A couple of weekends back, while on the train to London, I posted this up on Twitter:
The traders I was going to meet were Craig and Aaron, and our catch up marked the end of working closely together for three years.
Following that, Craig has now kindly forwarded the following note:
Regular readers of the blog will know that I kept track of all trades taken and the associated performance metrics covering the period July 2012 to April 2017, at which point I took a short break from the markets.
PDF copies of those records are available here.
This covered the good, the bad and the ugly of trend following. Sure, there were losing trades (lots of them!) and losing phases, but that is the nature of the markets, and typical of this type of approach to trading.
Despite a win rate of only 30%, the annualised returns equated to almost +75%, with an overall return of +470%.*
This can only be achieved by following the time-honoured principles of trading breakouts, cutting losses, letting your profits run and using good risk control.
As from 01 November, I will be starting a new record of all trades taken going forward, with all of the same metrics.
Recently I caught up with Craig, an experienced London-based trader who I have been working with for a couple of years, together with his trading partner Aaron, a for a day as part of the mentoring programme.
We had an exhaustive (and enjoyable!) session covering many topics, including further ideas about developing their edge, running multiple systems, correlation and risk.
When trading I play dumb. What I mean by this is that I avoid pretending to be 'smart' by predicting what may or may not happen. The people who draw squiggly lines on a chart outlining future price action - how do they know? The future doesn't exist.
So, by playing dumb, I am letting the markets show me the way - I simply react to what is happening.
Traders who are successful over the long-term have clearly defined their 'edge' in the market or markets they trade. To me, an edge is basically a method that statistically generates a positive expectancy over a large sample of trades.
In order to capitalise on that edge, the trader needs to develop the ability to use that edge. This basically means that a trading plan which is constructed to exploit that edge is followed as closely as possible.
