are right. The game is to make money, and finding ways to make it easier to win is a good move.
My friend often overrides my program version, and I always encourage her to do so. She follows the program and gets in on Mondays. Once a position reaches her profit target within one to three days, she overrides the program and takes the profit, which she does often.
We call it the Ka-Ching principle: the money is there; take it (she had 55 such overrides over the last 15 months, and her CAGR is at 141%). As you said: don't wait for the paper profit to disappear. At times, with her discretionary playing method, she also takes a loss, but usually gets out early there too. Her chicken view of risk is also a good attitude to have in a high-volatility trading environment.
Everyone wanting to use this strategy should adapt it to their trading style, just as you did. I did the same with your 2022 version. If you do not like certain features, change them. Don't necessarily adapt to the program; make it adapt to you and what you want to gain from it.
The program doesn't understand the market, but your experience and knowledge do. You can override the program from the outside to improve performance, even skip weeks or trades, as my friend does. It is all up to you.
That's great. There are many possible variations of the OPPW core strategy.
You are right. The game is to make money, and finding ways to make it easier to win is a good move.
My friend often overrides my program version, and I always encourage her to do so. She follows the program and gets in on Mondays. Once a position reaches her profit target within one to three days, she overrides the program and takes the profit, which she does often.
We call it the Ka-Ching principle: the money is there; take it (she had 55 such overrides over the last 15 months, and her CAGR is at 141%). As you said: don't wait for the paper profit to disappear. At times, with her discretionary playing method, she also takes a loss, but usually gets out early there too. Her chicken view of risk is also a good attitude to have in a high-volatility trading environment.
Everyone wanting to use this strategy should adapt it to their trading style, just as you did. I did the same with your 2022 version. If you do not like certain features, change them. Don't necessarily adapt to the program; make it adapt to you and what you want to gain from it.
The program doesn't understand the market, but your experience and knowledge do. You can override the program from the outside to improve performance, even skip weeks or trades, as my friend does. It is all up to you.
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