Hey Adam, hedging with the SPY ETF would be a common practice to hedge market risk. You may also want to do some research into other ETFs to see which ones are most correlated with your portfolio. Hedging with options is a common strategy, but unfortunately Quantopian does not yet support options trading.

Hello Ryan,
If I have stocks from the NDX100, could you tell me some ETFs i could potentially look at? I'm using the QQQ... with mixed results.

Thanks!

For simplicity sake you could use PSQ (short NDX) or QID (2x short NDX)

Thanks guys!
Quick question...say i have 100K intial capital and 100K(margin). And I want to trade up to 80K , (for cost of running business, etc). I was testing a strategy where i was allocating 10K per position (or 10% of initial capital per position). Does that seem unreasonably high? I've done some research where it's sensible to test with 2% of capital (per position), or in my case 2K allotment per position.

What would you suggest? It just seems 10K is a high risk amount to allocate per position.

Thanks!

@Anony When you mention risking 2 ATRs, are you referring to the trailing stop? Such that if i have Stock A at $20 and calculated an ATR 14 trailing stop of $2. Then you're saying 2 * $2 or $4...is this correct?

Thanks for that example. given the fact this is a closing/end of day strategy...would that change the equation any? vs say an intraday strategy?

Great thanks for the info! I had another thread, which didn't get a response on leverage. Could you possibly give some insight:

I'm testing a daily/end of day equity strategy and wanted to know best practices for applying leverage..such as 2:1 or 3:1, etc. I would think risk profile is also important here, however are there any general rules of thumb for when leverage makes sense vs not make sense? For instance, should volatility and max drawdowns be below a certain threshold, etc? Are there any other statistics/metrics i should look at first before even thinking of using leverage?

@Anony I appreciate your thorough a quick responses! I had another post regarding initial stock universe filter Market Cap VS Price * Volume, and would like to get your opinion. For my stock universe, wanted to run an initial filter..and am debating whether to use a Market Cap rank (say top 50) or use a Price * Volume rank (using a moving avg, and ranked top 50). What would be the pros/cons for each?

Thanks again!