I have traded mostly stocks, ETFs and Options last year (around 200 executed orders in 2025) with a reasonable level of success (in a bull market anyone is a hero). Reviewing the trades it became clear I let my losers run too long and cut some winners short too early. I have set myself a goal of being more disciplined in trading this year and came up with the following strategy:
# Overview:
* Goal: 20%/year target return
* Time horizon: 5 years
* Max Drawdown: 25%
# Additional constrains:
* No single trade above 1% of portfolio total
* Per-Ticker Limits: 10% single stock/20% single ETF
* Asset type concentration limits: Stocks: 35%/ETFs: 45%/Options: 20%
# Sector Allocations (soft limits):
* Information Technology: 35%
* Energy: 5%
* Large Blend: 30% (mostly for indexed ETFs - VOO, etc...)
* Other sectors: 30%
# How I plan on implement the rules:
1. All assets held must have a stop-loss/trailing stop-loss set at 15%-20% of either current price or entry price (use TA to identify support levels near the trigger value)
2. Option count against underlying ticker concentration - *100 Shares of NVDA + 1 short Put NVDA Contract = 200 share commitment.*
3. If total stock allocation is met, use LEAPS as stock replacement up to the 20% limit
As I'm investing across a range of account types (401K Traditional and Brokerage, Roth IRA, Taxable Brokerage, HSA), there are differences in types of operations I can make in each one of them. It gets a bit complicated but I try to use LEAPS across Roth IRA and Taxable Brokerage, while I can Wheel assets on the 401K Brokerage. I need to stick with the selection of mutual funds in 401K traditional. I don't understand Options enough to operate multi-leg strategies so I don't play with them.
# Current portfolio:
Current stocks held in descending order of value: NVDA, PLTR, NOW, SMCI, CALM, GOOG, IREN, ADBE, OKTA, FISV, SPT
Current ETFs held in descending order of value: IWB, VOO, MGK, SMH
Current open option contracts: Long LEAPS on the following underlying: NVO, NVDA, PLTR, NOK, KLAR, KVUE/A few Covered Calls on SMH, NOW, IREN, OKTA
# Feedback Request
Before I implement the strategy and limits, I would like to get feedback on the overall framework. Specific questions:
\- Should I tighten up the stop-loss limit on Stocks/ETFs and use the slack to broaden up the stop-loss limits for LEAPS/Options - keeping the 25% drawdown total?
\- Should I consider stashing 5% os total invested in corporate bonds (ETF along the lines of IGIB) as dry powder to buy significant dips?
\- Any glaring holes or immediate improvements to be made?
\- Anyone operates under a similar framework and can share experience?
Thanks!