Monday, December 21, 2015

2015 review - and an interesting question

Having now brought all my trading records up to date, and with no positions currently open, returns for 2015 total +36.82%. This equates to just over +16R. The full results are shown here, with the associated charts and graphs here.

In summary, the win rate has dropped a bit, but the profit factor (expressed in terms of R) has continued to increase, so that currently the average size of my winning trades is more than 5.2 times bigger than the average size of my losing trades.

These returns show an improvement compared to 2014, but with similar underlying characteristics - all of the profit was made in the first part of the year, and from mid-May onwards, it's simply been a question of giving back as little as possible of those gains made.

As mentioned in this post, I am currently engaged in a review of my trading performance covering the last year. This is something I would highly recommend all traders do. You may not know it, but sometimes changes in your trading or (perhaps more importantly) your mindset can sneak up on you. This is particularly the case if you are not 100% automated or systematic, and trade a 'rules-based discretionary' style, like I do.

While wrapping up our last group webinar of the year on Friday, a question popped into my head regarding my own trading and the drop off in the trades taken:

"Have I been trading to win, or have I been trying to avoid losing?"

A further look clearly shows that, while the average expectancy per trade metric has held up, the number of trades taken in both 2014 and 2015 is significantly lower than in previous years.

It's therefore no coincidence that, as trading opportunity has fallen, the overall returns have also dropped.

So, the big question for me is whether that is purely down to the markets, or down to an internal cautiousness, and therefore a change in my mindset?

Both here on the blog and when speaking to other traders, I have tried to explain away my lack of trading activity as a result of the lack of favourable market conditions towards my own style of trading - trend following based on breakouts. And other traders who I respect have made similar comments about the general market environment during the course of the last few months as well.

But is this right?

In theory, providing I do not exceed my pre-determined risk limits, I should take all signals as and when they come along. I have overall risk controls and parameters in place to avoid overtrading, and I haven't held a bunch of trades simultaneously since the early part of the year. My most profitable periods have always been when I have been the most invested.

This may well be a chicken and egg question. My most profitable phases have always been when I've got into a number of positions, but at those points in time the markets have allowed that to happen. But there is the possibility that, subconsciously, I haven't pulled the trigger when I should have done on certain setups, because I've been trying to 'outsmart' the market.

I would certainly rather be out of the market looking to get in, rather than be stuck in the market looking to get out. But it may be that I have gone too far in this regard.

Certainly, seeing some of the other guys in our group getting into profitable trades which I haven't taken has also been a wake up call.

I read recently that only 5% of people are goal setters, and less than 1% have written down goals. Writing down your goals, and keeping them in sight, can keep you on the straight and narrow - if they are out of sight, then they can fall out of mind. If they are not written down, then you are not confronted by them.

While I always work out my goals for the coming year, last year they weren't written down and left in clear sight near my PC. This year, they will be. And the main goal this year will be to simply act on the signals I get - hopefully with the consequence that trading activity will pick up.


  1. Congrats on your good return! Keep tight on your trading discipline :)

  2. Thanks Hazwan. Yes discipline is critical - in terms of risk control, following your entry and exit rules, as well as keeping your mind under control. Best of luck for 2016!

  3. Fantastic stuff ..parallels my own trading experience in recent years. I'll be doing my review shortly too