Introduction

In this topic, we are going to demonstrate how we can preserve our stock portfolio which is an extremely vital tactic in our portfolio management by using the trading strategies. To read the introduction of this blog, you can refer to MQ Trader – Portfolio Protection Strategy (Part 1).

There are several creative ways to protect portfolio such as diversification, buying put options and hedging with stock index futures that are used by many experienced traders when the market is bearish. MQ Trader would like to introduce a simple and effective method that can help us to exit from our position before the share is going to experience a long-term down trend.

MQ Trader Trading Strategy on VS

Figure 1: EMA 5 Crossover Daily Chart

Figure 2: MACD and RSI Daily Chart

Figure 3: ADX Crossover Daily Chart

Figure 4: Guppy MMA Daily Chart

Various trading strategies are used to compare results with each other, so that false signals can be filtered to increase the accuracy of the trading signals. Generally, EMA 5 Crossover is a highly sensitive trading strategy due to its calculation, so the trading signals appear within the shortest period (5 Feb 2018 – 7 May 2018).  To know more about the trading strategies, kindly visit EMA 5 Crossover, MACD and RSI, ADX Crossover and Guppy MMA.

Table 1: Percentage of loss incurred if VS share is not sold upon the existence of sell signal.

Figure 1 to 4 shows that all of the 4 trading strategies were able to detect the sell signal before the share price started to drop. To view the technical charts in MQ Trader system, please visit MQ Trader technical chart.

By following the sell signal, VS shareholders can avoid the share price to drop by a large value ranging from RM 0.75 to RM 1.00 per share if the shares are sold upon the existence of the sell signal. As a result, we can prevent our capital from being trapped in VS share which is encountering a long-term bearish trend for half a year. Table 1 indicates that our capital is able to be protected from losing up to 43.48% when we follow the sell signal generated in each trading strategy.

At the same time, we can search and invest in other up-trending stocks by using the sales proceeds while waiting for VS share price to rebound for maximizing our profits within a short period. Traders should always bear in mind that “Never fall in love with a stock” by looking for opportunities in up-trending stocks instead of holding a long-term down-trending stock and expecting the share price to rebound in the future.

Conclusion

Protecting capital is as important as knowing how to buy and sell the share at the right time to achieve compounding effect in our investment. We should always look for opportunities in up-trending stocks to reduce our opportunity cost. To see how to filter up-trending stocks, you may visit MQ Trader – How to pick a stock? 

Community Feedback

We encourage traders to try out and evaluate the MQ Trader system and provide us feedback on the features you like to see in the system. We have received many positive feedbacks so far, and we are currently compiling and reviewing them for possible inclusion into the next release of the system.

We would like to develop this system based on community feedback to cater for community needs. Thanks to all those who have provided valuable feedback to us. Keep those feedbacks coming in!

Disclaimer

This article does not represent a BUY or SELL recommendation on the stock covered. Traders and Investors are encouraged to do their own analysis on stocks instead of blindly following any Trading calls raised by various parties in the Internet. We may or may not hold position in the stock covered, or initiate new position in the stock within the next 7 days.

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MQ Trader stock analysis system uses Artificial Intelligence (AI), various technical indicators and quantitative data to generate accurate trading signals without the interference of human's emotions and bias against any particular stock. It comprises trading strategies which are very popular among fund managers for analysing stocks. 

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