To begin, it is hard to argue that having a predetermined maximum acceptable loss on every stock one owns is not a good idea. And a system that follows the issue price as it rises and falls. I have also heard the old ”Well you could get out too soon…” and am reminded of the Casino Owners Creed. ”You can’t win if you’re not in.” Right. But having been a regular user of Trade Stops service for 3 years, I am puzzled by the frequent result of the Risk Rebalancer feature. My experience has been fairly consistent. The Rebalancer nearly always want to sell large chunks (up to 51%) of my winners and reinvest in the losers. I operate on a different strategy which is ride your winners and prune/kill your losers. Of course I have never seen this strategy back-tested or even discussed except for the winners part. And unless you have entered the stops in your broker portfolios (a really bad thing to do) you can always adjust them to current conditions.
Love to see some comment about this.
PS: I have asked both Richard Smith (by email) and Porter Stansberry (one of my major brokers and an investor in TradeStops) and never gotten an explanation.
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