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Combined Trading Strategy

Short Description
This strategy is a combination of the Basic and Sell-Short Trading Strategies. One can spend 50% of the trading capital to trade stocks using Basics Strategy and 50% to trade stocks using Sell-Short Trading Strategy.

Basic Strategy



 
Sell-Short Strategy




More details


The Combined Strategy has lower risk and better risk/return ratio than other strategies. However, one

needs a larger trading capital to minimize the influence of the brokerage commissions.

It worth mentioning that 50/50 capital division may be not optimal for some markets. For the bear market, for example, it is better to use larger portion of the capital to sell short. In our history files we consider only 50/50 case.

The Figure shows quarterly returns of the Combined Strategy and quarterly returns of the Dow Jones Industrial Average and the NASDAQ-100 index. The period from January 1996 to September 2002 has been considered.

 

 

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