Average Down
This strategy has been published for a Pyramiding tutorial on the Backtest Rookies website.
For a full overview of the code and an introduction to Pyramiding check out our site.
Summary
The code example will create a simple script that allows us to average down whenever our portfolio is down x%. The idea will be to bring our average cost down so that we can still exit with a profit when conditions improve. With this in mind, the strategy shall also have a simple take profit exit at x% above our average price.
Inputs
For a full overview of the code and an introduction to Pyramiding check out our site.
Summary
The code example will create a simple script that allows us to average down whenever our portfolio is down x%. The idea will be to bring our average cost down so that we can still exit with a profit when conditions improve. With this in mind, the strategy shall also have a simple take profit exit at x% above our average price.
Inputs
- Target Loss to Average Down (%): This is the target percentage level will trigger us to average down. In other words, if we have a close below this level from our average buying price, we will average down.
- Target Take Profit: A standard take profit percentage level. Use this to set how much profit you will target.
- % Of Current Holdings to Buy: Is the number of shares/contracts we will aim to buy when we average down. 50 will mean we buy 50% of our current holdings. So if we have 100 shares, then we buy 50 when we average down.
- SMA Period: Defines our SMA lookback period. Our strategy will enter the first/initial position when we have a close above our SMA level.