Strategy Management for your Assets

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Strategies for your assets

Strategies are essential for successful, long-term investment in securities. An appropriate strategy should be selected for each asset and then consistently adhered to. Rule-based strategies facilitate adherence to the strategy through the use of fixed, clearly defined rules. These rules can be used to monitor a portfolio and signal the need for action.

You can enter the securities you are interested in, select a rule-based strategy and then monitor compliance with the strategy. If action is required, you can be notified.

We focus on rule-based strategies based on technical chart analysis tools. Such tools analyse the price performance of a security in the past in order to make an estimate for the future. A frequently used analysis tool is the moving average. The following example shows how a strategy based on the moving average can be implemented.

You can enter the securities you are interested in, select a rule-based strategy and then monitor compliance with the strategy. If action is required, you can be notified.

An Introduction with an example

Technical Strategies

What are technical Strategies

Technical strategies refer to chart-based analysis tools. An example of this is the moving average, which determines the average for each day on the basis of the past days. In the case of a 20-day moving average, "its" past 20 days are used to calculate the average for each day. The chart shows a moving average over 20 days for an idealised price development of a security.

Using Chart-Based analytical tools

A moving average is often regarded as a trend indicator. If the current price is above the moving average, the security is performing better than in the past. If, on the other hand, the current price is below the moving average, the security is performing worse than in the past. A strategy based on the moving average now attempts to follow this interpretation: If the price is below the moving average, the security is sold; if it is above it, it is bought. Or to put it very simply: you are invested when prices are rising; you have sold the security when prices are falling. The chart shows that with this (ideal) price performance of a security, you can achieve an increase in value of 69.7% in one year; with an aggregate performance of 142.2%.

... and what is the best average?

In such a strategy, the costs of buying or selling are decisive, as they weigh on the potential profit. The transaction costs of a large Swiss custodian bank are already taken into account in the charts. Equally important, however, is the question of the period over which the moving average should be calculated. A best-of strategy that calculates all possible averages for all days and always selects the most successful moving average in terms of profit maximisation can even achieve an increase of 94.9 % (or 254.3 %) in one year.

... and in reality?

Admittedly, the price performance of the security is optimal for this strategy. However, it illustrates the principle. Interesting results can also be achieved with such a strategy for real prices. The diagram on the right shows the application of the best-average strategy to the share price of the Swiss company LONZA. The performance is still 63.4%. Try it out for yourself by applying the strategy to a security of your choice or from your portfolio!