DIYQuant Trading Strategy aims to achieve Abnormal Returns by making trading decisions based on analysis of thousands of stocks to construct a profitable portfolio and anticipate market movements.
In a nutshell, the algorithm is a hybrid strategy comprises of trend following and contrarian trading. It aims to pick trending stocks that have potential for huge returns while riding in the same direction as the market. Winning trades are left to run to achieve even higher profit while losing trades are sold off quickly to keep losses small.
The algorithm also performs overall market and sector analysis to anticipate market/sector movements based on a proprietary component named Market-wide Trend Analysis (MATA for short). The system will switch between aggressive and defensive mode depending on the trend of the market/sector and adjust the portfolio accordingly once the trend starts to reverse. This provides the system with a good edge as it will always attempt to keep itself on the right side of the market.
Apart from that. it also perform portfolio risk management and position sizing. The idea is not to put all the eggs into one basket to mitigate concentration risk. This ensures survivability, and reduces the risk of ruin.