Mulvaney Capital’s Simple Trading Strategy

The hedge fund that trades channel breaks

So, I was browsing X the other day and a post from the chartist drew my attention:

I decided to explore some more…

And I came across a very interesting investor PDF.

Usually, these things are full of boring stats, references to S&P benchmarks, and “we plant a tree and adopt a dolphin for every trade we take” type of thing…

But this was a little bit different.

Mulvaney gave us an insight into their trading strategy:

  1. They deploy a trend-following strategy
  2. Buying channel breakouts
  3. They add to their positions as the trend develops
  4. Exiting trades via a trailing stop loss

Hmmm, ok, so what else?

Well, they seem to add like this:

Initial position size = x contracts

  • Add 1 = x contracts
  • Add 2 = x contracts
  • Add 3 = 1.5x contracts
  • Add 4 = 2x contracts

ie, they seem to get even more aggressive as the trend develops.

  • 80% of their trades are losers (80!)
  • They cut losers very quickly
  • As volatility increases they tend to widen stop losses

So in summary they do exactly the right things:

  • Cut losers short
  • Add and hold to winners

These guys are not reinventing the wheel here, they are just laser-focused on capturing price trends and extracting as much profit as possible from them.

It works…