This strategy is designed to take advantage of the short-term price corrections or pullbacks that happen in an ongoing long-term bullish trend.
The psychology behind a mean reversion strategy is to exploit human behavior at the price extremes. With this strategy we want to take advantage of those few times when the fear is at the highest in the stock and people are scrambling for an exit at any price. This creates short-term inefficiencies and opportunities for short-term gains when the stock snaps back to its original trend.
What are the advantages of the model?
Diversification: The strategy provides excellent diversification to your long-term portfolio which will only appreciate when there is a broader uptrend in the market. The strategy will have a very low correlation to your long-term holdings. Our Hybrid Model utilizes the same concept of diversifying into two low-correlated strategies.
Additional Returns: If you have an existing portfolio of stocks, you can apply our mean reversion strategy to earn extra returns. You can take conservative leverage on your portfolio to improve your returns with the same or less risk.
Low Drawdown: Mean reversion strategies typically have low drawdowns as it has a high number of winning trades and a low holding period. Our strategy has an average holding period of fewer than 3 days.
Proven strategies based on data & facts and not on subjective analysis.
Full disclosure of trading rules: This is not a Black-Box trading system. You’ll have a complete understanding of the rules, rationale & logic behind all the systems.
Capital Preservation: There is an inbuilt capital preservation mechanism to save us from large market declines like 2008-2009.
Time Effective: You can easily implement the strategy by spending just 10 minutes each day if there are any opportunities. You can continue with your day job or business. No need to remain glued to the computer screen watching every tick change.
Economical: You don't need expensive software & infrastructure. Most PMS & Mutual Fund charges anywhere between 1-2% fees irrespective of the performance. Most PMS share 15-20% of the profits that they generate. Here we only charge a flat subscription fee so you can earn the maximum return on your capital.