Trading Diary, 3-20-2025

The market has been cranky since January, with a new high early in the year but lately nearing correction levels, though it seems the last few days there is a possible bottom or near bottom instead of the dip of five or more per cent that some were predicting. 

Hedging in this climate may be somewhat after the fact. Luckily, in early January, I used a few methods to reduce risk and hedge. One was get rid of some of the more volatile growth etfs in my portfolio. I also liquidated some small cap etfs, maybe 5 per cent or so of the total, which seemed more riskty. At certain points, I bought some accelerated inverses such as SDS, which do require some monitoring:  instead of liquidating stocks, you have to actually deal with another etf, figuring out where to put stops.  Overall, the hedging has kept me up for the year, a couple of percent above SPY. Beta is low, though, which may not be the best for the upcoming months  On another front, using Chat GPT, I developed a strategy of buying stocks with stops when they rise, only when they rise, and then putting a quick trailing stop under them to reduce risk. As the stock rises, more are accumulated, but protected by the trailing stop (which has to be adjusted for the increased shares).  Then there is a built in profit taking mechanism at certain points. Using a low volatility stock, MSFT, and the assumption that the market would rise 10 per cent on the year with no months having a larger than 3 per cent drop, the strategy did not produce profits but did prevent anything but a minimal loss when the market began correction and MSFT dipped. Chat GPT actually gave all the values for the transactions, doing everything but entering them.