So, here is the idea:
Most people use dollar cost averaging in their 401k and have % of stocks and % of Bonds. But, they let their entire portfolio bounce around with the market.
My idea is to lock in the upside.
For example,
A person puts in $1000 into their 401k every two weeks. Let say they buy the same ETF (SPY). But, they put in a trailing stop of .50 on each share.
They buy $1000 of SPY @ $10 a share, next paycheck $1000 of SPY @ $20 and so on and so forth.
Fast forward 8 paychecks. You buy the $1000 of SPY stock at $50 but, the market turns down and you are out of your entire position at 49.50 a share. But, if the stock returns to 49.50 you buy back again at it goes up to 56. But, the market tanks for a long time. You were out of the position at 55.50. But, new money from your paycheck is buying new shares on the way down, let say it hits $15 a share. You lose .50 a share on each batch of stock you buy on the way down. But, as the stock recovers, you buy back each batch of stock at the price you sold it on the way up! I will have to play with a few variables since stock can open up or down from the previous close. And I have to take expenses into consideration.
How can I test this in Ninja Trader? Thxs
Most people use dollar cost averaging in their 401k and have % of stocks and % of Bonds. But, they let their entire portfolio bounce around with the market.
My idea is to lock in the upside.
For example,
A person puts in $1000 into their 401k every two weeks. Let say they buy the same ETF (SPY). But, they put in a trailing stop of .50 on each share.
They buy $1000 of SPY @ $10 a share, next paycheck $1000 of SPY @ $20 and so on and so forth.
Fast forward 8 paychecks. You buy the $1000 of SPY stock at $50 but, the market turns down and you are out of your entire position at 49.50 a share. But, if the stock returns to 49.50 you buy back again at it goes up to 56. But, the market tanks for a long time. You were out of the position at 55.50. But, new money from your paycheck is buying new shares on the way down, let say it hits $15 a share. You lose .50 a share on each batch of stock you buy on the way down. But, as the stock recovers, you buy back each batch of stock at the price you sold it on the way up! I will have to play with a few variables since stock can open up or down from the previous close. And I have to take expenses into consideration.
How can I test this in Ninja Trader? Thxs
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