Article Categories

Exposure

The Exposure metric measures the percentage of time that a traded position was exposed to the market, and therefore, subject to market volatility. Unlike a “buy and hold” approach which would have 100% market exposure, our strategies provide optimal entry and exit points to trade, so we are not “in the market” 100% of the time. This is important, as it reduces the statistical likelihood of having to endure an extended downturn in the market.

Because most of our strategies typically hold a position open for a small number of days or weeks at a time, we have a much lower rate of exposure. We capitalize on the price movement that occurs between the entry and exit trigger by taking profits on the trade and returning to a cash position while we wait for the next entry trigger. During the time that the strategy is “in cash”, there is no exposure to the market.

Our backtesting results for each strategy include an exposure metric that shows, for the duration of the backtesting period, the percentage of time that the strategy was “exposed” to the market. Maintaining a lower exposure is one of the ways that we mitigate the higher volatility of leveraged ETF’s that are traded in our strategies.

To see how exposure factors into our strategies, take a look at our Strategy Overview.


See Also Performance Metrics


Copyright © 2018, Market Chronologix, Inc.

Article details:
exposure | volatility | risk |