Quote Originally Posted by Harry View Post
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My question to the group is “is there a better strategy to minimize risk when one wishes to leverage positions when the Robots issues ‘very strong’ signals?” Pascal has already talked about how the 20DMF is an early signal. Should we divide money allotted for the robot signals into thirds and used the 20DMF for the first 1/3 in a 1X instrument. Options are another way to capture leverage but I must admit I don’t know much about options. Paul Duncan’s methods seem promising (slope of slopes to confirm market trend) and maybe these should be utilized for the final 2/3 of the principal if one wished to add leverage (2X & 3X) positions? I have questions but no answers. Any ideas?

Harry
I just noticed this thread, Harry. Regarding the risk of distortions due to compounding, a simple strategy I like is to monitor your position compared to what it would be if it tracked the cumulative 2X or 3X percentage price change in the underlying ETF. When it gets out of whack by a certain percentage (say, 5-10 percent), add or sell shares to bring it in line.

I hope this helps.

Neil