How do we tactically trade a biblically responsible investment portfolio?
Tactically trading a biblically responsible investment portfolio starts with the rules inside your selected investment model. In our faith-based models, we start by strength ranking our screened list of companies. The top 50 stocks are eligible for tactical trades.
Tactically trading a BRI portfolio involves making trades that respond to the environment of the market and follow the rules of a given investment strategy. In our faith-based investment models, we have a system that helps us determine on a daily basis which stocks could be candidates for tactical trades. Our system provides us with a range of data and information that helps us make that decision. Most importantly, this system helps us strength rank each stock in our pool of screened stocks. In our faith-based models, we only tactically trade the top 50 positions.
How are the top 50 stocks selected?
As we mentioned earlier, the process begins by a process called strength ranking. Strength ranking is like observing a race and listing all the racers by their performance from best to worst. In the case of stocks, we use price movements as the key indicators. We also will pay attention to other indicators such as momentum, rating values and others.
The top 50 stocks are eligible for tactical trading.
Each trading day begins with a re-evaluation of the top 50. All 50 companies are eligible for tactical trades. Our trade team will begin by placing a buy for the given stock. As per the rules of the faith-based investment models, the trade will seek to reach a 2% gain. Once we reach that goal, our trade team will then sell out of the position. At that point, as long as the position is still trending, we will continue to attempt to make another trade. At this point, we are looking for the price of the stock fall another 1%. Once, the price goes down by that 1%, our trade team will repeat the process: buy and then reach for another 2% gain. The results of this trading strategy can be viewed by looking at our faith-based trade blotter.
The purpose behind tactical trading.
The goal behind tactical trading is to reduce the overall effect of market volatility on a portfolio. This is unlike a buy and hold strategy, which rides out the downturns that come with market volatility. Tactical trading allows us to identify volatility and respond to it. On the macro-scale, this means paying attention to the momentum of a stock. On the micro-scale, this means we can respond intraday to the day-to-day and week-to-week price movements. The results are generally pretty healthy for a portfolio if executed properly.
For more information, please talk to your advisor.