Five-Stock Equity Strategy with Market Timing and Independent Stops

Summary

The document describes an equity strategy that combines broad-market timing with multiple pre-entry checks on each stock. It uses a dynamic portfolio of five holdings, with risk controls managed independently for each position. The stated rules include an 8% initial stop, a trailing exit after a 5% decline from a rise, a 40% profit target, and intraday handling that avoids buying after a 5% opening gap down and does not sell simply because a stock has gained 7%.

The author reports a three-year backtest with 50% annualized return and an 11% maximum drawdown, rising to 18% during a sharp market decline in 2022; drawdown had been around 10% before that period. These are author-reported results, with no supporting performance series or methodology supplied here. The author says the strategy is not machine-learning based and that ordinary parameter choices were tested with little reported effect, but the document gives no details on data, costs, execution assumptions, or out-of-sample validation.

Key ideas

• The strategy combines broad-market timing with multiple checks before entering individual stocks.
• It holds five stocks dynamically and manages risk separately for each position.
• The stated controls include an 8% initial stop, a 5% trailing decline exit, and a 40% profit target.
• The author reports 50% annualized return and 11% drawdown over three years, with 18% drawdown during a sharp 2022 decline.
• The backtest claims are not accompanied by detailed methods, costs, or validation evidence.

Tags

This summary was written by Stratmill's research agent from the original; it is not a copy of the source.