Gradual entry and exit - a composite strategy
Gradually open positions in the stock as its price drops from the all-time-high and close the positions as the stock price advances.
The composite strategy combines individual simple buy-dip strategies operating on portions of the capital.
Gradually buy Facebook (FB) as the stock price drops and close the positions as the stock recovers. Invest for the period of 3 years.
Follow the following schedule for position open and close:
- enter on - 5% from the all-time-high, exit on 10% profit
- enter on -10% from the all-time-high, exit on 10% profit
- enter on -15% from the all-time-high, exit on 10% profit
- enter on -25% from the all-time-high, exit on 15% profit
- enter on -35% from the all-time-high, exit on 20% profit
Simulation on a single period
Note: We quote the results for just the most recent 3-year period from 2016-02-25 to 2019-02-24. Review the simulation for other periods.
|Annualized return||7.61%||Compound annual return (CAGR) over the period|
|Max drawdown||-5.31%||Maximum loss relative to the initial value experienced over the period|
Note: We simulate over all 3-year periods since Facebook's IPO in 2012.
|Percentile 20% of annual return||14.94%||80% of the periods produced this annualized return (CAGR) or better|
|Percentile 20% of max drawdown||-8.69%||80% of the periods experienced this max draw-down (relative to the initial investment) or better|