Let us share with you a couple of insights on how to better approach the investment process utilizing PortfolioRunner.
Initially we created this portfolio and risk management service for ourselves and thus it reflects our point of view of effective investment analysis. We can’t state that our opinion is the only one, but it does allow us to earn money…and actually earn a bit more than the market. So, here we go:
1. First things first is that it is not all about profitability, but also about investment risks. In reality, only profitability/risk ratio makes it possible to evaluate results of any investment strategy. The best ratio available is Sharpe ratio which shows the benefit to taking a certain amount of risk.
2. Define your risk inclination. Risk inclination is basically how risky you plan on being with your portfolio. We have 3 risk levels predefined as Aggressive, Balanced and Conservative. However; you may adjust you personalized risk management settings by going to the Risk Management Center (click this button at “My Portfolio” page) and then setting your preferences to predefined risk settings.
3. Do NOT trade while markets are at high level of volatility! At “My Portfolio” page you can see markets risk levels indicated with a number in a in the ball on the far right side. 1 is the lowest market risk level while 10 is the highest market risk level. We personally do not trade when market risk level is over 7.
4. Don’t try to chase “HOT signals”. We definitely can show you a lot of stocks recommended by our strategies and which made us over 100% in a year…A lot of stock exchange services do it and we don’t. We don’t do it because buy signals without personalized portfolio risk management is simply a game. Instead, we show you real investment portfolios and they are based not just on buy/sell recommendations we produce, but also on scoring, capital diversification and protective stop risk management algorithms.
5. Don’t be afraid to experiment. We have multiple strategy creators working with us plus we have created a possibility to adjust risk management to fit your portfolio and your personal risk inclination, and so choose and combine to have better investment results. You may create more than one portfolio as well by selecting different strategies to receive buy/sell signals from and apply different risk settings to each portfolio. Track the performance of your portfolios and follow the one that you feel comfortable trading with.
6. Use margin when it’s possible. We’ve tested all our strategies on trades with and without margin that brokers offer. We tested those on real brokerage accounts with our own money invested. In mid and long term period they all are efficient and able to perform great with and without a margin. While trading with a margin, PortfolioRunner controls potential slumps and prevents margin calls. (Many financial advisers say that margin is not as good because it is essentially leveraging borrowed money, I know that we offer this, but do we want to state that we think you should anytime it is possible?
7. Follow “golden ration” rule when making a decision about how frequently you should trade. We do not like an intraday trader's idea. Some people like the intraday concept, some not, however our experience and 6 years of market analysis shows that it’s much harder to find a pattern while trading within a day rather than while working with day-to-day bars and analyzing month-to-month stock behavior. We also do not recommend the Buy and Hold strategy. There should be a golden ratio in everything you do.
We are confident that you will be more successful utilizing PortfolioRunner that you would without it. Good luck with your trades!
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predetermines new opposite trend and sets the signal for position closure. PortfolioRunner strategies have protective stop that register looses at the 2nd level of Fibonacci’ correction (as here we see the maximum probability of trend’ direction change (
at the picture). Use of wave stop corresponds to the rule of losses commitment, though still leaves a space for profitability growth.
market informed all known data about stock prices and no new data is available. Lines D & S – demand and offer correspondingly. At a moment 
stock price is 
, corresponding offer volume is 
and volume of demand is 
, 
. Under the influence of demand which is bigger then the offer, sellers increase price till 
level (when demand on a market will be equal to offer level - .gif){kind=small}
- see direction 1 on the picture). However at a price 
we’ll have new offer volume from sellers and offer will be increased till 
level (see direction 2 on the picture). Now volume of demand 
is less then volume of offer and sellers will decrease the price till 
level (see direction 3 on the picture). At this moment when price 
some of sellers will leave the market and volume of offer will go down to 
level (see direction number 4 on the picture). The same way all posterior turns to a balanced stock price are going on.