Diversification Squared

Outsmarting the Financial Markets

Diversification Squared

Outsmarting the Financial Markets

Stelinvest

Our Trading Approach

Reasonably Diversified Trading Strategies

Vast majority of (mainly retail) traders on financial markets lose their money in the end. There are many reasons for this statistics, including emotions (greed / quick profits) as well as using too high leverage which often leads to quick loss of equity (own funds). We look for the rest – the successful traders and their best performing strategies.

Stelinvest specializes in selection and mixing of the best trading strategies into one diversified strategy with ‚optimised‘ mix of profit and stability. That’s the main idea behind what we call Diversification Squared.

While trading on financial markets needs the right mindset, great amount of skills and experience, and sticking to a good strategy, we have developed a system for analyzing and identifying the best performers in the market.

One single trading strategy, by its nature, does not usually produce stable results over medium to long term. While it is natural that profitable months are sometimes followed by loss making one(s), we believe combining more, carefully selected, well performing strategies into one strategy, results in much more stable performance with great results.

Stel Strategies

Carefully selected trading strategies

We focus on trading indices, forex and plan to trade also commodities. Currently we have 2 strategies:

  • Stel Mix – combining indices and forex strategies trading in currencies pair of USD, EUR, JPY, GBP, CAD, AUD, CHF, NZD, SGD
  • Stel Index – trading various major stock indices, e.g. DAX, FTSE, Dow Jones, S&P 500, NASDAQ, ASX, CAC, NIKKEI

The strategies we use are both intraday (trades are closed within the trading day) and swing strategies (trades can be open for several days). Each strategy that we use must undergo rigorous selection process.

There are millions of traders and trading robots on financial market. Only a really small fraction of them has positive performance in the long term. We have developed a proprietary assessment approach, which we apply to assess various trading strategies and select the best ones for our master strategy. Our assessment process has 4 key steps:

1. Initial screening

Brief review of results, charts, drawdown and trading history

2. Trading history analysis

Computer-based big data analysis

3. Deeper assessment

Analysis of trading style and risk management and particularly management of critical situations by the trader

4. Observation & Test

Real account testing prior to adding to overall strategy

Normally, only a few strategies pass the first 3 steps and proceed to step 4. After we are all happy with the results, we add it to the master Stel strategy.

Risk Management

Stability as primary goal

Each strategy has predefined trading rules, which include criteria for opening and closing the trades. Entry and exit criteria for each trade (incl. Take Profit and Stop Loss levels) are determined based on the long term back testing as well as tested in real-time trading. Risk per trade (that means loss in case of hitting the Stop loss) is set at max 1% of equity, so trade size for each position is adjusted accordingly. In some cases, the Stop loss is adjusted to break/even position after the trade reaches certain profit level. As the markets are constantly changing the strategy entry and exit criteria are regularly adjusted to achieve best performance. Reward to Risk Ratio (RRR) is set at minimum 1:1 (in most cases around 2:1).

There are 2 variations of our strategies – Opti and Dynamic. The only difference between them is trade size, which is double in Dynamic strategy. That means double potential risk / profit.

The strategy is monitored daily to ensure that any extraordinary and material actual or potential negative impacts are managed as best as possible – this involves also manual closures of trades.

The risk management procedures and tools to manage the overall stability include:

  • Trade with low leverage (1:30 and 1:20) – as required by ESMA (EU regulation authority)
  • Possibly open more trades at the same time, but with low trade sizes
  • Set limit on overall drawdown (25% for Opti and 50% for Dynamic)
  • Avoidance or management of (potential effects of) critical events

Results of Stel Mix

Live trading data

About Us

Responsible investors

  Stelinvest Ltd. is based in Bratislava, Slovakia (EU). Our vision is to develop a portfolio of trading strategies that outperform the markets in terms of performance and stability / risk. We are a team of senior-level managers with decades of experience in corporate world (financial advisory / big 4, retail banking, sports betting, FMCG).

We put a lot of effort in analysis and selection of strategies we use. Though our system is performing very well, we still  learn from new situations on the market and implement new risk management rules or adjust current ones. The key for us is RESPONSIBILITY.

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