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Demo0. KeepDreaming

Hello,
This demo gonna be like a stress-test to some of my manage criteria in a simple way. And try to prove the point that, with a conservative start and managing the risk, it’s hard to make a mess.

I want to keep my lost aversion under control.
I don’t expect profits (random Darwins, but who knows…), only don’t make a mess.

RULES:
Selection criteria are not allowed.
The management must be for a B&H portfolio, trading approach is not allowed.

10K; Leverage x2; 10 Darwins

Darwins:
Filter “NEW” + Exp<2 + TR<3 months (future performance random) + zero info available form provider (as maximum only posted at description) + 0 investors
*Only 1 Darwin by provider allowed
The first 10 with this criteria:
DYU FLQ KEA KHL MZO PWQ QRK WDE WMI ZUR

Look “inside” the Darwin is not allowed during all the test.
If a Darwin is closed or abanoned (1 month without activity) I will sell it and select a new one (if the closed p/l is <0 it will be “transfered” to the new one).

The test is failed if, at any moment:
EQ <8K (-20% loss); but is expected significantly less due a conservative management aproach
Any Darwin has: closed p/l + open p/l <-200 (-2000/10)
*Flash-carsh events tolerated, that’s a mistake due a poor selection criteria,(not allowed in this test).

My main idea in order to success:
Large SL (like a firewall, around -25% DD). Small enries on DD’s averaging down using pending orders (oviosuly with potential lost predefined). Upscale on futures DD if the Darwin makes news highs and I’m able to rise the SL. Not risking all the -200 at the first try, in order to, if the Darwin touch the SL, have the chance to have a second try (only if the Darwin deserves it and seems it’s solving the problem). If the Darwin is making profits, at highs sell and buy again in order to leverage them and upscale on futures DD.

The test will end when:
All the Darwins reach their SL. The results will be evaluated.
If selling (at any time after 6 months) all the active Darwins in the quote of their SL it would generate profits to the portfolio (the test is valid).
*I won’t be managing the test forever, if the fact that I reached the target is obvious, I’ll end the test.

The demo starts this weekend.

4 Likes

Such a full-scale experiment :sweat_smile: !

Wish you the best !

2 Likes

It’s obvious to me that the key to avoid the failure of the “test” is the money management (fit the size of the entries to the enter/exit levels, in order to not exceed the maximum potential acceptable lost, and upscale only if I have margin).
How good/bad are the rest of the rules (selection, timing, risk and optimization of the portfolio) are irrelevant for the purpose of the “test”.
This topic is not to debate about pros and cons about money management, but I think thaht underestimate this “tool” is one of the causes of some shared portfolios losing too much (according to the opinion of the investor).

Before posting the first update I want to post my noob guidelines (they’re only FOR ME) related to the “motivation” of this demo: first aproach to darwins investment and expectations.

  1. My attitude will be: if the portfolio makes profits, ALL the merit belongs to the darwins and the providers. If the portfolio loses, ALL the guilt is mine.
  2. I need mental stability (I don’t want to feel negative emotions) in order to not make huge mistakes.
  3. It’s essential to know which is my limit of lost/risk (and try to manage in order to avoid achive that limit).
  4. A Darwin is a new asset with a lot implicit uncertainty. “Bad phases” (situations with low teoric probability, or simply unforeseen) soon or late will come. So underestimate the probability of them and don’t be ready to deal with them is a mistake.
  5. It’s better for me start conservative (avoid being in a potentially “catastrophic” situation), and evolve my management progressively (more deatils will be in the nexts demos).

This is just the “theory” (Alice in wonderland). The reality will be cruel.

Thanks for reading, feel free to do constructive criticism (trolls and spammers will be ignored).

1 Like

JULY UPDATE

Resume:

2 entries (averaging down): FLQ MZO QRK ZUR
1 entry: KHL PWQ

DYU and WMI have been adandoned, and haven’t given any entry, so I’ve discarted them and selected 2 new: MLM VTO

Actual:


Potential teoric lost (investment, average quote, SL):

FLQ: -94,47
QRK: -91
ZUR: -90,25
MZO: -90,27
PWQ: -44,94
KHL: -44,91
Portfolio: -455,84

The portfolio is very young and under construction.
Considering the remaining liquidity and the actual VaR (around 1%), the volatility is very low. Performance data: (max: 0.53%; min: -0.32%; actual: -0.28%) .
Zero sell orders have been executed.

Posting an screenshot of the portfolio or of the closed p/l has zero interest for now (at least for me, if you want to see it just aks for it and i’ll post it/them). The same for if you want to see the scpecific timing and evolution of any darwin.

1 Like

AUGUST UPDATE (sorry for the delay, busy week)

Resume:
Only KEA hasn’t given entry yet. The rest are (still) in DD mode (some are in range, others are close to the SL) and don’t accept more investment (the potential lost of each Darwin is -90 aprox).

Actual situation (8/9/19):
VaR of the portfolio: 1,48% (it’s approximate, correlation between Darwins is N/A due too short track record).
Potential teoric lost of the portfolio (all Darwins touch their SL and none of them deserve a second oportunity): -816,92 (-8,17%).

Some ideas:

  1. How is performing the portfolio it’s not “nice”. But: a) only 2 months and 2 weeks b) I’m buying during a DD, and I don’t have a “magic rule” to buy just before the start of the recovery (?, random Darwins). So it’s time to wait and see the evolution.

  2. There’re some pairs of Darwins that are performing in a very similar way. It’s too soon to say that one of them should be discarted (criteria of selecting/discarting Darwins are not allowed, but analize the effect of correlation can be interessitng).

  3. I want to say that I don’t like the actual rules of the management (are just some simple rules in order to make effective money management). I think there are concept errors and a lot of margin of improvement. But another purpose of this experiment is start with simple rules and change them (once the mistake/decision has been done) to the rules I’m using in my “real” demo.
    Befor the first update (timing of entry) I will wait to make at least one entry on KEA, but I advance that a rule like “wait to X% of DD (or aprox) and then buy” it’s not good enough (obviously it’s just my point of view).