Sunday, May 25, 2014

2014 so far - less has been more

While reviewing my trading performance today, I decided to do a comparison between those trades taken between the beginning of January to the end of May both for last year and for this. This is an interesting comparison as the general market conditions could not have been more different. Based on my preferred timeframe and system parameters, the indices last year were in a stable uptrend. This year, they have generally been in a non-trending volatile phase.

This has been reflected in the trading activity for both periods. In 2013, 74 trades were taken in that five month period. This year, for the same period, there has been a mere 21 positions opened, and 11 of those were in January alone. In my own opinion, being too aggressive and taking on too many trades when market conditions are not favourable is a sure way to chew up your capital.

To me, that change in trade frequency just underlines the difference in the market conditions between last year and now, and how patience and discipline have been the buzzwords in recent weeks and months.

Despite that, more profits (measured in R) have been made in the current year to date. This is despite being very selective in positions taken, and by concentrating on controlling risk at all times. This has undoubtedly been helped by a couple of those trades generate healthy multiple R profits. So, definitely a case this year for less being more.

Over the last few months, the overall expectancy achieved has slightly increased, despite the win percentage dropping. Getting into a couple of decent trends, and by allowing them to run as far as possible, can do this. You never know in what order the winning trades and losing trade will occur, and at the same time you never know when the big winners will come along.  All you can do is control your risk and play the odds.

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