Well that rounds out the 10-part series! But it is fairly fun, so I think I'll continue to do it. We hit this milestone on a SGT Friday night, no less, ready to go into the last trading day of the week!
This clip mentioned an idea of back-testing. And I find this was actually helpful before I first entered my position. Back-testing allows me to verify my hypothesis.
Scrolling more, I discovered another channel Sully's Advice which may be useful to learn Risk Management
Risk Management
- Win Rate Strategy - win 8 of 10 trades. But 1:1 risk:reward ratio.
- Risk:Reward Strategy - 1:2 ratio, win 5 of 10 trades.
Dude did 3 year back-test, usually going for 1:2, but sometimes 1:1. So it seems like having a strategy, testing it before applying would be very useful.
Portfolio Distribution
For this, I read that ideally you don't want to have more than 2% in a single stock. But is that different for Magnificent Seven?
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