1Lun
20%pa is ambitious, but achievable.
You have presented a current selection from your asset universe. Of course, this is not enough to achieve your goal. You need defined entry and exit criteria.
The central question remains: what is your strategy?
Value, momentum, mean reversion, short/medium-term trading...? What do the backtests say?
Without answers to these questions, the goal remains a pipe dream. 🤷
You have presented a current selection from your asset universe. Of course, this is not enough to achieve your goal. You need defined entry and exit criteria.
The central question remains: what is your strategy?
Value, momentum, mean reversion, short/medium-term trading...? What do the backtests say?
Without answers to these questions, the goal remains a pipe dream. 🤷
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@Epi What do you mean by the backtests? If he bets on smaller stocks with growth, which may not even be profitable, the backtests are not necessarily meaningful.
If you do a backtest on the defense sector, for example, you won't get comparable figures over 10 years, even 5 years, will you?
I'm really interested in how you, as an expert in this area, assess this, as I've never done this for my strategy, which is similar to his except for $BTC.
If you do a backtest on the defense sector, for example, you won't get comparable figures over 10 years, even 5 years, will you?
I'm really interested in how you, as an expert in this area, assess this, as I've never done this for my strategy, which is similar to his except for $BTC.
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•1Lun
@Multibagger If you bet on smaller, unprofitable stocks with growth, then not just any of them. You will already have certain selection criteria and trading rules. And these rules will change your specific portfolio holdings on an ongoing basis. And these rules should lead you to your goal of 100k, even if you don't know today which specific stocks you will be holding in two years' time.
The crucial question now is whether these rules only work in the current market environment or in others as well. And this is exactly what you need to test if you don't want to sail blind.
Backtests don't look at whether your stocks performed well in the past, but whether your rules would have allowed you to hold stocks in your portfolio that would have performed well in other markets in the past.
Of course, backtests are only ever a look into the past. But knowing how a rule basically works in crashes and booms is better than just trading at random.
The crucial question now is whether these rules only work in the current market environment or in others as well. And this is exactly what you need to test if you don't want to sail blind.
Backtests don't look at whether your stocks performed well in the past, but whether your rules would have allowed you to hold stocks in your portfolio that would have performed well in other markets in the past.
Of course, backtests are only ever a look into the past. But knowing how a rule basically works in crashes and booms is better than just trading at random.
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•@Epi Thank you for the explanation. I am very realistic and think that any backtest would say it is not possible to net 45% every year with my strategy.
Then I'm the one who doesn't know that and just tries! 😉😂
Then I'm the one who doesn't know that and just tries! 😉😂
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•1Lun
@Multibagger I wouldn't be so sure that your strategy wouldn't be successful in the backtest.
I have also tweaked 3xGTAA in regions of 50%-120%pa.
For me, backtests mainly have an orientation function: I know which rules work under different scenarios and can estimate what drawdown and return I can expect.
For example, if 3xGTAA is still scratching the 0 line in 2025 YTD, that doesn't make me nervous because that was quite normal in the past. I know there will be months of double-digit % gains again in the foreseeable future.
I used to trade without any backtesting at all, very similar to you. However, I have come to realize that it is very difficult for me in the long term to avoid all the psychological traps that eat up profits that have been built up over a long period of time. I'm also a perma-bear by nature. But as such, you don't make lasting profits on the stock market. 😅 Most recently, I also took responsibility for the family assets.
So I switched to rule-based trading. The emotions on the stock market remain, but they hardly influence my trading anymore. This reassures me and my portfolio. 1.5-2% every month would be nice.
However, maybe you're the one who doesn't know what he's doing and still reaches his goal? With 3-30k, that's not a problem at all psychologically. But at some point you will want to minimize the chance and then rule-based trading comes into play - and the need for backtests.
I have also tweaked 3xGTAA in regions of 50%-120%pa.
For me, backtests mainly have an orientation function: I know which rules work under different scenarios and can estimate what drawdown and return I can expect.
For example, if 3xGTAA is still scratching the 0 line in 2025 YTD, that doesn't make me nervous because that was quite normal in the past. I know there will be months of double-digit % gains again in the foreseeable future.
I used to trade without any backtesting at all, very similar to you. However, I have come to realize that it is very difficult for me in the long term to avoid all the psychological traps that eat up profits that have been built up over a long period of time. I'm also a perma-bear by nature. But as such, you don't make lasting profits on the stock market. 😅 Most recently, I also took responsibility for the family assets.
So I switched to rule-based trading. The emotions on the stock market remain, but they hardly influence my trading anymore. This reassures me and my portfolio. 1.5-2% every month would be nice.
However, maybe you're the one who doesn't know what he's doing and still reaches his goal? With 3-30k, that's not a problem at all psychologically. But at some point you will want to minimize the chance and then rule-based trading comes into play - and the need for backtests.
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