They are institutions, so they cannot get in and out quickly, as we do. Not just because of their size, but also because they will do some analysis of the business. So a few weeks or months of consolidation may not matter to them, if they believe the relative long term story is intact. They may or may not take decisions based on single stocks, and may look to make return on the whole basket, in a period of time.
Can we do what they do, depends on the objective of our strategy. If we don’t mind higher taxes, brokerage and other charges, and are confident enough of our system to catch new trades, we can move in and out when we see momentum waning in our positions. One way to look if this works or not is to have some data of at least some period, to draw inferences. Do what we want to do, experience gains and losses, let some data come, let some time pass, analyze all of this, and change or let it continue as per the requirement.
One thing that can derail the entire process is the change in the market regime, if there is no conducive market, we may have to change our process, or experience frequent stop losses/drawdowns. It will take a lot of time and tinkering to come up with a system that can work in all kinds of environments, if it can be created, or create multiple systems for different environments.
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