I have yet to see gambling theory designed to help you win at a game that doesn't even give you a 50/50 chance(blackjack, craps, poker, etc) applied to a game that gives you a 60/40(The market).
But I'm trying it. I hope this is the right venue for my question.
One aspect of game theory imho is to control what you can control and the game will play itself to some degree. If an average player with better bankroll, money management and discipline skills (things you can control) is playing against good game players(things you can't control), without those skills, the average player has the advantage over the longhall. And his risk of ruin is almost non-existent.
I had been mostly a buy and hold/accumulation faze IRA investor, all mutual funds, until 2009 when the economy tanked and accumulation stopped due to employment difficulties. Poker fills the gap for now. Anyways, I was fully invested with nothing to add to my positions in my account at the market bottom, 2009. A big missed opportunity. I haven't seen many, if any, good "when to sell" articles to raise moneys for a downturn in a bull market. Nothing clear and definitive that you can control. Since 2012 I have been using a regressive betting scheme from an old Blackjack book I read in the 80s. Which I have modified to suit the market since we don't use chips. It's a simple money management pattern for buying low and selling high.
Basically, if your equity fund goes up 10% in cash value, you sweep 5% to cash, bonds or a fund that is down 10% and reset your start point at the new fund balance. If it goes up another 10%, sweep another 5% and reset, etc.
If your equity fund goes down 10% in cash value you add 10% in cash value from cash, bond or an equity fund that is up 10%. Reset your startpoint. If it goes down another 10%, add 10% and reset, etc.
With this pattern we make money in a choppy market with no commissions or emotions.
My question is -Are these percentages optimal? or for example should it be a 7% sweep and 15% rebuy? 8% moves? I'm also limited by a 60 day frequent trader policy which hasn't been an issue with 5/10 percentages. I don't know how to back test this.
I've noticed my trades are usually a day or two ahead of the momentum pundits, I'm selling when they say buy on TV. Or buying when they say sell.
Finishing gambler cliche:
Amateur gamblers fly to Las Vegas with $500 hoping to win $5000.
Professional gamblers use $5000 to win $500.
tx for reading,