Saturday, March 23, 2013

My own trading performance - update

I've shown here a weekly chart of the equity curve, based on my own trades since July 2012, using the rules as detailed in my e-book and the addendum. All these trades have been called in 'real-time' on my protected Twitter feed, together with entry prices, initial stop levels etc. There has been 114 trades opened in that period, of which 7 remain open. The chart only tracks the actual cash equity curve (i.e. closed trades only). As of last night, this shows an increase in equity over that period of 102.82%. (The current returns shown on the blog sidebar include open profits).
Some points of note:
  • The chart has been based on an initial cash balance of £20,000, with a risk per trade of 2%;
  • You can see the equity is moving up in a step by step fashion - this is as expected, as weeks go by where there are small winners cancelled out by small losers, and any remaining positions are kept open while meaningful trends develop;
  • The big jumps in equity are when one (or more) trades where profitable trends have developed over a period of time have finished;
  • The very small drawdowns have been achieved by the conservative initial stop placement used;
  • The drawdowns are also limited by the very aggressive cutting of positions that do not act as intended (per the addendum rules) - some are closed within a few hours of being opened;
  • Within this period there has been one stock that gapped through a stop level. This resulted in a loss of almost 1.7R;
  • The win rate is slightly above 50%, and the profit factor is in the region of 2.8;
  • Due to the revised rules there have actually been a couple of additional trades where, per the original system rules, profits would have been made, but under the revised rules, small losses were actually incurred;
  • The bulk of my losses incurred are now less than 0.5R, whereas under the original rules, almost 25% of the losing trades would have ended up being a 1R loss.
 The returns could easily have been increased as a result of the following:
  • More aggressive initial stop placement, closer to the entry price - this would have increased the position size or number of shares traded on each position, BUT this would also increase the risk of incurring a loss bigger than 1R should a stock gap through a stop level;
  • I have a self-imposed limit on the number of positions I can open on any given day;
  • I spend very little time actually trading or looking for potential new setups each day - the scans I use update in real-time, and as a result I have missed plenty of potential entries (some of which have been traded by others using the system);
  • Due to the rules explained in the addendum to the e-book, I am very lightly invested at all times - for example, as of last night I have less than 1% equity at risk on my current positions (barring any gaps down through my stop levels).
So you can see how decent returns such as these can be generated with relatively little open risk, and without taking up huge chunks of your day. Have these results been optimized or curve fit? No, the basic parameters used are exactly the same as in previous years - the only change is the additional tweaks detailed in the addendum, which were designed to reduce the drawdowns that a basic trend following system could incur. And as I've said, there's been dozens of profitable setups that I've missed, which have been traded by others using the system, including the traders in the mentoring programme (quite a few of which have been tweeted as set ups). I've also posted plenty of charts of winning trades from other people who have been kind enough to email me with their progress.

To find out more, simply get yourself a copy of the e-book (with the addendum), or to access my own trades in real-time, as well as undertaking full training and gaining 12 months' worth of support, consider joining the mentoring programme.

1 comment:

  1. Thanks for the information. Ive been doing some articles almost similar to this on my blog,Its good to get some inspiration from elsewhere once in a while. Keep it up !